Case Study 2

Organizations look forward on eliminating any possibility of these risks, but it is never possible to do away with all of them at some point no matter how a company avoid these risks, they will encounter difficulties. However, there are some initiatives that an organization can apply to minimize the possibility of occurrence of these risks. Some of the steps to avoid risk include identifying hazards, realizing what impact the risks might have on workers, assess the risk and yearly review as well as record the hazards as transformations take place. I will focus on United Airlines.

· APPLE’S RECENT RISK AND UNCERTAINTIES

In the year 2019, the main risk that faced Apple organization is the competition risks, having a current strong decline in revenue and sales in their market in China. China has the main marketing space for Apple products, mostly iPhone as well as iPads. In the year 2017the Company made around $18billion from its market in China, which was about 20% of the company's total revenue. Apple products are currently facing competitive challenges from phones like Huawei since there is a probability of losing around 6% of the company total sales due to the decline of the Chinese market of their products. From the calculation, the company is seeing a foreseeing a total loss of up to 26% of its revenue by the year 2020 if the rate continues the same in the coming months.

The problem of competition is more accelerated due to the ongoing trade conflicts amid the United States and China. The US is claiming that Chinese organizations are utilizing technology in such a way that it might affect the security of a nation. The current moves by the US to refuse the Huawei, a china base technology organization, is the reason behind the organization foreseen decline of revenue up to 26%. 1 APPLE IS IN A POSITION OF LOSING ITS MARKET BASE AS

WELL AS REDUCE ITS EXPERIENCE IN ITS PROFIT MARGIN IN THE COMING YEARS. PRESENTLY, THE MAJORITY OF THE APPLE PRODUCTS ARE SOLD AT A 20% REDUCED PRICE IN CHINESE MARKETS COMPARED TO MOST COUNTRIES.

This is an initiative set focused on advanced competition and risks and uncertainties in the marketplace (fortune.com, 2019).

How to Improve Risk Management

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Majority of the firm assumes risk management to be like risk avoidance, to evade risky projects that might lead to fails, losses or misses. There is a high level of competition amid most firm and this make most organization prepared and ready for the emergence of these risks. Most risks affect the revenue of a given organization. Every organization need to have in place relevant strategies to mitigate risk in the right way. The advice that Apple organization should take is to advance the level of competitive risk control by first establishing a team of specialists from diverse departments within the organization at the same time incorporating the exterior experts. The group can be made up of competitive risk evaluation that operates to assists the organization comprehend the variation of the competitive risks the organization undergoes and ways to deal with these challenges. 1

THIS SHOULD THEN BE FOLLOWED BY THE IDENTIFICATION OF THE COMPETITORS, THEIR PRODUCTS, AND THEIR PRICING. HUAWEI BEING THE LEADING THREAT FOR APPLE IN CHINA, THE TEAM CAN FOCUS ON UNDERSTANDING MORE ABOUT THE PRODUCTS OF HUAWEI.

After having proper knowledge of their main competitors that is Huawei, the organization can make the work on developing a new form of technology as well as innovation by presenting a new and unique product which most consumers prefer. There is a need for the firm to develop advanced new products that have a great significant value compared to that of its competitors. 1 FOCUSING

ON CUSTOMER SATISFACTION SHOULD REMAIN THE KEY TARGET FOR APPLE EVEN AS IT PLANS TO DEAL WITH THE RISKS OF LOSING ITS MARKET IN CHINA. THE MAIN AREAS WHERE THE COMPETITORS TAKE ADVANTAGE IS THE PRICING WHICH IS DUE TO THE HIGH PRICES THAT APPLE SET FOR THEIR PRODUCTS. With this factor, the risk management plan should also focus on evaluating the market state to check the risks that might emerge to either increase or reduce their revenue. It is important that the organization focuses on the value addition and the comprehension of the market dynamics on ways it can offer a business opportunity for their organization.

Adverse Selection

· THE ADVERSE SELECTION MEANS A SITUATION WHEREBY A SINGLE PARTY HAS MORE NECESSARY DATA REGARDING A GIVEN PRODUCT OR EVEN A GIVEN MARKET OTHER THAN ONE PARTY. THE APPLE ORGANIZATION IS EXPERIENCING MORE ISSUES OF ADVERSE SELECTION, MOSTLY IN THE

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CHINESE MARKET, WHERE IT IS EXPERIENCING UNCERTAINTIES AND RISKS (FISHMAN & PARKER, 2015). SOME POTENTIAL BUYERS OF APPLE PRODUCTS MIGHT FAIL TO TELL THE GOOD FEATURE FROM APPLE'S PRODUCTS COMPARED TO PRODUCTS OF OTHER FIRMS. SOME OF THE POTENTIAL CUSTOMERS FOR APPLE PRODUCTS CANNOT TELL THE GOOD ATTRIBUTES FROM THE PRODUCTS OF APPLE AS COMPARED TO THOSE OF OTHER FIRMS. DUE TO THE LACK OF ACCURATE AND THE RIGHT INFORMATION IN THE MARKET, THE COMPANY IS AT RISK OF LOSING SALES. IT LEADS TO POOLING EQUILIBRIUM BECAUSE THE CUSTOMERS CONTINUE TO GROUP THE PRODUCTS AS THE SAME SINCE THEY ARE UNINFORMED ABOUT THE UNIQUE FEATURES OF THE PRODUCTS.

The adverse selection has the probability of leading to the asymmetry that results to the lack of effectiveness in quantity and pricing. One of the many ways in which an organization can handle the issues is through adverse selection is by providing refunds, warranties as well as guarantees if in any case, a product generates an issue with the user — this assist in improving the presentation of the product and the customer's trust. 1 "INTERMEDIATION IS ALSO A MAJOR WAY

THAT APPLE CAN USE TO OVERCOME THE NEGATIVE EFFECT OF ADVERSE SELECTION. INTERMEDIARIES CAN HELP MINIMIZE THE ASYMMETRIC INFORMATION GAP THROUGH THE ESTABLISHMENT OF TRUST AND BUILDING A STRONG RELATIONSHIP BETWEEN THE BUYERS AND THE SELLERS (FISHMAN & PARKER, 2015).” MORAL HAZARDS

Moral hazard can be referred to as a risk-taking action whereby one party involves into diverse transactions without faithfulness and with the conscious that the other party will undergo the consequences. "The major cause of moral hazard is asymmetric information (Kaya & Vereshchagina, 2015).” Presently, the Apple organization is facing the issue of moral hazard by offering relevant information regarding its prices and products to the clients on their website among other social media pages. Since moral hazard takes place where one party lack sufficient data regarding the item or the transactions, the organization has used the chance of internet development to offer sufficient data needed by clients and all the other stakeholder to enhance understanding.

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· “PROVIDING THE RIGHT INFORMATION TO THE CUSTOMERS AND BUILDING A STRONG RELATIONSHIP AND TRUST BETWEEN THE SELLERS AND BUYERS HAVE BEEN USED BY MANY INDUSTRIES TO HELP INCREASE INFORMATION EFFICIENCY AND REDUCE MORAL HAZARDS." By trusting and frequently involving with customers, a firm is in a position to maintain a long-lasting connection that can improve the

company’s competitive advantage. 1 THROUGH THE CREATION OF A PLATFORM THAT

GIVES ROOM TO FREE FLOW OF DATA AS WELL AS CONSTANT INTERACTION AMID THE CUSTOMERS AND ORGANIZATION ITSELF, THE INCIDENCES OF THE ASYMMETRIC DATA ARE REDUCED WHICH LEADS TO THE REDUCTION OF CASES OF MORAL HAZARDS WHERE ONE PARTY GETS INTO A CONTRACT WITHOUT A GOOD INTENTION BECAUSE THE CONSEQUENCES WILL BE CARRIED BY ANOTHER PARTY.

· PRINCIPAL-AGENT PROBLEM

· BUSINESSES USUALLY HIRE PEOPLE EXPECTED TO WORK ON THEIR BEHALF AND FOR THEIR INTERESTS. HOWEVER, THE PROBLEM ARISES AS A RESULT OF THE CONFLICT OF INTEREST BETWEEN THE PRINCIPAL AND AGENTS WHEN IT COMES TO INCENTIVES AND PAYMENT OF SALARIES. APPLE, LIKE ANY OTHER COMPANY, HAVE A PRINCIPAL-AGENT PROBLEM WHERE THE EMPLOYEES ARE HIRED AND EXPECTED TO PERFORM. BOTH THE PRINCIPALS AND THE AGENTS AT APPLE COMPANY HAVE VARYING SELF-INTERESTS, WHICH CREATES A PROBLEM. WHILE THE AGENTS ARE EXPECTED TO PERFORM THEIR DUTY AND MEET THE EXPECTATIONS OF THE PRINCIPAL, THEY MAY WORK TO MEET THEIR INTERESTS, THUS CREATING MORE PROBLEMS.

THE NEW IDEA TO A PRINCIPAL-AGENT CONNECTION THAT IS ADOPTED BY APPLE WORKS ON ERADICATING THE UTILIZATION OF THE TACIT IDEA AS WELL AS THE DECISION MAKING BASED ON THE AGENT SIDE. THE TOP EXECUTIVE OFFICERS ARE EXPECTED TO HOLD TRIPLE THEIR BASE SALARIES IN STOCK, THUS MAKING THE AGENTS DOUBLE UP AS.

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IN THIS SCENARIO, THE DECISIONS THEY MAKE ALSO AFFECT THEM DIRECTLY IN THE LONG RUN. IT ENSURES THAT THE EXECUTIVES ARE ALSO ASSIGNED TO THE LONG TERM RESPONSIBILITIES AND NOT TO ONLY STRIVE THROUGH THE SHORT TERM GAINS. THIS MOVE BY APPLE CAN HELP REDUCE THE CONFLICT OF INTEREST AND INSTEAD MAKE THE AGENTS WORK TOWARDS THE GOALS OF THE PRINCIPALS BECAUSE THEY ARE ONE OF THEM. EVERY DECISION MADE WILL DIRECTLY AFFECT THE EXECUTIVES, A MOVE WHICH MAKES THEM MAKE THE RIGHT DECISIONS AND TO THE BEST INTEREST OF ALL THE OTHER PRINCIPALS.

Organizational Structure

· APPLE IS ONE OF THE ORGANIZATIONS THAT ARE CONSIDERED TO HAVE A GREAT ORGANIZATIONAL STRUCTURE. The company's organization structure facilitates effective as well as rapid innovation, a very important step in the progression of a tech organization. The organizational structure offers support to the organization strategies that further the

innovation and advancement of a certain company. Apple Inc. 1 HAS A HIERARCHICAL

ORGANIZATIONAL STRUCTURE WHICH HAS DIVISIONAL CHARACTERISTICS AND A WEAK FUNCTIONAL MATRIX. These characteristics are important on product-

founded teams that are within an organization like the macOS and iOS. 1 THE STRUCTURE

HAS THE UPPER AND THE LOWER DIVISIONS AND IS COMPOSED OF THE “SENIOR VICE PRESIDENTS AND VICE PRESIDENTS FOR THE VARIOUS OUTPUT UNITS (KAYA & VERESHCHAGINA, 2015).” THE PROBLEM WITH THE APPLE INC. ADMINISTRATIVE STRUCTURE IS ITS FEEBLE FUNCTIONAL MATRIX AND LIMITED DECISION MAKING FROM THE JUNIOR EMPLOYEES. In the feeble functional matrix, the highest management controls the project way and makes decisions while the

plan heads have inadequate power. 1 THE ORGANIZATION, THEREFORE, REQUIRES

THAT A STRUCTURE BE CHANGED TO ALLOW FOR PARTICIPATORY DECISION MAKING WHERE EVEN THE JUNIOR EMPLOYEES ARE ALLOWED TO TAKE PART IN DECISION MAKING AND TO MAKE THEM FEEL PART OF THE SUCCESS OF THE FIRM. WHILE THERE ARE MAJOR DECISIONS THAT MUST BE MADE BY THE TOP EXECUTIVES, CERTAIN ROUTINE DECISIONS CAN BE MADE BY THE

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SUBORDINATE TO ENSURE THAT THEIR IDEAS ARE ALSO TAKEN INTO CONSIDERATION.

References

Fishman, M. 1 J., & PARKER, J. A. (2015). 1 VALUATION, ADVERSE SELECTION,

AND MARKET COLLAPSES. THE REVIEW OF FINANCIAL STUDIES, 28(9), 2575-2607.

KAYA, A., & VERESHCHAGINA, G. (2015). 1 MORAL HAZARD AND SORTING IN A MARKET FOR PARTNERSHIPS. ECONOMIC THEORY, 60(1), 73-121.

PRINCIPAL AGENT PROBLEM IN PEER REVIEW. JOURNAL OF THE ASSOCIATION

‐

FOR INFORMATION SCIENCE AND TECHNOLOGY, 66(2), 297-308.

CHINA BANNING THE IPHONE COULD CAUSE APPLE EARNING TO PLUMMET. (2019). 1 RETRIEVED FROM

HTTPS://WWW.DAILYMAIL.CO.UK/SCIENCETECH/ARTICLE-7081903/ESCALATIG-TRADE-WAR-CHINA-BANNING-IPHONE-APPLES-EARNINGS-PLUMMET-26-CENT.HTML

HTTP://FORTUNE.COM. (2019). 3 RETRIEVED FROM HTTP://FORTUNE.COM/2019/04/05/APPLE-CHINA-MARKET-PLANS/

Citations (4/4)

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· Another student's paper

· Another student's paper

· Another student's paper

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C ASE AN ALYSIS O F RISK,U N C ERTAIN TY AN D M AN AG IN G IN C EN TIVES

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APPLE IS IN A PO SITIO N O F LO SIN G ITS M ARKET BASE AS W ELL AS RED U C E ITS EXPERIEN C E IN ITS PRO FIT M ARG IN IN THE CO M ING YEARS

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CASE STUDY 2 1

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CASE STUDY 2

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CASE STUDY 2

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Cases Analysis of Risk, Uncertainty and Managing Incentives

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PRESEN TLY,TH E M AJO RITY O F TH E APPLE

PRODUCTS ARE SOLD AT A 20% REDUCED PRICE IN CHINESE M ARKETS CO M PARED TO M O ST COUNTRIES

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THIS SHOULD THEN BE FOLLOW ED BY THE

ID EN TIFIC ATIO N O F TH E C O M PETITO R S,TH EIR PRO DUCTS,AND THEIR PRICING

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H U AW EIBEIN G TH E LEAD IN G TH REAT FO R APPLE IN CHINA,THE TEAM CAN FOCUS ON

UNDERSTANDING M ORE ABOUT THE PRODUCTS OF HUAW EI

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FOCUSING ON CUSTOM ER SATISFACTION SHOULD REM AIN TH E KEY TARG ET FO R APPLE EVEN AS IT PLAN S TO DEAL W ITH TH E RISKS O F LO SIN G ITS M ARKET IN CHINA

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THE M AIN AREAS W HERE THE CO M PETITO RS TAKE ADVANTAGE IS THE PRICING W HICH IS DUE TO THE H IG H PRIC ES TH AT APPLE SET FO R TH EIR PRODUCTS

Currently, most of the Apple products are being sold at a 20% reduced price in China compared to other countries (fortune.com, 2019)

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This should then be followed by the identification of the competitors, their products, and their pricing

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Huawei being the leading threat for Apple in China, the team can focus on understanding more about the products of Huawei

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Focusing on customer satisfaction should remain the key target for Apple even as it plans to deal with the risks of losing its market in China

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The key areas that competitors take advantage of are the pricing due to the high price of Apple products

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TH E AD VERSE SELEC TIO N M EAN S A SITU ATIO N

W HEREBY A SING LE PARTY HAS M O RE NECESSARY DATA REGARDING A GIVEN PRODUCT OR EVEN A G IVEN M ARKET O TH ER TH AN O N E PARTY

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TH E APPLE O RG AN IZATIO N IS EXPERIEN C IN G

· O RE ISSU ES O F AD VERSE SELEC TIO N ,M O STLY IN TH E C H IN ESE M ARKET,W H ERE IT IS EXPERIEN C IN G U N C ERTAIN TIES AN D RISKS (FISH M AN & PARKER, 2015)

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SO M E PO TENTIAL BUYERS O F APPLE PRO DUCTS M IGHT FAIL TO TELL THE GOOD FEATURE FROM APPLE'S PRODUCTS COM PARED TO PRODUCTS OF O THER FIRM S

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SOM E OF THE POTENTIAL CUSTOM ERS FOR APPLE PRODUCTS CANNOT TELL THE GOOD ATTRIBUTES FROM THE PRODUCTS OF APPLE AS COM PARED TO THOSE OF OTHER FIRM S

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Adverse Selection Adverse selection refers to a situation in which one party has more accurate information about a product or a market than the other party

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Apple Company suffers from the problem of adverse selection, especially in the Chinese market, where it is currently facing serious risks and uncertainties (Fishman & Parker, 2015)

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Some of the potential customers for Apple products cannot tell the good attributes from the products of Apple as compared to those of other firms

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Some of the potential customers for Apple products cannot tell the good attributes from the products of Apple as compared to those of other firms

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DUE TO THE LACK OF ACCURATE AND THE RIGHT INFO RM ATIO N IN THE M ARKET,THE CO M PANY IS AT RISK O F LO SIN G SALES

Due to the lack of accurate and the right information in the market, the company is at risk of losing sales

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IT LEADS TO PO O LING EQ UILIBRIUM BECAUSE THE CUSTOM ERS CONTINUE TO GROUP THE PRODUCTS AS THE SAM E SINCE THEY ARE

UNINFORM ED ABOUT THE UNIQUE FEATURES OF THE PRODUCTS

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"IN TERM ED IATIO N IS ALSO A M AJO R W AY TH AT APPLE CAN USE TO O VERCO M E THE NEG ATIVE EFFEC T O F AD VERSE SELEC TIO N

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IN TERM ED IARIES C AN H ELP M IN IM IZE TH E ASYM M ETRIC INFO RM ATIO N G AP THRO UG H THE ESTABLISHM ENT O F TRUST AND BUILDING A STRO NG RELATIO NSHIP BETW EEN THE BUYERS AN D TH E SELLERS (FISH M AN & PARKER,2015).” M O RAL HAZARDS

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“PRO VIDING THE RIG HT INFO RM ATIO N TO THE CUSTOM ERS AND BUILDING A STRONG

RELATIO N SH IP AN D TRU ST BETW EEN TH E SELLERS AND BUYERS HAVE BEEN USED BY M ANY

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It leads to pooling equilibrium because the customers continue to group the products as the same since they are uninformed about the unique features of the products

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Intermediation is also a significant way that Apple can use to overcome the negative effect of adverse selection

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Intermediaries can help minimize the asymmetric information gap through the establishment of trust and building a strong relationship between the buyers and the sellers (Fishman & Parker, 2015)

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Providing the right information to the customers and building a strong relationship and trust between the sellers and buyers have been used by many industries to help increase information efficiency and reduce moral hazards

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INDUSTRIES TO HELP INCREASE INFO RM ATIO N EFFICIENCY AND REDUCE M O RAL HAZARDS."

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THROUGH THE CREATION OF A PLATFORM THAT GIVES ROOM TO FREE FLOW OF DATA AS W ELL AS CONSTANT INTERACTION AM ID THE CUSTOM ERS AN D O RG AN IZATIO N ITSELF,TH E IN C ID EN C ES O F THE ASYM M ETRIC DATA ARE REDUCED W HICH LEADS TO THE REDUCTION OF CASES OF M ORAL HAZARDS W HERE ONE PARTY GETS INTO A CONTRACT W ITHOUT A GOOD INTENTION

BECAUSE THE CONSEQUENCES W ILL BE CARRIED BY AN O TH ER PARTY

Source - Another student's paper

By establishing a channel that allows for the free flow of information and constant interaction between the firm and the customers, the incidences of asymmetric information are minimized thus leading to the decrease in cases of moral hazards where one party gets into a contract without a good intention because the consequences will be carried by another party

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BU SIN ESSES U SU ALLY H IRE PEO PLE EXPEC TED TO

· ORK ON THEIR BEHALF AND FOR THEIR IN TER ESTS

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HO W EVER,THE PRO BLEM ARISES AS A RESULT O F THE CO NFLICT O F INTEREST BETW EEN THE

PRINCIPAL AND AGENTS W HEN IT COM ES TO IN C EN TIVES AN D PAYM EN T O F SALARIES

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APPLE,LIKE AN Y O TH ER C O M PAN Y,H AVE A PRINCIPAL-AG ENT PRO BLEM W HERE THE

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Principal-Agent Problem Businesses usually hire people expected to work on their behalf and for their interests

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However, the problem arises as a result of the conflict of interest between the principal and agents when it comes to incentives and payment of salaries

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Apple, like any other company, have a principal-agent problem where the employees are hired and expected to perform

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EM PLO YEES ARE H IRED AN D EXPEC TED TO PERFO RM

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BO TH TH E PRIN C IPALS AN D TH E AG EN TS AT APPLE C O M PAN Y H AVE VARYIN G SELF-IN TERESTS,W H IC H CREATES A PRO BLEM

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· H ILE TH E AG EN TS ARE EXPEC TED TO PERFO RM THEIR DUTY AND M EET THE EXPECTATIONS OF THE PRIN C IPAL,TH EY M AY W O RK TO M EET TH EIR

INTERESTS,THUS CREATING M O RE PRO BLEM S

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TH E N EW ID EA TO A PRIN C IPAL-AG EN T

CONNECTION THAT IS ADOPTED BY APPLE W ORKS O N ERAD IC ATIN G TH E U TILIZATIO N O F TH E TAC IT IDEA AS W ELL AS TH E DEC ISIO N M AKIN G BASED ON THE AGENT SIDE

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TH E TO P EXEC U TIVE O FFIC ER S AR E EXPEC TED TO H O LD TRIPLE TH EIR BASE SALARIES IN STO C K, THUS M AKING THE AGENTS DOUBLE UP AS

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Both the principals and the agents at Apple Company have varying self-interests, which creates a problem

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While the agents are expected to perform their duty and meet the expectations of the principal, they may work to meet their interests, thus creating more problems

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The new solution to the principal-agent relationship adopted by Apple aims at eradicating the use of tacit knowledge and the opportunistic decision making on the side of the agent

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The top executive officers are expected to hold triple their base salaries in stock, thus making the agents double up as principal (García, Rodriguez‐Sánchez & Fdez‐Valdivia, 2015)

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IN THIS SCENARIO ,THE DECISIO NS THEY M AKE ALSO AFFECT THEM DIRECTLY IN THE LO NG RUN

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IT EN SU RES TH AT TH E EXEC U TIVES ARE ALSO ASSIG N ED TO TH E LO N G TERM RESPO N SIBILITIES AND NOT TO ONLY STRIVE THROUGH THE SHORT TERM G AINS

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THIS M OVE BY APPLE CAN HELP REDUCE THE

CO NFLICT O F INTEREST AND INSTEAD M AKE THE AGENTS W ORK TOW ARDS THE GOALS OF THE PRINCIPALS BECAUSE THEY ARE O NE O F THEM

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EVERY D EC ISIO N M AD E W ILL D IREC TLY AFFEC T TH E EXEC U TIVES,A M O VE W H IC H M AKES TH EM

· AKE THE RIGHT DECISIONS AND TO THE BEST IN TEREST O F ALL TH E O TH ER PRIN C IPALS

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APPLE IS ONE OF THE ORGANIZATIONS THAT ARE CO NSIDERED TO HAVE A G REAT O RG ANIZATIO NAL STRUCTURE

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In this scenario, the decisions they make also affect them directly in the long run

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It ensures that the executives are also assigned to the long term responsibilities and not to only strive through the short term gains

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This move by Apple can help reduce the conflict of interest and instead make the agents work towards the goals of the principals because they are one of them

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Every decision made will directly affect the executives, a move which makes them make the right decisions and to the best interest of all the other principals

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Organizational Structure Apple is one of the companies considered to have a better organizational structure

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HAS A HIERARCHICAL O RG ANIZATIO NAL STRUCTURE W HICH HAS DIVISIONAL

CHARACTERISTICS AND A W EAK FUNCTIO NAL M ATR IX

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THE STRUCTURE HAS THE UPPER AND THE LOW ER DIVISIONS AND IS COM POSED OF THE “SENIOR VIC E PRESID EN TS AN D VIC E PRESID EN TS FO R TH E VARIO US O UTPUT UNITS (KAYA & VERESHCHAG INA, 2015).” TH E PRO BLEM W ITH TH E APPLE IN C

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AD M IN ISTRATIVE STRU C TU RE IS ITS FEEBLE FU N C TIO N AL M ATRIX AN D LIM ITED D EC ISIO N M AKING FRO M THE JUNIO R EM PLO YEES

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TH E O RG AN IZATIO N ,TH EREFO RE,REQ U IRES TH AT A STRUCTURE BE CHANGED TO ALLOW FOR PARTIC IPATO RY D EC ISIO N M AKIN G W H ERE EVEN TH E JU N IO R EM PLO YEES ARE ALLO W ED TO TAKE PART IN DEC ISIO N M AKIN G AN D TO M AKE TH EM FEEL PART OF THE SUCCESS OF THE FIRM

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has a hierarchical organizational structure which has divisional characteristics and a weak functional matrix

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The structure has the upper and the lower divisions and is composed of the senior vice presidents and vice presidents for the various output units

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organizational structure is its weak functional matrix and limited decision making from the junior employees

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The organization, therefore, requires that a structure be changed to allow for participatory decision making where even the junior employees are permitted to take part in decision making and to make them feel part of the success of the firm

Source - Another student's paper

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· HILE THERE ARE M AJOR DECISIONS THAT M UST BE M AD E BY TH E TO P EXEC U TIVES,C ERTAIN

ROUTINE DECISIONS CAN BE M ADE BY THE

SUBO RDINATE TO ENSURE THAT THEIR IDEAS ARE ALSO TAKEN IN TO C O N SID ERATIO N

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J.,& PAR KER ,J

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VALU ATIO N ,AD VERSE SELEC TIO N ,AN D M ARKET C O LLAPSES

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TH E R EVIEW O F FIN AN C IAL STU D IES,28(9),2575-2607

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KAYA,A.,& VERESH C H AG IN A,G

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M O RAL HAZARD AND SO RTING IN A M ARKET FO R PARTN ERSH IPS

While there are significant decisions that must be made by the top executives, individual routine decisions can be made by the subordinate to ensure that their ideas are also taken into consideration

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J., & Parker, J

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Valuation, adverse selection, and market collapses

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The Review of Financial Studies, 28(9), 2575-2607

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Kaya, A., & Vereshchagina, G

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Moral hazard and sorting in a market for partnerships

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EC O N O M IC TH EO RY,60(1),73-121

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A.,R O D R IG U EZ‐SÁN C H EZ,R .,& FD EZ‐VALD IVIA,J

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TH E PRIN C IPAL‐AG EN T PRO BLEM IN PEER REVIEW

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JOURNAL OF THE ASSOCIATION FOR INFORM ATION SC IEN C E AN D TEC H N O LO G Y,66(2),297-308

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CHINA BANNING THE IPHONE COULD CAUSE APPLE EARN IN G TO PLU M M ET

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R ETR IEVED FR O M

H TTPS://W W W .D AILYM AIL.C O .U K/SC IEN C ETEC H /AR TIC LE-7081903/ESC ALATIG -TR AD E-W AR -C H IN A-

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Economic Theory, 60(1), 73-121

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A., Rodriguez‐Sánchez, R., & Fdez‐Valdivia, J

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The principal‐agent problem in peer review

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Journal of the Association for Information Science and Technology, 66(2), 297-308

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China banning the iPhone could cause Apple earning to plummet

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Retrieved from

https://www.dailymail.co.uk/sciencetech/article-

7081903/Escalatig-trade-war-China-banning-iPhone-

Apples-earnings-plummet-26-cent.html

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BAN N IN G -IPH O N E-APPLES-EARN IN G S-PLU M M ET-26-C EN T.H TM L

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H TTP://FO RTU N E.C O M

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M ANAGERIAL ECONOM ICS & GLOBALIZATION DR

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APPLE’S REC EN T RISK AN D U N C ERTAIN TIES

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R ETR IEVED FR O M

H TTP://FO RTU N E.C O M /2019/04/05/APPLE-C H IN A-

M ARKET-PLAN S/

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PRIN C IPAL-AG EN T PRO BLEM

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http://fortune.com

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Apple’s Current Risk and Uncertainties Apple Inc

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Retrieved from http://fortune.com/2019/04/05/apple-china-market-plans/ García, J

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Principal-agent problem

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