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Apple’s Value Added Impacts

In today’s world, companies are no longer being measured by their financial bottom line but by a triple bottom line of economic, social and ecological returns, highlighting the fact that there is more than a single value a corporation provides. Furthermore, the majority value of many corporations lies in their intangible assets which can be defined as human, intellectual, social, and structural capital as well as goodwill and reputation (Waddock, 2009, p. 156-157). Indicators of success for a company is determined by rating the relationships they have with these intangible assets. Determining the most important indicator is probably biased by the particular type of stakeholder you are. However, it is my observation that reputation is the most important as it is an aggregate of the quality of relationships an organization has with all of its intangible assets and stakeholders.

Apple’s focus seems to be primarily on their relationship with their shareholders, an area where they have succeeded more than any modern day company. Their relationships with employees and contracted manufacturer employees have been under the microscope for low wages and poor work conditions. Efforts to support their community through donations and advancements in technology for schools appears to be more driven by the bottom line than a general desire to be a leading corporate citizen. Although Apple has been conscious of the environment, they recently withdrew from an environmental monitoring program after they engineered new solutions that put battery power before environmental concerns. These relationships will all be discussed in detail in this blog posting.

For the most part Apple has been a good corporate citizen when it comes to the environment. However, recently they did announce they were pulling 39 of their products from the EPEAT program, a government-backed registration of environmentally friendly electronics. The reason is believed to be related to a new laptop design to improve battery performance which makes the battery unable to be removed, and easily recycled with common tools (a EPEAT requirement) (Hesseldahl, 2012). After about a month of complaints from consumers, Bob Mansfield, Senior Vice President of Apple Hardware Engineering posted a letter on the Apple site that said “I recognize that this was a mistake. Starting today, all eligible Apple products are back on EPEAT”. His letter also reflects Apple commitment to the environment has and will continue to be strong “It’s important to know that our commitment to protecting the environment has never changed, and today it is as strong as ever. Apple makes the most environmentally responsible products in our industry” (“A letter from Bob Mansfield”, 2012).

Historically, Apple has not been a leader in supporting communities through financial or community-based outreach programs such as those implemented by Fedex (Waddock, 2009, p. 144) and Home Depot Canada (Toane, 2010). Much of this was attributed to former CEO, Steve Jobs who suggested that “giving away money was a waste of time” (“Tim Cook touts Apple’s charitable contributions at all-hands town hall meeting”, 2012). However, under new CEO Tim Cook, Apple has changed its ways and has introduced new programs to match employee donations as well as donating $50 million to Stanford hospitals.

Apple has also introduced a variety of programs over the years to positively impact schools and their learning efforts across the country. Most recently, Apple introduced its textbox initiative that would make textbooks from publishers available as interactive e-books at significantly lower costs. The program was initially raved by educators across the country, especially those in lower-income areas where less funds were available for newer books. However, after more careful review of the program and all of its requirements it was determined that “In order to buy and read these textbooks, each student will have to own an Apple iPad. No computer, off-brand tablet, or even iPhone or iPod touch will work. Books made with the new iBooks Author application are only viewable on iPads in the iBooks 2 app, can only be sold through Apple’s iBookstore (where the company takes its customary 30 percent of the sales cost), and cannot be exported as ePubs, the standard open format for all e-book files”. This has created frustration for public school administrators like Maria De La Vega, superintendent of the Ravenswood public school district in East Palo Alto, CA which is only 30 minutes from Apple headquarters. De La Vega says “We don’t really have a technology budget, most of what we’ve been able to acquire has been through donations and leftovers from offices closing down”. Unlike Apple, Hewlett Packard has donated a number of small laptops to the district, so there’s now one computer for every sixth to eighth grade student. But those devices will be unable to read the new digital textbooks or any content created with iBooks Author (Kelly, 2012).

With what some would call “failed initiatives” like the introduction of the electronic textboxes and only a recently invigorated donation programs, Apple has seen little if any impact to their success. Consumers seem to be more concerned about the product and price than Apple’s efforts to support their community. A possible explanation for this phenomenon in our CSR-sensitive world may come from researched performed by De PelsMacker, Driesen and Rayp. They concluded after a massive study of fair-trade coffee in Belgium, that “brand was the most important attribute of coffee, closely followed by flavor and fair-trade label third” suggesting that the CSR-factor of the fair-trade label was less important than the company name and product quality. They also noted that “a total of [only] 35% of all respondents were prepared to pay a price premium for fair-trade coffee” (De PelsMacker, Driesen & Rayp, 2005). Michael Porter also indicates that the financial aspect is an important one when he says “The economic model provides a new and comprehensive approach to reviving our nation’s distressed urban communities” and “Rethinking the inner city in economic rather than social terms will be uncomfortable for many who have years to social causes and who view profit and business in general with suspicion” further suggesting that stakeholders are more concerned with the true financial bottom line and less about the triple bottom line (Porter, 1995).

References

A letter from Bob Mansfield. Retrieved from http://www.apple.com/environment/letter-to-customers/. Accessed on October 12, 2012.

De Pelsmacker, P., Driesen, L. & Rayp, G. (2005). Do consumers care about ethics? Willingness to pay for fair-trade coffees. The Journal of Consumer Affairs. Vol 39, No. 2.

Hesseldahl, A. (2012). Apple reverses stance on EPEAT environmental rating system. Retrieved from http://allthingsd.com/20120713/apple-reverses-stance-on-epeat-environmental-rating-system/

Kelly, H. (2012). How schools are reacting to Apple’s entry into education. Retrieved from http://venturebeat.com/2012/01/21/apple-textbook-public-private-schools/#YD4q133WhIAOQQtK.99

Porter, M. (1995). The competitive advantage of the inner city. HBR. May-June, 1995.

“Tim Cook touts Apple’s charitable contributions at all-hands town hall meeting”. 2012. MacDailyNews. Retrieved from http://macdailynews.com/2012/02/02/tim-cook-touts-apples-charitable-contributions-at-all-hands-town-hall-meeting/#7t8SZ4HxZYwTlcsI.99

Toane, C. (2010). Brands harness the power of the hour. Retrieved from http://strategyonline.ca/2010/05/01/upfronthour-20100501/

Waddock, S. (2009). Leading Corporate Citizens: Vision, Values, Value Added. New York, NY: McGraw-Hill Irwin.

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