Assignment 2: Human Resource Strategy

Apple’s CSR and Marketing Strategies

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Apple’s CSR and Marketing Strategies

Introduction

Founded in 1976 by Steve Jobs and Steve Wozniak, Apple is the world’s largest technology company. The company’s marketing strategies have enabled it to revolutionize various industries. This have improved the company’s brand name. Apple has several corporate social responsibilities initiatives that improve the company’s competitiveness. Some of the most successful products of the company include iPod, iPad, iTunes, and iPhone. Apple outsources its production activities to foreign companies. Therefore, it is vital for the company to ensure that the activities of the suppliers do not tarnish the image of the company. The company’s supplier code of conduct has regulations and standards that the suppliers must adhere to. However, from time to time suppliers engage in unethical activities (Hiscock, 2012).

Apple’s Ethical and Social Responsibilities

Global warming due to environmental degradation is one of the major problems that threatens humanity. Industrial operations are the major activities that lead to environmental degradation. Therefore, it is vital for companies to ensure the sustainability of their operations. Apple is one of the companies that strives to ensure the sustainability of its operations and products. Apple was the first company to stop the production of cathode ray tubes (CRTs) in 2006. CRTs contain approximately 1.4 kg of lead, a highly toxic compound that leads to neurological problems. Manufacture of packaging material leads to greenhouse gas (GHG) emissions. Apple uses very little packaging material in its products. This reduces the environmental impact of the production of the packaging material (Lannuzzi, 2011). Apple also strives to reduce the amount of toxic compounds in its products. Electronic cables contain PVC, whereas displays contain mercury. Apple reduced these toxic compounds in its products. In addition, Apple recycles its products. The company offers customers who return old products for recycle a discount while purchasing a new product. This has reduced the environmental impact of Apple’s products significantly. (Reinhold, 2011).

Apple has various initiatives that strive to improve the health of the less fortunate. The company has collaborated with other companies to form the (Product)Red. (Product)Red is a global fund that raises funds that help in tackling Aids, malaria, and tuberculosis in developing countries. The initiative requires companies to develop products that increase awareness of the diseases. The company should donate a certain proportion of its revenue to the sales of the product to the initiative (Shimp, 2008). Since its enrolment into the initiative, Apple has helped in raising millions of dollars using the (Product)Red iPod Nano and the (Product)Red iPad cover. Thus, its involvement in the initiative has improved the lives of thousands of people.

Ethics and Social Responsibilities Violations

Apple outsources the production of almost all its products to international locations. This reduces the cost of production. Foxconn is Apple’s largest supplier. The company manufactures iPads and iPhones. It has almost 1 million employees who work in 15 factories. Foxconn also supplies other major electronic companies, which include Sony and Dell. In 2006, Chinese newspapers reported that Foxconn’s workers worked for very long hours. In addition, in between 2009 and 2010, 13 employees of the company committed suicide. Investigations revealed that the employees may have committed suicide due to poor management style of the company. One of the employees committed suicide shortly after losing an iPhone 4 prototype. The company used a military style of management. It imposed penalties to employees who violated their rules and regulations. Revelations of the suicides necessitated Apple to react to the accusations to avoid tarnishing its image. Steve Jobs, the CEO of the company at the time, reacted by claiming that Foxconn was not a sweat shop. Foxconn has excellent facilities in its factories. It has a swimming pool, tennis courts, and movie theatres. In addition, the company organizes fishing, mountain climbing expeditions, and various tournaments. However, its employees cannot enjoy the facilities since they work for very long hours. The employees work for 70 hours a week. This is 10 hours more than the hours that Apple’s Supplier Code of Conduct recommends (Christopher, 2012).

Apple’s Supplier Code of Conduct requires suppliers to provide safe working conditions. However, the employees of various suppliers work under unsafe environments. In May 2010, 2 2 employees died and 16 others incurred serious and minor injuries due to an explosion at Foxconn. Apple and Foxconn carried and investigation to determine the cause of the explosion. However, they did not publish their findings. This may be an indication that the employees worked in unsafe environments. In addition, in 2011, Apple admitted that 137 workers of Wintek, an Apple supplier in Suzhou, China, suffered from n-hexane poisoning. N-hexane is a toxic compound that the company used to clean the touch screens of iPhones. N-hexane poisoning led to several serious health conditions. The workers received between $12,000 and 21,000 as compensation. However, they complained that the complained that the compensation that the company offered was not enough. In addition, the company requested employees who requested received compensation to resign from their positions (Christopher, 2012).

Apple’s products are very expensive. Therefore, its suppliers are expected to provide their employees with good remuneration. However, research shows that the suppliers provide their workers with very little pay. The workers may work for long hours without overtime payment. In addition, the workers in various supplier factories have poor working environments. Apple may ensure that the employees adhere to wage and benefits standards by educating the employees on their rights. This would enable the workers to demand for their rights if the suppliers do not meet Apple’s standards.

Apple may also request its suppliers to provide details of the wage and benefits it offers its employees. The company should impose certain penalties to suppliers who do not meet its wage and benefits standards. This would encourage companies to adhere to the standards. Since suppliers may provide inaccurate information on the wage and benefits that they offer their employees, Apple may visit the company’s premises and interview workers to prove the accuracy of the information.

The U.S. provides Apple with one of the largest markets for its products. Despite the fact that Apple is an American company, it outsources almost all production activities to foreign locations. The company has approximately 43,000 employees in the U.S. and 20,000 employees in foreign locations. In addition, suppliers of the company have tens of thousands of employees. The number of U.S. citizens that the company employs is significantly lower than the number that other major American companies such as General Electric or Exxon Mobil employ. In 2011, the company made $400,000 per employee. This amount was higher than what other major American companies earned. (Duhigg & Bradsher, 2012). This highlights the profitability of the company. However, despite the company’s profitability, its pays its employees about $11 per hour. The company is capable of improving the contractual terms with suppliers to enable them increase their workers’ pay without the need for its customers to pay more for its products. The company can easily absorb the excess payments and retain its position as one of the most profitable companies per employee in the U.S. However, pursuit of profits limits the company’s willingness to increase the contractual terms. Therefore, customers would not be willing to pay more enable the suppliers of company increase the pay of its employees. In addition, U.S. citizens would not be willing to pay more as outsourcing limits the amount of jobs that the company creates in the U.S. economy.

Apple’s Marketing Strategy

Apple marketing strategy strives to show that the company is selling more than a product. It strives to shows that the company is selling a much exciting product. The company has successfully used this strategy for several decades. The company used this strategy to market one of its first products, the Apple II. The company claimed that the people would work, play, and grow with the personal computer. When Apple launched the iPod, it did not provide its customers with a series of facts and figures on the product. The company claimed that the product enabled customers to have 1,000 songs in their pocket. Apple continues to use this strategy to market its products. This enables the company to create a ‘buzz’ prior to launch of a new product. This improves the company’s competitiveness.

Apple has a pricing strategy that targets high-end customers. Customers in this market segment value quality instead of price. This enables it to charge high prices for its products. The company designs high quality products that would appeal only to this market. This strategy makes the company to lose certain customers. However, it increases the loyalty of the existing customers. Referrals by the loyal customers enables the customers to recoup the loss in revenue due to the customers it ignored.

Apple has attained its dominance in the market due to its effective market strategy. Apples develops high quality products. Its marketing campaigns highlight the level of sophistication and quality of its products. Apple has retail stores in various major cities around the globe. Sales in the stores account for a sizeable percentage of the company’s revenue. In addition, the stores enable the company to move closer to its customers. Apple’s stores are very luxurious. The luxuriousness of the stores maintains the brand image of the company.

Measures that would improve Apples competitiveness

Apple strives to meet the need of its current customers. The company introduces new products that incorporate the technology or features of previous products. The company incorporates very few additions. This strategy has enabled the company to maintain the loyal customers. When the company introduced the new iPad Air and iPad Mini, it did not consider the include features that would have satisfied new customers. Instead, the devices had similar screen technology. This strategy has prevented Apple from breaking its boundary and acquire new customers. Apple should ensure that new products have new features. On the other hand, Samsung does not shy away from introducing new products that have new features. In 2013, the company introduced several products that had new features. This enabled it to capture new customers. The Gear watch is one of the major products that enabled the company to acquire new customers. Samsung’s strategy enabled it to push out old products due to very slight variations. However, this strategy is risky. Samsung has reaped huge benefits due to its willingness to take risks. It is currently the market leader in the smartphone market. Apple may improve its competitiveness in the smartphone market by developing innovative products at a faster rate.

Apple’s strong brand gives it a competitive edge in the market. The company relies on rapid innovation to attract and retain customers. However, after the death of Steve Jobs, the company has not been able to produce innovative products at a rate that would make customers yearn to own the products. This is slowly diluting the strong brand of the company. IPhone 5S, the company’s latest iPhone had only minor refinements compared to the previous version. This made rivals taunt the company for lack of major advancements in the product. To ensure that the company does not lose its ‘premium’ and ‘innovative’ brand, Apple should split its advertising strategy according to the region. To tackle this problem, the company should advertise its new products that have little additions to new markets. This would ensure that the new products do not cannibalize the lucrative developed markets. Rolex is one of the companies that has successfully used this strategy to maintain its brand premium. The company creates only premium products. This is due to the fact that creating low-end products would dilute the brand of the company.

Conclusion

Outsourcing is a contemporary global phenomenon. This necessitates companies to ensure that suppliers do not engage in activities that may tarnish their reputation. Apple uses its supplier code of conduct to ensure that the suppliers do not tarnish their reputation. Apple’s strong brand gives it a competitive edge over other companies in the industry.

References

Christopher, E.M. (2012). International Management: Explorations across Cultures. London: Kogan Page Publishers.

Duhigg, C. & Bradsher, K. (2012, January 21). How the U.S. Lost Out on iPhone Work. The New York Times. Retrieved on 31 January 2014 from: http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html

Hiscock, G. (2012). Earth Wars: The Battle for Global Resources. Hoboken, NJ: John Wiley & Sons.

Lannuzzi, A. (2011). Greener Products: The Making and Marketing of Sustainable Brands. Boca Raton, FL: CRC Press.

Reinhold, A. (2011). . Switching to a Mac for dummies. Hoboken, NJ: John Wiley & Sons.

Shimp, T.A. (2008). Advertising, promotion, and other aspects of integrated marketing communications. Mason, OH: Cengage Learning.