Ethical Issues and Corporate Governance in Apple Inc.

This report analyzes the ethical issue of Apple deliberately slowing down the performance of their old phones and the corporate governance practices followed by the company. It also discusses the impact of ethical practices on internal and external stakeholders.

Business report

EXECUTIVE SUMMARY
Apple Inc. had the law suit that they deliberately slowed down the performance of
their old phone such as iPhone 6, 6s, and 6s Plus so as to switch their existing customers
towards their newly launched phone with the view to earn more profits and to sell their
premium rage phones in the market. The company admitted that they deliberately slowed
down the speed of their phones as their aging lithium batteries were not that much capable to
hold that much power which were put on the devices. Further in order to deal with this
conspiracy the company decreased prices of lithium batteries from £79 to £25 which was
movement through which company tried to push their better image in front of their
customers. This report includes analysis of this issue of slowed down IPhones’ and
movement to solve this issue by Apple along with this corporate governance movement taken
by company is also a major part of following report.

Table of Contents
PART 1.......................................................................................................................................2
INTRODUCTION......................................................................................................................2
MAIN BODY.............................................................................................................................2
Ethical issue of Apple Inc......................................................................................................2
Ethical issue handling by Apple Inc.......................................................................................2
Corporate governance............................................................................................................4
Corporate governance practices followed by Apple Inc........................................................4
PART 2.......................................................................................................................................5
Normative theories.................................................................................................................5
Descriptive theories................................................................................................................6
PART 3.......................................................................................................................................6
Ethical practices affect Apple’s internal stakeholder.............................................................6
Ethical practices affect Apple’s external stakeholder............................................................7
CONCLUSION..........................................................................................................................8
REFERENCES...........................................................................................................................9

PART 1
INTRODUCTION
The report contains an issue based case study which is based on Apple INC. In which
the case study is taken about slowed down of apple phones which states that a scandal took
place in the year 2017 under which the multinational mobile phone company Apple Inc. had a
law suit of slowing down the speed of their operating systems of older phone so as to push
customers towards their new phones. This report includes normative theories, descriptive
theories and the sustainability practices adopted by the company so as to solve the raised
issue and to identify those factors which are having major impact on corporate governance
and CSR of the company.
MAIN BODY
Ethical issue of Apple Inc.
Apple Inc. had the law suit that they deliberately slowed down the performance of
their old phone such as iPhone 6, 6s, and 6s Plus so as to switch their existing customers
towards their newly launched phone with the view to earn more profits and to sell their
premium rage phones in the market. They felt into conspiracy theory by purposely
diminishing the speed of operating system of their devices due to which customer faced
problem in typing messages oh phones and sudden shut down of their devices. According to
the law suit it was an intentional movement by Apple Inc. so as to force their customer to
move towards new launched phone upgrades so as to position their new products into the
market in a profit giving manner.
Ethical issue handling by Apple Inc.
The company admitted that they deliberately slowed down the speed of their phones
as their aging lithium batteries were not that much capable to hold that much power which
were put on the devices. Further in order to deal with this conspiracy the company decreased
prices of lithium batteries from £79 to £25 which was movement through which company
tried to push their better image in front of their customers. Furthermore the company claimed
to regain the trust of their customers which was lost due to emergence of people as wrong
intentions of Apple that was misunderstood by their valuable customers. In order to regain
trust of their customers, Apple heard all the grievances of their customers and made them
satisfied that they are not stooping their working and they are working for ultimate
satisfaction of their customers.
Corporate governance
Corporate governance is the set of rules and regulations of the company and helps the
business to operate and continue its workings. Various practices are adopted in the process of
corporate governance which includes action plan of the business, decisions for executive
compensations, policies for dividend and managing performance of the company ate

marketplace. It can be said that corporate governance is the set of rules and principles through
which business are working in order to safeguard interest of their stakeholders. Corporate
governance acts as the mediator between management and other stakeholders that the
business is running by taking base as interest of their stakeholders and other parties which are
having high impact from the company’s business. Furthermore corporate governance helps
the business to take all sort of strategic decisions so that no harm can be faced by their
employees and other related parties such as customers or suppliers. Corporate governance
assist the business to be transparent so that to provide guidance over business development
and business growth. It has been observed that scope of corporate governance is very broad
and huge as this motivates the business to create ethical environment in the business so that
its impact can be seen over external parties which helps the business to position themselves
as trustworthy and the company with high business performance. Corporate governance helps
the business to lower their capital cost which makes the business more efficient and profit
generating. Further corporate governance helps the business to eliminate its wastages due to
which risk and mismanagement can be detected very easily and avoid any uncertainties
which may arise in business course of actions.
Corporate governance practices followed by Apple Inc.
Apple is having high focus on their corporate governance as they wants to establish
them as an ethical business operating company. Apple is having high focus on their
shareholders and directors. On the other hand Apple highly focused on the approach of giving
rewards for good performance and punishing their employees if any misconduct is seen.
Apple had added two more independent directors to their committees so as to enhance their
level of corporate governance. Further board of director in Apple has enhanced their roles as
before they were responsible to appoint nominating committee but now they have given
responsibility of nominating corporate governance committee to their business so as to add
more value to their company in the marketplace. Furthermore the company has made several
rules to reduce their business stock options as they reduced this from 23% to 16%. They
allowed their employees to buy employee stock option on more cheap prices so as to
motivate them and to boost their engagement in their company. Apple is having sole power
given to their board of directors and they consist of executive and non-executive directors
both. Apple is having specific guidelines so as to follow the procedure to recruit nay directors
in their team of board of directors. The company is having commission of 8 directors in their
company which are given the authority to serve the company for one year each and when
they are reselected the tenure may be increased. The corporate governance committee is
accountable to look after recruitment of directors in the company and exhibit their planning.
This strategy builds high transparency within the business and their stakeholders as the
company is having their real owners as in form of shareholders. Apple is one the best
company which is high on their corporate governance that helps the business to grow with
sustainability and securing interest of their stakeholders so as to establish trust and
relationship between them. On the other hand Apple is having highly prototype structure
within their stores, their software and their hardware. The most effective corporate
governance principle adopted by Apple is that they do not allow their employees to know
everything, they just know what they are required to know so as to maintain secrecy and to

produce surprise product at all time. Here the scandal is having corporate governance
principle as Apple was adhered to their statement as they have not done anything wrong for
their customer they just slowed down their operating system so as to maintain their market
image that they are not using any low quality of batteries in their mobile phones. Further
Apple tried to sell batteries on a very cheap price so as to deal with this situation and use this
scandal as a weapon to reposition themselves as a trustworthy company and a company who
always try to support their customers and provide better value products to them. Furthermore
majorly the company admitted that they have slowed down their operating system this is the
main corporate governance of the company as they did not deny the fact and released their
statement to deal with this law suit and to regain trust of their customer so as to gain business
sustainability.
PART 2
Normative theories
Normative theories include those efforts made by the businesses so as to explain
moral and ethical aspect of the business. This involves introduction of those rules which may
have direct impact over humans by the business. The major focus of these theories are to
justify morals and ethics of the business as they are applied in the business so as to add more
value to the business and to provide benefits to their stakeholders and other related parties.
Normative ethics are the branch of philosophical ethics which is the study of action within
ethics. This is different from descriptive ethics so over some business cases this theory is
called as prescriptive ethics. So it can be said that normative ethics are those plans and
objectives of the business to claim that what a business is doing and what they are supposed
to do. Apple can utilise this theory so as to take decisions about their accuracy and value
perfection.
Ethical egoism: Under this theory moral agents are bound to work for their own
interests. This involves self-interest of individual that the person starts any kind of activity
when they are having their own interest over there. Under the context of Apple, the company
tried to think about their own image when law suit was filed against them. And to deal with
this situation they took numerous corrective measures.
Utilitarianism: This involves those actions taken by the business organisation which
may have high impact on happiness of huge population. With the help of these ethical
measures the company may make their stakeholders happy and enlarge their trust so as to
provide them long term assistance and to get high sustainability over the business. For this
Apple may take those actions which may have high implications of the brand image of the
company that may help them in solving this law suit without having any dispute with their
customers and government.
Virtue ethics: This involves those actions which are taken so as have proper virtue
practices in the business so as to deal with those situations which may have high impact over
the business performance so as to tackle the business with high ethical standards. With this

context Apple may high implications on their employees who are working for the giving the
company high value in the marketplace. In Apple there are strict rules for employees who are
doing misconduct in the business so as to provide additional support in the business and a
fear of getting punished for any misbehaviour.
Descriptive theories
This is also known as comparative ethics which is the examination of morality and
individual beliefs. This theory involves describing behaviour of individual as in respect of
moral behaviour and their psychology so as to make them understand about business ethics
and morality so as to assist them in enhancing their beliefs and moral over the business. This
theory is used to understand those facts which are helpful in decision making so that to make
them happy and satisfied. This theory is called as positive theory as this helps the individual
to observe their own behaviour and to guide the business to get good results.
Individual factor: This refers to those contributions which are given to the systems
of the business and that is related to those information which are having linkage with
characteristics, expanding knowledge so that to guide business for earning high profits and
long term sustainability. For this Apple is highly focused on enhancing their values which are
helpful for the business to deal with complex situations and to tackle those with their ethics
and rules. Further they may have support system which helps their employees to guide at any
point of time so as to provide assistance over their working and to have efficient result within
their operations.
Situational factors: These are the external factors which are having high impact over
environment rather than individual in the business. These are those factors which are having
impact on the outer environment so that to channelize ethical practices in the business for
better flourishing of the business. This is having several functions like work and school,
people around the workplace. In the context of Apple the company is having high impact
over this factor as people around the business are affecting from the business operations are
having high power to control the business working. For this Apple has established various
ethical channels so as to deal with complex situation in a desired format.
PART 3
Ethical practices affect Apple’s internal stakeholder
Internal stakeholders Ethical practices Unethical practices
Employees For employees Apple has
some policies which can give
high benefits to their
employees as employees are
the drivers of the business.
For this they can enforce
legal laws such as equality
act and safety act so as to
boost their performance and
to stay within ethical line.
Apple is having high
working hour in their
business during launch of a
new product this has
obtained negative image in
the minds of their employees.
Apple forced their employees
to work more than 90 hours a
week in addition they are
having an employee whose

age is less than 15 years for
that they have hide material
facts.
Directors Apple is having high priority
over their directors for that
they have separate legislative
laws which are followed by
the company at the time of
their recruitment.
The directors of Apple hide
the fact about illness of Steve
jobs which is having negative
impact on the goodwill of the
company and their ethics.
Shareholders Apple is continuously trying
to promote the value of their
shareholders and for that they
are distributing high amount
of dividend every year.
The company has taken
thousands if stock option
back in their hold. This is
impacting the business in
negative manner as the
employees in form of
shareholders are losing trust
from the company.
Ethical practices affect Apple’s external stakeholder
External stakeholders Ethical behaviour Unethical behaviour
Customer Apple is working on
improvement of their product
for that they have reduced
prices of their batteries so as
to promote their business and
to adopt ethical practices in
the business. The major
ethics of Apple is to render
high quality product and
services to their customer so
as to enhance their integrity
and business interactions.
The company is having
insufficient data security
which is the major aspect at
which Apple is having
unethical behaviour. On the
other hand company is
having a law suit that they
have deliberately slowed
down their operating system
speed so as to forcefully push
their customer towards their
latest upgraded product.
Government The company is continuously
working to pay high taxes to
the government and to
comply all rules and
regulation which are made by
government.
The company is having high
law suits about not
complying labour laws and
data security act which is
breaching their ethical
conduct.
Society Apple has having so many
CSR practices so as to
provide high benefits to their
society and add more value
to the company.
Apple has employed a child
who is below the age of
15yeras by which company
has done unethical behaviour
to the society.
CONCLUSION
From the above report a clear understanding is made so as to understand the scandal
of Apple which was based on slowed down speed of operating system of their older version

of phones so as to promote selling of their new phones. Further the report includes
understanding of corporate governance so as to make the business aware about their rules and
regulations and to make all the business activities adhered to that. In the last part ethical and
unethical behaviour of Apple is explained in the context of external and internal stakeholders
so as to establish conclusion about their performance in the marketplace.

REFERENCES
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