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Case 15

Apple Inc.’s Ethical Success and

ChallengesMaintains Strong Ethical Roots

CASE NOTES FOR INSTRUCTORS

The Apple Inc. case examines the ethical successes and challenges that the company faces in the

highly competitive technology industry. Because Apple is so admired for its products and services—

and has consistently scored top place in Fortune magazine’s “Most Admired Companies” list—

students might not realize that the company experiences ethical issues daily. This case introduces

students to several business ethics issues, including corporate culture, sustainability, privacy, and

intellectual property.

During its more than 30 year history, Apple Inc. has undergone many successes and downturns.

During the 1990s, the share price was so low that some analysts thought the company could never

recover. However, thanks to the leadership of Steve Jobs and a highly skilled and enthusiastic

workforce, Apple products have attained a cult following. The brand has become the most valuable

brand name in the world. Because it operates in the fast-paced technology industry, Apple must

constantly innovate to create unique high-quality products.

A key section in this case concerns the ethical issues that Apple is experiencing. Students should be

able to relate to some of these issues such as privacy, which is becoming a major concern among

consumers. Sustainability is another area likely to be important to consumers. Because Apple

constantly upgrades products, the company must deal with the problem of old products being

discarded. The large amount of electronic waste in landfills is encouraging Apple to offer incentives

for consumers to recycle their older technology. Apple has also become involved in a number of

lawsuits throughout its history, sometimes as the plaintiff and sometimes as the defendant. Apple

aggressively defends its intellectual property and patents, prompting it to file lawsuits against large

companies such as Microsoft and Samsung. On the other hand, other technology companies such as

Cisco and Kodak have sued Apple over the same issues, leading to speculation on whether Apple is

being above board in all of its dealings.

Apple continues to encounter new opportunities and threats as it looks toward the future. It also

continues to encounter ethical gray areas where there is no clear right answer. For instance, Apple

found itself pitted against the FBI after it refused to hack into the iPhones of two terrorists who had

shot and killed people in an office in California. While the FBI claimed it needed access to help fight

terrorism, Apple made the hard decision to refuse the request as it believed providing the

government with a way to bypass its security measures could put the privacy of millions of Apple

iPhone users at risk.

While this case is certainly not exhaustive, it should get students thinking about the ethical conduct

of the companies that they admire most.

QUESTIONS AND DISCUSSION

1. Explain how Apple’s philosophy and organizational culture have impacted how it handles

ethical decisions.

Apple bases its success on “creating innovative, high-quality products and services and on

demonstrating integrity in every business interaction.” To realize its philosophy, Apple has

created a corporate culture that encourages enthusiasm and innovation among employees.

Another way that Apple has demonstrated integrity is through its interaction with customers in

Apple retail stores. Apple’s retail culture specifies that employees must address a customer

Finally, Apple maintains an organizational culture where evangelism is encouraged. Apple

employees are urged to spread their enthusiasm for Apple products to others, who then become

evangelists themselves. Many employees have expressed that they feel like they are a part of

2. Why is Apple’s industry so competitive, and how could this affect the ethical risk in Apple’s

operations?

The technology industry is a race in which Apple and other tech firms are competing against

one another to win the top prize: market share. Due to technological advances in the last few

decades, a product that once took years to develop might take a matter of months. Additionally,

This competitive atmosphere places pressure on Apple and its competitors. First, it has caused

technology firms to aggressively defend their intellectual property. New revolutionary products

such as the iPod can tip the balance in a company’s favor—and have the potential to influence

Privacy is an interesting issue to consider as an ethical issue. While privacy issues have been a

concern for years, the advent of digital technologies such as social networking have been

ableallowed companies to target consumers like never before. By figuring out consumers’ likes

3. How do you think Apple has handled the various ethical issues that it has faced in the past?

Students’ answers will vary. Those who think that Apple handled its ethical issues well could

make several arguments. In terms of privacy, one could argue that Apple needs to remain

competitive. As long as it does not abuse the information, then there is no harm in collecting

information about its iPhone locations. Apple has also taken strides to become a more

sustainable company. Not only does it build its products with less toxic substances and more

recyclable materials, but it also offers incentives to encourage people to return their old

Those who think Apple has not handled its ethical issues very well could also make several valid

arguments. They could argue that Apple misled consumers on how its iPhones collect location

data. It told consumers that when they turn off a certain feature on their iPhones, the device

would stop collecting information. However, some iPhones continued to collect information

even after the feature was turned off. Apple claimed this was a glitch in the system and

continues to defend its practices. This may make it appear unsympathetic to users’ concerns

ADDITIONAL RESOURCES

By contracting its manufacturing out to countries like China, Apple gets the advantage of

lower labor costs. However, it also experiences increased risks regarding oversight. The

following link from The Wall Street Journal examines some of these risks:

http://online.wsj.com/article/SB10001424052702304563104576361232998099752.html

This describes the backlash Apple faced after saying it was no longer registering its products

under a voluntary registry of electronic products:

http://www.wsj.com/articles/SB10001424052702304373804577525033302381546

Is Apple the most innovative company? This article investigates:

http://www.forbes.com/sites/susanadams/2015/12/08/is-apple-the-worlds-most-innovat

ive-company/#2715e4857a0b14c689147557

Apple’s large European tax bill:

https://www.bloomberg.com/news/articles/2016-12-16/the-inside-story-of-apple-s-14-bi

llion-tax-bill