Apple Risk Management

Background Information

Apple Inc. is an American-based company that was founded by Steve Jobs in 1976. In the beginning, this company was established for the development of personal computers. In 2007, the enterprise started offering different consumer electronics. This marked a significant point in time when the company started diversifying its services and products. This caused an increase in their market share and thus their client base. There are other information technology companies that can be said to have witnessed success that is close to that of Apple. However, only Samsung can be said to be bigger that Apple Inc. This is in terms of the assets that they own. When it comes to the manufacture of mobiles, Apple Inc. is ranked as the third biggest worldwide. With more than 1,100,000 employees, this is a company whose decisions would affect numerous people around the world.

The hardware that is sold by Apple is known for one major characteristic. They have unique products, which they conduct product differentiation with to ensure that they are able to attract as many customers as possible, along with their loyalty. The iPhone and iPad are some of the examples which consumers around the world can relate to. In the past, Apple Inc. dealt with consumer electronics. However, they have diversified their activities in a bid to attract more consumers. At the moment, they also deal with online services, such as the iTunes Store. Of late, Apple has been trying to venture into new industries to aid in increasing their competitiveness. This has caused them to engage in production of goods and services that are outside their comfort zone. Although it has been difficult, they have always tried to remain ahead. In this research, the risk assessment and management in the company have been analyzed.

 

Apple’s Goals and Mission

For the normal functioning of any organization, there is a need to establish the goals and missions that should be followed by all the members, thus contributing to the end results of the company. However, Apple Inc. is not a company that documents its goals and missions even though they have always been successful. This has been based on one major reason: Apple Inc. has been managed by good leaders who communicate their goals and missions to the employees and the rest of the world. Steve Jobs, the founder, is an example of such a leader. The advantage of this approach is that the leader can be as dynamic as possible. As changes take place in the industry, the leaders can adjust their missions and goals to align well with the alteration that have taken place. Moreover, Apple Inc. is in the technology industry. This is an industry that is subjected to constant changes. Therefore, this would be the best approach for them.

The mission of Apple is to design the best personal computers, operating systems, and professional software. In addition, they have a mission to be the leaders in the revolution toward digital music. This is a mission that has always helped them remain the best in their industry. Currently, Apple has re-invented mobile phones and has been the main determinant of the changes that take place in the mobile industry. The goals of this company are divided into two major sections. These are finance and environment. They have stated that money making is not their main goal. Instead, their main objective is the production of quality goods. As for the environmental issue, Apple has stated that it aims to power every Apple device with energy from renewable sources. This would help conserve and preserve environmental resources for the use by future generations.

Risk Management Practices of the Firm

Risks Faced By the Firm

The first risk that has to be mentioned for Apple is the fact that they are in a highly competitive industry. This is a risk that can simply be identified by brainstorming. There are numerous companies in the world that supply computer software, hardware, and consumer electronics. This is not only in America but in the whole world. Most of these companies are as aggressive as Apple or more in many different ways. That is the reason as to why the entry of Apple into this industry can be regarded as a risk in itself. Advertising and acquiring resources necessary to produce these goods, Apple could not have been sure that they would get their return on various investments. This is because they were not sure whether they were going to penetrate this market, dominated by many other companies. This was not the risk that existed in the beginning only. Instead, it is the risk that is as progressive as the day-to-day operations of this company. Apple has been in the constant quest to be the best in the provision of their products. However, every day new companies emerge in the industry. Some of them devise new ways and technologies to sell to the consumers. Therefore, every day Apple is at risk of losing their customers. This is the risk that is suffered by most companies that are in competitive markets.

Through surveying the activities and steps conducted by Apple Inc., it is easy to identify a risk in the ways in which the company tries to venture into new markets. For a long time, Apple has tried to supply new and different products. This can be referred to as a systematic hazard since it risks most of the assets of this company. There are many instances in which Apple can be considered as a company that invests its resources in areas that are completely outside its comfort zone. For example, in the beginning, this company was in the business of making personal computers. Nevertheless, they diversified their activities later and came into consumer electronics. However, this was some time ago. In the recent past, Apple has gone into a completely different industry. They developed a device that looks like a wrist watch. According to their idea, this device will be responsible for recording the health conditions of an individual. These would include factors such as the blood sugar level, heartbeat, body fat content, and many others.

First, it is important to note that the trustworthiness of this device may be doubted by people who purchase it. This is because there are other sure ways of learning about these body health parameters. Secondly, this is an idea that is in the domain of the health industry, considerably out of the comfort zone of Apple. Although this is a consumer electronic device, the service that they meant to provide is in the domain of the health industry. This is an industry which they have never invested in before. For this reason, they can be compared to a startup company. When a company is starting, it has to compete with others that have already established themselves. Usually, there are many challenges for such a company. The most disturbing challenge for the small startups is the availability of capital. This marks the only difference between such a company and Apple in the context of venturing into a new industry. Apple has the capital to risk; so, they can venture into this market. Therefore, they are more at risk since they are exposed to different resources that may be required by venturing into this new market. This is a systematic risk, basing the argument on the fact that they may not penetrate the market. The costs that would be incurred in the course of acquiring resources, technology, advertisement, and human resources are a complete risk for this company. This is a hazard which Apple has been exposed to over the years.

In connection to this risk, there is a unique characteristic that can be identified for companies in the consumer electronics and computer industry. These companies are under the risk of competition from counterfeit products. All over the world, there are companies that have the ability to produce fake products, which resemble the original ones, in ways that the consumers cannot understand. Fake and pirated products, especially in the electronics industry, have become very common. The biggest threat is in the fact that the quality of fake products nowadays is not as low as it was some time ago. These companies have the ability to supply fake products whose quality is almost as high as that of the original products. This means that the consumers can chose from either of the two companies. The advantage that these companies have is that they can provide the fake goods at lower prices. Therefore, they are able to compete with companies such as Apple. This is a risk which Apple is constantly exposed to as times pass. Fake companies continue to develop their products and provide them at affordable prices, thus attracting more consumers. Additionally, fake companies can use the brand of the company while producing low quality products. This creates a bad image of Apple since the consumers think that they are dealing with their products.

The other risk that Apple faces has something to do with the market. Sometimes, one may forget that the achievement of the company is not only affected by their internal environment. Instead, there are external factors which are unique for each industry. For Apple, these include consumers whose tastes and preferences change each day. Therefore, they have to adjust to the buying behavior of their customers. The fact that this is a characteristic of consumers in the electronics industry does not mean that Apple should abandon its original activities and try new industries with new challenges. Instead, they have to keep providing the electronics and adapting to the changing consumer tastes. For this reason, it has been observed that Apple has been at a constant risk each passing day. The introduction of new electronic devices and technologies has seen this company exposed to the risk of losing the market share that they have enjoyed for many years. In such a dynamic industry, the risk never ends. This is the reason as to why such companies invest a lot of resources in the formulation of important strategies.

Analysis of the Risks

The risks that have been identified for Apple Inc. can be analyzed in different dimensions and from various perspectives in a bid to shed more light on them. First, there is a risk from the fact that the company is in a competitive industry. In the consumer electronics, it is better to focus on one product as well as concentrate on one competitor while deciding the type of risk which this company is exposed to. In this case, the smartphones that Apple produces should be considered. These shall be compared to Samsung, which is considered to be the biggest competitor for Apple. This does not mean that there are no other competitors. Obviously, Apple does not control the whole consumer electronics industry. This can be judged from the market share that they enjoy. Therefore, there are many other companies which offer competition. However, Samsung is the major threat to Apple, judging from the competition that they have displayed over the years.

In the past, Apple did not experience such competition. This is because companies like Samsung were formed later. However, the fact that Apple had begun earlier failed to count when technology changed and Samsung was ready to take advantage of the same. A company that has roots in the industry can only enjoy the fact if the old methods are still applicable. However, it becomes a different issue when the products and the technology associated with them change. A better explanation can be offered by considering the smartphones. Every other time, Apple has been trying to launch new smartphones with better qualities than the previous ones. This can be blamed on the efforts of Samsung in doing the same. After a short while, a new Galaxy smartphone was introduced. These phones come with better camera definition, bigger memory storages, bigger screens, better usability, and other factors that matter to the consumers. When this happens, Apple cannot let their older versions of the iPhone compete with these newer models. Instead, they have to provide better products to gain more consumers or simply retain the old ones. This is a risk that keeps companies in the industry on their toes.

The other risk that requires careful analysis is the systematic risk in which Apple tries to venture into new industries. One may understand that there is a lot of pressure in their current industry. This is a fact that may limit their growth and cause them to diversify. However, diversification has to be well-calculated if not supposed to ruin the company. Sometimes, the diversification may involve the investment of numerous resources due to which the company may lose its ability to sustain itself in the future. For example, it has been mentioned that Apple was willing to introduce a wrist device that took record of the medical conditions of the body. This is a field in which they do not have experience. When problems occur in the consumer electronics industry, this company can solve them easily since they are familiar with this field. However, this is not the same case when it comes to other industries. First, gaining certification to provide this product, which is in the health sector, may cost the company some resources and compromise. In addition, there are companies that are well-established in the health sector since they have been there for a long time. However, with the application of efficient and effective strategies, Apple Inc. has a history of being able to avert such crises. 

The other risk that has been mentioned is that of a changing consumer base. Companies that provide basic commodities, such as sugar, salt, flour, and others, may not understand the risk that is faced by Apple. This is because people will always require these products. They will have to use the products in the same way as before. To some extent, these can be compared to basic needs over which people have no control. However, the provision of consumer electronics is trickier. As times change, the preferences of people alter as well. This is because they are products that can be developed. When new technologies are discovered, they can be incorporated into these electronics. For this reason, it becomes difficult to keep track of the consumer needs.

Apple has had such problems in the development of their products. For example, when they started manufacturing and selling personal computers, there was no much competition. However, companies such as Microsoft employed new technology in their computers. This caused the tastes of consumers to change. They started demanding more qualities in the computers. This changing need is a risk that has to be faced by all the companies that are in this industry. This is the similar case for the smartphones. With time, the qualities and features of the iPhone have to be changed eventually. This is because the consumers start to have more and different wants as time passes. In the past, people preferred phones that were small in size. With time, they have grown to like tablets, which is a changing consumer need. This is one of the most challenging and urgent needs that ensure that Apple keeps trying to get better with reference to customer satisfaction. In this paper, different ways applied by Apple to combat these risks have been explained. 

Report on the Strategies that the Firm Employs to Manage Its Risks

These risks that have been mentioned for Apple Inc. are well understood by the company. They are able to assess the risks and develop ways to deal with them. Some of the methods that they apply are used to handle single risks, while others are used to manage multiple risks. The first strategy that Apple applies is branding. This is a strategy that is used to counter the risk of constant competition. Of all the methods that huge companies use to counter competition, this is the most effective. In branding, the company tries its best to create a connection between the company and the customers. This is when the customer can be made to choose a product without their knowing about it. In other words, when the consumers have the need, the only name that they can think of is that of the company. The best way to achieve this is by advertising and providing quality goods. In this way, the providers are sure that when the customers purchase a product from the company, they develop a positive attitude towards the product.

Apple Inc. has been using branding in most of their products. In the modern times, iPhone is known by people all over the world. This is a phone that is always discussed before it hits the market. A perfect example is the introduction that the phones received when Steve Jobs was introducing them to the market. Before the consumers got to see the iPhones, they had received adequate information about these phones. An attitude had already been formed in their heads. They understood that a different product was to be introduced to the market. IPhones marked an important transition point from feature phones to smartphones. This is the reason as to why everyone considers acquiring an iPhone when thinking about the qualities that have to be in smartphones. This was due to the branding of this company. For some other companies, it has been a sign that their phones are not a preference of the consumers. This is because their qualities vary from time to time. However, Apple has struggled to ensure that they are able to maintain a certain level of quality so that the consumers can respect their brand. This is how they have managed to remain at the top in the presence of strong economic giants in their industry. This is one of the numerous strategies that have been identified to be used by Apple Inc. in the quest for managing their risks.

Branding is also important in combating competition from other companies. The companies that are able to brand their products and train consumers to love their products are the ones that remain competitive. In regard to the issue of combating competition, innovation is another strategy that Apple invests in. This is a plan that is based on the fact that people can never get enough of the product. When humans receive one product, they want more from the respective companies. Therefore, for a company to be successful, there is the need to satisfy this thirst from the consumers. There are many activities and strategies that Apple has been applying for a very long time. However, they have always made it clear that innovation is the major strategy of the company. In their hiring process, they have strategies to employ the best professionals. For example, they employ people who can develop the best applications for iPhones. These are young individuals who are creative enough to develop new ways of providing certain services and satisfying the needs of their consumers. With different innovations that are made, Apple is able to provide devices that are envied by other companies. This ensures that they stay ahead of the competition.

Apple Inc. is a company that focuses on perfection. In every product that they produce, they ensure that it is flawless. In case the consumers raise complaints, they are corrected as soon as possible. Every three months, this company is able to launch a new device correcting all the problems that may have existed in the previous versions. This has been mentioned in relation to the systematic risk that the company faces when it ventures into new industries. When the company goes into a new industry, there is one major way through which they can ensure that they combat the existing competition. This is by the introduction of the best products that have never been in the industry.

Apple has been able to achieve this quality and efficiency with their innovativeness. For example, it was mentioned that they have been trying to venture into the healthcare sector through the innovation of the wrist device that keeps track of different body processes. Obviously, there are other ways that can be applied to learn these parameters in the patients. However, a wrist device could be important since it is as a cell phone to the individual that is using it. This is an innovation that is meant to hit this market in the best way possible for Apple although consumers may have other options for their health. However, they may still choose to use the Apple products based on their innovative nature. In addition, they are able to acquire consumer loyalty from the quality of goods that they deliver. The advantage of this company is that they ensure that the consumers are able to know more about their products through the advertisement. For the customers who have used their products before, the experience inclines them to want more of their products. However, they always try to have new ways through which they can attract more customers. This can only be done by appealing to new customers. With this strategy, Apple has been able to manage the risks involved with indulging into new industries outside their comfort zone. 

Evaluation of the Degree to Which the Risk Management Program is Succeeding to Further the Goals of the Organization

The risk management strategies that Apple applies are well-aligned with the goals of the organization. For example, branding has been explained to be used as a plan to form a positive attitude in the consumers to their products and brands. Therefore, apart from the advertising of their name, they care about the quality of goods that they deliver to the market. This means that the company constantly works toward excellence. For some companies, the risks may be averted in ways that just reduce the losses that they might make, not caring about the quality. However, the management of risks by Apple is conducted in a way that favors the bettering of the quality of their products. As the years pass, the company keeps improving the quality of their products. The nature of their industry ensures that the definition of quality changes constantly. For example, with the iPhones, quality can be defined as the incorporation of different features in a single device. This is how Apple has managed to stay ahead in the industry.

In addition, the use of innovativeness in the industry has ensures that they are the best in the design of their personal computers. As it is mentioned above, the major mission ofAapple was to be the best in the products that they provided for the consumers. With constant innovations aimed at enhancing the quality, this company has ensured that it is at its best. It manages the human resources and other factors in the company to make the best of its products. Although they have been facing constant competition, they have managed to remain relevant over a long period of time. There are big companies that were seen to remain obsolete when they failed to be as dynamic as the industries in which they were operating. However, Apple has managed to adapt to these changes by considering the needs of their consumers. Additionally, this is a company that is not affected by profits or losses. They have mentioned that their goal is not in making money. They just want to deliver quality products. Coincidentally, most of the risks that they face can be managed by ensuring that their quality is the best. Even with the hardships in their industry, they have been able to achieve this excellence. 

In their branding, Apple wants to be associated with sustainable methods of conserving the environment. This affects the thoughts of the consumers every time they think about acquiring a product from Apple Inc. In their goals, Apple mentioned that it always wanted all their devices to be powered from renewable sources. This is not a goal that can be achieved overnight. However, this company has shown the power of their dreams and visions. When they work toward their visions, they eventually achieve different objectives that they have set for their company. Bettering the consumer experience and promoting their brand, Apple assists in ensuring that they are working toward saving the environment. When consumers notice that the company is concerned about their future, this is one of the best ways to appeal to them. However, the fact that Apple has mentioned that profits are not the major motivation does not mean that they do not appreciate returns on their investments. Instead, the company has to have different aims with regard to their finances. Any company in the business sphere has to look for sustainability from the profits that they are able to get. This unmentioned goal is achieved by the strategies that they have applied in managing their risks. On a general note, it can be mentioned that Apple is more concerned about their product as opposed to looking at the marketing strategies only. The marketing of their products is based on the quality of their products. 

Recommendations to Improve the Risk Management Program

There are various ideas that can be applied to Apple Inc. to ensure that their risk management program becomes better. First, this company is known for overpricing their products. As it has been mentioned, competition is one of the risks that the company has to deal with from time to time. However, they have always maintained their high prices. With time, technology might enable other companies to provide the quality that Apple has achieved at a lower price. This has been seen in the efforts of Samsung, a company that poses threat to Apple Inc. in the market. Based on the market, the company should make adjustments on their prices to ensure that they attract more consumers willing to acquire their products. 

The other adjustment that they should make to their strategies is to put more focus on the counterfeits. This is a problem that has been seen to challenge big companies in the computer and electronics industry. Apple should develop teams and strategies to monitor all the goods that are provided in their supply chain. This is where they can apply the law and the power that they have to deal with the companies that may be providing fake products under their name. In this way, they can be in a good position to beat unfair competition, where counterfeit products are provided at low prices. Therefore, they will only be left with the fair competition from companies such as Samsung. They can apply their quality and price strategies to ensure that they combat such competition. In connection to the information on fake products, Apple should strive to ensure that they maintain the sophistication that consumers love. 

Conclusion

The recommendations made do not mean that this company has not been excellent. It was seen that Apple had good quality of products from the beginning. This might seem like their characteristic, causing them to loosen their grip on activities and strategies to maintain this sophistication. The company should ensure that they do not lose what they have, trying to reach for other factors. It is always important to apply all the methods that have been proven to be effective and efficient in the past. If Apple works more to maintain this, they can avert and manage all the risks that they had in the past. 

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Nov 13, 2019 in Marketing Essay Samples