Risk Management

Project Report

Submitted To: Dr. Naeem Ullah

Submitted By: Sadia Rafique

PhD (MS)
Reg. No.: FURC/FA21-PHMS-005/FUI
Enterprise Risk Management (ERM)
In achieving the strategic objectives of an organization, probable risks events are evaluated
and identified through a process called ERM. This process creates a strategy to plan, to
organize the structure, to lead, and to control the activities of organization. Entrepreneur risk
management consists of financial, operational, strategic risks and accidental losses.
Organization: Apple

One of the successful technology firms in international market, Apple Inc., can only continue
registering great performance with its capable management which can identify and manage
risks both in the internal and external environment. 
In late 1980s and in early 1990s, this one of the top most organization also faced serious
challenges particularly in design and manufacturing costs of personal computers. Poor
workmanship in design and development made this product less popular. To address the
problems, in 1997 board of directors brought back the jobs and did serious attempts to
eradicate these problems in a better way.

1. Identified Threats (Risks)

External Threats
Samsung is the biggest rival that Apple Inc. is currently facing in the market because of the
similarity of the products that both firms offer. However there are other major competitors
too; like Google, HP, Microsoft Toshiba and Dell.
Internal Threats
Management must be aware of internal threats too that might emerge from internal
operations. One of the major threats is; rivals in the market are always in the search of the
highly-skilled workforce. Thought the employee turnover of this company is low, however
the firm has already lost its talented employees to top technology firms like Google Inc. and
Microsoft Corporation.

Loyalty is one of the most important qualities that employees of a firm should have. Apart
from other internal threats, one of the major things which a firm has to secure is its designs
and novel work. Threat of stealing designs and other copyrights is real and is very dangerous
to the time and investment involved.

2. Calculation of Risk and Risk Threshold

Risk threshold calculations show the importance of risks and other factors to management
and clear the need to focus on solutions by addressing them. Particularly the external threats
are more critical and can be severe, therefore and it needs to be addressed as early as possible
to make sure that they do not disturb the company operations negatively.

It is considered that Samsung has already taken the market of Apple Inc. and Stiff market
competition highlights the issues and problems that Apple Inc. is currently facing.
iPad and iPhone inventions dominated Apple inc. in the market for a long time. However,
Samsung with very similar products and features came up with relatively lower prices which
Apple \inc. was offering. This made it very easy for Samsung to enter the largest market USA
and in other global markets. To keep the cost lower for end user, Apple Inc. moved its
production plant from USA to China to cut down the cost of operations. Whereas,
competition becomes even stronger as new local firms are emerging by offering lower prices
with almost similar features.

In the external market, Counterfeiting and stealing of copyrighted designs are the significant
threats too. Both companies Apple Inc. and Samsung had long court battles over the issues of
copyrights. Whereas the counterfeiting problem has been a major concern in China. another
significant threat in the external market. Apple Inc. and Samsung Corporation have been held
in long court battles over issues of abuse of copyrighted designs. Apple has accused Samsung
of stealing some of its designs. The problem of counterfeiting has been a major concern in
China.

Terror threats are one of the emerging external threats which is given least consideration by
the companies. It has already happened in France when Charlie Hebdo was attacked by the
terror group, and left the top editors at this firm dead. It was a well-planned attack and such
mishaps might bring companies in risk of losing its valuable employees and assets.

Innovation cost has also been an issue and sometimes firms spend a lot to come up with a
new invention only for the rivals to copy it at no cost. Though innovations are strong, but its
cost association is a serious challenge. Innovation itself is strong, but the cost associated with
it is an issue.

Other internal factors like lack of loyalty and employee turnover are not posing any
significant threat to this firm comparatively to these internal threats.

Mitigation Actions

Despite of the strict competition faced by Apple Inc. in the smart phone market, it still
remains one of the top brands in the electronic market. The mentioned issues can slow the
progress of the company, and might force it out of the market. However the issues discussed
above have the potential of slowing the growth of this company or even forcing it out of the
market entirely. However, this firm can come up with measures that can help it deal with the
threat in a very effective manner.

The given are some of the possible mitigation actions that it can use to deal with each of the
above-discussed threats.

Managing competition
For the firm apple Inc., market competition is the major threat that firm has to deal
professionally based on the discussion above. To deal with the problems and mentioned
issues, the management first must expend its product line by introducing low cost products
that can favourably compete with products of firms like Samsung, and management must take
the advantage of its strong brand to diversify its products.
Fighting counterfeit
Firm has yet to find the way of fighting counterfeit products which is a big challenge,
especially in the global market. It is the serious concern as firm is offering high-quality
products, Apple Inc. in markets outside the United States and Europe, particularly in places
where counterfeiting is rampant such as in China. Another strategy can be adopted is that
firm can warn its customers purchasing the products outside its speciality shop.

Reducing the cost of innovation

The cost of innovation at this company is relatively high. To deal with this problem, the
management may consider new approaches that will cost less (Marchetti 2012). For instance,
the management may come up with a policy where new ideas are taken through a thorough
screening to ensure that they are viable before investing a lot in them at advanced stages only
to realise that they cannot apply to the firm.

Managing terror threat

Terror attacks threats also need to manage which is the trouble not only for the firm but also
for the entire country. Firm can get out of this trouble by introducing new security system in
its premises especially its head office in California, but also in its production plants and in
major outlets. However employees should get training to respond any possible terror attack.

Improving employee loyalty and reducing their turnover rate

Reducing employees turn over and improving their loyalty would be finding useful and
management should come up with human resource management strategies which are
engaging. Employees should be involved in decision-making processes.

Conclusion

Firms are keenly focusing on one of the most important areas of management; risk
management. One of the leading American company Apple Inc. are keen to focus on risk
management, faces numerous threats in the market that may have a significant impact on its
operations. Stiff competition in the market, terror attacks, counterfeiting, employee loyalty
and employee turnover rates are the major issues of this firm. It need to deal with to improve
its competitiveness.