Suicides in Answer to Apple’s and Foxconn’s Unethical Behaviour


Seminar Paper, 2015
18 Pages, Grade: 1,0

Excerpt

Table of Contents

1 Introduction (200 words)

2 Background (500 words)
2.1 Apple
2.2 Foxconn
2.3 Global Supply Chains
2.4 Ethical Behaviour

3 Analysis (1000 words)
3.1 Tragic Occurrences
3.2 Foxconn’s Ethical Failure
3.3 Foxconn’s Response
3.4 Apple’s Ethical Failure
3.5 Apple’s Response
3.6 Response Effectiveness

4 Recommendations (300 words)

5 Limitations

6 Conclusion (200 words)

7 References

Appendices

1 Introduction

The first US firms employed Asian manufactures in the 1970s. Henceforward contracts between Western companies and Asian manufacturers increased (LeBaron, 2014). Nowadays, many popular and big companies such as Apple, Nike, and Nestle have subcontracts with suppliers overseas and build global supply chains with bad and exploiting working conditions (LeBaron, 2014).

The report at hand contains a case study of Apple and one of its suppliers Foxconn. A spate of suicides in one of Foxconn’s factories shocked the public in 2010. Due to employees who worked and lived in the manufactory in Shenzhen the working conditions were inhumane. The report examines if the suicides were related to unethical behaviour of both Foxconn and Apple. Before analysing the specific behaviours, background information are given about both companies. In addition, the below used concepts of global supply chains and ethical behaviour will be explained. The analysis of the tragic occurrences contains an analysis of Apple’s and Foxconn’s behaviour and reactions on the incidences. The main aim is to find out if Apple as buying firm is responsible for the occurrences in Foxconn’s factories and what behaviours resulted in the suicides. In the end, recommendations are given in order to avoid similar catastrophes in the future.

2 Background

Two companies are involved in the discussed ethical failure. This section describes both companies and gives background information about global supply chains, sweatshops, and ethical behaviour (Xu & Li, 2013).

2.1 Apple

Apple Inc. was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne under the former name Apple Computer. The company was established to produce and sell the first personal computer Macintosh (Lazonick, Mazzucato & Tulum, 2013). In 2014 Apple had approximately 93,000 full-time employees (Apple, 2014). From 2001 onwards, innovations like the IPod in 2001, the IPhone in 2007 and the IPad in 2010 caused Apple’s extraordinary growth. Its unique products made Apple to the most famous and richest company in the world. In 2013 Apple had US$ 121 billion in liquid assets (Lazonick et al., 2013). Apple’s focus lays on creation and marketing of electronic devices, software and online services whereas production and selling is mainly sourced out (Apple, 2014). Since the foundation date the company’s headquarters are situated in the US. However, Apple is an international firm and part of a widely ramified global supply chain.

2.2 Foxconn

The Foxconn Technology Group is part of Hon Hai Precision Industry Company Ltd. It was founded in 1974 by Terry Gou (Foxconn 2013b). Since 1994 Foxconn grew constantly. In 2014 its capital increased to NT$ 147,934,068,630 which is approximately AUD$ 6,400 billion (Foxconn 2014). Due to important innovations and over 55,000 patents Foxconn has a good reputation within the electronic industry (Foxconn 2013b). Therefore, many popular brands such as Apple, Dell, Sony, Nintendo, or Nokia chose Foxconn as one of their suppliers (Guo, Hsu, Holton & Jeong, 2012). Foxconn employs over 1 million workers. Its headquarters are situated in Taiwan, whereas its factories are spread all over the world, e.g. in Asia, Europe, and America. Due to the facts that most of the factories are located in China and that the tragic occurrences happened in one of the Chinese sites, the report at hand concentrates on the organisational behaviour in Foxconn’s Chinese firms (Chan, Pun & Selden, 2013a).

2.3 Global Supply Chains

Apple is part of a global supply chain. On the one side, Apple assigns Foxconn to produce IPhones and IPads in China whereas Foxconn employs the company Sharp amongst other international factories in order to produce the necessary components for displays (Haslam, Tsitsianis, Andersson & Yin, 2013). On the other side, Apple has to sell and bring the products worldwide to its customers. Therefore, it contracts retailers in almost every country to generate points of sale (Haslam et al., 2013). These widely ramified global supply chains have advantages and disadvantages. On the one hand, global supply chains provide large scales of economy and low costs due to lower labour wages and therefore a financial profit (Xu & Li, 2013). However, it is on the other hand complicated to control every supplier and retailer. Therefore, Apple faces a great dependence and a high risk considering that suppliers could fail, deliver substandard quality or work against Apple’s standards and values (Apple, 2014).

In recent years international supply chains were harshly criticised. Since the anti-sweatshop movement took place in the mid-1990s, the public became aware of inhumane working conditions among international suppliers (Guo et al., 2012). Unsafe working conditions, child labour, overwork and pollution cause severe harm to the workforce and the environment (Chen & Baddam, 2015).

2.4 Ethical Behaviour

Ethics deal with identifying standards about what is wrong or right. Ethical behaviour describes acting in the right way. In general, it can be stated that companies do at least not act unethical as long as the harm to shareholders and stakeholders is reduced to an absolute minimum. Ethical behaviour in business contexts includes decision making as well as the decision itself according to moral standards. These moral standards can be formulated by the company itself in e.g. value statements (Fisher, 2004; Candy, 2013).

3 Analysis

In order to analyse the incidences in Foxconn’s factory the following paragraph first describes the tragic occurrences. Ensuing, it examines if Foxconn and Apple behave in an unethical way and how both companies reacted to the suicides. Four different concepts are applied: organisational values, leadership, power, and communication.

3.1 Tragic Occurrences

One of Foxconn’s factories is located in Shenzhen, China. Approximately 420,000 employees work and live in the factory (Xu & Li, 2013). In 2010 Apple’s supplier Foxconn gained notoriety due to a spate of suicides. Within a few months, 18 workers attempted suicide in Shenzhen. Jumping from the factory put 14 young workers to death whereas 4 survived having severe injuries. All employees were between 17 and 25 years old (Chan, 2013b).

In 2004, the company signed a code of conduct released by global firms such as Apple, IBM, and Dell. The code contains paragraphs regarding labour conditions, health and safety, environmental protection, ethics, and management systems (EICC, 2014).

Foxconn’s employees reported on inhumane working conditions. Supervisors forced workers to overwork, toilet breaks during the shift were not allowed, employees had to attend unpaid meetings, and day and night shifts caused physical and mental issues whereas one day off within two weeks did not give the possibility to recover (Chan, 2013b). Workers were faced with numerous rules and enormous time pressure in order to finish their work quickly. During the whole day security guards observe the buildings and the workers. Moving freely is not possible due to numerous safety controls (Chan, 2013b). Supervisors are allowed to punish employees by public humiliation (Chan, 2013b).

3.2 Foxconn’s Ethical Failure

Before an analysis can be done it must be figured out if Foxconn behave in an unethical way. Organisational values are a framework of ethical behaviour. They are chosen by the company and used as guidelines to behave in a right manner (McShane, Olekalns, Travaglione, 2013, ch. 12). Foxconn claims to be guided by the aim of improving social harmony and ethical standards. Thereby, the company wants to generate a greater value for its shareholders, management and employees as well as for the community (Foxconn 2013a). According to employees Foxconn does not follow these values. Inhumane working conditions and abusive managers caused stress, anger and anxiety. This and the fact that Foxconn’s working conditions brought workers to commit suicide are clear evidences for an unethical behaviour.

Foxconn’s ethical failure is amongst others attributable to the leadership style. Leadership is about influencing and motivation employees in order to ensure that they can do their work and achieve the company’s goals. Leadership is a power given from the company. (McShane et al., 2013, ch. 12). Foxconn is a highly hierarchical organisation with many managers (Chan, 2013b). Transformational, ethical or servant leadership can strengthen the employees’ commitment and job satisfaction (McShane et al., 2013, ch. 12). In order to modify the employees’ behaviour Foxconn’s managers are urged to put pressure on the employees and use punishment as consequence for undesirable behaviour (McShane et al., 2013, ch. 5). A former worker reported on public humiliations and physical violence (Chan, 2013b). Therefore, the leadership style in Foxconn’s factories is destructive and inhumane. It causes severe harm to the workers such as physical and mental issues. It is one factor that can explain why Foxconn behaves unethical.

3.3 Foxconn’s Response

After the young workers committed suicide, Foxconn communicated the tragic occurrence in a very questionable way. After hardly reacting to the incidences Foxconn’s spokesperson Liu Kun rejected bad working conditions to be causing the suicides (Xu & Li, 2013). Foxconn claimed individual and personal issues such as relationship disputes to be causal. Furthermore, Kun stated that the rate of suicides is on a low average compared with China’s total suicide number (Chan, 2013b).

Not before the tenth case of death CEO Terry Guo reacted by rejecting that Foxconn’s working conditions had an influence on the suicides. When the eleventh worker died Guo initiated a crisis management and visited the factory. After the last suicide he declared a monthly pay raise for all employees between USD 135 and USD 180 which is a raise of 30%, and an additional pay raise for high qualified employees (Xu & Li, 2013).

The communication strategy impaired Foxconn’s position. Not giving information about the severe incidences and not showing empathy and respect for the victims downgraded the company’s reputation. Furthermore, it is possible that some workers committed suicide as a reaction to not being heard by the management (Xu & Li, 2013).

[...]

Excerpt out of 18 pages

Details

Title
Suicides in Answer to Apple’s and Foxconn’s Unethical Behaviour
College
University of Queensland
Course
Managing Organisational Behaviour
Grade
1,0
Author
Year
2015
Pages
18
Catalog Number
V336694
ISBN (eBook)
9783656984122
ISBN (Book)
9783656984139
File size
1051 KB
Language
English
Tags
Apple, Foxconn, Corporate Social Responsibility, Wirtschaftsethik, CSR, Suicides, Suizid, Global Supply Chain, unethical behaviour, business ethics
Quote paper
Maren Düchting (Author), 2015, Suicides in Answer to Apple’s and Foxconn’s Unethical Behaviour, Munich, GRIN Verlag, https://www.grin.com/document/336694

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