Pols 6000 Corporate Governance

POLS6000 CORPORATE GOVERNANCE

 Case Study Report

Ethical Apple

Table of Contents

1.        Executive Summary        2

2.        Introduction        2

3.        Issues and Theory        3

4.        Bad Corporate Governance        4

5.        Conclusion        4

6.        References        5

1. Executive Summary

This case study analysis shows the failures of Apple's governance. This leads to lose the customers' trust which is considered as the most important thing of corporate. The bad governance practices caused administrators and receivers have to face with the difficult decisions. It could be concluded that the major factors such as unethical making-decisions, lack of transparency, disclosure and ignored the culture that has caused the failures of Apple. Moreover, ignoring a number of vital governance principles such as moral values also causes this collapse.

1. Introduction

In the latest news related to Apple, which is one of the companies have the largest smartphone consumer markets in the world. Apple has faced a lawsuit which is against by many consumers after admitted deliberately slowing down their iPhone by reducing the performance of the battery (Spence 2017). Many people said that Apple had deliberately slowed their iPhones, instead of just replacing batteries you would consider buying another Apple's product. Apple's customers argue that Apple has violated the ethical values of deliberately reducing the performance of the iPhone without informing the consumer. Moreover, after Apple apologized to their customers and accepted the replacement battery for $ 29 instead of the original price of $ 79. However, consumers in Korea claim that Apple has underestimated the illegality of its work and the damage that customers suffer, instead of replacing free batteries Apple has reduced the price of replacing the battery for the iPhone, especially those who have to replace the iPhone because of poor performance (Fingas 2017).

As of December 31, 2017, approximately 186,000 iPhone users are involved in claims for damages. Meanwhile, Apple must participate in a class action lawsuit in the US and Israel with a compensation cost of $ 999 billion (Hyun-june 2018).

The actions of Apple's board of directors are considered to be an unethical decision, a strategy in global of programmed obsolescence to boost sales. This has undermined consumer confidence in Apple products. While the company had previously faced many criticisms from the public when many suicidal workers in partner companies and tax issues. With all of these events, this is Apple's trust crisis to consumers (Segar 2017).

Discussion and analysis

This case study will analyze the ethical decision-making issues in corporate governance. The flaws in making decision process which based on the ethical values and the governance principles will be discussed.

1. Issues and Theory

Corporate governance processes are bound by contractual, legal, regulatory and market conditions (Kumar 2016). This definition aims to protect the interests of shareholders and other stakeholders. Corporate governance systems are set up control mechanisms to ensure that making-decisions are consistent with the organization's ethical standards (McKay, Nitsch, and Peters 2015). In addition, it ensures the alignment of the interests of control among stakeholder groups. Corporate governance is not only benefits shareholders but also builds and maintains investor confidence. Corporate governance is accountable to shareholders for financial information and capital market efficiency (Hapsoro and Fadhilla 2017).

Corporate governance process involves making decisions that are consistent with ethical values (García-Sánchez, Rodríguez-Domínguez, and Frías-Aceituno 2015). It is how ethics can make corporate governance more meaningful. Ethical decision-making needs to be reviewed and evaluated in line with ethical values (Elm and Radin 2012). When making ethical decisions, it is necessary to eliminate unethical options and chose the ethical making-decisions (Ho 1993). Proper ethical decisions will create and maintain trust between customers and businesses; between businesses and partners. This demonstrates the respect and responsibility of the business. In order to make better decisions, businesses need to establish their own basic ethical principles (Hicks 2010).