Apple Inc. and Samsung Electronics Co.

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Table of Contents

Introduction
Apple Computers Inc
Samsung Electronics
Conclusion
References

Introduction

With a market capitalization of more than $600 billion, Apple Computers Inc. Apple is the largest technology company in the world (Anon., 2012, para 12). The company boasts itself as the producer of computers and other electronic devices.

Apple is famous for its ‘i’ products. These include the iMac, iPod, iPad, and the iPhone. The company owes much of its success to the previous visionary leader, the late Steve Jobs. Jobs oversaw the launch of several successful products during his time at the helm of the company.

Apple mainly targets the high-end market that is willing to pay high prices to access high quality products. Customers love Apple’s products due to their high quality. Apple’s products have revolutionized the market.

Apple revolutionized the music industry with the iPod and iTunes. iTunes provided an alternative means of accessing music. However, the company’s success did not stop with the iPod and iTunes, the company went on to make one of the highest quality smartphones in the market, the iPhone.

The iPhone integrates phone with a music player. The company has successfully launched several versions of the iPhone. The latest version is the iPhone 5. The rate at which the company sold out the pre-orders is testament to how customers love the product.

Apple had pre-orders of more than 2 million iPhones within 24 hours of the launch of the iPhone (Gupta & Ghosh, 2012, para 1). This value was significantly higher than that of the pre-orders of iPhone 4S, which hold the previous record of one million records in the first 24 hours.

The company expects the sale of the iPhone 5 to eclipse its predecessors. Apple Chief Executive Officer, Tim Cook, seems to have followed in the footsteps of the previous CEO, Steve Jobs.

Apple’s main competitor in the smart phone market is Samsung Electronics. Samsung has a wider product range than Apple. Some of the company’s products include semiconductors, phones, flat screen televisions, tablet computers, and home appliances.

The company has been following the lead of other electronic giants such as Apple and the Japanese electronics giant, Sony. However, the Samsung is gradually becoming a formidable player in the manufacture of electronic products.

The company takes advantage of technological innovations to improve its competitiveness. Samsung is currently the world’s largest manufacturer of smartphones. Samsung has a global smartphone market share of 34.6%. On the other hand, Apple has a market share of 17.8% (Ramstad & Lee, 2012, para 11).

Apple Computers Inc

Business organizations are under the constant scrutiny of various parties. Contemporary business practice demands business to engage in ethical activities in both the pre-production and post-production stage.

Failure to engage in ethical activities would lead to tarnishing of the image and reputation of a company, which takes several years to build. Image and reputation are one of the major factors that influence the competitiveness of an organization.

Apple should also ensure that its suppliers engage in ethical activities. Failure to do so may greatly harm the image and reputation of the company, which is one of the factors that determine the competitiveness of the company.

From time to time, various parties have accused Apple of engaging in unethical activities. However, Apple has undertaken several measures to ensure that it always engages in ethical activities.

Apple strives to build excellent working relations with its employees and suppliers. The company fulfills various needs of the employees to increase the productivity of the employees. In addition, Apple has a supplier code of conduct that ensures that suppliers meet certain standards on labor and human rights.

The supplier code of conduct follows international standards of labor and human rights. The company terminates the working relations of suppliers who do not meet the specifications of the supplier code of conduct. The code of conduct dictates that suppliers must ensure that they treat their employees fairly at all times (Rogers, 2009, p. 101).

However, engaging in ethical activities is not just the prerogative of an organization. There are several government regulations that ensure that companies always engage in ethical activities.

Companies should ensure that their activities are economically, socially and environmentally sustainable. The supplier code of conduct ensures that their activities are socially sustainable (Crane & Matten, 2010, p. 32).

Apple continuously audits its suppliers to ensure that they always adhere to the terms of the supplier code of conduct. According to the supplier code of conduct, it is vital for suppliers to ensure that there is no medical discrimination of employees and juvenile (under 18 years) workers receive special protection.

The company prohibits juveniles from working in certain sections of the suppliers manufacturing plant. In addition, Apple offers the supplier’s employees training on labor and human rights in their area of jurisdiction. This reduces the likelihood of the suppliers violating the rights of the employees (Bassi, Frauenheim & Costello, 2011, p. 193).

However, these measures only reduce the possibility of suppliers engaging in unethical activities. It is impossible to reduce the likelihood of suppliers engaging unethical activities completely. It is a fact that employees of some of Apple’s suppliers still work in deplorable conditions.

The suppliers are able to conceal the mistreatment from the regular audit of Apple. Plants in Asia, and especially China, are the major culprits of violating the supplier code of conduct. In 2009, 91 children who were below 16 years old were working in Chinese suppliers plants.

The suppliers paid the children less that $1 per hour (Congress, 2011. p. 79). This is despite the fact that the children helped in making various Apple’s products, which are expensive.

Regular audits by Apple have enabled it to discover various irregularities in the operations of its suppliers. Apple’s audit has enabled immigrant workers receive reimbursement of exorbitant recruitment fees. Immigrant employees have received more than $3 million in reimbursement since 2008 (Christopher, 2012, p. 329).

The company’s supplier code of conduct dictates that suppliers should offer their employees a 60-hour week with a day off. In 2010, only 32% of the suppliers offered their employees a 60-hour week with a day off. In 2009, 46% of the companies met the standard working hours. Apple publishes its audit report annually (Christopher, 2012, p. 329).

In fact, in 40% of the companies, Apple was the first company to check whether the activities of the supplier were socially acceptable (Christopher, 2012, p. 329). If Apple determines that a supplier regularly violates the supplier code of conduct, the company terminates the contract of the supplier.

This reduces the likelihood of a company violating the terms of the supplier code of conduct. In addition, Apple’s representatives have a right of making impromptu visits to suppliers manufacturing plants.

This forces the suppliers to comply with the terms of the supplier code of conduct always. However, the large number of Apple’s suppliers makes it difficult to monitor all suppliers.

Foxconn Technology is one the largest suppliers of Apple. Foxconn is the largest Chinese exporter. The company assembles various electronic products for electronic companies, which include Samsung, Lenovo, Dell, Dell, Intel, IBM, Microsoft, Sharp, Hewlett-Packard and Sony.

Foxconn is the world’s largest contractors of electronic products. In fact, the company assembles 40% of the global consumer electronic products (Van Kerckhove, 2012, p. 67). In 2010, the company was under the scrutiny of various parties after it became evident that a series of suicides in the company were due to the deplorable working condition in the company’s assembly plants.

During the same period, an employee who lost an iPhone prototype died mysteriously. Apple’s head at the time, late Steve Jobs, denied that that Foxconn was a sweatshop. Jobs stated that the suicide rate in the factory was lower than the suicide rate of similar manufacturing plants in the US.

In fact, the company has excellent working conditions. Foxconn gives its employees access to cinemas, swimming pools and restaurants (Christopher, 2012, p. 330). In addition, the suicide rate of the company’s employees was significantly lower than that of the public.

These facts made subsequent investigations into the suicides not to be critical of the company’s working conditions (Van Kerckhove, 2012, p. 67).

In 2011, 137 employees of a Wintek Corporation subsidiary were victims of n-hexane poisoning (Christopher, 2012, p. 330). Poisoning resulted in muscular atrophy and damage to the nervous system.

The employees used n-hexane to clean various iPhone components. The company offered the employees compensation of between $12,000 and $20,000 (Christopher, 2012, p. 330).

Environmental degradation is one of the major political and social issues. Environmental degradation is mainly due to human activities. Emissions from industries are the major sources of environmental pollution. Therefore, it is critical for industrial plants to reduce their level of toxic emissions.

It would be foolhardy for a company to ignore the environment, as it is the source of the resources for the company. However, it is very difficult to eliminate toxic emissions from industrial processes. Organizations can only minimize the amount of toxic emissions or level of toxic chemical in their products.

PVC is one of the toxic chemicals used in manufacture of electronic devices. PVC is a component of cabling of electronic devices. Apple strives to reduce the amount of toxic chemicals in its products.

Apple was the first company to eliminate PVC from its electronic devices. In addition, Apple manufactures mercury-free LED display (Lannuzzi, 2011. p. 71).

However, the company eliminated the toxic chemicals from its products due pressure from environmental organizations. Apple was also the first electronic company to eliminate cathode ray tubes (CRTs). CRTs contain more than 1 kg of lead, a highly toxic compound.

In addition, the company uses few packaging material in its products. Less packaging material ensures that there is minimal greenhouse gas (GHG) emission in the manufacture of the packaging material (Lannuzzi, 2011, p. 68).

Sustainability demands that companies or their products should be energy efficient. Companies or products that are not energy efficient lead to more environmental degradation as they lead to the release more GHG (Tseng et al, 2006, p. 588).

Apple’s products are one of the most energy efficient products in the market. The company ditched CRTs for LCDs. CRTs use more energy than LCDs. In addition, Apple strives to reduce the amount of energy it uses in its operations.

The company gives its employees subsidies to encourage carpooling. In addition, the company provides a free bus service to its employees. This reduces the amount of fuel that employees use to get to their offices (Webber, Webber & Wallace, 2009, p. 125).

Samsung Electronics

Samsung also has a supplier code of conduct that ensures that suppliers engage in ethical conduct. The code of conduct ensures that suppliers provide favorable working conditions to their employees. Samsung does not permit companies to employ staff below the legal working age (16 years).

Samsung terminates the contracts of suppliers who fail to abide by the terms of the supplier code of conduct. The company uses regular audits to determine whether the suppliers engage in acceptable activities.

In August 2012, Samsung’s audits determined that HEG electronics engaged in unacceptable activities. HEG assembles Samsung’s mobile phones. HEG Electronics engaged in inadequate management practices and exposed its employees to unsafe practices.

In addition, the HEG overworked its employees and the supplier’s employees worked in unhealthy conditions. Samsung demanded the company to improve the working conditions of its employees. Samsung’s auditors did not find any underage employees.

However, there were several underage people within the company’s premises (Lee, 2012, para 3). Use of underage employees in HEG prompted Samsung to send a team of 105 Samsung employees to investigate all 105 Chinese companies that supply various products to the company.

This shows Samsung’s commitment to ensuring that all suppliers abide by the company’s supplier code of conduct.

Innovation is one of the major factors that affect competitiveness in the electronics industry. Electronic companies invest heavily in research and development (R&D).

This enables the companies to develop innovative products that would improve the competitiveness of the company’s products. Companies that do not have the necessary funds to invest in R&D usually tend to copy the innovations of other companies.

Therefore, intellectual property violations are common in the electronics manufacture industry. Most electronic companies outsource to China, other Asian countries or Eastern European countries that have low costs of production. This enables companies to reduce their overall costs of production significantly.

China is one of the countries where violation of intellectual property is very common (Lehman, 2006, p. 1). Intellectual property is usually very important to any electronic company. Intellectual property is more valuable than buildings or other physical property of the company (Miller & Cross, 2012, p. 206).

The problem of intellectual property violation necessitates companies to take measures to reduce the probability of the theft of certain sensitive intellectual property.

In most instances, companies ensure that there is internal manufacture of sensitive intellectual property. patenting of intellectual property help in preventing intellectual property theft.

Historically, Samsung has been following the lead of other companies in the development of innovative products. However, the company has recently been a leader in creating innovative products due to several strategic changes within the company.

Samsung and Apple are currently engaged in a legal tussle over intellectual property violations. Samsung has had close working relations with Apple for a long time. Samsung provides Apple with several products that Apple uses in manufacture of various products.

Apple accuses Samsung of intellectual property violations in its Galaxy line of phones and tablet computer. Apple claims that the Galaxy’s tablets computers and smartphones copy the design and interface of Apple’s iPhone and iPad. Galaxy tablets and smart phones run Google’s android operating system (Miller & Cross, 2012, p. 206).

In August 2012, nine jurors ruled that Samsung violated six Apple’s intellectual property rights (Ramstad, 2012, para 5-9). Some of the patents that Samsung violated included Apple’s patents on the shape and icons on the iPhone.

According to the jury, Samsung violated Apple’s patents on physical design. The jury determined that Samsung knowingly infringed Apple’s patents. Due to the intellectual property violation Samsung paid Apple $1.05 billion.

However, the penalty was short of Apple’s request for a $2.5 billion penalty on Samsung due to the intellectual property violation (Vascellaro, 2012, para 1-3). Apple also filed a lawsuit seeking to prohibit the sale of Samsung’s products due to patent violation.

This led to the temporary ban on the sale of the Galaxy Tab. However, the court later lifted the ban on the sale of the product (Ramstad, 2012, para 5-9).

The legal battle between Samsung and Apple seems to be a never-ending tussle. Samsung has filed other lawsuits against Apple claiming that Apple’s newly released iPhone 5 violated several Samsung’s patents.

Samsung and Apple are engaged in a legal battle due to their quest to claim market dominance in the smartphone market, which is worth more than $200 billion. The market has a very high growth potential in the future (Vascellaro, 2012, para 15).

Therefore, achieving market dominance would enable any company reap huge financial benefits. Samsung is the current leader in sales of smartphones.

In addition, Samsung has other innovative electronic products. The innovative products are slowly making Samsung a formidable force in the manufacture of electronic products.

Conclusion

Both Apple and Samsung strive to ensure that their activities, and those of their suppliers, are ethically acceptable. The supplier code of conduct ensures that the suppliers activities conform to internationally accepted standards on labor and human rights.

Both companies perform regular audits to ensure that their suppliers conform to the code of conduct. Apple and Samsung are ready to terminate the contracts of suppliers who willingly violate the code of conduct. In addition, Apple strives to empower the employee of its suppliers to reduce the possibility of exploitation by the suppliers.

Innovation is one of the most critical factors in the competitiveness of companies in that manufacture electronic products. Therefore, electronic companies invest vast sums of money in R&D. Due to the importance of innovation electronic companies usually patent their innovations.

Patent violations are common in the electronic manufacture industry. Samsung and Apple are engaged in a legal tussle over patent violations. Both companies accuse each other of violating its patents.

The legal tussle is due to each company’s quest to dominate the highly lucrative smart phone market, where innovation and originality is very critical in making a company gain a competitive advantage in the market.

Litigation by both companies due to patent violation is bound to have huge financial implication on both Samsung and Apple.

References

Anon., 2012, Business this week, The Economist. Web.

Bassi, L., Frauenheim, E. & Costello, L. 2011, Good company: Business success in the worthiness era, Berrett-Koehler Publishers, San Francisco, CA.

Christopher, E. M. 2012, International management: Explorations across cultures, Kogan Page Publishers, London.

Congress 2011, Congressional-executive commission on China, Government Printing Office, Washington DC.

Crane, A. & Matten, D. 2010, Business ethics: Managing corporate citizenship and sustainability in the age of globalization, 3rd edition, Oxford University Press, Oxford.

Gupta, P. & Ghosh, S. 2012, Apple sells 2 million new phones, sets early order record, The Guardian. Web.

Van Kerckhove, G. 2012, Toxic capitalism. London: Kogan Page Publishers.

Lannuzzi, A. 2011, Greener products: The making and marketing of sustainable brands, CRC Press. Boca Raton, FL.

Lee, J. 2012. Samsung finds problems at Chinese supplier, The Wall Street Journal. Web.

Lehman, J. A. 2006, Intellectual property rights and Chinese Traditional section: Philosophical foundations, Journal of Business Ethics, vol. 69 no. 1, 1-9.

Miller, R. L. & Cross, F. B. 2012. The legal environment today: Business in its ethical, regulatory, e-commerce, global setting, Cengage Learning, Belmont, CA.

Ramstad, E. & Lee, J. 2012. WSJ update: Samsung electronics posts best-ever quarterly net profit in 2q, The Wall Street Journal. Web.

Ramstad, E. 2012, Judge lifts ban on U.S. sales of Samsung tablet. The wall Street Journal. Web.

Rogers, S. C. 2009, The supply-based advantage: How to link suppliers to your organization’s corporate strategy, AMACOM Div American Mgmt Assn, New York.

Tseng, H., Chi-Hsiang, D., Hui-Lien, T. & Kung, H. 2006, Modern business ethics research: Concepts, theories, and relationships, Journal of Business Ethics, vol. 91 no. 4, 587- 597.

Vascellaro, J. E. 2012, Apple wins big in patent case, The Wall Street Journal. Web.

Webber, L., Webber, L. & Wallace, M. 2009, Green tech: How to plan and implement sustainable IT solutions, AMACOM Div American Mgmt Assn, New York.

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