Sunday , May 28 2017
Apple Logo Pic1

Apple’s lack of ethics is decreasing profits


These days, we are catching a glimpse of what might be the future at Apple: Its continuous success of rising share prices, earnings and revenues might be over. A 27% decrease in share prices within a year is one sign of a changing tide:

AppleSharePrice

Financial experts at Bloomberg, WSJ and FT are pointing out possible explanations for this downturn.  No one, however, mentions what I think is the main reason for the decline: Apple’s lack of attention to ethics.

Years ago, Apple’s cutting-edge brand image was so strong that it overruled any criticism consumers might have had about the way Apple treats its workers. The iPhone 1, 2, 3 and even 4 were such superior products, customers felt they just had to get them, regardless of rumors of despicable working conditions at iPhone plants in China.  Back then, we all suspected Apple was maybe too greedy, but we were able to justify choosing their products despite all the disgraceful stories we heard.

A few years ago, Apple was the industry leader in attractive design, futuristic user experience, revolutionary products, and innovative specs.  However, now the situation has changed.  Today rivals of Apple, notably Samsung, offer similarly beautiful, easy to use, and technologically advanced products while unethical aspects of Apple’s brand image have been revealed thanks to news stories confirming child labor and other miserable working conditions at Apple’s factories in China.

Customers are increasingly confronted by ethics issues while considering whether or not to purchase Apple products because of the sullied image of the once-adored company.  Let’s look at this change:

Apple Change

According to my analysis, Apple’s brand image is still strong, but in some significant aspects, it has started to fade. The once-lauded, but now diluted elements include ergonomics, virtuosity, cleverness, unique design, trust, reliability, and ability to inspire passion. Negative new brand elements, not clearly perceived before, include greed, irresponsibility, and unethical behavior, as well as tax evasion.

What is new is that these negative points are becoming a permanent part of Apple’s core image and therefore are affecting consumer decisions. Consumers are realizing that buying the latest design and technology just to be trendy could possibly conflict with their core values of treating other people fairly.  If Apple is not treating Chinese workers with fairness and dignity, we might as well turn our wallets to another manufacturer.  Surely not everyone will jump to the Fairphone concept, but many would choose a company that is fair and principled over one that is not.

This is the reason why Apple’s share prices, earnings, and revenues could slump further if the company does not reform its practices.  Apple can regain its popularity if it is willing to embrace social responsibility to the fullest extent possible.  Why not just do it?  It costs money to embrace those important values that most people hold dear.  But by neglecting ethics and codes of conduct, Apple might pay a much higher price in the end due to its diminished brand image.

We know it can be costly to play the game fairly.  The new scenario is that it is even more expensive to allow greed to drive decisions regarding the welfare of individuals.  Maybe some companies can temporarily get away with unfairness, hypocrisy and inequity, but a price tag will always follow.

My advice to Apple: Revolutionize your strategy on ethics and social responsibility.  Become the first large corporation to truly embrace integrity and fairness in all of its actions. Think about maximizing the company’s reputation instead of maximizing the amount in the bank. Profit should not be the only strategy considered.  And try not to fall into the same trap as Kodak did when it ignored an important opportunity: when Kodak employee Steve Sasson developed the first digital camera and suggested mass production, the company said “No, this idea will hurt our film production.”  Today, Apple might react similarly if an employee suggests that more emphasis should be placed on improving workplace conditions.  “No, it will hurt our profits.”