Business Society
In regards to the Foxconn situation, I believe Apple has several relevant stakeholders. I will outline the stakeholders as well as their stakes, attributes, the responsibilities Apple has to them, and the strategies and actions Apple should take for each. I limited my selection of stakeholders solely to the Foxconn readings. In reality, Apple has many more stakeholders such as local governments, local communities, surrounding businesses, and many other social and activist groups. For this analysis, I chose the stakeholders listed below.
The Foxconn case shows many stakeholders for Apple. I listed them in the chart above, along with the various attributes, responsibilities, and typologies, along with the strategy Apple should use in dealing with them. I will take the time to explain each in detail, along with my thoughts on why I selected each.
The first thing to consider with these stakeholders is ranking them according to their relative importance. This will allow Apple to make timely decisions about who to deal with first. Based on the typology, I will propose the following order of importance. All of the Definitive stakeholders should be addressed first. These stakeholders would be Employees, Customers, Stockholders, and the U.S. Government. Next would be the Dominant stakeholders, Overseas Contract Labor, and Suppliers. The next group would be the Discretionary stakeholders, Competitors, and the Chinese Government. The Dormant Stakeholders would be next; in this case, they are the Monitoring groups, such as the Fair Labor Association. The final group would be the Non-Stakeholder groups, in this case the generic “U.S. Worker”. These are not Apple workers in the U.S.; rather, they are workers in the U.S. who would benefit from Apple jobs being brought into the United States.
In analyzing Apple Employees, I felt that they hold an interest and a right, as stakes. Apple should perceive them as legitimate, they do have power, since they design and create the products sold by Apple. If they are unhappy with conditions, they are definitely in a position to impact Apple. That is also why I determined them to be urgent as well. Apple should feel an economic responsibility to them; they rely on Apple for their livelihoods. Additionally, Apple owes them certain legal and ethical responsibilities as employees. I feel they also have certain philanthropic responsibilities. The health and well-being, and happiness of their employees should be important to Apple. The employees are what make the company special. Based on these criteria, I view employees a Definitive stakeholder, since they have legitimacy, power, and urgency. They are very likely to cooperate with Apple, since they are agents of Apple, and what is good for Apple will often be in their best interests as well. I feel they are also a high threat to Apple, since they are driving the innovation and designing the products which make Apple such a special company. Any strategy dealing with employees should therefore be collaborative in nature. In regards to the Foxconn situation, the Apple employees themselves are not being mistreated. Apple should work with their employees and make sure they are receiving safe and effective working conditions, and are not being mistreated, though that doesn’t seem to be the case. Employees are the driving force behind Apple, and they need to work in partnership with them. Perhaps create some joint committees on employee issues to make sure conditions remain positive for their workers.
The next stakeholder is the Customer. The customer has interest and rights stakes. Apple should view them as a legitimate, powerful, and urgent stakeholder, which would make them a definitive one. Apple should owe their customers an economic, legal, and ethical responsibility based on their position as customers purchasing products. They would tend to cooperate with Apple, and should be seen as a high threat. If the customers leave, essentially so does Apple. As such any strategy should be collaboration with their customers. Perhaps they could survey their customers about the Foxconn situation. If the customers stop buying Apple products due to the brutal situation in the manufacturing plants, Apple will be forced to act quickly. Getting customer feedback, and working with customer groups early on will help Apple form a reaction to the situation without the loss of sales, jobs, and economic strife. It will be the overall best way for them to address the problems in the eyes of their customers.
Apple’s stockholders absolutely have an interest, right, and ownership stake in Apple. Apple should view them as a legitimate, powerful, and urgent stakeholder. As such, they are a Definitive stakeholder. As owners of the company, Apple absolutely owes them an economic, legal, and ethical responsibility. They are also a Definitive stakeholder. They would tend to cooperate with Apple, since they have a strong economic bond with them. They are also a high threat, since, as owners, they have the ability to force changes, or can sell their stock, driving share prices down. As with the others, a strategy of collaboration is best with this stakeholder. Prominent and powerful shareholders should be worked closely with on formulating a response to the Foxconn situation. As owners, shareholders wield tremendous power. Apple would best handle this situation by engaging with shareholders, and coming to a solution endorsed by them. Any good method of dealing with labor issues with manufacturers will impact Apple’s economic bottom line. They will either need to raise prices to compensate for higher prices paid to manufacturers, or they will need to earn less per unit. Determining the level of commitment of the shareholders towards doing the right thing with Foxconn is a very important piece of information Apple will need to correct the situation. Since shareholders can force change, it’s best to work with them early on to avoid that action.
The United States Government is a stakeholder with interest and right stakes. Apple should view them as legitimate, powerful and urgent. Apple owes them economic, legal, and ethical responsibilities. They pay taxes, and wages, but are subject to the legal and regulatory system enforced by the U.S. government. They also have a responsibility to act ethically with them, not just to the absolute letter of the law. The government will tend to cooperate with Apple, at least initially; they are also a high threat due to their power. At some point public pressure will mount for the U.S to do something about unhealthy and unsafe conditions in factories overseas. At that point, the U.S government will likely not be as cooperative with Apple, and will act to force change upon them. That change will likely not have Apple’s best interest at hand. Collaborating with the government early on will allow Apple to address change in a way beneficial to themselves as well as to the workers overseas. If Apple were to work with U.S. regulatory and trade organizations, they could act as an industry leader in working to enact change in their Chinese factories. They could be seen as a forerunner in third world worker’s rights. Apple yields tremendous power with Foxconn. Combined with regulations and assistance from the U.S. they could really be a force for positive change. The public relations boost to them would help to offset, at least somewhat, any hot to their economic bottom line.
The next stakeholder, what I feel is the most important one in this case is the actual overseas contract workers. They have an interest and a right stake. Apple should view them as legitimate stakeholders. As far as power, I submit they have a little. Should they ever get organized on a large scale, or if the Chinese government really steps in to end the abuse, they will have much greater power, but under current conditions, they wield very little if any. Apple should feel an economic, legal, ethical, and philanthropic responsibility to these workers. These are the workers actually assembling the products which make Apple great. In many ways, they should have the same rights and responsibilities as Apple’s own employees. Due to their legitimacy, but low power, I categorized them as a Dominant stakeholder. They will tend to cooperate with Apple. I ended up rating their threat as low, simply because they are unorganized and wield little power currently. If I was advising Apple, I would caution them that this could change very quickly should they ever organize on a large scale. A work strike or slowdown would cripple Apple’s supply of products. It would take significant time to move that elsewhere. Currently though, their threat is low. I would suggest a strategy of involvement with these workers. If Apple is serious about correcting the vile conditions in these manufacturing camps, they need to send empowered teams overseas to help oversee conditions there. They need to involve the workers in developing a reasonable arrangement to maximize output, while providing reasonable pay and working conditions to these workers so vital to Apple’s success. It would not be enough to just visit on occasion, Apple needs to set up full time oversight at these factories. That way, local management cannot cherry pick situations for them. They will see the real conditions. They must also be empowered by senior management at Apple to drive and direct change at these locations. Without the full buy in of senior people at Apple, these are ineffective steps. Having workers and local Foxconn management on these boards with Apple employees will empower each to work for their interests.
Suppliers are another key stakeholder in the Foxconn crisis. Suppliers hold interest and right stakes. They should be viewed as legitimate and powerful stakeholders. Apple should feel economic, legal, and ethical responsibilities to them. They owe them the right to earn a profit on each item sufficient to enable them to pay a fair wage and have safe conditions for employees. I classify them as dominant stakeholders, since they are legitimate and powerful. They will tend to have a high level of cooperation with Apple, and pose a high threat. Any slowdown or work stoppage, even a day’s worth will have economic repercussions for Apple. The best strategy to use with suppliers is one of collaboration. By working with them on conditions, and coming to a reasonable agreement on price per unit output, Apple can make sure that Foxconn is making enough to pay workers well, and give them a safe and secure place to work. By cutting the price Foxconn receives, Apple is almost forcing these conditions upon the workers. By collaborating with Foxconn management and Foxconn workers, Apple can broker a set of situations which are amenable and fair to each stakeholder. As I mentioned in my analysis of the contract labor stakeholder, sending permanent Apple employees, empowered to address situations, over to Foxconn and other manufacturing facilities, Apple can come to a fair and equitable price, wage, and working condition arrangement. Eventually public pressure either in the U.S. or China will drive these changes; Apple would be best served by getting ahead of the curve and being seen as a leader in labor reform overseas.
Competitors are another potential stakeholder. They have an interest stake in Apple, but no right or ownership stakes. They should be seen as legitimate stakeholders, but without any real power or urgency behind them. Apple owes them a legal and ethical responsibility. They need to make sure they act in fairness and in full compliance with all legal and regulatory frameworks. I classified competitors as Discretionary, because they have no power or urgency. They will have a low probability of cooperation, and pose a low threat to Apple. As such, the best strategy to deal with them is by monitoring their situation. Since most of Apple’s competition uses overseas contract labor, they are all on somewhat equal standing on this situation. If one or more competitors act to reform labor conditions overseas, or move manufacturing to the U.S. or another location where unsafe conditions aren’t tolerated, that may be used as leverage against Apple. If Apple is the leader in this reform, the others will tend to follow. It is vital that Apple monitor their competitors.
The Chinese Government is another very important stakeholder in the Apple/Foxconn situation. They have an interest and a right stake in it. They should also be viewed by Apple as legitimate. I considered how to rate their power and urgency. Currently, the Chinese are very dependent on companies like Apple bringing in the millions of manufacturing jobs they need to drive their economy. Further, the Chinese citizens and workers aren’t sufficiently organized or powerful enough to drive the government to change things. As such, there is no real threat of the Chinese government getting involved to push for change. I attributed no power or urgency to them, however, should the workers and citizen unite and organize, that could change very quickly. It warrants Apple keeping an eye on that. Apple owes an economic, legal and ethical responsibility to the Chinese government. They pay taxes and wages, and must comply with laws and regulations. I typed the Chinese government as a Discretionary stakeholder, since they are legitimate, but currently aren’t seen as powerful or urgent because they need Apple more than Apple needs them. They will tend to highly cooperate with Apple, and pose a relatively low threat. The best strategy in dealing with them is one of involvement. If Apple is serious about correcting the labor conditions, they should involve the Chinese government. They yield tremendous power and influence with them. If they threaten to pull their work unless real reform is enacted, the Chinese government will act immediately. They government is very dependent on companies like Apple sending manufacturing jobs to them, loss of those jobs would be a disaster for them. They will make any reasonable concession to keep the jobs in China. By working closely with the Chinese government, as well as any other governments they do work with, Apple can be a world leader in third world labor reform. As one of the biggest players, Apple has tremendous influence.
Various monitoring groups, such as the Fair Labor Association, have stakes with Apple. They have an interest, but no right or ownership stake. I believe Apple would see them as having some potential power, if they are large enough or influential enough. I don’t’ believe Apple sees them as legitimate or urgent, since they haven’t worked closely with them at all in the past. I believe Apple owes them an ethical responsibility, since they should want to do the right thing. In regards to Foxconn, they should view an ethical responsibility to help these groups drive reform. I classified them as a Dormant stakeholder, since they have potential power but little else. They would tend to not cooperate with Apple and pose little threat. As such, a good strategy with them would be to monitor them. Should these groups gain greater influence, or get in a position to drive the public or government to get involved, they will potentially yield significant power and influence. Currently that is not the case, but it could change quickly, and Apple should monitor these groups closely. When and if Apple starts driving true reform, involving or cooperating closely with these groups could add legitimacy to that change. Rather than Apple simply claiming reform, if these groups corroborated the change, the public and competitors would tend to view it as fact rather than an advertisement or assertion by Apple.
The final stakeholder I analyzed is the U.S. Worker.Much has been written and discussed lately about bringing jobs to the U.S. I analyzed what if any stake the U.S. worker has with Apple. I see them as having a definite interest, but no right or ownership stakes. I don’t see Apple viewing them as legitimate, powerful or urgent. If there is any responsibility owed, it would be philanthropically. Apple has stated that the American worker simply doesn’t have the skills to bring these jobs to the U.S. Perhaps Apple can work to help teach these skills to U.S. workers, or help to influence the U.S. Government, colleges or trade schools to teach and emphasize the needed skillsets. Since they are not legitimate, powerful, or urgent, they should be typed as a non-stakeholder. They would tend to cooperate highly with Apple, but pose very little threat. A good strategy would be one of involvement. Perhaps Apple could work with relevant government and educational groups to stress the needed skills to bring more of their manufacturing jobs to the U.S. With the job market and economy down, being seen as a force to help drive U.S. manufacturing, Apple would win a public relations windfall. This could also drive change in their overseas manufacturing plants, if they see real completion from U.S. firms.
Overall, the Apple and Foxconn labor situation is bad. Conditions at Foxconn and plants all over the third world are showing no signs of improving. As global competition and economic drivers push the bottom line over all else, conditions will stay bad and may even deteriorate. If Apple transitions from a shareholder to a stakeholder management system, they will see their absolute responsibility to the workers in these horrible worker camps overseas. It is in the best interest of every stakeholder I analyzed for Apple to take a leadership role in reforming the labor conditions in the plants manufacturing their products. It may not be their best economic bottom line decision, but if they consider the triple bottom line, they will see that change is vital to their success.
