International Business Environment

ABERDEEN BUSINESS SCHOOL BSM029: International Business Environment Individual Coursework SUBMITTED BY: Syed Muhammad Asim (1214852) Module Co-Coordinator: Dr. David Jones Msc International Business 6 January 2014 Word Count: 4000

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International Business Environment

Executive Summary
In this report focus is on the issue of managing supply chain effectively in order to eliminate and restrict the Corporate Social Responsibility statement breach due to supplier being in different country with different cultural values, the company chosen which has been already exposed to this issue is Apple Inc whose supplier in China Pegatran group has violated workers right by abusing workers, making them work long hours and providing inappropriate working conditions, whereas Apple Inc has a CSR statement which promises to provide safe and secure working conditions throughout its supply chain, implications of a breach of CSR is severe resulting in negative publicity of Apple Inc brand. Industry which has been looked upon in this report is electronics, whereas sector is manufacturing. Furthermore the strategic tools, frameworks and models used in this report are, SWOT analysis focused on Strength and Weaknesses only, PEST analysis, McKinsey 7S Framework, Hofstede national cultural difference theory and finally VRIN Framework. The report was finalized with the usage of secondary resources such as, articles, book, journals and websites. Lastly Samsung supply chain management benchmarking was given as one of the recommendation for Apple Inc in order to overcome the issue of managing supply chain effectively.

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Contents Executive Summary ....................................................................................... 2 1.0 Introduction ............................................................................................. 5 2.0 Corporate Social Responsibility, Culture and Supply Chain ............................. 6 2.1 CSR ..................................................................................................... 6 2.2 Culture ................................................................................................. 7 2.3 Supply Chain ......................................................................................... 7 2.4 The Issue and its Relevancy .................................................................... 7 3.0 Apple Inc and the CSR issue ...................................................................... 9 3.1 Labor and Human right issues at Apple inc supplier in China ....................... 9 3.2 CSR and Supply Chain Auditing at Apple Inc ........................................... 10 3.3 The Current Issue with Apple inc ........................................................... 10 4.0 External Environment of Manufacturing sector............................................ 11 4.1 Supply Chain Model of Apple Inc ............................................................ 11 4.2 Political/Legal policies........................................................................... 14 4.3 Economic Environment ......................................................................... 14 4.4 Technological Environment ................................................................... 15 5.0 Internal Environment of Apple Inc ............................................................ 16 5.1 McKinsey 7S Framework ....................................................................... 16 5.2 Hofstede National Culture differences Theory .......................................... 17 5.3 Strengths and Weaknesses of Apple Inc ................................................. 18 5.4 VRIN Framework for Apple Inc .............................................................. 19 5.5 Initiatives ........................................................................................... 21 6.0 Recommendation and Conclusion ............................................................. 22 7.0 References ............................................................................................ 24

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List of table and Figures

Table 1: Showing the obligations of CSR..........................................Page:7 Table 2: Showing the PEST analysis of manufacturing sector in China and United States.........................................................................................Page:14 Table 3: Showing the 3 dimensions.................................................Page:18 Table 4: Showing the Strengths and Weaknesses of Apple Inc............Page:19 Table 5: Showing further initiatives which Apple Inc has taken...........Page:22 Table 6: Summarizing the whole issue and recommendations............Page:24 Figure 1: Showing the Supple chain model of Apple Inc......................Page:12 Figure 2: Showing the 7S framework...............................................Page:17 Figure 3: Showing the VRIN Framework...........................................Page:21

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International Business Environment 1.0 Introduction

Apple Inc. (Apple) designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and thirdparty digital content and applications (Forbes, 2013). The electronics industry scope cannot be restricted to mass-market products that are produced in millions and even billions of pieces a year (mobile phones, TVs, PCs, etc.). Mass-market products only represented 53% of the electronics industry in 2008. The electronics scope also encompasses embedded electronics in transport (cars, planes, trains, etc.), in defense equipment, in IT infrastructures as well as electronics used in manufacturing process or professional services in order to boost productivity (Decision, 2009). The key factors governing the growth of electrical and electronics industry are as follows: Rising and continuous investments in research and development has led to increased productivity and higher-value added electrical and electronics products. Increased foreign investments have resulted in the accelerated growth in terms of electronics production and exports. Foreign companies are now making huge investments and are installing extensive production capacities in developing countries. Extends support to several global industries namely medical, telecommunications, industrial and automotive sectors. Rising incomes and living standards have resulted in the increase in demand of electronics especially consumer electronics products in the world. (Digitivity, 2013)

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International Business Environment 2.0 Corporate Social Responsibility, Culture and Supply Chain
2.1 CSR
According to Brusseau (2013), the title corporate social responsibility has two meanings. First, its a general name for any theory of the corporation that emphasizes both the responsibility to make money and the responsibility to interact ethically with the surrounding community. Second, corporate social responsibility is also a specific conception of that responsibility to profit while playing a role in broader questions of community welfare. As a specific theory of the way corporations interact with the surrounding community and larger world, corporate social responsibility (CSR) is composed of four obligations: Table 1: Showing the obligations of CSR The Ethical responsibility to do whats right even when not required by the letter or spirit of the law. This is the theorys keystone obligation, and it depends on a coherent corporate culture that views the business itself as a citizen in society, with the kind of obligations that citizenship normally entails. (Brusseau, 2013) The Philanthropic responsibility to contribute to societys projects even when theyre independent of the particular business. A lawyer driving home from work may spot the local children gathered around a makeshift lemonade stand and sense an obligation to buy a drink to contribute to the neighborhood project. (Brusseau, 2013)

The Economic responsibility to make money. Required by simple economics, this obligation is the business version of the human survival instinct. Companies that dont make profits arein a modern market economydoomed to perish. (Brusseau, 2013) The Legal responsibility to adhere to rules and regulations. Like the previous, this responsibility is not controversial. What proponents of CSR argue, however, is that this obligation must be understood as a proactive duty. That is, laws arent boundaries that enterprises skirt and cross over if the penalty is low; instead, responsible organizations accept the rules as a social good and make good faith efforts to obey not just the letter but also the spirit of the limits. (Brusseau, 2013) Generated by Student

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2.2 Culture
Culture is a fuzzy set of basic assumptions and values, orientations to life, beliefs, policies, procedures and behavioral conventions that are shared by a group of people, and that influence (but do not determine) each members behavior and his/her interpretations of the meaning of other peoples behavior. (Oatey, 2012) The research of Geert Hofstede (2013), has shown that cultural differences between nations are especially found on the deepest level; i.e. on the level of values. In comparison, cultural differences among organizations are especially identified on the level of practices. Practices are more tangible than values.

2.3 Supply Chain

According to Meindl et al (2004), A supply chain consists of all parties involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customers themselves. Within each organization, such as manufacturer, the supply chain includes all functions involved in receiving and filling a customer request. These functions include, but are not limited to, new product development, marketing, operations, distribution, finance, and customer service. According to Lambert et al (2001) Supply chain management is increasingly being recognized as the integration of key business processes across the supply chain. For example, Streamlining cross-company processes is the next great frontier for reducing costs, enhancing quality, and speeding operations. It is where this decades productivity wars will be fought. The victors will be those companies that are able to take a new approach to business, working closely with partners to design and manage processes that extend across traditional corporate boundaries. They will be the ones that make the leap from efficiency to super efficiency.

2.4 The Issue and its Relevancy

The main issue here is the effective management of supply chain when following CSR principles, especially when supplier is in another country which has different The Robert Gordon University Page 7

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culture. Not being able to live up on any principle of CSR as stated in table 1, should effect the image of the company adversely. According to Yoon et al (2006), CSR activities improve a company's image when consumers attribute sincere motives, are ineffective when sincerity of motives is ambiguous, and hurt the company's image when motives are perceived as insincere or even if there is an breach of CSR statement presented by company. Culture plays a significant role in such failures of CSR statement if it involves a breach of CSR down the supply chain and if company has branch in more than one country following a CSR based in one region where cultural preferences are different in other region, for example, company originating from America believes in following ethical values in the work place but has a supplier which is from China who does not have same cultural preference and those ethical values practiced in America might not be seen in China and lead to failure of CSR. Since there are a lot of companies all around the world which have adopted the practice of CSR yet they fail to follow all of its principle as stated in table 1, especially, doing something unethical. Such short comings on promises of following CSR brings in bad reputation for the company, reduction in share prices (Kolbel, 2005), reduction in share holder value (Robinson et al, 2008). According to Bilson (2010), "An obvious example of bad publicity from bad corporate social responsibility at play and the effect that bad social responsibility has on a company, is Enron, the Texan energy company that not only brought itself down but also one of the largest accounting firms at that time, Arthur Andersen. Enron was a darling of corporate philanthropy and gave millions in charity donations to charity organizations and won several awards for its corporate social responsibility work, including a climate protection award from the EPA and a corporate conscience award from the Council on Economic Priorities". As it can be learnt that the issue of not living up to CSR statement launched by the company brings about disastrous outcomes.

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International Business Environment 3.0 Apple Inc and the CSR issue
As discussed in the earlier part of this report, that not living up to the CSR statement can bring bad reputation to the company, an organization which has been recently exposed to this issue is Apple inc, their suppliers in China have breached the Apple inc CSR statement and now Apple inc is taking various initiatives to deal with this, initiatives taken by Apple inc will be discussed in detail in the later part of this report.

3.1 Labor and Human right issues at Apple inc supplier in China
Since Apple inc deals in manufacturing sector, it has suppliers in China which manufacture products on Apple inc behalf. According to Torres et al (2012), A well-known conflict involving Apples suppliers is the suicides at Foxconn. It is the largest contracted electronics manufacturer in the world, with dealings involving Dell and Sony. Foxconn is the manufacturer of iPhones and iPads and employs over 900,000 workers, of whom 420,000 employees work at the Foxconn Shenzhen plant. This plant covers 15 factories, including dormitories, a hospital, a bank, a grocery store and restaurants. The workers live and work inside the complex. In 2006 the Chinese local press reported on the excessively long working hours and the discrimination of mainland Chinese workers by Taiwanese superiors. In May 2010 several media sources reported several cases of suicide at Foxconn. From 2009 to 2010 a total of 13 workers had committed suicide. The first worker, Sun Danyong, committed suicide after he had been interrogated on the loss of an iPhone 4 prototype that he had in his possession. When the former CEO Steve Jobs was asked about the suicides at Foxconn, he responded: Foxconn is not a sweatshop. (Torres et al, 2012) During an undercover investigation it was discovered that the reason for the multiple suicides was related to internal management. The facilities of Foxconn are fine, but the management is poor, (Torres et al, 2012).

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3.2 CSR and Supply Chain Auditing at Apple Inc
According to Torres et al (2012), Apple makes sure that suppliers comply with the Supplier Code by conducting audits. The audits cover working and living conditions, health and safety but also environmental practices at the facilities. According to Apples Supplier Responsibility Report 2010, Apple conducted 102 audits in 2009. In 2011 Apple conducted 229 audits, an increase of 80% compared to 2010. An audit is conducted by an Apple auditor and supported by local thirdparty auditors. In the Supplier Responsibility Report 2010, published in February 2011, Apple included a paragraph responding to the suicides at Foxconn. In the Supplier Responsibility Report 2011, Apple reports that during inspections Apple discovered ten facilities with underage labor violations. One of the facilities had a large number of underage workers. Because the management did not want to address the problem, Apple terminated businesses with this facility.

3.3 The Current Issue with Apple inc

The importance of CSR is growing rapidly (Allirajah, 2013), many organizations have adopted the practice of CSR yet not all have been successful at it. As it can be noticed in table 1, the four obligations a company should follow, but the issue arises when companies like Apple inc produce a CSR statement as such " Workers everywhere should have the right to safe and ethical working conditions. They should also have access to educational opportunities to improve their lives. Through a continual cycle of inspections, improvement plans, and verification, we work with our suppliers to make sure they comply with our Code of Conduct and live up to these ideals" (Apple inc, 2013). This statement of Apple inc was proved wrong when in China, Technology giant Apple is facing fresh allegations of worker rights violations at Chinese factories of one of its suppliers, the Pegatron Group. (BBC News, 2013) The main issue behind such short fall of CSR statement by Apple inc could be related to the cultural differences between China and America, as Apple inc is a company originating from United states and with implementing ethical practices The Robert Gordon University Page 10

International Business Environment

which are norm in United States, such practices in China however are not a norm and worker abuse is very relevant there, as there have been numerous cases of such worker abuse in China. Cultural difference between where organizations operate is a highly important issue which needs to addressed as it has direct impact on the welfare of the organizations in the world of work today and reflect how ineffective management of supply chain can literally effect the image and well being of the company.

4.0 External Environment of Manufacturing sector

4.1 Supply Chain Model of Apple Inc
Figure 1: Showing the Supple chain model of Apple Inc

Source: Supply Chain OPZ (2013) Figure 1, clearly shows how Apple Inc operates it supply chain, manufacturing is done in China, whereas distribution is done from America mostly. The Robert Gordon University Page 11

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Such supply chain model has only been possible due to external influences. As Apple inc is sourcing its business from United States and manufacturing it in China the reasoning behind it can be found by analyzing the external environment of manufacturing sector in United States and China. According to Downey (2007), PEST analysis is a scan of the external macroenvironment in which an organization exists. It is a useful tool for understanding the political, economic, socio-cultural and technological environment that an organization operates in. It can be used for evaluating market growth or decline, and as such the position, potential and direction for a business. In this particular case the most relevant element of PEST analysis would be, Political, Economic and Technological.

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Table 2: Showing the PEST analysis of manufacturing sector in China and United States PEST Political/Legal China Reduction in corporate tax policies of China. (WEF, 2013) No minimum wage legislation. (Wage indicator, 2013) Policy of opening up the China manufacturing sector to the whole world. (WEF, 2013) The countrys 12th FiveYear Plan, will further enhance manufacturing sector performance in China. (Deloitte, 2013) Exchange rate of China is stable and value of currency is increasing. (Index mundi, 2013) Inflation rate in China decreased in 2012 as compared to 2011. (Index mundi, 2013) More exports than imports, favorable trade balance. Growing manufacturing industry. (WEF, 2013) Good infrastructure, availability of telecommunication, internet and transportation. (Index mundi, 2013) United States The manufacturing industry in the US has been affected by the new regulations that have been passed by a number of government agencies over the last thirty years. Approximately 2,183 unique regulations had been passed that affect the growth of the manufacturing sector. (Murray, 2013) Minimum wage legislation. Inflation rate at 2.1% in 2012, lower than that of 3.1% in 2011. (Index mundi, 2013). Exchange rate has devalued since 2011. still stable. (Index mundi, 2013) More imports than exports. Growth in manufacturing industry. (Murray, 2013) Very good infrastructure, Availability of highly advanced technology, internet and various advanced methods of transportation. (Index mundi, 2013)

Economic

Technological

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International Business Environment

As it can be noticed under table 2, that various external forces influences the well being of manufacturing industry in China and United States. It is indeed these forces which have allowed Apple Inc to have a supply chain which consist of various countries and have a supplier which manufactures in China, however it is the responsibility of Apple Inc to maintain the effectiveness and standards of workplace its supplier engages in.

4.2 Political/Legal policies

Due to different external environment in China and United States, such as political and legal policies, in China there is no minimum wage legislation and worker abuse is a common norm (Wage indicator, 2013). Hence it would make perfect sense of Apple Inc to avoid paying high wages in United States and have manufacturing being done in China where wage levels are very low as compared to United States. The Government of China has moved from close economy to open economy in 1970 (Index mundi, 2013), whereby inviting foreign firms to do business in China, again makes perfect sense for Apple Inc to take benefit from such favorable policies. The Issue however arises, when Apple Inc cannot control the actions of its suppliers in China, due to the ability of misusing workers right in China is a common practice and various Chinese manufacturers do it (BBC News, 2013) as Government does not intervene and is not as effective in taking action compared to the Government of United States, the political and legal environment of China could be related to the birth of this issue.

4.3 Economic Environment

As it can be seen in table 2, most of the indicators show that the economy of China is doing very well, yet a problem is with unemployment rate in China which is 6.5% as of 2012 (Index mundi, 2013) with the vast population China has this amounts to a significant number. Hence it can be assumed that even if a worker is unhappy with his workplace environment in China, he would still want to work to support his family and meet daily needs, and this gives another reason to manufacturing firms in China to abuse The Robert Gordon University Page 14

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worker, make them work over 70 hours per week in order to get work done as was the case with pegatron group the Apple Inc China supplier (BBC News, 2013). Apple Inc has concrete reasons to have a supplier from China as inflation rate in China has a decreasing trend since 2008 (Index mundi, 2013) showing there won't be any inflation problem which Apple Inc would be bothered with. Exchange rate of United States has been stable but loosing value against Chinese currency RMB over last 5 years (Index mundi, 2013) this would only mean each year Apple Inc has to pay more for importing electric goods from China. Yet it is still profitable as cost of production to make Apple Inc products in United States would be higher as compared to China.

4.4 Technological Environment

Technological environment of China is great as it can be seen in table 2, the change in how world operates now, availability of transportation services through ships has made it possible for a company such as Apple Inc to do business with a company pegatron group in China and have products delivered in time. It can be said that, the most important external force which has contributed the most in the issue of worker right violation in China is indeed the government rules and regulations as they are not as strict as of the government in United States it allows domestic manufacturers to make use of it and exploit any loop hole in policies. PEST analysis is a perfect tool to analyze this particular issue and why does it exist and how did Apple Inc manage to be part of it, as external forces allowed Apple Inc to do business with Chinese suppliers and Chinese suppliers were able to exploit workers as policies of government of China were not as robust and rigid. one thing links to another and PEST provides the overview of every external environment element, although in this particular case the most relevant would be political and legal framework.

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International Business Environment 5.0 Internal Environment of Apple Inc

In this section cultural perspective would be used in order to understand the issue from Apple Inc perspective.

5.1 McKinsey 7S Framework

According to Wilkinson (2008), in the 7S-model the so-called hard and soft elements are incorporated, in which hard elements aim at matters an organization can influence directly. The soft elements are present in an organization in a more abstract way and can be found in the organizational culture. The hard elements in the 7S-model are Strategy, Structure and Systems, the soft elements are Style, Shared Values, Skills and Staff. Figure 2: Showing the 7S framework

Source: Vliet (2012)

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As it can be seen in figure 2, that the most important part of 7S framework is the soft element share values, which is usually found in organization culture. Apple Inc in their CSR statement has clearly tried to incorporate the shared values in their supply chain (Apple, 2013), but unfortunately they failed, as to begin with the culture between United States and China is totally different and having to incorporate shared values on such level is even more challenging.

5.2 Hofstede National Culture differences Theory

According to Hofstede & Waisfisz (2013), there are six dimensions which provide why there is difference between organizations in different national boundaries. Table 3: Showing the 3 dimensions Mean vs. Goal oriented In a very means oriented culture people perceive themselves as avoiding risks and making only a limited effort in their jobs, while each workday is pretty much the same. In a very goal oriented culture, the employees are primarily out to achieve specific internal goals or results, even if these involve substantial risks. (Hofstede & Waisfisz, 2013) Internally driven vs. Externally driven In a very internally driven culture employees perceive their task towards the outside world as totally given, based on the idea that business ethics and honesty matters most and that they know best what is good for the customer and the world at large. In a very externally driven culture the only emphasis is on meeting the customers requirements; results are most important and a pragmatic rather than an ethical attitude prevails. Hofstede & Waisfisz, 2013)

Employee oriented vs. work oriented In very employee oriented organizations members of staff feel that personal problems are taken into account and that the organization takes responsibility for the welfare of its employees, even if this is at the expense of the work. In very work oriented organizations there is heavy pressure to perform the task even if this is at the expense of employees. Hofstede & Waisfisz, 2013) Generated by Student As it can be deduced from table 3, only the most relevant dimensions have been selected for this report, the issue is doing business in more than one country,

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different country having different culture, this leads to complications in the practices of work. An example of the countries United states and China, both have different culture, and then dimensions principle has to be matched with countries as stated in Table 3, mean oriented country in this case should be United States whereas China would fall under Goal oriented, most of the organizations in United states believe to be internally driven whereas in China they are externally driven, and finally the most important is being employee oriented as compared to work oriented, China is known for getting the work done at any cost, whereby they would even abuse worker for it, whereas in United states such practice would result in organization being sued as organizations there are employee oriented. (Brodt & Seybolt, 1996) Hence such national culture differences is what can explain the failure of Apple Inc in sharing the same cultural values throughout the supply chain and the breach of its CSR statement.

5.3 Strengths and Weaknesses of Apple Inc

Table 4: Showing the Strengths and Weaknesses of Apple Inc Strength Customer loyalty combined with expanding closed ecosystem. Apple is a leading innovator in mobile device technology. 2012, Strong financial performance ($10,000,000,000 cash, gross profit margin 43.9% and no debt) Brand reputation. Strong marketing and advertising teams Weakness High price Incompatibility with different OS Decreasing market share Patent infringements Further changes in management Defects of new products Long-term gross margin decline

Source: Jurevicius (2013) As it can be seen in table 4, there are various strengths and weaknesses which Apple Inc has, most important strength which Apple Inc has is the customer loyalty The Robert Gordon University Page 18

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which brings in repeat purchases and free positive word of mouth, also Apple has a good track record of being the innovators in the electronic industry specially in mobile device technology, along with solid financial background and finally having a very competent advertising and marketing team, all this amounts for the success which Apple Inc has achieved till date. However their weaknesses are pertinent as well, Apple Inc products are usually higher in price as compared to different companies in the same industry, recently Apple Inc has been experiencing a decline in its market share which could be relate to recent death of Steve Jobs and defects in new products. Strengths which Apple Inc has could be used to better tackle the issue of managing supply chain in order to deliver the fulfillment of CSR statement. to be discussed later on in this report.

5.4 VRIN Framework for Apple Inc

According to Resource-based view of strategic management, competitive advantage is closely related to company's internal characteristics (Spanos and Lioukas, 2001). More specifically, if a company possesses and exploits valuable, rare, inimitable and non-substitutable resources and capabilities it will achieve sustainable competitive advantage and above average performance (Barney, 1991). Apple Inc might not be having all the required features of VRIN framework as being in electronic industry it is hard to not have a substitute of mobile phone, Ipads and laptops it is easier to even imitate products as such is the nature of the industry in which Apple Inc operates. However Apple Inc does have value and rareness required to achieve sustainable advantage over competitors.

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Figure 3: Showing the VRIN Framework

Source: Marcsimony (2012) Apple Inc has valuable resources as it is able to provide end consumers with higher value for money product, which does not only serve the purpose of fulfilling need but also wants are entertained. Rare in this sense of the brand reputation which Apple Inc has, not any brand has such loyal customers and are innovators in the mobile device technology like Apple Inc and so it can be said they have rare resources as well, they only have issues as their products can be imitate and are substitutable. Figure 3, clearly shows if a company has valuable and rare resources they have temporary competitive advantage and temporary above normal performance, Apple Inc must use it to tackle the issue they are facing which might hurt their brand reputation.

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5.5 Initiatives
In this section of report focus will be on the initiatives which Apple Inc has already taken in order to deal with the mentioned issues. Apple Inc has said "We dont allow suppliers to act unethically or in ways that threaten the rights of workers even when local laws and customs permit such practices. Were working to end excessive work hours, prohibit unethical hiring policies, and prevent the hiring of underage workers" (Apple Inc, 2013). Apple Inc also believes in ending excessive work hours In 2012, Apple began tracking supplier work hours on a weekly basis, growing our program from 500,000 workers to over one million. Our procurement teams interact with our suppliers on a daily basis and use this information to match labor to demand. To help reduce working hours throughout our industry, Apple is coleading the Electronic Industry Citizenship Coalition (EICC) working group to share our programs and practices with other organizations (Apple Inc, 2013). Table 5: Showing further initiatives which Apple Inc has taken Addressing underage labor Our approach to underage labor is clear: We dont tolerate it, and were working to eradicate it from our industry. When we discover suppliers with underage workers or find out about historical cases where workers had either left or reached legal working age by the time of the audit we demand immediate corrective action as part of our Underage Labor Remediation Program. Providing tools to enable responsible hiring. Last year marked the third year of our Prevention of Underage Labor training program, an initiative to help suppliers identify and prevent underage labor. We conducted training for 84 suppliers that were chosen because their facilities are located in provinces at high risk for underage labor. Source: Apple Inc (2013)

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From table 5, and above mentioned initiatives it can be said that Apple Inc is trying hard to stabilize its image in the outer world and trying best to deliver the CSR statement by effective management of its supply chain, However they still keep repeating the same mistake of hiring a supplier who does not totally follow the cultural perspective of Apple Inc and this issue needs to be dealt with much more severe actions.

6.0 Recommendation and Conclusion

Apple Inc should benchmark supply chain practices, one the best companies in electronic industry which is known for its effective supply chain management is Samsung. Apple Inc should implement six sigma for managing supply chain, as Samsungs effort and investment has turned out to be fruitful. Their SCM six sigma program has produced highly qualified and talented SCM specialists, who are currently training the methodology to other members in their organizations and leading SCM projects (Emerald Management First, 2013). This should allow Apple Inc to overcome the short comings it is facing in effective management of its supply chain which is leading to the breach in CSR statement, redesigning supply chain could also mean picking up suppliers from different region, which could also translate to even quicker delivery of products and have same cultural values as Apple Inc. Samsung also has setup cross functional Team: In order to bring internal departments closer, they use the system called Voice of Business. What they do is to gather internal requirements and establish action plans based on collective decision (Supply Chain OPZ, 2013). This should also allow Apple Inc to have less problem in translating their cultural values down the supply chain and a shared vision and values could be possible.

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Table 6: Summarizing the whole issue and recommendations Issue Effective management of supply chain in order to restrict and eliminate CSR breach.

McKinsey 7s Framework Shared values

Recommendations

Six Sigma Methodology

Cross functional team

Improve communication with supplier

Strengths Loyal Customer's Financially strong

Strong marketing and advertising teams

Generated by Student Finally, it can be said that, the issue of CSR breach can be solved only if Apple Inc can implement six sigma methodology and setup cross functional team in order to achieve shared values throughout supply chain along with the initiatives they have already taken.

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International Business Environment 7.0 References

Apple Inc. 2013. Supply Responsibility at Apple [Online]. Available from: <https://www.apple.com/supplierresponsibility/> 23 December 2013 Barney, J. B. 1991, Firm resources and sustainable competitive advantage, Journal of Management, 17, pp. 99-120 Cedillo Torres. 2013. Four Case Studies on Corporate Social Responsibility: Do Conflicts Affect a Company's Corporate Social Responsibility Policy? [Online]. Available from: <http://www.utrechtlawreview.org/index.php/ulr/article/view/URN%3ANBN%3ANL %3AUI%3A10-1-112903/203> 23 December 2013 CIMA. 2007. Strategic Analysis Tools [Online]. Available from: <http://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_strategic_an alysis_tools_nov07.pdf.pdf> 18 December 2013 Chopra, Sunil and Peter Meindl. 2004. Supply Chain Management. 2 ed. Upper Saddle River: Pearson Prentice Hall David Wilkinson. 2008. Organizational Development Strategy [Online]. Available from: <http://www.tamesidehospital.nhs.uk/documents/ODStrategy_Nov08_final.pdf> 27 December 2013 Decision. 2009. World Electronic Industries [Online]. Available from: <http://www.decision.eu/doc/brochures/exec_wei_current.pdf > 20 December 2013 Deloitte. 2013. Global Manufacturing Competitive Index 2013 [Online]. Available from: <http://www.deloitte.com/assets/DcomUnitedStates/Local%20Assets/Documents/us_pip_GMCI%20report_Supplemental% 20country%20analysis_12132012.pdf> 22 December 2013 Digitivity. 2013. Electrical and Electronic Industry Overview [Online]. Available from: <http://www.digitivity.com/industry-overview.html> 15 December 2013 The Robert Gordon University Page 24

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Emerald Management First. 2013. Supply chain management six sigma at Samsung [Online]. Available from: <http://www.supplychain247.com/images/pdfs/samsung_six_sigma_scm.pdf> 22 December 2013 Forbes. 2013. Apple [Online]. Available from: <http://www.forbes.com/companies/apple/> 11 December 2013 Geert Hofstede. 2013. Dimensions [Online]. Available from: <http://geerthofstede.com/organisational-culture-dimensions.html> 12 December 2013 Helen Spencer Oatey. 2012. What is Culture? [Online]. Available from: <http://www2.warwick.ac.uk/fac/soc/al/globalpad/openhouse/interculturalskills/glo bal_pad_-_what_is_culture.pdf> 20 December 2013 Index mundi. 2013. China Exchange rates [Online]. Available from: <http://www.indexmundi.com/china/exchange_rates.html> 25 December 2013 Index mundi. 2013. China Inflation rate (Consumer prices) [Online]. Available from: <http://www.indexmundi.com/china/inflation_rate_(consumer_prices).html> 22 December 2013 Index mundi. 2013. United States Inflation rate (Consumer prices) [Online]. Available from: <http://www.indexmundi.com/united_states/inflation_rate_(consumer_prices).html > 24 December 2013 James Brusseau. 2013. The Business Ethics Workshop, V. 1.0 [Online]. Available from: <http://catalog.flatworldknowledge.com/bookhub/reader/1695?e=brusseauch13_s02> 10 December 2013 Jo Bilson. 2010. Effects of Bad Corporate Social Responsibility [Online]. Available from: <http://suite101.com/a/effects-of-bad-corporate-social-responsibilitya215647> 23 December 2013

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