University of Phoenix CMGT/442 Week 3 - Information Systems Risk Management

CMGT/442

November 29, 2016

Professor Julio Rodriguez

Introduction

Apple Inc. is a worldwide company that deals with the design, development and selling off their self-innovated personal computers, electronic devices and computer software to customers worldwide. The reason behind our choice of this company was driven by the innovativeness it displays in its products, as well as the reliability and security of those products. Some of the main products associated with Apple. Inc. are the IPad, IPod, IPhone and Mac computers (Datamonitor, 2000).

Risks that Apple Inc. faces

For a number of years now, Apple Inc. has managed to outshine its competitors by using advanced marketing techniques such as graphic design, advertising, and digital music, to name a few. Furthermore, Apple products are unique and can be costly compared to competitors. Apple has a reputation to upkeep and lots of information to keep safe in order to continue to be of the most reliable software and hardware products today. Like any other company Apple Inc. has been faced with a large number of risks. In order to protect the business and its customers, Apple Inc. must stay vigilant by employing methods to study, understand and assess risks.

One of the main risks is about the legal patents. According to Geekwire, apple is among the most sued companies throughout the industry. This is a high risk since it is possible that at some point Apple may lose its patents as well as tarnish the reputation that the company has worked so hard to build. Such a case will deny Apple the competitive advantage it has over its competitors and potentially lose customers over the controversial issues that the company faces.

The second risk that Apple faces is brought about by use of sweatshops for their product manufacture. This by itself is an unethical practice in a business (Scott, 2008). Cases have been recorded of employee mistreatment in some of its branches. With these unethical practices, Apple Inc. risks a chance of being closed down or sued due to bad labor practices.

The third risk that faces Apple Inc. faces is brought by the great dependency Apple Inc. has on other companies. By Apple being dependent on other companies to create their own product, Apple loses control on the distribution of its product. For instance, the iPad processors are manufactured by Samsung, while LG manufactures the IPS display (Datamonitor, 2000). Under such a case the unique components can be used by other companies.

The fourth risk that Apple Inc. is exposed to is the cyber-attacks. Considering that the company uses cloud computing technology it risks being attacked. Such attacks may cause operation interruption and financial loss to the company (Scott, 2008). Similarly, such attacks may cause leakage of sensitive data that can be used to bring the company down as well as damage the company’s reputation.

The fifth risk that Apple Inc. faces is the change in legislations in the company they operate. Some companies may impose economic sanctions, international regulations and protectionism which will interfere with the business operations of Apple Inc. Some of these regulations could force Apple to stop operating in some countries and significantly reduce their profit margins. Comment by Julio Rodriguez: Country?

The sixth risk that Apple Inc. is prone to be caused by the intensified competition, volatility, and market stagnation. With Apple facing so many charges it may lose its reputation (O'Grady, 2009). Also, by allowing other companies to manufacture their parts, those companies maycompanies may copy the idea and develop similar products that will increase the competition for Apple. These factors could potentially result in a decrease in sales.

Similarly, since Apple relies on other companies to make their products, their plans may be interrupted. Apple may be targeting to have a certain number of products in place for sale at a certain time but the manufacturing companies’ could fail to deliver the required products in time. Such a case will result in a change of plans for Apple. In a case where their products are for sale then they will incur an unplanned drop in sales or not be able to reach their financial goal

The eighth risk that Apple Inc. faces is the interruptions of business operations or the supply chain interruption as well as a political upheaval. With so many cases in court, Apple may be forced to stop operating for some time. Similarly, they may fail to get the raw materials required to manufacture their products leading to low manufacturing and at times reduced sales.

The ninth risk that Apple Inc. is exposed to is the operation cost increase. Considering that Apple Inc. has court cases and that it depends on other companies to manufacture some of its products they may not always be in a position to spend due to a limited budget. This is because at times there may be hidden charges or some extra charges that will be provided to cater for unplanned court cases or to cater for extra product manufacturing.

The final risk that Apple Inc. faces is that apple continuity is at risk. With the many court cases and the dependency on its competitor’s apple can’t fully determine its future. This is greatly emphasized by the fact that its status is not under its control but under the control of others.

Finally, Apple Inc. is exposed to a fluctuating currency since it operates internationally. In this case, the profit margins of the company are at risk (O'Grady, 2009). Together with the international trade tariffs these two factors greatly make the profit undeterminable.

Conclusion

From our discussion above, it is evident that Apple faces very serious risks that can affect its operations. Due to this, the company should adopt strong risk management skills to mitigate the risks and consequently continue to enjoy their great sales and profits.

References

DATAMONITOR:Apple Inc.. (2010). Retrieved from

http://connection.ebscohost.com/c/company-reports/51496184/datamonitor-apple-inc

Frank, B. H. (2014). Apple, Amazon top list of companies most sued. Retrieved from

http://www.geekwire.com/2014/chart-apple-amazon-top-list-companies-sued-patent-infringement/

O'Grady, J. D. (2009). Apple Inc. Westport, Conn: Greenwood Press.

Scott, M. (2008). Apple, inc. Westport: Greenwood.

Running head: APPLE INC. RISK ASSESSMENT

APPLE INC. RISK ASSESSMENT