1. Due Apr. 27, 2011
Sustainability and Quality Assessment: The Case of Apple
Although sustainability is an overall developing strategy in global scope, we believe that
public entities, no matter profit oriented (e.g. business companies) or not (e.g. non-profit
associations), should shoulder their responsibilities on sustainable growth of human being. Thus,
a comprehensive assessment of their choices and practices is a way of necessity to understand
the real situation and to explore solutions of a sustainable development. In this case, I choose
Apple, the worlds‟ leading consumer electronic and software company, to implement the
sustainability and quality analysis. In addition, I follow the value creation scheme to analyze
each element of sustainable operations under the guidance of triple bottom line and quality
control (Martins, Mata, Costa, & Sikdar, 2006).
Company Background
Apple Inc. is an American-headquartered multinational corporation that designs,
manufactures and markets a range of popular products including hardware (e.g. personal
computers, mobile and media devices), software (e.g. operation systems and software
applications), peripherals (e.g. iPad and iPhone case), and third party digital contents (Apple Inc.,
2011b). The Company outsources a substantial part of manufacturing and logistics to third
parties and sells its products internationally using self-owned retailer stores, online stores, and
third party resellers (Apple Inc., 2011b). The company has been honored the most admired
company several times by Fortune Magazine (Bernasek, 2010; Colvin, 2009; Fisher, 2008);
however, it also received harsh criticisms for its lagged environmental and labor practices.
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2. Economy
Overall market and sales. Consumer products draw Apple‟s main focus: its innovative
lines of iPod media players (9.02 million sales*1), iPhone (18.65 million sales*1), and its newly
launched iPad (4.69 million sales*1) hold the majority of consumer market (Apple Inc., 2011b);
Macs (3.76 million sales*1) are historically pricier than Windows powered PCs, with exceptions
if the two are similarly configured. The company‟s roaring financial success is a reward from
every Apple user but also a great return to its numerous shareholders.
Operation. Worth noting is Apple‟s user-oriented albeit anti-traditional business
philosophy: unlike the business school‟s typical approach of product diversification to defuse
market risk (by offering a range of products that vary performance grades, features, and prices),
Apple puts every resource and attention behind a few flagship products and makes them
exceedingly well (Morris & Levinstein, 2008). This paradigm makes Apple‟s products inherently
sustainable: less variety in design means less sophisticated and easily standardized molds in the
manufacturing process, which is able to ultimately cut the spending on raw material as well as
labor cost; also, by not differentiating low-end and high-end products, Apple is able to carter for
markets that are geographically and culturally different.
Another sustainable strategy is to put its innovativeness and creativity in the usability
(focus on software based ease of use rather than the traditional hardware specification) to avoid
the low margin battle with its rivals (Yoshida & Ojo, 2009). By building an eco-system around
Apple‟s software platform, developers, publishers, and multimedia distributors have been
contributing to the usability goal under Apple‟s roof; the ability of gain mutual benefit is more
likely to have a lasting effect on the Company‟s profitability (Yoshida & Ojo, 2009). However,
dispute on the openness of the Company‟s platform remains unsettled, with most criticisms
1
Sales are in Q2 2010.
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3. arguing that proprietary device and software can not only ensure Apple‟s control on consistent
user experience but also can guarantee the Company a huge profit (Cusumano, 2010). The
inconformity to existing rules may harm the motivation of numerous developers and
manufacturers if a formidable rival appears.
Distribution and Service. A variety of direct and indirect distribution channels are used
by Apple to reach the end consumer, including but not limit to brick and mortar stores, online
stores, third-party cellular network carriers, wholesalers, and retailers (Apple Inc., 2010b). The
company believes a direct and effective communication with its customers can differentiate itself
from its competitors (Apple Inc., 2010b). Thanks to this notion, Apple is able to focus on
providing a high quality of sales and after-sales support across the world. The rise of automated
services, which deliver the digital content and updated software application through Internet, isi
another tactic to enhance service quality (Cusumano, 2010).
It is not hard to speculate the effect of providing high quality service: (1) knowledgeable
and passionate salesperson can ensure an integrated buying experience; (2) by operating self-
owned flagship stores, Apple is able to eliminating the cost of market research on what consumer
are pursuing, since the information can be directly obtained from the interaction between
consumer and salesperson; and (3) most importantly, customer loyalty can be raised up by
turning the whole experience into pop culture, which can further help building a sustainable
public relationship.
Society
Human resource management. Apple is perhaps the best-known company for
maintaining the balance between creative and commercial personnel, epitomized by the
cooperation between the meticulous CEO Steve Jobs, who acted as the creative brain specialized
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4. in shaping product design and use experience, and COO Tim Cook, who handled the day-to-day
operations (Rigby, Gruver, & Allen, 2009). Working culture in Apple has a consistent image as
its products: the spiritual pursue of doing extraordinary work is Apple‟s universal recruiting
requirement. Apart from the intelligent engineers, Apple has 10,000 (out of 25,000 in total) full
time employees working in its retail stores (Morris & Levinstein, 2008). Moreover, Apple is
dedicated to be an Equal Employment Opportunity and Affirmative Action Employer; it even
provide opportunities to job applicants with physical or mental disabilities through a special
“reasonable accommodation” plan (Apple Inc., 2011d).
Supplier responsibility. Apple is a company that likes to operate everything under one
roof expert for the hardware manufacturing. Substantially all of Apple‟s products and parts are
outsourced globally to manufacturing partners, primarily located in East Asia (Apple Inc.,
2010b). Suppliers have to accept the Apple Supplier Code of Conduct (the Code) as a condition
of business contract, which targets at improving working conditions as well as treating workers
with dignity and respect (Apple Inc., 2010a). Furthermore, Apple conduct onsite audits, approve
corrective action plans, and verify implementation together with third-parties such as
government agencies and NGOs (nongovernmental organizations), to ensure the suppliers take
the Code seriously with double check (Apple Inc., 2011c). Apple is also the active member of
EICC (Electronics Industry Citizenship Coalition), a group of electronic firms voluntarily
working together to adopt CSR (Corporate social responsibility) practices; annual reports
documenting detailed audited information on supplier social responsibility have been published
by Apple from 2007 (Apple Inc., 2011e).
However, Apple‟s effort on equal-standard social responsibility, regardless of where the
products are made, has seldom stopped sweatshop charges from mass media. Suppliers of Apple
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5. have been repeated criticized for abusing workers under inhuman and military conditions (Moore,
2011; Tsai, Kane, & Ye, 2009), of which the super-factories are mainly clustered in east China.
Although the widely reported child-labor or suicide incidents were not happened under the direct
supervision of Apple -- who usually acclaimed immediately to have an thorough investigation
after the media exposure -- consumers should not excuse Apple‟s seemingly innocent: as the
world‟s leading technological company, Apple has an undeniable bargain power on suppliers
( Kane, Sherr, & Tsai, 2010) – the root reason for suppliers mal-balanced the relationship
between profit and social responsibility.
Environment
Evaluation on environment friendliness of Apple‟s services is not easy, since the
Company does not actually manufacture the products. The true manufacturers are mostly located
in developing countries, where environmental regulations are lax and frequently get violated
(Bertolucci, 2009). Meanwhile, the market force from government and cooperate buyers are
forcing Apple to meet the environment standards: electronic vendors have to follow RoHS
(European Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical
and Electronic Equipment) if they want to sell product in European countries or EPEAT
(Electronic Product Environmental Assessment Tool) if the customer is US a federal agency
(Bertolucci, 2009).
Transparency. Apple documents detailed reports of its environmental progress and
energy efficiency designs on official website. A comprehensive analysis of green-gas-emissions
is also available, covering the complete products‟ lifecycles from manufacturing to retail
facilities. Specifically, consumers can download environmental report tailored for each product;
they can even participate in free recycle program according to product category by simply
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6. clicking the mouse (Apple Inc., 2011a). In contrast, scant information can be found on e-waste
recycling operation after collecting these wastes from consumers. Little is known on energy
consumption of data computing, which responsible for its massive media data exchange on
iTunes platform. Lack of transparency on less tangible area can be a potential flaw on the green
image of Apple, especially when green organizations began to realize this problem and gave
harsh comment on behalf of consumers (Cook & Horn, 2010).
Hazardous Substance Management and Restrictions. Although all Apple products
(except for power cords) are now free of PVC and brominated flame retardants (BFRs) (Apple
Inc., 2011a), the Company is criticized for not giving timelines for further phasing-out other
hazardous substances such as DEHP and phthalates, which leads to an unfavorable overall
Greener Electronics Ranking position (Apple dropped its place from 5th to 9th in the latest report)
behind its major rivals in the market of consumer computer and mobile equipment such as Dell,
HP, Nokia, and Sony Ericsson (Greenpeace, 2010). The plans of eliminating elemental bromine
and chlorine in all product lines are in progress, however, with no official disclose of detailed
information reported (Greenpeace, 2010).
Energy Use. Apple‟s product is born to be more efficient: designers and engineers are
dedicated to develop smaller, thinner, and lighter products without compromising usability or
computing power (Apple Inc., 2011a). Using less material and building power efficient
processors are the main contributors of eliminating greenhouse gas emission: every single
product is benefited from Apple‟s strategy of putting software and hardware designing under one
roof and thus exceeds the strict Energy Star guidelines (regulated by the United States
Environmental Protection Agency) for efficiency (Apple Inc., 2011a). Nevertheless, clean energy
(or the renewable energy) has not been incorporate into Apple‟s operation, which is extremely
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7. important because energy use in data center buildings are experiencing an explosive increase but
remains out of the public eye (Cook & Horn, 2010). In this filed, Apple lagged behind its rival
Google who has audaciously invested several wind farms from 2010 (Becker, 2011; Morrison &
Sweet, 2010).
Recycling. Apple currently provides two recycling programs (one for computer, the other
one for small electronics) to customers all over the world; participation is encouraged by sending
out incentives (e.g. gift card or discount when purchasing a new product) (Apple Inc., 2011a).
Again, little is known about the operation procedure of recycling; less information is available
about the efficiency of third-parties who are handling these e-wastes out of American market.
Moreover, what Apple adopts is the cradle-to-grave way of consumption, with no innovative
considerations on creating a reusable product line or creating a green manufacturing chain1.
Consumers are increasingly encouraged to buy a new device no longer than 18 months (that‟s the
typical period of launch a brand new generation) instead of updating the old one. The planned
obsolescence, or the designed disposability, may be the key problem of Apple‟s green strategy.
Quality
Internal Quality Metrics. Quality control is a vital issue for every company, since the
overall quality of offerings plays an important role in brand reliability and can improve customer
satisfaction in the long run (DelVecchio, 2000; Taylor & Baker, 1994). Apple sets up an
extremely high quality standard inherited from its luxury product positioning, which has been
systematically imbedded into Apple‟s culture: there is a senior vice president of operation
specialized in making sure „the products meet the highest standard of quality‟(Adrian, 2010).
Therefore, suppliers of Apple are carefully chosen and intensively tested, to ensure that all
1
Although Apple acclaims that any Mac or PC desktop or notebook computer may qualify for reuse, the
computers are not made to be reused.
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8. suppliers are on the same quality level as Apple itself (Apple Inc., 2010b). Recently the antenna
design and problematic Bluetooth performance coming with the new iPhone 4 have put Apple in
spotlight. However, Apple‟s attitude is less than responsible: the CEO simply decided to give the
iPhone owner a free case but rather sticking to the original design without serious real-world
testing prior to the product launch (Yukai Iwatani Kane, Sheth, & Morison, 2010).
Service quality is less tangible but as equal important as the product quality (Taylor &
Baker, 1994). The post-sales support quality is ensured by the ecosystem built on iTunes Store,
which provides personalized yet system-level-integrated applications to every customer; as a
result, users who are attracted by the aesthetic design of Apple‟s products are able to enjoy
superior easy-of-use features and experience high-quality service (Yoshida & Ojo, 2009).
External Quality Metrics. Objective standard of quality can be established and
performance of salesperson can be measured (although more complicated than product
evaluation) quantitatively. But the customer expectation, the other facet of quality measurement,
is intangible and hard to explore (Reeves & Bednar, 1994). Apple has a higher risk of market
failure in this sense (than other PC makers) because it keeps fewer product lines than its
competitors, which is less flexible in satisfying consumers from different social background. The
risk gets doubled because of the aggressive market strategy: Apple, acts like a nonconformist,
scoffs at the notion of a target market and do no market research before initiating a new product
(Morris & Levinstein, 2008). Thus, the incongruence of Apple‟s innovation and consumer‟s need
may be a potential cause of market failure. Furthermore, market success of the existing product
lines may pull up the expectation of consumers, who may require a breathtaking innovation from
Apple instead of a minor upgrading.
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9. References
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