Despite its strong brand and impressive financial performance, Apple is not a stranger to controversy. The company has, for some time now faced public backlash for failing to effectively implement sustainable supply chain management strategies to curb the rampant ethical malpractices in its supply chain. Ethical concerns about the glaring human rights violations perpetrated by Foxconn, one of Apple’s suppliers in China, started to emerge as early as 2010, but the company is yet to find a solution. Even though the company made attempts to investigate the working conditions at Foxconn, following 18 reported suicide attempts by the supplier’s assembly-line workers and 14 confirmed deaths, labor rights violations are still being reported 8 years down the line (Cuthbertson, 2017; Clarke & Boersma, 2018). The apparent lack of commitment to sustainable supply chain management is underscored by the fact that it does not feature on Forbes list of the top 100 The Most Sustainable Companies in 2019. Its major competitors, including Samsung, HP, and LG, appear on the list.
Apple should make deliberate efforts to promote sustainable supply chain management, which entails among other things responsible sourcing, to maintain its brand image both in the US and China. iPhone sales in China dropped by 30% in the first quarter of 2019 while Huawei, its main competitor in the Chinese market, saw its sales grow by 41% during the same period. Back in the US, the company is also riddled with ethical malpractices in the workplace. Bobrow-Strain (2012) points out the poor organization culture at Apple, which explains why it does not feature on Fortune’s list of best 100 companies to work for. Apple’s unethical practices threaten its corporate image, which is its biggest asset. The company should strive to promote its corporate image to maintain brand loyalty. This can be achieved through sustainable supply chain management.
Apple was in 2017 forced to pay $506 million to the University Of Wisconsin-Madison for copyright infringement due to patent infringement. The company had initially been required to pay $234 million after the Wisconsin Alumni Research Foundation won against Apple in 2015, but Apple not only failed to pay the damages but also continued to infringe the patent until it expired in 2016 (Mamiit, 2017). Later the same year, Apple filed a $1 billion lawsuit against Qualcomm for allegedly overcharging it billions of dollars. In retaliation, Qualcomm sued Apple for patent infringement claiming that the company leaked some of its secrets to Intel. The legal warfare ended on March 2019, with Apple having to pay Qualcomm 4.5billion in damages. With Intel withdrawing from the 5G modem market for phones, Qualcomm is now the only company that offers the technology. This means that Apple will either have to get the technology from Qualcomm or start producing its 5G modems; this uncertainty has forced the company to delay the release of 5G devices until 2020.
This scenario reiterates the repercussions of the legal environment on company performance. If the case has gone to court, then it would have probably ended with Apple being banned from selling smartphones in the US. The would have dire consequences on the company’s sales it the US. In the future, the company should be cognizant of its legal obligations to other stakeholders both the domestics and global market
Clarke, T., & Boersma, M. (2018, August 8). A hostage situation: Why Apple won’t address its unethical supply chain . Retrieved from www.smartcompany.com.au: https://www.smartcompany.com.au/industries/information-technology/a-hostage-situation-why-apple-wont-address-its-unethical-supply-chain/
Cuthbertson, A. (2017, March 11). iPhone X release: The human cost of apple’s most expensive iPhone ever. Retrieved from newsweek.com: https://www.newsweek.com/iphone-x-release-human-cost-apples-most-expensive-ever-iphone-699901
Mamiit, A. (2017, July 26). Apple Legal Issues Continue: Court Orders $506 Million Payment To University Of Wisconsin-Madison For Patent Infringement. Retrieved from www.techtimes.com: https://www.techtimes.com/articles/212047/20170726/apple-legal-issues-continue-court-orders-506-million-payment-to-university-of-wisconsin-madison-for-patent-infringement.htm