Monday, February 17, 2014

Apple vs. Samsung (2011-Present)

Apple Inc. logo

Apple and Samsung are two very large names in electronics today. An ongoing feud between the two on patent rights have taken the news world by storm. No one can know for sure who is right in this case but either way, this feud does not look good from a stakeholder point of view. "Samsung starts gaining market share, hurting Apple Inc's margins and stock price and threatening its reign as the king of cool in consumer electronics" (Poornima Gupta). Besides the fact that Samsung has taken business from Apple, Apple is now looking to sue and already has sued Samsung for copyright infringement. If there is one thing stakeholders do not want to get mixed in with is lawsuits. Problems weigh in when you look at the fact that Apple "bought some $8 billion worth of parts from Samsung last year, analysts estimate" (Gupta). No matter who is right, we have to look at it from an ethical point of view. Is it right for Apple to sue Samsung for allegedly copying the IPhone or was Samsung creating their own smartphone to compete with Apple?

Stakeholders Apple is not comforting their stakeholders when it comes to lawsuits. I know if I were in deep with Apple, I would have backed off already because of Samsung's smartphones and legal troubles between the two. When we look at this scandal from an ethical point of view, I believe that this whole lawsuit is unethical, but necessary in the ways of business. 

Samsung Inc. logo
The first ethical view is Utilitarianism. Utilitarianism is the modern day approach to ethics and is defined as "an ethical tradition that directs to make decisions based on the overall consequences of our acts" (24 DesJardins). Also Utilitarianism is identified with the policy of "maximizing the overall good" or "the greatest good for the greatest number" (27). Thus, the decisions that accomplish this are good, while those that do not accomplish this are bad. When we look at what Apple and Samsung did, we see two businesses that are competing against each other. Everyone knows that business needs competition in order for the business to not gain a monopoly nor put out less than average products and selling them for an outrageous amount. When Apple took Samsung to court, they were hopefully aware that this was going to be front page news, not for a week, but years until this feud cools down. "A federal judge on Friday slashed nearly half of the $1 billion damage award a jury ordered Samsung Electronics to pay Apple Inc. after a high-profile trial over the rights to the design and technology running some of the world's most popular smartphones and tablet computers" (Paul Elias). Apple ultimately won a lawsuit but did not receive nearly the amount they were asking for. This shows the greed factor that Apple has over its competitors. I believe Apple is wrong from and Utilitarian ethical point of view because they are not thinking of the consequences of stakeholders when following through with this lawsuit. However, Apple needed to do this lawsuit to keep Samsung away from their Iphone design so they can continue to dominant the smartphone and tablet market, We'll take a look now at another ethical point of view, one known as Kantianism.

The Kantian Theory states that "our fundamental ethical duty is to treat people with respect, to treat them as equally capable of living an autonomous life. But since each person has this same fundamental duty towards each others, each of us can be said to have the rights to be treated with respect, the right to be treated as an end and never as a means only" (DesJardins, 38). Viewing the Apple situation from the point of view using the formula for humanity which states that people should be treated as ends and not as means (38). I believe Apple did follow this ethical approach for the most part. No one is being mistreated in this lawsuit, in fact, the CEO's of Apple and Samsung have met in order to cool down this feud between the two.

Tim Cook, CEO of Apple Inc.

The next ethical point of view is individualism which is Milton Friedman's ethical views. Milton Friedman is considered one of the most important economist of the twentieth century because of the this theory and his other work. Friedman states "The only goal of business is to profit, so the only obligation that the business person has is to maximize profit for the owner or the stockholders" "The world’s top two smartphone makers have spent hundreds of millions of dollars in legal fees on claims of copying each other’s features in a global battle to dominate the market" (Joel Rosenblatt). Apple and Samsung are following Milton Friedman's theory for sure because of how much they have spent to maintain their dominance over each other. Hundreds of millions of dollars have been spent in order to make sure they maximize their profit in the end of each quarter. I believe that Apple and Samsung are doing their best to maximize their profit, however, as we know, Friedman's theory isn't the best overall ethical theory to be following.

Virtue Theory Lastly, we'll take a look at the virtue theory. The "Virtue Theory is Based on Aristotle's Ethics" (Salazar). The four primary virtues in the theory are "courage, honesty, temperance, and justice" (Salazar). Courage is defined in this theory by "risk-taking and willingness to take a stand for the right ideas and actions" (Salazar). Apple knew what they were doing when they filed the lawsuit against Samsung. Front page news, lack of trust in stakeholders all go along with this lawsuit. They were willing to be risk takers and sue Samsung to make sure they were dominant in the market, however it's not the correct risk-taking a business should even be taking. Apple did not follow the first virtue clearly since these were not the right ideas or actions to be taken to maintain market dominance. The next virtue, honesty, is defined as "in agreements, hiring and treatment of employees, customers and other companies" (Salazar). Apple is completely honest in all the information that has been released about this lawsuit. They knew what they were doing and ultimately won the case for a little less than half a billion dollars. Temperance, the next virtue is defined as "reasonable expectations and desires". (Salazar). Apple did follow this virtue as well because their desire was to maintain market dominance and sue Samsung for stealing their design for smartphone and tablets. They won their case, however, Apple has since declined in their profit and Samsung has increased. The last virtue, justice, can be defined as " hard work, quality products, good ideas, fair practices" (Salazar). Being an Iphone user, I can say with bias, that Apple does have great products and ideas. When the Iphone was released, the world changed at how we see phones and how most people do business. Apple and Samsung have both revolutionized that smartphone world and though there may be high tension between the two, this tension and competition can only result in better products for the consumers.

Gupta, Poornima, Miyoung Kim, and Dan Levine. Tim Cook Was Originally Opposed To Suing Samsung. Huffington Post, n.d. Web.

Gupta, Poornima, Miyoung Kim, and Dan Levine. Tim Cook Was Originally Opposed To Suing Samsung. Huffington Post, n.d. Web.

Rosenblatt, Joel. "Apple, Samsung Agree to Mediator in Effort to Settle Suit." Bloomberg, n.d. Web. 17 Feb. 2014.

DesJardins, Joseph R. "Ethical Theory and Business." An Introduction to Business Ethics. 5th ed. New York, NY: McGraw-Hill/Irwin, 2014. 38-41. Print.

Salazar, Heather. “Kantian Business Ethics,” in Business in Ethical Focus, ed. Fritz Allhoff and Anand J. Vaidya (Broadview Press, 2008).

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