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Apple and Ethics Essay

Scenario

“Insider trading is the buying or selling of a security by someone who has access to material, nonpublic information about the security” (Investopedia, 2012). A deal has been made by all major cell phone companies with Apple to provide the IPhone 6. The development of this deal will significantly increase Apple’s market shares and stocks as a cell phone provider. In return, the announcement of the new product launch will affect its stock prices in a positive way. There are key parties’ privy of desiring this knowledge including Apple’s Board of Directors, the Board of Directors from other leading cell phone providers and their acquaintances. The information regarding the launch of the IPhone 6 is confidential and can be used to make some individuals or organizations very wealthy.

Some members from Apple plan to make the information about this deal known a week in advance to these outside cell phone companies before the news goes public. During this time there are many situations where legality and ethics come into play. Information pertaining to the new IPhone 6 is going to be used to make trades known before the general public is aware and insider trading is a major concern. What does a company like Apple have to incorporate into its organizational guidelines to prevent insider training from occurring? Ideally, how would we as a team use the outcomes from our ethical values assessments to deal with the unethical decision practices of insider training?

Introduction

According to the on-line article Apple Inc.’s Ethical Success and Challenges (2011), “In 1976, Apple Computers was established by Steve Jobs and Steven Wozniak in Cupertino, California…[by] the year 1977, Apple Incorporated went public with its first line of computer devices to fill the desired consumer needs” (Sawayda & Ferrell, 2011). Currently, Apple Incorporated is recognized as one of the largest technology and computer based organizations in the entire world. Based on years of operation, Apple and its affiliated investors have experienced company sales fluctuations based on unpredictable cyclical product demand trends. Foremost, Apple remains resilient through these product and cyclical business trends based on well-constructed Code of Conduct guidelines which have permitted this organization to remain ethically competent and socially responsible.

In support of Apple remaining an ethically and socially sound organization, its Code of Conduct guidelines assists in preventing key players’ such as stakeholders, stockholders and employees from the adverse effects of insider trading which is an unethical business practice. Based on the research our team has conducted on Apple, we will substantiate how our ethical decision-making values’ pertaining to the provided scenario above align with Apple’s policies on insider trading. Thus, our team will compare, contrast and validate variables such as Apple’s organizational values, our personal values and ethical decision-making practices.

Organizational Values

Apple Inc.’s products and services are known world-wide. A company of this magnitude and respect achieves this through quality products, quality leadership, and organizational values that are superior to all competitors. “Apple has 4 key principles that make up their organizational values…1) Honesty, 2) Respect, 3) Confidentiality, and 4) Compliance” (Apple, 2012). Apple CEO Tim Cook encourages for every employee to demonstrate honesty and high ethical standards by treating everyone within the company with the utmost respect and courtesy. “Protecting Apple’s intellectual property and its affiliated company’s information ensures that all business dealings fully comply with federal laws and regulations” (Apple, 2012). These key principles of Apple’s conduct policies regarding those pertaining to unethical activities such insider trading re-enforce its organizational values. Organizational values are used to protect Apple and its subsidiaries in all ethical and lawful decision making situations.

Thereby, the values that are being expressed adequately provide specific guidelines for necessary actions required to prevent insider trading like the scenario being posed in this paper. Outlined in Apple’s conduct policy are specific guidelines that cover all aspects of this scenario. The first specific guideline that relates to the scenario is Apple’s policy on customer and third-party information. “It is the responsibility of every Apple employee to protect and maintain the confidentiality…[f]ailure to protect customer and third-party information may damage relations with customers, suppliers, or others and may result in legal liability” (Apple, 2012). In the given scenario, the customers are the cell phone companies. A warning is made to all employees of Apple that legal action can result if the policy is not followed.

To ensure employees understand and agree to following this policy, Apple uses legally binding non-disclosure agreements, “never share confidential information outside Apple (for example, with vendors, suppliers, or others) unless a nondisclosure agreement is in place. These agreements document the need to maintain the confidentiality of the information. Original copies of nondisclosure agreements must be forwarded to the legal department” (Apple, 2012). By signing the non-disclosure agreement both parties face legal consequences for simply disclosing information, even if the party they disclose the information to does not use it in insider trading. This policy would further ensure ethical decisions are being made by both parties in our scenario. Beyond Apple’s policies on protecting customer information, Apple has a policy for protecting its own proprietary information including the wrongful trading of stocks.

According to Apple’s policy, it is of the utmost importance for every employee to protect all information pertaining to product information, current and future products, confidential market research, and nonpublic earnings including financial data (Apple, 2012). In our scenario, Apple’s new CEO and Board of Directors would be specifically responsible for protecting the information regarding the new deal. Not only must the CEO and board protect the information from third-parties, they must also not use the information themselves to buy or sell Apple stock. According to Apple’s policies, “no employee is allowed to trade Apple stock, nor give family members or friends advice on when to buy or sell stock while they have information they learned in advanced through their job that will affect the price of the stocks until that same information is made to the general public” (Apple, 2012).

To ensure this policy is followed, Apple has an added organizational control. Blackout periods, sent down by Apple’s legal department, where the company’s CEO, Board of Directors, and other pre-informed individuals are prohibited from trading Apple stock (Apple, 2012). This final provision of the company’s policy would come in to effect of our scenario. As soon as Apple’s legal department became aware of the situation a blackout was imposed. Apple’s organizational values are strict guidelines to support uphold ethical decision- making. The legal department even enforces checks and balances to reassure on measures to deal with a presented scenario such as our teams.

Personal Values

Based on the ethical values of our team member they strongly believe in having self-respect, lasting friendships, knowledge and providing opportunities for personal growth for themselves and those whom deserve it the most. The personal values associated with our team member’s ethics assessment most closely aligns with (O) obligation and least aligned with (E) equity. Our team have a strong sense of commitment to our company and respect for Apple’s policies of confidentiality. The desire to help and be fair with others is equally as important as following Apple’s policies and not sharing the news of the new product to any individual. Aviva Geva (2000) author of Moral Decision Making in Business expresses, “When facing a scenario in which one decision is achieves the greatest good, but can detriment an individual’s rights and another decision has the opposite effect, it is important to analyze the entire situation as a whole in order to find the appropriate course of action” (Geva, 2000).

While sharing this information pertaining to our team member they would feel a sense of duty to inform those whom have the ability to turn this information into something positive. The individuals who are exposed to this information are family and friends that work in this field of technology. If those individuals are able to use the information to grow in their career, our team member would feel it is acceptable to inform them of the new product. The information shared would have the understanding that it is for that individual alone to use towards progressing in their professional goals. Sharing this knowledge would boost our team member’s friendships with these individuals and satisfy their need for equal individual opportunity.

Following Apple’s plans of announcing the information within a period of a week suits our team member’s goals in remaining committed to their company. By following Apple’s plan, they are able to reconcile this with themselves, as they are not decrementing their own reliability or self-respect. While our team member feels a sense of duty to share this information with those they feel deserve to know, there is a sense of responsibility to respect and uphold the confidentiality of the company. The final decision our team member makes focuses on which personal value they treasure the most which is self-respect, lasting friendships and what they believe is most morally justified.

Ethical Decision Making

Ethical decision-making involves incorporating the human conscience, actions, values and integrity to support a healthy business environment. “Apple has tried to ensure that its employees and those in which they work display appropriate conduct in all situations…[by] [drafting] a code of business conduct that applies to all its operations, including those overseas…regarding corporate governance” (Sawayda & Ferrell, 2011). Internally, Apple’s ethical values align with its corporate structures influence in progressive development of ethical leadership and a zero-tolerance policy for misconduct. Thereby, Apple thrives on promoting an inclusive community where employees can openly and privately discuss organizational advancements according to strict corporate guidelines.

As a socially respected business entity, Apple’s devotes a lot of energies to morality by abiding to ethical practices against insider trading in order to maintain organizational virtue, secrecy and integrity. Apple diligently practices equality and honesty within all its internal and external business structures to safeguard against any form of corruption. Robert McGee (2007) author of the article Applying Ethics to Insider Trading suggests, “It is [unethical] for privileged groups or individuals to profit from information that is not available to the general public…the [U]tilitarian approach looks at the results…the winners exceed the losers” (McGee, 2007).

Furthermore, Apple’s corporate structure levies strict conduct policies to ensure that all of its employees are upholding company values to prevent the compromise of organizational misrepresentation from conflicts such as insider trading. According to the on-line article A Model of Ethical Decision Making (2006), “In some professions, code of conduct are created to give guidance to decision makers facing ethical problems” (McDevitt, 2006). Thereby, Apple’s ethical values and decision making practices supports upwards and downwards business management traditions.

Conclusion

Apple’s structural values include strict rules and regulations to maintenance and support ethical decision- making. Apple’s 4 keys of their organizational values…1) Honesty, 2) Respect, 3) Confidentiality, and 4) inspires and exhibits trustworthiness and high ethical standards by treating everyone within the company with the utmost respect and courtesy. The core values related with our team member’s ethics assessment aligned closest with (O) obligation and least associated with (E) equity. We chose our team’s member results because they point out that we as a team have a durable pledge to our company and admiration for Apple’s guidelines and procedures of confidentiality. Furthermore, the aspiration to assist and be nondiscriminatory with others is correspondingly imperative as following Apple’s policies.

A deal was made by all major cell phone companies with Apple to provide the IPhone 6: this confidential information has the potential to illegally make shareholders stacks of money. Using this confidential information to benefit in this manner is considered insider trading. Each employee has an obligation to protect all information pertaining to product information confidential. Apple’s Code of Conduct guidelines support the prevention of such stakeholders, stockholders and employees from the adverse effects of insider trading. Despite the fact that our team member feels a sense of duty to share this information with those they feel deserve to know for career purposes, out team members sense of responsibility, accountability and respect for the confidentiality of the company leads them to do the ethical thing.

Bibliography
Apple Incorporated (2012). Business Conduct: The way we do business worldwide Retrieved from http://files.shareholder.com/downloads/AAPL/1635337056x0x443008/5f38b1e6-2f9c-4518b691-13a29ac90501/business_conduct_policy.pdf Geva, A. (2000). Moral Decision Making In Business: A Phase-Model. Business Ethics Quarterly. Volume 10, Issue 4. Retrieved from http://web.ebscohost.com.ezproxy.apollolibrary.com/ehost/pdfviewer/pdfviewer?vid=3&hid=13&sid=4bd55660-0b29-4088-8172-dad26e4b5242%40sessionmgr13 pgs. 773-803. Investopedia. (2012). Insider Trading. Retrieved from

http://www.investopedia.com/terms/i/insidertrading.asp#axzz2AXbGvp5w. pg. 1 McDevitt, R., Giapponi and Cheryl Tromley. (2006). A Model of Ethical Decision Making: The

Integration of Process and Content. Retrieved from

http://search.proquest.com.ezproxy.apollolibrary.com/docview/198084237/fulltextPDF/13A0A663AC029B76168/7?accountid=35812. pg. 222

McGee, R. W. (2007). Applying Ethics to Insider Trading. Retrieved from

http://search.proquest.com.ezproxy.apollolibrary.com/docview/198091721/fulltextPDF/13A0AA5F66442684A54/6?accountid=35812. pg. 207.

Sawayda, J., Ferrell, O.C and Linda Ferrell. (2011). Apple Inc.’s Ethical Success and Challenges. Retrieved from http://danielsethics.mgt.unm.edu/pdf/Apple%20Case.pdf. pg. 3


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