Stakeholder Report

Introduction

The research report has been formulated on the selected company of Apple Inc to focus on the corporate ethics and leadership performance of the company concerning a particular incident which has tested the Corporate Social Responsibility practices of the organisation with profound impact on the organisational stakeholders. The study has concentrated on the performance of the CSR strategy of Apple in respect to the organisational obligations to wards the stakeholders and management of corporate ethics. The report has also highlighted the interaction between the Apple leadership, the management structure and the interests of significant stakeholders.

The report from fortune.com (2017) has highlighted that the tech giant Apple Inc, had been culpable in the purposefully slowing down the comparatively older iPhones to compensate the decay of batteries and this issue had emerged during 2017. The perception had been amongst the Apple users that the tech giant had been consistently slowing down the early and old models of the iPhones whenever a new version had been launched into the market with the objective of forcing the older iPhone users to upgrade to the new and costly models. Such revelations had culminated in the registering of law suits by concerned and affected customers of older Apple iPhone models for the specific reasons that the company had resorted to such tactics without issuing prior warning (fortune.com, 2017).

Garcia‐Castro and Francoeur, (2016) have determined that the Apple Inc operates through a hierarchical organisational structure. The divisional characteristics are notable in terms of the traditional structural functionalities which are utilised to develop the business objectives of the company. One particular feature of the divisional characteristics of the Apple organisational structure is that such characteristics refer to the product grouping of the company such as the MacOS and Ios. Chikhale and Mansouri (2015) have stated that the functional matrix of such an organisational structure involves a particular inter-divisional collaboration process between the different organisational segments. According to Mogensen (2018), the primary characteristics of Apple organisational structure are as the following:

Significant aspects: i) Greater collaboration between different organisational parts including interdisciplinary collaboration such as between the hardware and software teams.

ii) The CEO Tim Cook operates from the central role of such a Wheel and Spoke based configuration.

iii) Upper functional tier outlines functional grouping of components with the leadership provisioning performed by senior vice presidents of the company. The divisions such as retail, global marketing, R&D and Finance all are controlled by the individual senior vice presidents in terms of their functionalities.

2: Product oriented work structure divisions.

Significant aspects: i) This format involves the uppermost and the lower tiers of the company.

ii) The different products and services host the leaderships of different senior vice presidents and individual vice presidents.

iii) Divisions such as Software Engineering (MacOS and Ios), Hardware Engineering (Mac, iPhone, iPad and iPod) and Hardware Technologies (components and particular accessories) are all served by the individual vice presidents who have to report directly to the Senior Vice presidents.

iv) The purpose of this structural configuration is to manage the individual products and their components to deliver the same to the targeted market segments and intended customers.

3: Functional matrix is oriented towards preservation of the organisational hierarchy.

Significant aspects: i) This signifies the collaborative interactions in between the multiplicity of components of the company.

ii) Project chiefs do not have much authority and control since the directions of the individual projects are determined by the top management tier.

iii) The orientation is on the facilitation of information dissemination at the innovation levels and ideation processes. This structure also emphasises upon the development of a strong brand identity for the Apple Inc.

Shackelford et al (2017) have stated that one specific feature of such a functional matrix has been the limited flexibility of the organisation. This a glaring downside for the corporate structure of the company. The reason is that any hierarchical organisational structure particularly prevents the lower tiers to respond to the business necessities and market contingencies in a flexible manner. For instance, the hierarchical functionality matrix prevents the product based divisions of Apple to take the initiative of proceeding towards change implementation in accordance to the trends in the Smartphone and other consumer electronic accessory markets. The lower rungs of the company architecture have to wait for the CEO and the other top echelon executives to provide directives for such initiatives. This inhibits rapid change implementation.

According to Ledenyov and Ledenyov (2015), the concerns and interests of the stakeholders of Apple are reflected through the policy parameters of the company regarding the Corporate Social Responsibility management framework of Apple. Varying demands are imposed by the stakeholder groups concerning the differential aspects of the business operations by the company and these demands encompass the most significant aspects such as product quality and functionalities, sustainability of the products and the organisational employment practices as well as the commercial and financial performance of such business endeavors.

List of the major stakeholders of Apple and the expectations and business obligations of the company

Sun et al (2019) have outlined the following enlistment of major stakeholders of Apple:

Apple has to prioritise the customers regarding the development of the CSR management strategies. The consumers, as stakeholders, are comprised of the institutional buyers and individual customers of the Apple products and services. The primary interest of the consumers of Apple products has been to obtain the most efficacious and functional services from the purchased Apple products. The price points of Apple products are comparatively higher. TIBICHI (2018) has opined that the premium pricing strategy of Apple has to be made acceptable through emphasis on the quality, performance and brand value aesthetics of the offered products. Apple Inc, is, thus, obliged to develop greater responsible sourcing of materials and recycling mechanisms of the same concerning the sustainability management aspects of the business. Prior to the aforementioned controversy, the CSR management efforts of Apple had been successful to satisfy the consumer expectations.

Fu et al (2018) have emphasised that Apple employees are prioritised to be the second most significant stakeholders in the organisational CSR approach. The primary interests of such stakeholders are obtainment of effective remunerations, accessing of proper career development options and acquisition of proper compensation in cases of accidents or any other occupational hazard. The significance of these stakeholders stems from the fact that the employees of Apple are the sources of human resource capabilities for the company regarding management of innovation and profitable product development. Competitive compensation and salary packages are provided by Apple to the employees at various facilities to satisfy the interests and concerns of the employee stakeholders.

Heracleous and Papachroni (2016) stated that the major determinants of the obligations of CSR, for Apple, have been the investors, who form a considerable segment of the organisational stakeholders for the company. The primary interest of the investor stakeholders of Apple is to maximise the returns which they get over their investments. The measure of excellence of financial performance of Apple is responsible to address the concerns of these stakeholders. The profit margin thresholds of Apple, being one of the most profitable organisations in the world, are generally high. This ensures a comparatively strong position in the financial markets for the company with greater liquidity and high cash mounts than most of the other market competitors. Such capabilities also ensure that Apple could avoid any recurrence of debt. Thus the CSR obligations towards the investors, so far, have been effectively satisfied by Apple Inc.

According to Kao (2018), the suppliers and distributors formulate a peripheral yet extremely considerate segment of the organisational stakeholders in terms of the finalisation of CSR efforts of Apple. Suppliers and distributors of the company are indirect stakeholders in nature, however, their influence in determination of the CSR obligations has compelled Apple to devise the Supplier Code of Conduct in the form of monitoring and imposing specific regulatory management practices regarding the employee practices within the supply chain based organisational functioning. The interest of such stakeholders is comparable to those of the Apple employees in the form of compensation, security of their contracts and ethical organisational practices. The devised code of conduct outlines that compliance to the 60 hour work durations on a weekly basis has to be ensured. The compliance rate to this regulatory policy, Fu et al (2018) have outlined, had been 92% during the financial year of 2016-17.

Furthermore, Mogensen (2018) have argued that any review of the yearly Supplier Responsibility Report of Apple could make evident the fact that the company has been implementing various policies to curtail the unethical practices which have been observed previously amongst the suppliers. Some of these unethical practices could be identified as utilisation of underage labour at least at 10 of the Apple facilities, hazardous working conditions which had been prevalent at 2 facilities, forgery and falsification of production audit materials at 4 facilities and the incidence of bribery at 1 facility affiliated with Apple. However, such stringent regulations have to be applied at the Apple facilities simultaneously.

According to fortune.com (2017), the leadership response emanating from Apple had been the forwarding of a formal apology by the company to the affected customers for slowing down the devices. Initially, before the lawsuits had been filed against Apple, the company had attempted to justify the slowing of older iPhones with the explanation that such a practice was necessary to protect the electronic components of the iPhones since the batteries have aged and the potency has been reduced. However, this explanation could not assuage the discontent the customers and two class action lawsuits were initially filed at California.

The Apple leadership had termed such an incident to be the outcome of misunderstanding between the company and the customers. Furthermore, Apple had offered for replacement of the old batteries at a lower cost ($29) from that of the existing price range ($79) so that the old iPhones could be effectively utilised. Democratic style of leadership has been exhibited by the Apple CEO Tim Cook. For this purpose, Cook had to develop, promote and exercise consensus amongst the senior group of managerial personnel of the company. Greater autonomy has been accorded to the members of the new product and service development teams to provide greater operational initiative. However, Tim Cook also provided at active support leadership element concerning the damage control process for Apple concerning the controversy through providing a keynote address at the World Wide Developers Conference which was conducted at Moscone West, San Francisco, California.

The factor of effective stakeholder management was highlighted through the emphasis on delivering of best of experiences for the existing customers, through better overall performance and prolonging of the lives of older devices. Such devices included the previously launched iPhone 6, iPhone 6s and iPhone SE.

Conclusion and recommendation

In the current hyper competitive markets, performance excellence, increment in sales volumes and maintaining of profitability are the fundamental aspects for a company such as Apple. To this effect, ensuring of proper CSR management policies concerning the stakeholders of the company is vital. Different strategic approaches for each of the stakeholders are required.

• Effective leadership provisioning.
• Development of motivation for the employees.
• Greater control on the formulation of policy parameters regarding the services offered to the existing and new customers would be required.
• Reduction of any chance of conflict at the policy implementation levels and avoiding of future incidents regarding the scandal which has been highlighted in the previous report would be also crucial for the leadership element of Tim Cook.

Reference List

• Garcia‐Castro, R. and Francoeur, C., 2016. When more is not better: Complementarities, costs and contingencies in stakeholder management. Strategic Management Journal, 37(2), pp.406-424.
• Chikhale, M.M. and Mansouri, M., 2015. An agile and collaborative framework for effective governance to enhance management in large-scale enterprise business systems: The case of Apple Inc. Global Journal of Flexible Systems Management, 16(3), pp.283-293.Mogensen, B.G., 2018. Managing Corporate Legitimacy Through CSR Reporting: A Qualitative Case Study of Apple Inc.’s Supplier Responsibility Reports.
• Shackelford, S., Richards, E., Raymond, A., Kerr, J. and Kuehn, A., 2017. iGovernance: The Future of Multi-Stakeholder Internet Governance in the Wake of the Apple Encryption Saga. North Carolina Journal of International Law and Commercial Regulation, pp.16-74.
• fortune.com (2017) Apple Admitted it Slows Down Old iPhones. Now it Faces a Lawsuit [online] Available at https://fortune.com/2017/12/22/apple-iphone-batteries-slow-lawsuit/ Accessed on: 20.11.2019
• fortune.com (2017) Apple’s Slowed Down iPhones [online] Available at https://fortune.com/2017/12/31/biggest-corporate-scandals-misconduct-2017-pr/ Accessed on: 20.11.2019