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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
