Southern New Hampshire University Risk Management Investment Analysis Report


(Apple, Inc)Prompt: In this milestone, you will submit a draft of the Investment Analysis section(II) and the Conclusion section(VI)ofthefinalproject. Youwillevaluatethe perception of the company’s stock and offer recommendations on this stock to potential investors and portfolio managers. Additionally, you will provide a conclusion and overall recommendation as to whether the company is a good investment opportunity. Specifically, the following critical elements must be addressed: II. Investment Analysis a) What is the perception in the market of this company’s stock? b) How would you view this stock as an individual investor? Why? c) What asset allocation strategy might you recommend for including this company’s stock in a portfolio? Be sure to justify your recommendation(s). d) How do you feel a portfolio manager would treat this stock and others from the same industry from an asset allocation perspective? What leads you to this conclusion? VI. Conclusion:Basedonyouroverallanalysis,wouldyourecommendyourselectedcompanyasaninvestmentopportunityoveritscompetitors?Besureto justify your rationale. Guidelines for Submission: Your paper must be submitted as a 4- to 5-page Microsoft Word document with double spacing, 12-point Times New Roman font, one-inch margins, and at least 2 sources cited in APA format.

2 attachmentsSlide 1 of 2attachment_1attachment_1attachment_2attachment_2

Unformatted Attachment Preview

Intro and Feasibility
Apple is a multinational company that manufactures, designs, ad sells various consumer
electronics, online services, and computer software. It is considered amongst the main
technological companies including Google, Amazon, and Facebook. The company competes in a
competitive industry with high bargaining power. However, the company ensures that all the
products designed in its company remains ahead of competitors due to their ability to remain
innovative and competitive in terms of their pricing.
According to Booton (2016), Apple is ranked as the largest publicly traded company
relative to its competitors by market capitalization with an estimated value of approximately
$530. It is also the second biggest manufacturer of mobile phones in the world. Its products
range from tablets, computers, cell phones, and operating systems, among other computer
applications. Compared to its competitors – Microsoft, Google, and Samsung, among others –
Apple has managed to stand out from its competitors in terms of size, market, and scope of
Apple has taken up a leadership position in the technology industry due to its positioning
strategies that have set it apart from other companies in the industry (Yusoff & Husnina, 2018).
It leads in all public companies with a market gap of approximately $1.3 trillion, which exceeds
the GDP of most countries.
After its establishment in 1976, the company has been growing exponentially and went
public in 1980. The company’s success has been evidenced through its stock price in that the
company’s stock increased from 2003 at $6 to more than $80 in 2006. In 2015, the company
announced the highest profit with a new income of $53.4 Billion and its full year revenue
amounted to $233.7 Billion and its net income was $53.4 billion which was an increase by 26%
from the 2014 records where revenue totaled to $39.5 billion. According to Yusoff & Husnina,
(2018) its third quarter earnings, the company registered $53.8 billion in revenue and
approximately $2.18 earnings per share.
Apple is known for making fewer products than most of its competitors although they
take more market share than all the competitor’s products combined. Its products and services
include iPod, Apple Watch, iPhone, Mac, and professional software applications. The products
have enjoyed notable level of success in the market owing to their pricing and innovation.
According to Schaltegger & Burritt (2017), the company’s revenue is directly related to the
registered revenue and investment made locally and internationally.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate accounting. John Wiley &
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts
and practice. Routledge.
Yusoff, M., & Husnina, N. (2018). Determinants of Risks and Performance in Apple
Inc. Available at SSRN 3181705
Risk Analysis and Management
Risk Analysis
Since its establishment, the Apple Computer Company has grown into one of the most
innovative technological firms. The company has been known for exceptional innovation and
growth and its ability to meet consumer needs by capturing technology suing tablet products,
personal computing (Mac), and smartphones. However, the success evidenced in the company
has not been without risks – most of the risks evidenced in the company lie in its ability to
maintain its consumers while attracting new ones. In order to increase its profits and market
scope, the company has opened operations in different foreign countries (Soh & Najihah, 2019).
As a result, it has increased its exposure to risks in the areas it runs its sales and operations. It is
thus necessary to engage in risk analysis and risk management strategies to ensure continued
sustainability and performance in Apple Inc. Company.
One risk that is relevant to the company’s success, industry, and products is the aspect of
financial risks. Constant changes in local currencies and in the value of USD has posed a
significant risk to the company’s growth in foreign countries. Every time foreign currency
depreciates, the company’s products that are in foreign markets become more expensive.
Considering that the company aims to maintaining the same margin of profits, this causes the
management to increase its prices in foreign markets. Increased prices result in the reduction of
sales as a result of decreased demand. However, if the company prefers to maintain its prices in
the foreign markets, it will need to decrease its profit margin, an aspect that will also result in
decreased net sales. The company is also likely to face fluctuations in its market figures in the
investment portfolio, considering that it has a diverse portfolio in different countries and
markets. These investments could be exposed to the risk of fluctuations and credit risk in every
market, an aspect that could cause significant losses in the event that the economic conditions
fail to turn out favorably.
Risks that are relevant to particular scenarios often depend on the presented situation and
circumstances. Changes in the value of USD and foreign currencies are financial risks faced by
the company that is classified under the category of market risk. Market risk is one of the most
relevant risks in a capital oriented firm in that the firm’s main objective is to maximize the wealth
of shareholders. Apple is an investor-owned and profit-oriented organization; thus the risks
under finances can best be categorized under market risk. This category of risks refers to the
contribution made by the project, the riskiness or standard deviation of a stock portfolio that is
well-diversified. Financial risks, including changes in foreign currency, affect the company’s
primary goal, which aim is to increase shareholder wealth. According to Porsch, Gandorfer, &
Bitsch (2018), market risk fits best in this category in that it is concerned with capital projects
and aims at maximizing stakeholder profits.
Financial risks are bound to increase with regard to a company’s external environment –
competition, economic trends, regulatory landscape – in a manner that affects the internal
environment – people, infrastructure, and process – adversely. For instance, fluctuations in
economic activity are likely to result in business cycles that are known to affect individuals and
businesses in different ways. Economic trends, changes in interest rates, and inflation can result
in increased rates of unemployment, such as to affect the livelihood of people and associated
processes. Externally castigated policies such as the level of interest rates, taxes, and government
attempts could curtail or stimulate the company’s degree of economic activity. In addition, forces
of demand and supply, which are often affected by the external environment, have a significant
role to play in the manner that prices and the number of goods and services are treated in the free
market. These aspects tend to have a direct impact on people, technology, infrastructure, and
related processes.
Most of Apple’s operations are often based on its upcoming periods and forecasted
demands. According to Codron, DeMaria, Drogué, Le Gal, Lubello, Pavez, & Vernin (2016), the
company’s forecasting span is approximately 150 days. In order to balance the risks associated
with the company’s economic status, it is necessary to take into consideration different aspects of
finance when forecasting future sales. This strategy will enable the company to mitigate various
financial risks that often occur for failure to undertake effective forecasting measures. This
aspect can mitigate the risk of losses and sales values that are inherent in the contemporary
markets and especially, its foreign markets. Apple can also apply the currency forward contract
to control the risk that results from currency fluctuations and changes in the USD values. In
addition, the company should take into consideration foreign factors, including political stability,
competitors, and cultural factors, in order to balance out financial risks and inherent returns.
Risk Management Strategies
Risk management techniques to resolve financial risks in Apple should revolve around
the retention (accepting and budgeting for the risk), sharing or transferring, reducing or
mitigating the risk or eliminating it to avoid adverse consequences. Traditional risk management
techniques that can be applied by the company to mitigate the identified risks include contractual
risk transfer, risk retention, risk avoidance, and risk control. Apple can also use credit
operational, and interest rate risks tools such as derivatives, hedges, and swaps, among others.
Considering that Apple is a large company, it would deem difficult to choose the most
appropriate management technique for the company. For clarity, these techniques can be
classified as internal and external risk management techniques.
Internal strategies include the techniques applied when the company decides to accept the
risk in order to manage it growth internally. This is applicable to the foundation or status of
normal business processes. Some of these techniques include internal netting and natural
hedging. Internal netting is a scenario for managing an array of internal exposures across various
currencies, while natural hedging refers to the tools that are often created to manage risks
associated with interest rates and foreign exchange.
Apple Inc. can also opt to engage in risk-sharing strategies whereby the manager
mitigates the encountered risks or shares them with outside parties, such as to reduce
organizational responsibilities. The main techniques applicable in this scenario are two – joint
and forward ventures. Forward venture entails the engagement in contracts for future delivery of
assets at a particular fixed price to reduce cost uncertainties and related risks. This technique will
help Apple to prevent losses caused by unwanted or unfavorable currency movement. Joint
ventures can be implemented to help the company overcome the financial risks associated with
getting into new markets. This technique occurs where one party agrees to handle a particular
level of risk whereby there is an allowance to share it with another interested party.
Although the risk management techniques are many, the risk manager should decide the
strategy that suits Apple’s company effectively.
The main goal of every person involved in projects should be to maximize rewards while
mitigating risks in order to increase revenue and project outcomes. Failure to contain risks
adequately often results in budget overruns, damaged reputations, and reduction in the profit
margins. In order to avoid these issues, it is necessary for Apple management to consider
strategies that facilitate the maximization of returns while handling the identified financial risks.
Employees often play a huge role when it comes to the creation and mitigation of risks in
an organization. In order to prevent financial risks that result from employee mistakes, Apple
should ensure the training and hiring of staff who install, maintain, and manage applications in a
manner that reduces risks while increasing returns (Pissonnier, Lavigne, Toubon, & Le Gal,
2016). The company should build and maintain a secure network and a reliable level of
infrastructure that is resistant to threats that could result in losses. The company should also
come up with measures that help to avoid the maintenance and associated warehousing energy
expenses (warehousing) in order to increase the flow of products and reduce the associated costs.
In order to boost its profit margins while increasing returns, Apple should maintain its
compliance and protect its margins with a record of agreements that are likely to affect its bottom
line. The company should improve flexibility so as to facilitate rapid business changes and
mobilize fast execution of requirements. Apple should also accelerate its growth by reducing the
barriers encountered in entering new regions and delivering advanced services to its customers/
In order to determine the effectiveness of the risk/return strategies, Apple Inc. should
monitor the level of customer satisfaction and returns. Reduction of associated risks will result in
increased returns and improved customer relations. Hiring qualified and equipped staff will
enable the staff to direct their focus only on value-added tasks, which will reflect in the company
returns (Yusoff & Husnina, 2018). In order to know whether the risk mitigation measures are
bearing the anticipated returns, the company should monitor its growth and response from areas
that were associated with high risks. The company should also monitor the efficacy of control
measures, elimination, or management techniques (joint ventures and forward ventures) through
the returns and registered company growth periodically.
Codron, J. M., DeMaria, F., Drogué, S., Le Gal, P. Y., Lubello, P., Pavez, I., … & Vernin, X.
(2016, October). Management of sanitary and phytosanitary risks in the apple value
chain: The Sustain’Apple project. In III International Symposium on Horticulture in
Europe-SHE2016 1242 (pp. 295-302). 10.17660/ActaHortic.2019.1242.41
Pissonnier, S., Lavigne, C., Toubon, J. F., & Le Gal, P. Y. (2016). Factors driving growers’
selection and implementation of an apple crop protection strategy at the farm level. Crop
protection, 88, 109-117.
Porsch, A., Gandorfer, M., & Bitsch, V. (2018). Strategies to manage hail risk in apple
production. Agricultural Finance Review.
Soh, N., & Najihah, N. (2019). An analysis of an explanation of Apple Inc.
Yusoff, M., & Husnina, N. (2018). Determinants of Risks and Performance in Apple
Inc. Available at SSRN 3181705

Purchase answer to see full

Investment Analysis

market leader

innovative tech company

process of evaluating

technology and devices

User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.

Reviews, comments, and love from our customers and community:

This page is having a slideshow that uses Javascript. Your browser either doesn't support Javascript or you have it turned off. To see this page as it is meant to appear please use a Javascript enabled browser.

Peter M.
Peter M.
So far so good! It's safe and legit. My paper was finished on time...very excited!
Sean O.N.
Sean O.N.
Experience was easy, prompt and timely. Awesome first experience with a site like this. Worked out well.Thank you.
Angela M.J.
Angela M.J.
Good easy. I like the bidding because you can choose the writer and read reviews from other students
Lee Y.
Lee Y.
My writer had to change some ideas that she misunderstood. She was really nice and kind.
Kelvin J.
Kelvin J.
I have used other writing websites and this by far as been way better thus far! =)
Antony B.
Antony B.
I received an, "A". Definitely will reach out to her again and I highly recommend her. Thank you very much.
Khadija P.
Khadija P.
I have been searching for a custom book report help services for a while, and finally, I found the best of the best.
Regina Smith
Regina Smith
So amazed at how quickly they did my work!! very happy♥.