Influence of Laws, Regulations, and Operational Risk Assessment in Strategic Planning and Risk Mitigation The Role of Finance at Apple
The role of finance in the strategic planning process has become more relevant because of the introduction of the balanced scorecard. The balanced scorecard emphasizes financial performance as a key indicator of an organization’s success and helps link strategic goals to performance (Kono & Barnes, 2010).
The balanced scorecard also “provides timely and useful information to facilitate strategic and operational control decisions” (Kono & Barnes, 2010).
Apple is no different than other major organizations in that it relies heavily on finance in the strategic-planning and decision-making process. The following list provides financial goals and metrics based on the “best-in-industry” organizations. Free Cash Flow
Economic Value-Added
Asset Management
Financing Decisions and Capital Structure
Profitability Ratios
Growth Indices
Risk Assessment Management
Tax Optimization
“Investment in new business strategies and acquisitions could disrupt the Company’s ongoing business and present risks not originally contemplated” so it is important that Apple does upfront work to make sure it is investing in acquisitions or projects that have a return on investment (US Securities and Exchange, 2013).
It is important for Finance to be involved in the strategic planning and decision-making process because they are able to identify the return on investment as well and possible unidentified issues which may not have come up. Another role Finance plays in the strategic-planning and decision-making is evaluating equipment needed to support future growth.
The Business plan on Strategic Information System Planning
Strategic Information System Planning is imperative in business planning because firms cannot become competitive in both the short term and the long term periods without them. Tamir, Seev, Moshe, and Chanan (2010, p. 18) writes that in management of a firm, Strategic Information System Planning (SISP) is imperative and is the roadmap to ensuring that Information Technology ‘activities are ...
Finance can judge if spending capital on machinery would be a better decision than leasing the equipment. This is especially important when it comes to strategic-planning for future growth. Finance’s role in tax optimization is another important role in the strategic-planning and decision-making process. “As of September 28, 2013, Apple had deferred tax assets arising from deductible temporary differences, tax losses, and tax credits of $4.2 billion, and deferred tax liabilities of $16.5 billion” (US Securities and Exchange, 2013).
Finance played the key role by managing the level of tax liability undertaken in conducting business. Finance also was able to weigh product development and new initiatives against their tax implications (US Securities and Exchange, 2013).
Apple sees Finance as an equal partner in the strategic-planning and decision-making process. “Studies have shown that a vast majority of corporate strategies fail during execution” (Kono & Barnes, 2010).
By Apple allowing Finance to play an important role in decisions using these metrics listed above, Apple is ensuring it creates a sustainable competitive advantage that maximizes the organizations value (Kono & Barnes, 2010).
Common Practices at Apple
The specific practices or behaviors the company routinely engages in to retain and attract new customers or to expand its geographical reach revolve around the company’s organizational strategy to keep information protected. The aversion to prerelease publicity about products and services is a constant at Apple. Phil Schiller, Apple’s powerful senior vice president of product marketing, has been known to compare an Apple product launch to a blockbuster Hollywood movie opening weekend. “There is tremendous emphasis on the product’s first few days, akin to a film’s opening weekend. Releasing details ahead of time would dampen the suspense” Lashinsky, 1).
The Research paper on History Of Failed Apple Products
Define Risk? Webster dictionary defines risk as the possibility of loss or injury. As I was reading through the case study it surprised me with the products that have failed with Apple. The case only highlights products such as: The 20th Anniversary Macintosh, the A/UX Operating system, Apple’s “Hockey Puck” USB mouse, and lastly the Mac Cube. These products were failures to Apple, but in reality ...
Apple fans camp out in front of Apple stores in anticipation of new Apple product releases in a way that is reminiscent of the lines that once greeted a new installment in the Lord of the Rings or Star Wars franchises. That is precisely the effect Schiller desires from the day one burst of activity. Another reason Apple wants new products to remain in stealth mode until their release dates is so they don’t steal the thunder from existing products.
If consumers know exactly what’s coming, they may hold off on a purchase for fear it will be superseded by the next generation. This dulling of demand renders products already on retail shelves or in warehouses awaiting purchase worthless (Lashinsky, 1).
Most important, announcing products before they are ready gives the competition time to respond, raises customer expectations, and opens a company up to the carping of critics who are bashing an idea rather than an actual product (Lashinsky, 2).
Steve Jobs once said that not talking about the inner workings of the company is something he borrowed from Walt Disney. The creator of the original Magic Kingdom felt the magic the public attributed to Disney would be diminished by excessive focus on what went on behind the scenes. Disney enforced strict internal secrecy. When it was planning Walt Disney World in Florida in the 1960s, for example, the company formed a committee to work on a “Project X.” Internal memos about the plans for the new theme park were numbered so they could be tracked, (Lashinsky, 2).
Examples
Behavioral economics is the study on the effects of psychological, social, cognitive, emotion, and ethics. This is a wonderful study of economics because so much is at risk and reminds us that we are human with emotions, feelings, rationales, and gut feelings. Not all of us are perfect and the definition of perfect is in itself flawed because the definition of perfect leaves us striving for more. The driving force to behavioral economics is a belief set by Adam Smith considered one of the founding fathers of modern economics. Adam wrote books such as The Wealth of Nations and The Theory of Moral Sentiments. In these books, he establishes the relationship between psychology and economics.
Overall, Apple’s record of accomplishment of behavioral economics is relatively good since its founders Steve Jobs and Steve Wozniak both had a mission, vision, and purpose. The founders of Apple set the basis of the company to innovate, challenge the status quo, and change the world. Time will tell if the new CEO and others will carry on their legacy and maintain the moral platform. Apple’s Supplier Code of Conduct details their commitment to the highest standards of social and environmental responsibility and ethical conduct. Apple has its own internal auditors along with third-party auditors to maintain their code of conduct. Apple is very straightforward with their supplier compliance of this conduct which includes termination if found in violation. Apple’s code of conduct covers: Labor and Human Rights
The Essay on Personal Information Apple Products Services
Protecting your privacy is important to Apple. We strive to keep your personal information confidential. By ensuring that you are aware of and understand the Apple Customer Privacy Policy, we can provide you with better service. Please take a moment to read the following policy to learn how we handle your personal information. Why we collect personal information Apple collects and uses your ...
Health and Safety
Environment
Ethics
Management Commitment.
The labor and human rights section details their policies towards antidiscrimination, ant-harassment and abuse, prevention of involuntary labor and human trafficking, prevention of underage labor, and juvenile workers protections etc. Here I believe Apple is in jeopardy because of the different cultures and areas of off shore manufacturing. Apple is under the microscope for their factories in China and other countries for underage workers.
Another area of concern towards behavior economics is innovation or product to market increasing the price of its stock. Here is a slippery slope of potential insider trading. Whether good or bad inside knowledge, upcoming iPhone release, or knowledge that Steve Jobs had, liver cancer if leaked has a potential to create an investigation. In 2009, the SEC investigated Apple in regards to leaking Steve Jobs health to the Wall Street Journal. A week prior at a conference Apple flaunted about its upcoming product releases investigated Apple. The timing led the SEC to investigate if Apple itself released the information after the conference.
References
Apple: Global Trade Compliance. (2014).
Retrieved from
https://www.apple.com/legal/more-resources/gtc.html
Forbes: Regulatory, Anti-Trust, and Disruptive Risks Threaten Apple’s Empire. (2014).
Retrieved fromhttp://www.forbes.com/sites/adamthierer/2012/04/08/regulatory-anti-trust-and-disruptive-risks-threaten-apples-empire/
The Term Paper on Values And Ethical Decision-Making At Apple, Inc.
Values and Ethical Decision-Making Compared with Apple, Inc. The values people choose and the ethical decisions they make in business will be an important part of their business experience. The way in which values and ethical decision-making are practiced compared to that of Apple, Inc. will be the focus of the following information. Furthermore, Team C will compare and contrast the values and ...
Kono, P. M., & Barnes, B. (2010).
The role of finance strategic-planning and
decision-making process. Graziadio Business Review, 13(1).
Retrieved from http://gbr.pepperdine.edu/2010/08/ the-role-of-finance-in-the-strategic-planning-and-
decision- making-process/
Lashinsky, Adam. (2012, Janurary 8).
The secrets apple keeps. Retrieved from
http://fortune.com/2012/01/18/the-secrets-apple-keeps/
US Securities and Exchange Commission, Apple Inc. 10-K Report, Rep. No. 10-K, at 91 (2013).
