APPLE’S LABOR FAILURE AT FOXCONN 4
APPLE’S LABOR FAILURE AT FOXCONN
Organisational behavior is an essential input in a business’productivity. A company’s success depends on the interplay ofmotivation, human resource management, decision-making andleadership. Apple has an effective structural arrangement andbehavior that contributes to its success in the industry. The companycontracts manufacturers and suppliers to produce and distribute itsproducts due to its international presence. Foxconn is one of themanufacturers that have been in the spotlight for employing minorsand exposing workers to hazardous conditions. The facility has alsobeen a hub of suicides and similar threats. Apple’s leadershipclearly stipulates the codes of conduct, but Foxconn has beenhesitant to adopt them sustainably. Consequently, its reputation inChina continues being tarnished. It would be prudent, therefore, forthe management to make a regular follow-up of recommendationimplementation. If Foxconn continues being a liability for thereputation of the Apple Company, the management may considerterminating its services.
Apple is one of the largest electronic companies with a worldwideclient base. The organisation has established various productionfirms located across the world to meet the demand for its productsthat many people prefer for their ostentation. According to Chan andSelden (2013), the company has a centralised decision-makingstructure, but it transfers some of the administrativeresponsibilities to manufacturers in specific countries (P. 102).However, the practices adopted by the manufacturers have to align toApple’s objectives. The individual firms employ workers. They alsomake training decisions after identifying gaps in the requiredskills. The distinct business regulations found in differentcountries require the company to make adjustments in human resourcemanagement, environmental protection and corporate socialresponsibility (Chan& Selden 2013, P. 103).
Although the giant company has efficiently kept its clienteleabreast with the latest human-friendly technology, its image has beenoverwhelmed by several malpractices. Any case of refuting theconventionally accepted laws results in massive criticism. Theinternational presence the enterprise enjoys becomes the source ofinternal focus in the case of malpractice.
Apple’s Failure in Foxconn
In China, the media and the China Labor Watch have constantlycriticized Apple. Foxconn, the company that manufactures Appleproducts for the Chinese markets, has been accused of massiveviolation of employment practices by subjecting workers to anunfriendly environment. According to Lucas, Kang, and Li (2013),more than 1.2 million workers make a livelihood from the company(93). However, the organisation has been accused of employing minorswith the intention of paying the lowest wages. According to the ChinaLabor Watch, the firm has been terminating the services ofmanufacturers and engaging new ones to reduce the production costs(Chen 2014). The contractor that quotes the lowest price wins thebid.
Consequently, the firm reduces the wages significantly. Besides, theworking conditions in Foxconn have been under the investigation ofcovert journalists from BBC who found employees sleeping at their jobpositions because of exhaustion. The workers reported being in theirpositions for 12 and, sometimes, 14 hours (Chen 2014). While theovertime is supposed to be optional for the employees, it has notbeen so in the Apple facility in China. The workers had high stresslevels as a result of working for long hours. It resulted in morethan 150 workers threatening to commit suicide. In 2010, 14 employeescommitted suicide because of the unfriendly working environment inthe facility (Chan& Pun 2010, P .3). The standards set by themanagement to react on the issue were not followed satisfactorily.The bad treatment of workers in the Chinese facility is due to theavailability of cheap labor. The desperate laborers looking foremployment believe that they can survive in the demandingenvironment. However, they later find that the manufacturer takesadvantage of their helplessness to exploit them (Chan & Pun 2010,P. 3).
According to Xu and Li (2013), the report of Apple’s unfavourablework environment in China was highly published. As expected, itaffected the company’s international reputation negatively (P.372). The management had an uphill task to recreate a friendlyassociation with the Chinese authorities. Unfortunately, the Chineseenvironment has not been friendly since then, and this can be provenby the recent banning of iBox and iMusic in its market (Xu& Li2013, P. 375).
Organisational Behavior Flaws that Led to the Problem in China
Organisational behavior encompasses all the facets of an enterprisemeant to increase productivity. In any company, improved yield is aresult of a set of activities from the various departments. First,the Maslow’s hierarchy of needs indicates that security, and inthis case, job security, is a major factor that contributes to thefulfillment of life. A feeling of insecurity demotivates the staff,and they only work to avoid losing their positions to other willingparties. The organisational structure of Apple involves a centraliseddecision-making process that allows minor resolutions to be made bythe board of the facilities in different countries.
In America, Apple is a model company. However, a similar practicedoes not reflect in its Chinese affiliates because of leadershipflaws (Litzinger 2013, P. 172). The organisational values and culturethat define a firm should reflect throughout its operations indifferent parts of the world. The company’s leadership isresponsible for ensuring that all the workplaces that identify withit adopt uniform corporate behavior (Litzinger 2013, P 172). Forexample, in the United States, where Steve Jobs established Apple,the public associates it with an attractive work environment, whichis conducive for self-actualization.
Secondly, Apple failed in efficient decision-making. Before 2012,China Labor Watch had put the company in the spotlight for employingjuveniles and exposing workers to unfavourable work conditions (Chen2014). Despite the management adopting a report to correct the issue,the decree was not implemented. This depicts the inability of thecentralised executive to follow-up the policies adopted. Forinstance, the repeated poor performance of the management in Chinawould have triggered the corporation to make a partial or completeoverhaul of the primary agent to save the company’s image, bothlocally and in the international domain.
Motivation is also an imperative facet of organisational behavior. Apple failed in instilling the attribute in its workers in China(Chen 2014). Additionally, the Herzberg’s two-factor theory ofmotivation provides that job satisfaction is a product of variousfactors that include safe working conditions, friendly companypolicies, job security, and friendly interpersonal relationships. In2010, 14 employees in the facility committed suicide owing to theworkplace pressure. Also, in 2012, more than 150 employees threatenedto commit suicide as a result of poor working conditions and poorhuman resource management. The undercover journalists discovered thatthe management went against the ethical work practices and subjectedthe workers to long shift hours with compulsory overtimes.
Another component of organisational behavior that lacks in theChinese facility is a model human resource practice. Employees formthe core of production. Their skills, motivation, and consistencydetermine the success of a company. In a competitive environment,companies strive to retain their best talents. However, where laboris readily available, the management may opt to offer low wages toworkers (Perlin 2013, P. 146). However, despite the supply of laborbeing higher than the demand, it does not always result in satisfiedand motivated employees. In America, the rate of competition is highand Apple fears losing its experienced staff to competitors,including, Nokia and Samsung among others. According to Perlin(2013), the leadership, however, does not instill a similar practicein China (P 148).
Apple’s SWOT analysis can also explain its failure in China. First,Apple enjoys a strong brand image and a robust financial performance.In addition, it invests heavily in research and development. Theseinternal qualities enabled it to penetrate the Chinese market inspite of the competition. However, the company suffers fromleadership challenges. After the death of Jobs, Cook has not fullyadjusted to the position, and it explains why he takes long beforegiving a directive to audit the suppliers and manufacturers (Wouters,2014 P 32). Besides, Kodak has accused the company of infringing itspatents.
Apple can exploit various opportunities. For example, the expandingSmartphone market in China and India presents an opportunity forincreased sales (Wouters, 2014 P 32). Additionally, an increasednumber of retail stores can be instrumental in helping Apple serveits client base. However, Apple operates in a competitive industrycharacterized by a war of dominance. There is also a threat ofsuppliers who have unfavorable labor and safety practices.
Drawing from the SWOT analysis, Apple’s image enabled it to have asignificant market share in China. However, its popularity has alsoincreased the severity of the malpractices associated with Foxconn.The threat of having non-compliant suppliers in the industry is aprimary problem plaguing Apple, and its executive has to make regularaudits to enforce an acceptable code of conduct. Additionally,reputation tainted reputation is a significant threat in thecompetitive Chinese electronic industry.
In summary, organisational behavior determines the success of abusiness. The interaction of its different components also influencesa company’s position in the industry. Apple’s leadership failureto act on the issues of motivation, human resource management anddecision-making triggered a strained relationship between the companyand the labor movements. It also damaged its international image andconsequently, its competitive edge in the industry.
After the media highlighted the issues in the factory, Apple’sleadership undertook corrective measures. The first effort was in2007 when the company audited 396 companies and suppliers. Fifteen ofthem were found to have violated the code of conduct as outlined byApple (Lucas, Kang & Li 2013, p. 92). The leadership also foundFoxconn culpable of employing juveniles, falsification of records andexposing workers to hazardous material. Apple also published a reportin 2013 indicating a series of measures, particularly, to beimplemented in Foxconn.
Also, the company reiterated its commitment to transparency andethics. According to Lucas, Kang and Li, (2013), the report outlinedthat all employees had a rightful access to safe working conditionsat all times (95). Furthermore, the management identified the need toempower the workers on their rights to avoid being exploited by themanufacturers. Although the different contractors may have distinctwork ethics, their malpractice is associated with the values ofApple. The report also proposed new and safe work ethics requiringemployees to sign a non-suicide attempt declaration (Perlin 2013, P.46). The idea, coupled with a less stressful work environment wasmeant to avoid massive suicides in the dormitories that usuallyspoiled the company’s international reputation.
Thirdly, the company opened its doors to the Fair LaborAssociation (FLA) to ensure compliance with the supplier’s codeof conduct. FLA conducts hundreds of audits in different workplacesto determine their compliance with fair work procedures (Chen 2013).By involving the body, the management believed that the company wouldbenefit from whistle blowing and implementation of correctiveactions.
The management under the leadership of Tom Cook sent occupationalpsychologists to address the issue of suicides in the facility. According to Cook, the employees were divided into groups of 1,000.Each psychologist observed their behaviors and counseled them onmanaging workplace stress (Perlin 2013, P.48). Although the suicidecases were associated with the militaristic culture adopted byFoxconn, counseling the employees would allow them to change theirattitude and appreciate the changes taking place in the complex.
Effectiveness of the Response
First, the decision made by the management to audit all thefacilities and suppliers in 2007 led to the termination of theservices of firms that had grossly violated the company’s code ofconduct. Fifteen firms were found inconsistent with Apple’s goals(Chen 2013). Secondly, the 2013 report was a useful tool for makinga follow-up of the recommendations made in 2007. According to Chan,Pun, and Selden (2013), the 2013 report recommended the adoption ofworkplace best practices, employee empowerment and workplacecounseling (116). Secondly, through the report, the China LaborWatch relaxed its stance on the presence of the Apple in China. Chan,Pun, and Selden (2013) also agree that the suicide attempts reduceddrastically since there has not been any case of attempted suicide inthe facility since 2013 (112). Additionally, the idea of terminatingthe services of non-compliant firms by the management triggered thesuppliers to revise their recruitment approaches. Since the ChinaLabor Watch accused Foxconn of employing Juveniles, it wasnon-compliant with Apple practices. It, therefore, risked beingstruck off the list of contract manufacturers and suppliers.
However, the management failed to make a follow-up of the proposedpractices. In 2007, not all the contracted firms spared during theworldwide audit were fully compliant with Apple’s values andorganisational culture. Most of them were only spared because theyhad a flexible environment and were willing to implement the proposedpractices. The China Labor Watch and the Fair Labor Associationobserved that Foxconn did not have a sustainable plan for maintainingApple’s organisational values. According to Chan (2013), thecompany was still employing minors despite the 2007 audit making itillegal (79). The management’s failure to stress on theimplementation of fair labor practices led to the Chinese industrydoubting the Apple’s commitment to comply with workplace bestpractices.
Also, the response of Apple’s leadership failed to address theprimary issue of overworking workers as observed by BBC. Covertjournalists discovered the continued trend of overworking employeesin spite of the management assuring the stakeholders of itscessation. Contrary to the expectation of the public, Tom Cookdefended the complex by citing the adoption of corrective measures.As usual, he promised that the management would look into the issue.Releasing the reports without taking an effective action has made themajor stakeholders, including, the workers and consumers to develop anegative attitude towards Foxconn. In a competitive market such asChina, Apple is likely to face a stiff market rivalry from otherinternational electronic companies.
Apple can implement several efficient measures to redeem its positionin China and the whole of East Asia. First, the company has more than390 suppliers and manufacturers across the world. Any malpracticeperpetrated by any of the parties resonates and the buck stops withApple (Chan, Pun, & Selden2015, P. 81). The organisation shouldmake a regular follow-up of the proposed codes of conduct. Forexample, after the management made its recommendations public in2007, it only gave a consecutive report in 2013. The period inbetween was enough for some of the suppliers and manufacturers todeviate from the agreed regulations.
Secondly, the decision to terminate the services of non-compliantpartners stands as the most effective action. Foxconn has beenaccused of violating the rights of employees severally. According toLuo and Jiang (2014), allowing Foxconn to continue being part ofApple only spoils its reputation internationally (371). Additionally,Apple being one of the biggest electronic companies in the worldwould not find it hard to engage another supplier.
Conclusively, Apple remains a household name in the United States,and it has earned a place in the international market. The company’sinnovation and ability to keep its consumers abreast with technologyhas enabled it to penetrate in various competitive markets across theworld (Chan & Selden 2013, P. 84). The company contractsmanufacturers and suppliers to meet the needs of its clients. Itrequires them to adopt the company’s policies. However, some ofthem violate the codes of conduct, and this tarnishes the company’sname.
Foxconn is one of the manufacturers that produce Apple products inChina. Since 2007, the facility has been in the media limelight forviolating employees’ rights. The management has been subjectingemployees to long working hours and compulsory overtimes. Also, thefacility has been under the criticism of the China Labor Watch foremploying juveniles (Luo& Jiang 2014, P. 372). The malpracticehas immensely strained the presence of Apple in the Chinese market.Although the Apple’s leadership has provided the guidelines for thefacility, they have not been fully implemented. The trend has madethe Chinese authorities doubtful of the organisation’s commitmentto complying with international best practices. In April this year,several Apple products including iBox and iMusic were banned in theChinese market.
The management reacted by auditing its suppliers and compiled areport on the codes for adoption by Foxconn and other firms. Thereport required the facility to provide safe working conditions forthe employees and desist from employing minors. Also, Tom Cook sent ateam of psychologists to the facility to counsel the workers tosuppress the rates of suicide. However, Foxconn did not implement therecommendation to the letter. To avoid a further laceration of itsreputation, the management should make a regular follow-up of itsrecommendations. If Foxconn cannot comply with the standards, Apple’sleadership should terminate its services and engage anothermanufacturer.
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