International Business Environment

ABERDEEN BUSINESS SCHOOL

BSM029: International Business Environment

Individual Coursework

SUBMITTED BY: Syed Muhammad Asim (1214852)

Module Co-Coordinator: Dr. David Jones

Msc International Business

6 January 2014

Word Count: 4000

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International Business Environment

Executive Summary

In this report focus is on the issue of managing supply chain effectively in order to

eliminate and restrict the Corporate Social Responsibility statement breach due to

supplier being in different country with different cultural values, the company

chosen which has been already exposed to this issue is Apple Inc whose supplier in

China Pegatran group has violated workers right by abusing workers, making them

work long hours and providing inappropriate working conditions, whereas Apple Inc

has a CSR statement which promises to provide safe and secure working conditions

throughout its supply chain, implications of a breach of CSR is severe resulting in

negative publicity of Apple Inc brand.

Industry which has been looked upon in this report is electronics, whereas sector is

manufacturing.

Furthermore the strategic tools, frameworks and models used in this report are,

SWOT analysis focused on Strength and Weaknesses only, PEST analysis, McKinsey

7S Framework, Hofstede national cultural difference theory and finally VRIN

Framework.

The report was finalized with the usage of secondary resources such as, articles,

book, journals and websites.

Lastly Samsung supply chain management benchmarking was given as one of the

recommendation for Apple Inc in order to overcome the issue of managing supply

chain effectively.

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Contents

Executive Summary...................................................................................................2

1.0 Introduction..........................................................................................................5

2.0 Corporate Social Responsibility, Culture and Supply Chain..................................6

2.1 CSR.................................................................................................................... 6

2.2 Culture..............................................................................................................7

2.3 Supply Chain.....................................................................................................7

2.4 The Issue and its Relevancy..............................................................................7

3.0 Apple Inc and the CSR issue.................................................................................9

3.1 Labor and Human right issues at Apple inc supplier in China............................9

3.2 CSR and Supply Chain Auditing at Apple Inc...................................................10

3.3 The Current Issue with Apple inc.....................................................................10

4.0 External Environment of Manufacturing sector..................................................11

4.1 Supply Chain Model of Apple Inc.....................................................................11

4.2 Political/Legal policies.....................................................................................14

4.3 Economic Environment....................................................................................14

4.4 Technological Environment.............................................................................15

5.0 Internal Environment of Apple Inc......................................................................16

5.1 McKinsey 7S Framework..................................................................................16

5.2 Hofstede National Culture differences Theory.................................................17

5.3 Strengths and Weaknesses of Apple Inc..........................................................18

5.4 VRIN Framework for Apple Inc.........................................................................19

5.5 Initiatives.........................................................................................................21

6.0 Recommendation and Conclusion......................................................................22

7.0 References.........................................................................................................24

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List of table and Figures

Table 1: Showing the obligations of CSR..........................................Page:7

Table 2: Showing the PEST analysis of manufacturing sector in China and United

States.........................................................................................Page:14

Table 3: Showing the 3 dimensions.................................................Page:18

Table 4: Showing the Strengths and Weaknesses of Apple Inc............Page:19

Table 5: Showing further initiatives which Apple Inc has taken...........Page:22

Table 6: Summarizing the whole issue and recommendations............Page:24

Figure 1: Showing the Supple chain model of Apple Inc......................Page:12

Figure 2: Showing the 7S framework...............................................Page:17

Figure 3: Showing the VRIN Framework...........................................Page:21

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1.0 Introduction

Apple Inc. (Apple) designs, manufactures and markets mobile communication and

media devices, personal computers, and portable digital music players, and sells a

variety of related software, services, peripherals, networking solutions, and third-

party digital content and applications (Forbes, 2013).

The electronics industry scope cannot be restricted to mass-market products that

are produced in millions and even billions of pieces a year (mobile phones, TVs, PCs,

etc.). Mass-market products ‘only’ represented 53% of the electronics industry in

2008. The electronics scope also encompasses embedded electronics in transport

(cars, planes, trains, etc.), in defense equipment, in IT infrastructures as well as

electronics used in manufacturing process or professional services in order to boost

productivity (Decision, 2009).

The key factors governing the growth of electrical and electronics industry are as

follows:

Rising and continuous investments in research and development has led to

increased productivity and higher-value added electrical and electronics

products.

Increased foreign investments have resulted in the accelerated growth in

terms of electronics production and exports. Foreign companies are now

making huge investments and are installing extensive production capacities

in developing countries.

Extends support to several global industries namely medical,

telecommunications, industrial and automotive sectors.

Rising incomes and living standards have resulted in the increase in demand

of electronics especially consumer electronics products in the world.

(Digitivity, 2013)

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2.0 Corporate Social Responsibility, Culture and Supply

Chain

2.1 CSR

According to Brusseau (2013), the title corporate social responsibility has two

meanings. First, it’s a general name for any theory of the corporation that

emphasizes both the responsibility to make money and the responsibility to interact

ethically with the surrounding community. Second, corporate social responsibility is

also a specific conception of that responsibility to profit while playing a role in

broader questions of community welfare.

As a specific theory of the way corporations interact with the surrounding

community and larger world, corporate social responsibility (CSR) is composed of

four obligations:

Table 1: Showing the obligations of CSR

The Economic responsibility to make money. Required by simple economics, this obligation is the business version of the human survival instinct. Companies that don’t make profits are—in a modern market economy—doomed to perish. (Brusseau, 2013)

The Ethical responsibility to do what’s right even when not required by the letter or spirit of the law. This is the theory’s keystone obligation, and it depends on a coherent corporate culture that views the business itself as a citizen in society, with the kind of obligations that citizenship normally entails. (Brusseau, 2013)

The Legal responsibility to adhere to rules and regulations. Like the previous, this responsibility is not controversial. What proponents of CSR argue, however, is that this obligation must be understood as a proactive duty. That is, laws aren’t boundaries that enterprises skirt and cross over if the penalty is low; instead, responsible organizations accept the rules as a social good and make good faith efforts to obey not just the letter but also the spirit of the limits. (Brusseau, 2013)

The Philanthropic responsibility to contribute to society’s projects even when they’re independent of the particular business. A lawyer driving home from work may spot the local children gathered around a makeshift lemonade stand and sense an obligation to buy a drink to contribute to the neighborhood project. (Brusseau, 2013)

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2.2 Culture

‘Culture is a fuzzy set of basic assumptions and values, orientations to life, beliefs,

policies, procedures and behavioral conventions that are shared by a group of

people, and that influence (but do not determine) each member’s behavior and

his/her interpretations of the ‘meaning’ of other people’s behavior. (Oatey, 2012)

The research of Geert Hofstede (2013), has shown that cultural differences

between nations are especially found on the deepest level; i.e. on the level of

values. In comparison, cultural differences among organizations are especially

identified on the level of practices. Practices are more tangible than values.

2.3 Supply Chain

According to Meindl et al (2004), A supply chain consists of all parties involved,

directly or indirectly, in fulfilling a customer request. The supply chain not only

includes the manufacturer and suppliers, but also transporters, warehouses,

retailers, and customers themselves. Within each organization, such as

manufacturer, the supply chain includes all functions involved in receiving and

filling a customer request. These functions include, but are not limited to, new

product development, marketing, operations, distribution, finance, and customer

service.

According to Lambert et al (2001) Supply chain management is increasingly being

recognized as the integration of key business processes across the supply chain. For

example, Streamlining cross-company processes is the next great frontier for

reducing costs, enhancing quality, and speeding operations. It is where this

decade’s productivity wars will be fought. The victors will be those companies that

are able to take a new approach to business, working closely with partners to

design and manage processes that extend across traditional corporate boundaries.

They will be the ones that make the leap from efficiency to super efficiency.

2.4 The Issue and its Relevancy

The main issue here is the effective management of supply chain when following

CSR principles, especially when supplier is in another country which has different

culture. Not being able to live up on any principle of CSR as stated in table 1, should

effect the image of the company adversely.

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According to Yoon et al (2006), CSR activities improve a company's image when

consumers attribute sincere motives, are ineffective when sincerity of motives is

ambiguous, and hurt the company's image when motives are perceived as insincere

or even if there is an breach of CSR statement presented by company.

Culture plays a significant role in such failures of CSR statement if it involves a

breach of CSR down the supply chain and if company has branch in more than one

country following a CSR based in one region where cultural preferences are different

in other region, for example, company originating from America believes in

following ethical values in the work place but has a supplier which is from China

who does not have same cultural preference and those ethical values practiced in

America might not be seen in China and lead to failure of CSR.

Since there are a lot of companies all around the world which have adopted the

practice of CSR yet they fail to follow all of its principle as stated in table 1,

especially, doing something unethical.

Such short comings on promises of following CSR brings in bad reputation for the

company, reduction in share prices (Kolbel, 2005), reduction in share holder value

(Robinson et al, 2008).

According to Bilson (2010), "An obvious example of bad publicity from bad

corporate social responsibility at play and the effect that bad social responsibility

has on a company, is Enron, the Texan energy company that not only brought itself

down but also one of the largest accounting firms at that time, Arthur Andersen.

Enron was a darling of corporate philanthropy and gave millions in charity donations

to charity organizations and won several awards for its corporate social

responsibility work, including a climate protection award from the EPA and a

corporate conscience award from the Council on Economic Priorities". As it can be

learnt that the issue of not living up to CSR statement launched by the company

brings about disastrous outcomes.

3.0 Apple Inc and the CSR issue

As discussed in the earlier part of this report, that not living up to the CSR

statement can bring bad reputation to the company, an organization which has

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been recently exposed to this issue is Apple inc, their suppliers in China have

breached the Apple inc CSR statement and now Apple inc is taking various

initiatives to deal with this, initiatives taken by Apple inc will be discussed in detail

in the later part of this report.

3.1 Labor and Human right issues at Apple inc supplier in China

Since Apple inc deals in manufacturing sector, it has suppliers in China which

manufacture products on Apple inc behalf.

According to Torres et al (2012), A well-known conflict involving Apple’s suppliers is

the suicides at Foxconn. It is the largest contracted electronics manufacturer in the

world, with dealings involving Dell and Sony.

Foxconn is the manufacturer of iPhones and iPads and employs over 900,000

workers, of whom 420,000 employees work at the Foxconn Shenzhen plant. This

plant covers 15 factories, including dormitories, a hospital, a bank, a grocery store

and restaurants. The workers live and work inside the complex.

In 2006 the Chinese local press reported on the excessively long working hours and

the discrimination of mainland Chinese workers by Taiwanese superiors. In May

2010 several media sources reported several cases of suicide at Foxconn. From

2009 to 2010 a total of 13 workers had committed suicide. The first worker, Sun

Danyong, committed suicide after he had been interrogated on the loss of an

iPhone 4 prototype that he had in his possession. When the former CEO Steve Jobs

was asked about the suicides at Foxconn, he responded: ‘Foxconn is not a

sweatshop.’ (Torres et al, 2012)

During an undercover investigation it was discovered that the reason for the

multiple suicides was related to internal management. ‘The facilities of Foxconn are

fine, but the management is poor,’ (Torres et al, 2012).

3.2 CSR and Supply Chain Auditing at Apple Inc

According to Torres et al (2012), Apple makes sure that suppliers comply with the

Supplier Code by conducting audits. The audits cover working and living conditions,

health and safety but also environmental practices at the facilities.

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According to Apple’s Supplier Responsibility Report 2010, Apple conducted 102

audits in 2009. In 2011 Apple conducted 229 audits, an increase of 80% compared

to 2010. An audit is conducted by an Apple auditor and supported by local third-

party auditors.

In the Supplier Responsibility Report 2010, published in February 2011, Apple

included a paragraph responding to the suicides at Foxconn. In the Supplier

Responsibility Report 2011, Apple reports that during inspections Apple discovered

ten facilities with underage labor violations. One of the facilities had a large number

of underage workers. Because the management did not want to address the

problem, Apple terminated businesses with this facility.

3.3 The Current Issue with Apple inc

The importance of CSR is growing rapidly (Allirajah, 2013), many organizations have

adopted the practice of CSR yet not all have been successful at it. As it can be

noticed in table 1, the four obligations a company should follow, but the issue arises

when companies like Apple inc produce a CSR statement as such " Workers

everywhere should have the right to safe and ethical working conditions. They

should also have access to educational opportunities to improve their lives. Through

a continual cycle of inspections, improvement plans, and verification, we work with

our suppliers to make sure they comply with our Code of Conduct and live up to

these ideals" (Apple inc, 2013).

This statement of Apple inc was proved wrong when in China, Technology giant

Apple is facing fresh allegations of worker rights violations at Chinese factories of

one of its suppliers, the Pegatron Group. (BBC News, 2013)

The main issue behind such short fall of CSR statement by Apple inc could be

related to the cultural differences between China and America, as Apple inc is a

company originating from United states and with implementing ethical practices

which are norm in United States, such practices in China however are not a norm

and worker abuse is very relevant there, as there have been numerous cases of

such worker abuse in China.

Cultural difference between where organizations operate is a highly important issue

which needs to addressed as it has direct impact on the welfare of the organizations

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in the world of work today and reflect how ineffective management of supply chain

can literally effect the image and well being of the company.

4.0 External Environment of Manufacturing sector

4.1 Supply Chain Model of Apple Inc

Figure 1: Showing the Supple chain model of Apple Inc

Source: Supply Chain OPZ (2013)

Figure 1, clearly shows how Apple Inc operates it supply chain, manufacturing is done in China, whereas distribution is done from America mostly.

Such supply chain model has only been possible due to external influences.

As Apple inc is sourcing its business from United States and manufacturing it in China the reasoning behind it can be found by analyzing the external environment of manufacturing sector in United States and China.

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According to Downey (2007), PEST analysis is a scan of the external macro-

environment in which an organization exists. It is a useful tool for understanding the

political, economic, socio-cultural and technological environment that an

organization operates in. It can be used for evaluating market growth or decline,

and as such the position, potential and direction for a business.

In this particular case the most relevant element of PEST analysis would be,

Political, Economic and Technological.

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Table 2: Showing the PEST analysis of manufacturing sector in China and United

States

PEST China United StatesPolitical/Legal Reduction in corporate tax

policies of China. (WEF, 2013)No minimum wage legislation. (Wage indicator, 2013)Policy of opening up the China manufacturing sector to the whole world. (WEF, 2013)The country’s 12th Five-Year Plan, will further enhance manufacturing sector performance in China. (Deloitte, 2013)

The manufacturing industry in the US has been affected by the new regulations that have been passed by a number of government agencies over the last thirty years. Approximately 2,183 unique regulations had been passed that affect the growth of the manufacturing sector. (Murray, 2013)Minimum wage legislation.

Economic Exchange rate of China is stable and value of currency is increasing. (Index mundi, 2013)Inflation rate in China decreased in 2012 as compared to 2011. (Index mundi, 2013)More exports than imports, favorable trade balance.Growing manufacturing industry. (WEF, 2013)

Inflation rate at 2.1% in 2012, lower than that of 3.1% in 2011. (Index mundi, 2013).Exchange rate has devalued since 2011. still stable. (Index mundi, 2013)More imports than exports.Growth in manufacturing industry. (Murray, 2013)

Technological Good infrastructure, availability of telecommunication, internet and transportation. (Index mundi, 2013)

Very good infrastructure, Availability of highly advanced technology, internet and various advanced methods of transportation. (Index mundi, 2013)

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As it can be noticed under table 2, that various external forces influences the well

being of manufacturing industry in China and United States.

It is indeed these forces which have allowed Apple Inc to have a supply chain which

consist of various countries and have a supplier which manufactures in China,

however it is the responsibility of Apple Inc to maintain the effectiveness and

standards of workplace its supplier engages in.

4.2 Political/Legal policies

Due to different external environment in China and United States, such as political

and legal policies, in China there is no minimum wage legislation and worker abuse

is a common norm (Wage indicator, 2013). Hence it would make perfect sense of

Apple Inc to avoid paying high wages in United States and have manufacturing

being done in China where wage levels are very low as compared to United States.

The Government of China has moved from close economy to open economy in 1970

(Index mundi, 2013), whereby inviting foreign firms to do business in China, again

makes perfect sense for Apple Inc to take benefit from such favorable policies.

The Issue however arises, when Apple Inc cannot control the actions of its suppliers

in China, due to the ability of misusing workers right in China is a common practice

and various Chinese manufacturers do it (BBC News, 2013) as Government does not

intervene and is not as effective in taking action compared to the Government of

United States, the political and legal environment of China could be related to the

birth of this issue.

4.3 Economic Environment

As it can be seen in table 2, most of the indicators show that the economy of China

is doing very well, yet a problem is with unemployment rate in China which is 6.5%

as of 2012 (Index mundi, 2013) with the vast population China has this amounts to

a significant number.

Hence it can be assumed that even if a worker is unhappy with his workplace

environment in China, he would still want to work to support his family and meet

daily needs, and this gives another reason to manufacturing firms in China to abuse

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worker, make them work over 70 hours per week in order to get work done as was

the case with pegatron group the Apple Inc China supplier (BBC News, 2013).

Apple Inc has concrete reasons to have a supplier from China as inflation rate in

China has a decreasing trend since 2008 (Index mundi, 2013) showing there won't

be any inflation problem which Apple Inc would be bothered with.

Exchange rate of United States has been stable but loosing value against Chinese

currency RMB over last 5 years (Index mundi, 2013) this would only mean each year

Apple Inc has to pay more for importing electric goods from China. Yet it is still

profitable as cost of production to make Apple Inc products in United States would

be higher as compared to China.

4.4 Technological Environment

Technological environment of China is great as it can be seen in table 2, the change

in how world operates now, availability of transportation services through ships has

made it possible for a company such as Apple Inc to do business with a company

pegatron group in China and have products delivered in time.

It can be said that, the most important external force which has contributed the

most in the issue of worker right violation in China is indeed the government rules

and regulations as they are not as strict as of the government in United States it

allows domestic manufacturers to make use of it and exploit any loop hole in

policies.

PEST analysis is a perfect tool to analyze this particular issue and why does it exist

and how did Apple Inc manage to be part of it, as external forces allowed Apple Inc

to do business with Chinese suppliers and Chinese suppliers were able to exploit

workers as policies of government of China were not as robust and rigid. one thing

links to another and PEST provides the overview of every external environment

element, although in this particular case the most relevant would be political and

legal framework.

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5.0 Internal Environment of Apple Inc

In this section cultural perspective would be used in order to understand the issue

from Apple Inc perspective.

5.1 McKinsey 7S Framework

According to Wilkinson (2008), in the 7S-model the so-called ‘hard and ’soft’

elements are incorporated, in which hard elements aim at matters an organization

can influence directly. The soft elements are present in an organization in a more

abstract way and can be found in the organizational culture. The hard elements in

the 7S-model are Strategy, Structure and Systems, the soft elements are Style,

Shared Values, Skills and Staff.

Figure 2: Showing the 7S framework

Source: Vliet (2012)

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As it can be seen in figure 2, that the most important part of 7S framework is the

soft element share values, which is usually found in organization culture. Apple Inc

in their CSR statement has clearly tried to incorporate the shared values in their

supply chain (Apple, 2013), but unfortunately they failed, as to begin with the

culture between United States and China is totally different and having to

incorporate shared values on such level is even more challenging.

5.2 Hofstede National Culture differences Theory

According to Hofstede & Waisfisz (2013), there are six dimensions which provide

why there is difference between organizations in different national boundaries.

Table 3: Showing the 3 dimensions

Mean vs. Goal oriented

In a very means oriented culture people perceive themselves as avoiding risks and making only a limited effort in their jobs, while each workday is pretty much the same. In a very goal oriented culture, the employees are primarily out to achieve specific internal goals or results, even if these involve substantial risks. (Hofstede & Waisfisz, 2013)

Internally driven vs. Externally

driven

In a very internally driven culture employees perceive their task towards the outside world as totally given, based on the idea that business ethics and honesty matters most and that they know best what is good for the customer and the world at large. In a very externally driven culture the only emphasis is on meeting the customer’s requirements; results are most important and a pragmatic rather than an ethical attitude prevails. Hofstede & Waisfisz, 2013)

Employee oriented vs. work oriented

In very employee oriented organizations members of staff feel that personal problems are taken into account and that the organization takes responsibility for the welfare of its employees, even if this is at the expense of the work. In very work oriented organizations there is heavy pressure to perform the task even if this is at the expense of employees. Hofstede & Waisfisz, 2013)

Generated by Student

As it can be deduced from table 3, only the most relevant dimensions have been

selected for this report, the issue is doing business in more than one country,

different country having different culture, this leads to complications in the

practices of work.

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An example of the countries United states and China, both have different culture,

and then dimensions principle has to be matched with countries as stated in Table

3, mean oriented country in this case should be United States whereas China would

fall under Goal oriented, most of the organizations in United states believe to be

internally driven whereas in China they are externally driven, and finally the most

important is being employee oriented as compared to work oriented, China is known

for getting the work done at any cost, whereby they would even abuse worker for it,

whereas in United states such practice would result in organization being sued as

organizations there are employee oriented. (Brodt & Seybolt, 1996)

Hence such national culture differences is what can explain the failure of Apple Inc in sharing the same cultural values throughout the supply chain and the breach of its CSR statement.

5.3 Strengths and Weaknesses of Apple Inc

Table 4: Showing the Strengths and Weaknesses of Apple Inc

Strength Customer loyalty combined with

expanding closed ecosystem. Apple is a leading innovator in

mobile device technology. 2012, Strong financial

performance ($10,000,000,000 cash, gross profit margin 43.9% and no debt)

Brand reputation. Strong marketing and advertising

teams

Weakness

High price Incompatibility with different OS Decreasing market share Patent infringements Further changes in management Defects of new products Long-term gross margin decline

Source: Jurevicius (2013)

As it can be seen in table 4, there are various strengths and weaknesses which

Apple Inc has, most important strength which Apple Inc has is the customer loyalty

which brings in repeat purchases and free positive word of mouth, also Apple has a

good track record of being the innovators in the electronic industry specially in

mobile device technology, along with solid financial background and finally having a

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very competent advertising and marketing team, all this amounts for the success

which Apple Inc has achieved till date.

However their weaknesses are pertinent as well, Apple Inc products are usually

higher in price as compared to different companies in the same industry, recently

Apple Inc has been experiencing a decline in its market share which could be relate

to recent death of Steve Jobs and defects in new products.

Strengths which Apple Inc has could be used to better tackle the issue of managing

supply chain in order to deliver the fulfillment of CSR statement. to be discussed

later on in this report.

5.4 VRIN Framework for Apple Inc

According to Resource-based view of strategic management, competitive advantage

is closely related to company's internal characteristics (Spanos and Lioukas, 2001).

More specifically, if a company possesses and exploits valuable, rare, inimitable and

non-substitutable resources and capabilities it will achieve sustainable competitive

advantage and above average performance (Barney, 1991).

Apple Inc might not be having all the required features of VRIN framework as being

in electronic industry it is hard to not have a substitute of mobile phone, Ipads and

laptops it is easier to even imitate products as such is the nature of the industry in

which Apple Inc operates.

However Apple Inc does have value and rareness required to achieve sustainable

advantage over competitors.

Figure 3: Showing the VRIN Framework

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Source: Marcsimony (2012)

Apple Inc has valuable resources as it is able to provide end consumers with higher

value for money product, which does not only serve the purpose of fulfilling need

but also wants are entertained. Rare in this sense of the brand reputation which

Apple Inc has, not any brand has such loyal customers and are innovators in the

mobile device technology like Apple Inc and so it can be said they have rare

resources as well, they only have issues as their products can be imitate and are

substitutable.

Figure 3, clearly shows if a company has valuable and rare resources they have

temporary competitive advantage and temporary above normal performance, Apple

Inc must use it to tackle the issue they are facing which might hurt their brand

reputation.

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5.5 Initiatives

In this section of report focus will be on the initiatives which Apple Inc has already

taken in order to deal with the mentioned issues.

Apple Inc has said "We don’t allow suppliers to act unethically or in ways that

threaten the rights of workers — even when local laws and customs permit such

practices. We’re working to end excessive work hours, prohibit unethical hiring

policies, and prevent the hiring of underage workers" (Apple Inc, 2013).

Apple Inc also believes in ending excessive work hours

In 2012, Apple began tracking supplier work hours on a weekly basis, growing our

program from 500,000 workers to over one million. Our procurement teams interact

with our suppliers on a daily basis and use this information to match labor to

demand. To help reduce working hours throughout our industry, Apple is co-leading

the Electronic Industry Citizenship Coalition (EICC) working group to share our

programs and practices with other organizations (Apple Inc, 2013).

Table 5: Showing further initiatives which Apple Inc has taken

Addressing underage labor

Our approach to underage labor is clear: We don’t tolerate it, and we’re working to

eradicate it from our industry. When we discover suppliers with underage workers

or find out about historical cases — where workers had either left or reached legal

working age by the time of the audit — we demand immediate corrective action as

part of our Underage Labor Remediation Program.

Providing tools to enable responsible hiring.

Last year marked the third year of our Prevention of Underage Labor training

program, an initiative to help suppliers identify and prevent underage labor. We

conducted training for 84 suppliers that were chosen because their facilities are

located in provinces at high risk for underage labor.

Source: Apple Inc (2013)

From table 5, and above mentioned initiatives it can be said that Apple Inc is trying

hard to stabilize its image in the outer world and trying best to deliver the CSR

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statement by effective management of its supply chain, However they still keep

repeating the same mistake of hiring a supplier who does not totally follow the

cultural perspective of Apple Inc and this issue needs to be dealt with much more

severe actions.

6.0 Recommendation and Conclusion

Apple Inc should benchmark supply chain practices, one the best companies in

electronic industry which is known for its effective supply chain management is

Samsung.

Apple Inc should implement six sigma for managing supply chain, as Samsung’s

effort and investment has turned out to be fruitful. Their SCM six sigma program

has produced highly qualified and talented SCM specialists, who are currently

training the methodology to other members in their organizations and leading SCM

projects (Emerald Management First, 2013).

This should allow Apple Inc to overcome the short comings it is facing in effective

management of its supply chain which is leading to the breach in CSR statement,

redesigning supply chain could also mean picking up suppliers from different region,

which could also translate to even quicker delivery of products and have same

cultural values as Apple Inc.

Samsung also has setup cross functional Team: In order to bring internal

departments closer, they use the system called “Voice of Business”. What they do is

to gather internal requirements and establish action plans based on collective

decision (Supply Chain OPZ, 2013). This should also allow Apple Inc to have less

problem in translating their cultural values down the supply chain and a shared

vision and values could be possible.

Table 6: Summarizing the whole issue and recommendations

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IssueEffective management of supply chain in order to restrict and eliminate CSR breach.

McKinsey 7s FrameworkShared values

Recommendations

StrengthsLoyal Customer's

Financially strong

Generated by Student

Finally, it can be said that, the issue of CSR breach can be solved only if Apple Inc

can implement six sigma methodology and setup cross functional team in order to

achieve shared values throughout supply chain along with the initiatives they have

already taken.

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Six Sigma Methodology

Cross functional team

Improve communication with supplier

Strong marketing and advertising teams

International Business Environment

7.0 References

Apple Inc. 2013. Supply Responsibility at Apple [Online]. Available from:

<https://www.apple.com/supplierresponsibility/> 23 December 2013

Barney, J. B. 1991, Firm resources and sustainable competitive advantage, Journal

of Management, 17, pp. 99-120

Cedillo Torres. 2013. Four Case Studies on Corporate Social Responsibility: Do

Conflicts Affect a Company's Corporate Social Responsibility Policy? [Online].

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