6 pages/≈1650 words
Business & Marketing
Case Of Apple To Discuss How Companies Exploit Business Ethics (Case Study Sample)
to use the case of apple to discuss how companies exploit business ethicssource..
The Moral Action Plan
The Moral Challenge Action Plan
This is a case of Apple Inc. that only came to light after a 17-year-old teenager from Tennessee discovered that his iPhone 6 handset slowed down when the battery charge got low, or when his battery aged. It is reported that when the device slows down, performing simple tasks becomes painfully lengthy, and this is irksome to customers who are used to high speeds of performance. That is why they are ready to pay the high price of Apple’s devices. According to Ben-Shahar, (2017), the event elicited global backlash from iPhone users as consumer groups and government authorities rushed to court to seek legal redress. The numerous cases were filed at home (in the USA) and across the Atlantic, especially Europe and in South Korea. The reports were, for a number of days, ignored by the company as it struggled to contain the damage and rein bad media. Later, Apple Inc. issued a press release stating that it meant well with upgrade of the software and that the slowing down of their handsets was an unintended result. Customers were especially irked by the fact that Apple knew about the effects of the software upgrade. This led to the customers believing the company was trying to rip them off because at the very same time, Apple introduced a new iPhone into the market, the iPhone X. To understand this better, let us get to the details of the issue.
According to Mickle & Grind, (2018), mobile handsets are powered by lithium-ion batteries that when they age, or when the battery charge is low, their power supply to the electronic components of the phone become instantaneous. This irregularity in the power supplied would occasionally lead to phones shutting down because it risks destroying the electronic components of the phone. In an attempt to fix this problem, the company updated the software by adding a feature that “smoothed out the instantaneous peaks only when needed to prevent the device from shutting down”. In simple terms, the upgrade to the phones’ software was to compensate for the degrading batteries. However, this new “feature” slowed down the iPhone devices to the point that there were long seconds between keystrokes when typing a message (McGregor, 2018, January 09). The company stated that batteries are consumable goods and that it is ready to cheaply replace them for twelve months beginning January. As a result, the shares of Apple Inc. took a serious beating, dipping way below its closest competitors in the technology sector. As if this was not enough, the company had to part with much more money to settle lawsuits that were lodged in various courts across the world.
From the standpoint of the company, this looks like an honest effort at increasing the utility of their customer; an attempt at fixing a bug in their devices. Conversely, from the customer perspective, this was an act of utter profit seeking by the company. Since this upgrade came at a time when a new device was being introduced into the market, customers felt that the old phones were being intentionally slowed down so that consumers would ditch the old phones for the new iPhone X. In a class-action suit filed in Chicago i.e. Ala Abdulla, Lance Raphael, Sam Mangano, Kirk Pedelty, and Ryan Glaze v. Apple Inc., case no. 17-ev-9178, the plaintiffs argued that the company was not honest and that it would have issued an upfront communiqué in order to protect its customers from ‘ambush’. They argue that the action by Apple Inc. is a breach-of-contract and that it was a serious lack of transparency. The plaintiffs were, specifically, angered by what is now a popular belief that Apple artificially, through nondescript and covert software upgrades, slows down older phones in order to push up the sales of new models a notch higher. The plaintiffs also argued that if truly the battery was the problem, and that it was already known that battery functioning deteriorate during cold weather or when the battery ages, then this should have been tested ahead and the problems contained. They believe that Apple is a large company, given the revenue they earn in a period of one year. Therefore, in light of this, they should be able to solve ‘mundane’ problems like battery malfunctioning.
From my standpoint, the action by Apple was unwarranted and it was aimed at racking up more money in profit. According to Eadicicco, (2017), Apple’s performance has been below competing companies like Google, Microsoft, and Amazon due to a loss of trust. Eadicicco, (2017) goes on to say that, for the last 5 years Apple just barely beat the market, which isn’t great for a company of Apple’s ambitions. In light of this, the company must have been in financial dire straits and it had to use all available means to increase profit earnings. It was immoral for Apple to put profit before customer utility since it is one company that has a cult following and is loved because of its efforts to put customer utility before profit. Like earlier noted, it is not entirely true that the company could not fix a slight problem of battery malfunction during cold weather or when the battery ages. Apple is a Fortune 500 company and it ranks very high on the Dow Jones Industrial Average. Therefore, claiming to insert a feature that slows down the device as a reason is a nonstarter.
It is difficult to prove the innocence of Apple because other companies have had to hoodwink their customers in this or another different way in an effort to raise their share price. An apt case in point is the Volkswagen emission scandal. In 2015, the United States found out that many Volkswagen cars sold to its citizens were fitted with a “defeat device” that would compromise the readings received during tests. This would obstruct the quality checkers from detecting any high levels of emissions hence falsely flagging the vehicles as low emissions cars hence environment friendly. This would help VW to sell more units and driving up share prices. However, after the scandal broke out, VW had to issue an apology together with a massive recalling of cars so that the software could be unfitted. The VW America CEO had to hand in his resignation in the aftermath which also saw a loss of trust by loyal customers together with a myriad of lawsuits.
Back to Apple, the company should have communicated earlier to avoid spooking customers. The customers were justified to be edgy because the company has in the past introduced or removed features from their handsets that did not bode well with the customers. Previously, Apple has had problems with customers when it removed the headphone jack, the home button and the skeuomorphic visual cues from their handsets. This speaks loudly to the customers regarding the company’s core values and moral responsibility towards them.
This issue raises a very pertinent question that demands answers very quick. Should technology companies increase their transparency, for example, disclose impacts on products in instances where they introduce a software or hardware upgrade? Well, it goes without saying that this is a very important concern. Corporations bear a lot of responsibility for their actions since they occupy a very large part of their customer’s lives. The kind of relationship that exists between company and customer is almost familial. It relies heavily on trust. Therefore it is paramount that this trust is maintained. To maintain the trust, technology companies MUST ensure that their customers are informed of every move they make to the last detail. Like in the case of the emissions scandal by Volkswagen, the company used dodgy terms like “lag” to evade culpability. Tendencies to avoid culpability are mistakes companies make when dealing with fallout. Apple promised to fix the “feature” a...
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