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APPLE’s EXPENSIVE EBOOKS
TABLE OF CONTENT
1.The Scenario 3
2.The Stakeholders 3
3.Ethical issue 4
4.Non-Ethical issues 5
5. Consequences 5
6.Ethical Analysis 5
7.Options 6
8.Conclusions 7
9.Reference 8
1.The Scenario :
Apple found guilty to violate the Sherman act and conspired to raise the price. Apple raised the price of eBooks with joining hands with five big publishers of US. These publishers were Hachette Book Group, Inc., Harper Collins Publishers, Macmillan Publishers, Penguin Group, Inc.,and Simon & Schuster. However, publisher defendant settled their claim and apple proceeded to trail. Apple adopted agency model to sell eBooks $9.99 to $14.99. Agency model let apple and publisher to control the price of eBooks. Apple also fixed different price tire for different books to inflate prices. Apple included MFN clause in contracts with publishers according to witch apple can sell eBooks at lesser prices. Apple is fined to pay $600 million to customers for increasing price and negatively impacted healthy competition in market. This lawsuit accued apple to force consumers buys eBooks at higher price unethically. Price fixing is an agreement between companies to sell product at pre-determined price. Apple ipad tablet launch drove the eBook price fixing. Amazon was selling eBooks on average $9.99, gaining position of market leader very fast. Amazon became market leader in eBooks segment by offering lower price, minimum profit, and fulfillment of customer expectation. Apple created its own monopoly, as publishers couldn’t offer discounts. Apple inc. adopted agency model under which six giant publishers wont sell anything at lower price to rival companies i.e. Amazon. Agency pricing is unethical and breach of ICT professionalism ethics. Agency pricing is anti competitive where Apple didn’t need to compete by fixing e book price. It is immoral practice as well. However, it increased revenue of 50 to 70% to all involved parties. (Jennings, n.d.)
2.The Stakeholders :
Competitors Amazons
Shareholder
Employees and shareholders
Customers
eBooks buyers
Community business community
Suppliers- Publishing house
3.Ethical issue-
Amazon actions- When Amazon learnt about deal of publishing house and Apple inc. Amazon approached authors and motivates the disintermediation. Intermediation means the elimination of intermediaries between producers and consumers. Now authors have option to choose 70% royalty options for eBooks in between of price range $2.99 to $9.99.
Suppliers- Publishers felt that low price of Amazon can create problem for them for their hardcover profitable books. These six publishers house adopted several different strategies to beat with Amazon price. Ultimately, they joined hand with late Steve jobs, Then CEO of Apple inc. to adopt agency model and inflate prices.
Business community- In ICT, professionalism is important aspect of ethical issues. Professionalism is arguable is most significant in some business community, especially in tech giants like Apple Inc. ICT has potential to influence lives of all. Professionalism in ICT emphasizes the problem in business communities and it demand companies to behave professionally. There is difference between person is considered as professional to conduct business or person being integral part of business to be considered professional. Being part of profession means having adequate qualification and skill to carry the business. Professional is meant by conducting business in professional way. Apple inc. falls in second category, where Steve jobs conducted eBook business in unprofessional approach. (Souppouris, 2013)
4.Non-Ethical issues
Shareholders- Shareholder of Apple inc. sued CEO and other executive, who were involved in price fixing. Shareholders claimed that price fixing scandal damaged the company and demanded compensation for damage. (KELLER, 2014)
5. Consequences:
As result of fixing price is following
Competitors Amazons No monopoly
Shareholder
Employees and shareholders Increased returns damage to goodwill
Customers
eBooks buyers
Higher price
Community business community
market dismantled
Suppliers- Publishing house Increased returns
Apple Inc. Apple Increased returns and Reduced competition
(Flood, 2012)
6.Ethical Analysis-
A.Consequentialism
Consequentialism is ethical theories that hold about consequences of one’s act should be ultimate base to decide rightness pr wrongness of decision. Alternatively, we can say that consequentialsim is doctrine that decides the morality of action should be judged by its consequences. According to Utilitarianism approach of consequentialsim, people or organization should act in way to maximize human welfare. (Jackson, 1991)
In present case study, Apple justified his actions that it stopped monopoly of Amazon and justifies increased price of consumers. Amazon was intervening in market dynamics and prevented market to be free. Because of Apple Inc.’s agency model, Amazon market share lowered down from 90 to 60%. However, actions of apple inc. was not maximizing the human welfare as it consumers were required to pay more.
b. Just Consequentialism
It is system of applied ethics and means to remedy for ethical problem. It combines the core value of Consequentialism. In present case study, company wants to break the monopoly of other rivals. The good point is to make market free. Action also reduced competition and increased revenue for shareholder. Just Consequentialism has further concern in present case, if we choose to ignore the harm to consumers. We want good computing policies that can protect consumers and promises to let the human being flourish. Just Consequentialism says that ends never justify unethical means. Theory says benefit of small group or good become enemy of just. If means are unjust good will end somehow. (H. Moor, 1999)
7.Options :
1. Apple should pay attention to other marketing strategies to gain profit margin rather than agency pricing.
2. Amazon should not directly deal with authors and offer 70% royalty. Instead, Amazon should fight legal battle, which it did at later stage
3. Publishing house should not focus on short term goals and should not influence business market by using their power. Publishing house must venture into other market for profit making
4. Shareholders always pay close attention to companies’ decision making and should prefer long term continued survival rather than short term profit seeking.
5. Companies must conduct business in professionalism for long-term stability.
8.Conclusions :
US department of justice filed lawsuit in April 2012.Apple is forced to pay $200 million to customers. Solutions from my recommendations are implemented by tech giant and other stakeholders in present case study. For instance- Amazon grew as competitors. Apple stopped unethical behavior, refund to customers and allowed to continue business by US government. (Kendall, 2016)
Retailers got freedom to set price again. Publishers settled claim outside of court. However, Consumers’ received compensation 3 times of what they paid. Apple Paid fine to breaking the law. We can conclude that Amazon was growing big, but apple did not have rights to intervene through unethical manners and caused harm to its reputation and customers also.
9.Reference-
1. Kendall, B. (2016). Supreme Court Turns Away Apple Appeal in E-Books Antitrust Case. WSJ. Retrieved 28 May 2016, from http://www.wsj.com/articles/supreme-court-turns-away-apple-appeal-in-e-books-antitrust-case-1457362484
2. :Souppouris, A. (2013). Apple warns guilty ebook verdict would ‘send shudders through the business community’. The Verge. Retrieved 28 May 2016, from http://www.theverge.com/2013/6/22/4454426/apple-ebook-price-fixing-closing-argument
3. KELLER, J. (2014). Apple shareholders sue Tim Cook, other execs over ebook price fixing. iMore. Retrieved 28 May 2016, from http://www.imore.com/apple-shareholders-sue-cook-other-execs-over-ebook-price-fixing
4. Jennings, M. Business ethics.
5. H. Moor, J. (1999). Just consequentialism and computing. Ethics And Information Technology, 1, 65-69.
6. Jackson, F. (1991). Decision-Theoretic Consequentialism and the Nearest and Dearest Objection. Ethics, 101(3), 461-482. http://dx.doi.org/10.1086/293312
7. Flood, A. (2012). The Apple ebook price-fixing lawsuit has terrifying implications. the Guardian. Retrieved 28 May 2016, from https://www.theguardian.com/books/2012/apr/13/apple-ebook-price-fixing-terrifying
We Also Provide SYNOPSIS AND PROJECT.
Contact www.kimsharma.co.in for best and lowest cost solution or
Email: solvedstudymaterial@gmail.com
Call / What’s App: +91 82907-72200 (Call/WhatsApp) or +91 88003-52777 (WhatsApp Only)