Essay: Business Value For Samsung And Apple Inc.

Differences in approaches and explanations for differences

Disucss about the Business Value for Samsung and Apple Inc.

Apple Inc is a multinational technology company, headquartered in US. This company designs, produces and sells electronic consumer products worldwide. Despite generating highest revenue among the software companies, Apple Inc has faced several social issues in business operation. China is an emerging market in Asian zone. Apple faced social issues in China for different reasons. Despite including labour and human rights and empowerment of workers in the CSR values, Apple faced problem from the labor union. It has been found that the company has violated 86 labor rights including unsatisfactory labor conditions, environmental pollution. In addition to this, labours were paid less by apple (Lee, 2014).

Samsung is a company belonging to the same industry. Starting business from Korea, the company has become a leading company in the electronics industry. Strong business and corporate level strategy, product innovation are the success factors for the growth of the company. Samsung has put continuous effort to maintain social responsibilities and given priority to the stakeholder’s value. Apple and Samsung, both dominate the smart phone industry in present decades. The industry is oligopoly in nature. There are few companies in this industry globally, who hold large amount of market share. Some of them are market leaders and some of them are followers in nature. As described by Wiggers (2016), this industry is turning to become duopoly from oligopoly as Samsung and Apple together enjoys lion’s share in this industry. During second fiscal quarter, Apple made 38% profit margin in smart phone and Samsung made 30% profit margin. Other competitors in the market are Microsoft, HTC, Lenovo and Blackberry.

The corporate social responsibility report of Apple Inc published in 2016 states that Apple Inc tries to give respect and value to everyone associated with the supply chain management. This company works hard to make the work place better. Yearly review is done to make sure this progress. However, the Apple Inc has experienced several challenges in business process regarding health and safety violation in the work place, violation of human rights, uncontrolled working hours, and age discrimination during recruitment. Lee (2014) stated that during 2014, Apple Inc faced issues regarding labour and environment in China. The company was accused of violating labour right organization in China, China labour Watch. This was not direct fault of Apple Inc. Auditor group of Apple found that a manufacturing firm Foxconn, which had contract with Apple, was violating the labour policy of China. Moreover, Apple is also accused with industrial pollution in this country.

Reasons of the differences

China Labour Watch also found that three factories of Pegatron, which manufactures equipments of Apple computers and iPhones, use child labour under 18 (Myers, 2013). Those child labours perform same task as adults. Child labours are exploited in terms of low wage, non-payment of wage or not receiving payment on time. These issues violate child rights and hence, have impact on business. Exploitation of labour reduces wage cost and increases revenue (Cornelissen, 2014). However, in order to hold market share, price of electronics goods manufactured by Apple has been reduced after 2014.

In order to address those challenges, Apple Inc does an audit, which is supported by third party expert. As stated by Duhigg & Barboza (2012) the steps undertaken to mitigate those issues are review of payroll documents of workers, physical assessment of health and safety conditions at workplace, inspection of environmental condition inside and outside the manufacturing factories. Apple has adopted new CSR policy in the form of green energy in business, to regain its brand value in Chinese market.

On the other hand Samsung maintains high ethical standards and commitment in business and lawful activities. Samsung has a compliance management system for system review and eliminating unlawful activities. This system addresses issues on human rights, health and safety at workplace and environment (Torelli, Monga & Kaikati, 2012). Samsung has a helpdesk within Compliance management system, where an employee can ask anything regarding work and relevant laws and regulation. As employees can directly let the management know about their issues, Samsung Company can immediately take decision on how to address those issues.

The case study of Samsung has been taken for Australia and that of Apple Inc is China. South Korea is the country origin of Samsung and America is the country origin of Apple. While operating in different countries, both the companies have to face challenges regarding business culture, social norms, business laws and regulations. Any difference in the culture of home and foreign countries creates problem in business operation as highlighted in this case study.  There are differences in cultural and social norms. As stated by Sullivan &  Goh (2016), number of middle income group population are more in China compared to rich and poor income group. Diversity in the income group is seen in China rather than Australia. Social mobility of resources is high in Australia. Moreover, social norms are rigid in China than Australia. Social mobility is restricted in China, which are reflected in the business organisations. It can be inferred that doing business in Australia is easier in comparison to China.

Social accounting approach of both companies

As discussed by Epstein & Buhovac (2014), a foreign firm has to face challenges in China in the form of administrative and bureaucracy, communication gap, human resource management and business culture. Language becomes a barrier for effective communication in business organisation in China. It is a probable cause of human resource management problem faced by Apple Inc in this country. China is a prospective market for business. Wage rate has been increased by China government to make the labour market competitive. Therefore, low wage provision in the manufacturing unit and longer working hour violate the labour laws and regulations.

Internal communication culture is relatively clear in the Australian business environment. Therefore, managers of Samsung can communicate effectively with their employees to resolve any conflicts in the company. Samsung has been able to align its business model in Australia same as it apply in South Korea. Moreover, business model followed by Apple in China is not compatible with the business environment of the country. Business culture and the way of business communication in China and America are different. This is the reason that Apple Inc faces challenges in China. Samsung has not faced human resource problem in Australia as the business culture has suited with the socio-cultural environment of that country.

The social accounting approach by Zadek talks about the fact that a corporate organization needs keep a check on the social issue of the society that they are working (Zadek, Evans & Pruzan, 2013). According to Zadek et al. (1997), an organisation needs to consider eight social accounting principles such as inclusivity, comparability, completeness, evolution, management policies and systems, disclosure, external verification and continuous improvement. A third party organisation has been engaged to monitor children’s progress.

Approach of Apple

Corporate governance policy of Apple is aggressive. The manufacturing companies associated with Apple engage workers for more than standard hour of works with less payment. Therefore, labour policy of Apple has been criticised for several times. Hence, Apple Inc. has mentioned in the CSR report that the company has taken steps to bring fair employment and safe working conditions in the supply chain. The labour and human right section of the CSR report highlights that the company takes important steps to stop child labour in the organisation (Cornelissen, 2014). This organisation compels the manufacturer and suppliers to return the children at home and to pay for their education. The third party organisation physically evaluates health and safety conditions inside and outside of the organisation. The third party auditor reviews the corrective action plan after every 120 days (apple.com, 2016).

Approach of Apple

Inclusiveness is reported in both the companies as corporate social responsibilities. Samsung has reported that integrity management, talent development, workplace environment are core value of their business. The society section of the CSR report includes a comprehensive business environment, which links suppliers, distribution network and customers (samsung.com, 2015). Samsung management reviews the long term cooperative relationship with stakeholders. This company evaluates the opinion of stakeholders through stakeholders’ forum, survey and onsite visit (Torelli, Monga & Kaikati, 2012). The company uses different communication channels for different stakeholders. Communication channel for the suppliers are supplier dialogue fair and informal meeting with them. Communication channel with media is Media day.

Samsung gives value to their employees and their problems. There is a counselling centre in the company, which addresses various issues in the organisation and takes opinion regarding improvement of the situation. Organisation’s plan, vision and strategies are communicated with the employees through Samsung Live and news letter. Online discussion forum is a platform provided by the organisation, which gives opportunity to the employees to communicate directly with the higher authority (samsung.com, 2015). Direct communication helps to resolve critical issues with less complication. This kind of communication improves the relationship between employees and the executives (Epstein, M. J., & Buhovac, 2014). Fleming (2012) depicted that commitment of the employees towards organisation becomes stronger, which positively acts for the growth of the organisation. Relationship among the co-workers improves also through this method.

The outcome of the discussion forum comes out in the following way in Samsung Company. Firstly, collective intelligence officers recruited by Samsung review the issues and opinion suggested by employees of each business division (Freundlieb, M., & Teuteberg, 2013). The team makes a design of strategies to implement the suggestions given by employees in compliance with the business objectives. Employee survey report of 2014-15 shows that this company has adopted 31.6% of employee ideas in business strategy (samsung.com, 2015). Samsung emphasises to fulfil SMART targets for continuous improvement of organisation behaviour, employee benefits and for improvement of workplace environment. Its compliance program includes compliance management system and prevention of unlawful activities within or outside the organisation. In order to manage safety of workplace and product environment, the company has taken green management integration system (Maon et al., 2012).

It can be said from the above analysis that problem solving approach and social accounting approach is better in Samsung compared to Apple. Engagement with social aspects and stakeholders is more acceptable than that of Apple Inc.

Approach of Samsung

Social report of Samsung reflects that the company is passionate to create a sustainable and better future. Protection of environment and enabling social development are principle policies of CSR of this company. The vision of the company is to extend business beyond profit generation and maximisation of stakeholder’s value. The CSR report has three sections such as people, society and environment (samsung.com, 2015). Talent development is core value of the organisation. Continuous change in management process is considered for the survival of the business. Samsung follows some basic principles that are reflected in the CSR report, which are obeying laws and ethical standard of the operating country, respecting customers, shareholders and employees. Balance of eco system is basic criteria for sustainability of business in the competitive industry.

The social report of Apple Inc is publishes as supplier report. The 2016 report depicts that the company takes initiatives to address the challenges faced in China in terms of bonded labour, employment of under aged labour and extending labour hour with less payment. The supplier report published by Apple reflects four sections such as accountability, labour and human rights, empowering workers and environmental safety issues (apple.com, 2016). The last section of the CSR report presents audit report. Empowerment of employees through promoting education, standard of living and protecting human rights are organisational goal of Apple Inc. The company wants to engage with industry partners, governments, NGOs in order to make supply chain stronger for the growth of the organisation.

However, the original activities and controversies do not reflect true stated value written in the CSR report. The supplier responsibilities report states that the company does not support unethical activities, which violates regulations, social norms. The actual scenario is otherwise. Along with use of child labour, this technology firm has been also accused for violation of company rule and patent related issues. Further the CSR report shows that Apple Inc has decided to take plausible actions against the unsocial and unethical activities within organisation and its manufacturing units. After 2014-15, this company has failed mitigate child labour use in production process. As child labour is cheaper than adult labour, exploitation is easier. There is still a gap between the actual performance and stated value in the social report of Apple Inc.

References

apple.com (2016) Supplier Responsibility 2016 Progress Report. Retrieved 28 December 2016, from https://images.apple.com/supplier-responsibility/pdf/Apple_SR_2016_Progress_Report.pdf

Chan, J., Pun, N., & Selden, M. (2013). The politics of global production: Apple, Foxconn and China's new working class. New Technology, Work and Employment, 28(2), 100-115.

Cornelissen, J. (2014). Corporate communication: A guide to theory and practice. Sage.

Duhigg, C., & Barboza, D. (2012). In China, human costs are built into an iPad. New York Times, 25.

Epstein, M. J., & Buhovac, A. R. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers.

Fleming, P. (2012). The end of corporate social responsibility: Crisis and critique. Sage.

Freundlieb, M., & Teuteberg, F. (2013). Corporate social responsibility reporting-a transnational analysis of online corporate social responsibility reports by market–listed companies: contents and their evolution. International Journal of Innovation and Sustainable Development, 7(1), 1-26.

Lee, J. (2014) Labor and Environment Issues Plague Apple for Third Year. Retrieved 28 December 2016, from https://www.triplepundit.com/2014/09/labor-environment-issues-plague-apple-third-year/

Maon, F., Kotler, P., Lindgreen, A., & Vanhamme, J. (Eds.). (2012). A stakeholder approach to corporate social responsibility: Pressures, conflicts, and reconciliation. Gower Publishing, Ltd..

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samsung.com (2015) Sustainability report 2015. Retrieved 28 December 2016, from https://www.samsung.com/us/aboutsamsung/sustainability/sustainabilityreports/download/2015/SAMSUNG_SUSTAINABILITY_REPORT_2015_ENG.pdf

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Torelli, C. J., Monga, A. B., & Kaikati, A. M. (2012). Doing poorly by doing good: Corporate social responsibility and brand concepts. Journal of Consumer Research, 38(5), 948-963.

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Zadek, S., Evans, R., & Pruzan, P. (2013). Building corporate accountability: Emerging practice in social and ethical accounting and auditing. Routledge.