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The whole aim of my Extended Project Qualification is to investigate whether abusing suppliers is the biggest ethical issue and whether the companies Toyota and Apple abuse their powers over their suppliers. I decided to choose that question as it’s related to business and I thought it would be a good idea to choose a business-related subject, as I take business studies as an A-level subject and I’m very interested in the subject, therefore, topics such as this are of real interest to me. I wanted to explore and research the ethical issues that lie behind the big companies, Toyota and Apple. I will already have knowledge on this topic as like I’ve said I previously and currently study business, which covers and comes across many different areas of ethical issues that could occur in a business, it will also aid me when I’m completing this project.
The main topic for my project is Business Ethics, there were many different definitions of business ethics but I think the one which best described it was the definition that I found from Investopedia, as it covered all areas of which ethics in business occurs, the definition was, “Business ethics is the study of proper business policies and practices regarding potentially controversial issues, such as corporate governance, insider trading, bribery, discrimination, corporate social responsibility and fiduciary responsibilities. Law often guides business ethics, while other times business ethics provide a basic framework that businesses may choose to follow to gain public acceptance”.
Business ethics is a fundamental component of how a company is run, therefore; it plays a huge role throughout every business and has a key role in business in general. Due to that, I wanted to do my project on this specific area of business and explore how ethical companies actually are when you really look into them, rather in comparison to what they want you to believe about their ethical policies. There were many big businesses which are unethical and most likely abuse their powers against suppliers.
Despite that, I selected Toyota and Apple as they are huge companies which are affiliated with mass people around the world not only that, both of the companies’ portfolios which are the tech market and car market are very expensive. If people were to find out the ethical issues that exist in the companies people may revise their decisions to buy products from these companies until they become more ethical and become more appealing to consumers and switch to alternatives which could be argued that is better from a company with far less ethical issues, because of that these two companies seemed very appealing to write my project on. Not only did this seem appealing for me to write about I also believe it would appeal and intrigue many ordinary people as it affects them if they have any interest in them to companies or specific markets they operate in or just an interest in the business.
Toyota Motor Corporation, which is more commonly known by most people as Toyota, “is a multinational corporation headquartered in Japan. At its peak, Toyota employed approximately 320,000 people worldwide. It is the world\’s largest automobile maker by sales”. As of 2017 Toyota has a market share range of 2.61%-4.26%, which means it controls quite a good portion of the automobile market. From 2014-2016 Toyota was up there with the top brands in the UK, in 2017 Toyota’s market share rose to 4.26% which was the highest ever recorded for the company. As Toyota is a Japanese company, a lot of their manufacturing plants are back in Japan and there have been many articles and studies about their manufacturing plants as they have been described by many people who have looked into it as “slavery” and “human trafficking”. Not only have their manufacturing plants been described as those, there have also been many \”karoshi\” claims each year. This term means \”overworked to death\”, these claims made by people who study the Toyota plant shows just how a big company that seems to do everything above board and ethical but how they contrast to what they actually are.
Toyota’s goal is to lower wages in America, which you would think is like any normal business goal to cut expenditure in order to improve the profitability of the company, however, the way they try and do it is completely unethical and morally wrong. The way that Toyota go about increasing their profitability is by setting up their manufacturing plants in the poorest states in America in an attempt to manipulate the lowest wages in the country, not only do Toyota take advantage of the low wages, they don’t put their workers on permanent contracts, they keep their employees on temporary contracts which lower their costs, however once again unethically.
In 2009 Toyota finally admitted to neglecting safety concerns and delaying recalls of their vehicles purposely, in an attempt to save money. “Toyota purposely and repeatedly delayed safety regulations by avoiding defect investigations and obstructing government inquiries into safety concerns” in 2009 Toyota released a presentation called “wins for Toyota safety group” it shows the financial benefit that Toyota acquired by delaying the checking of their vehicles that are being consumed by consumers, their financial position benefitted from this vastly, because instead of recalling all their vehicles with safety issues, they only called in only some at a time which means that they always had some of the cars that they knew had issues with were still in use which led to financial rewards as they didn’t have a mass recall for all of their vehicles which would have seriously affected their financial position in a negative manor. Due to this “Toyota said a phase-in to new safety regulations for side airbags saved the company $124 million and 50,000 man hours. Delaying a rule for tougher door locks saved$11 million”. At the same of them having to recall mass amounts of cars, Toyota was still selling vehicles which they knew had flaws and advertising them to be the “safest” and best quality on the road.
There was one real major unethical thing that Toyota did, which was that they conspired with NHTSA, they are the department which is located in the government that is responsible for crash test ratings. They conspired with them to falsely change and improve Toyota’s safety record whilst hiding the fact that NHTSA was inefficiently staffed and also not compensated to be able to deal with the fluctuating of safety concerns which were highlighted by consumers. These corrupt behavior/scandals that Toyota has shown leads to a larger problem because it creates a precedent for future corruption and unethical behavior when it comes to the safety of the vehicles that are used daily by consumers. All of these unethical factors that I have previously mentioned just show how unethical Toyota are when you really do some research and look in to the company properly, because without researching into Toyota as a company they look like an ethical and reputable company to any ordinary consumer looking to buy their vehicles when really, they’re not.
Apple Inc. is a huge multinational company which designs, develops and sells consumer electronics, computer software, and other online services. “The corporate objectives of Apple Inc. are based on its mission statement which is based on creating advanced and innovative services, high-quality products and ensuring the integrity of business procedures.” As I’ve previously stated that Apple is a multinational company and therefore they have a big market share of the smartphone market, Apple accounted for 14.6% of the market in the third quarter of 2016, as you can see below in the graph.
Despite Apple being a multinational company, it has many critics and been labelled as a very unethical company by many people who have researched into apples ethical standards and corporate social responsibilities. “Corporate social responsibility is a form of self-regulation by which companies exceed legal minimum requirements in an attempt to be good social citizens”. There have been many claims been made about unethical practices being used by apple whilst in the process of creating Apples Products, such as being forced to work overtime, poor conditions, being severely underpaid, exposed to potential injury without proper protection etc. “Despite Apple\’s best efforts, unsavoury labour practices are still being used to build iPhones, iPads, and Macs. In its ninth annual report on supplier responsibility, the company says it\’s auditing more factories than ever, reimbursing unpaid workers, and tackling violations proactively.\” Apple has their own code of conduct that they say they supposedly abide by, their code of conduct includes many things such as health & safety, wage, working hours etc. despite this it has been very widely publicised that they do not stay in line with their code of conduct, for example, Apples code of conduct regarding working hours states that “Except in emergency or unusual situations, a work week shall be restricted to 60 hours, including overtime, and workers shall take at least one day off every seven days. All overtime shall be voluntary. Under no circumstances shall work weeks exceed the maximum permitted under applicable laws and regulations” from the research that I have conducted, I found out that apple breach their code of conduct regularly. An undercover reporter working in a factory manufacturing parts for the iPhone 6 was worked hard, 18 days straight which are a clear breach of their conduct as they state that every worker should receive at least one day off of work per week, this is just one out of many cases where this has happened, and is a regular occurrence in Apples manufacturing plant in Asia where they are able to exploit workers.
There have been many times when Apple has broken their code of conduct, in the form of compulsory overtime, holiday allocation, and wage etc. Despite all of those issues Apple is still thriving as a business, and still, amass huge amounts of revenue per annum. Apple has now been known for their complete disregard for human life in the process of the products being manufactured, as most of their products are manufactured in sweatshops overseas with appalling conditions. As well as that Apple is also contracted to suppliers that regularly disrespect and disregard the environment, their suppliers are infamous for creating false records/documents to cover up their labour practices in attempt to make themselves look presentable to Apple and the consumers, their suppliers are also well known for their mistreatment of women and their use of unsafe equipment.
Even though Apple is one of the most advanced multinational companies around it has high suicide rates and, like previously stated, appalling conditions to work in. The news of the high suicide rates in the Apple manufacturing plants in China leaked to the public, the news shocked the public. Despite that it didn’t lead to any decreases in sales for their products, nonetheless, Apple vowed to “clean up their act supply chain”. Due to all this bad publicity for Apple their chief executive at the time, Tim Cook, implemented many processes to keep control of the poor working conditions and also improve the constraints in the Apple manufacturing plant, in an attempt to make it a better place to work for their workers, and to also stop the bad publicity from harming their brand image.