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OPRE 6302.005: Operations Management Term ProjectSeamus Donovan, Mikhil Jhaveri, Lydia Dai, Utkarsh Chandel Apple’s Battle Against the Coronavirus and Recommendations to Mitigate Risk 04/29/2020
2 Executive Summary of Apple’s Risk Mitigation StrategyApple Inc.is an American technology giant headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, and online services.It is considered one of the Big Four technology companies, alongside Amazon, Google, and Microsoft.With such an enormous company as Apple, there are thousands of challenges that the business faces every day.From changing their value chain, environmental and humanity-focused initiatives, to understanding how to mitigate environmental challenges, Apple has many avenues of risk that can cause damage to their production and supply chain.Today’s most relevant and immediate risk happens to be a biological threat, a virus that has grown exponentially and mutated across the globe in a matter of months: The Coronavirus.The Coronavirus, formally known as COVID-19, originated in Wuhan, China in December 2019.The virus wreaked havoc on the world’s value chains and Apple is no exception.As the virus has continued to gain momentum, Apple has closed hundreds of retail stores outside of mainland China, Hong Kong, and Taiwan.Not only has the tech giant closed retail doors, but they’ve also experienced a significant decline in sales because of the pandemic’s ongoing effects on the economy and consumers’ financial security.According to our performance analysis, we focused in on the iPhone sales and performance mostly due the impact of the iPhone sales on Apple’s bottom line revenue.March iPhone sales declined 56% year over year, while unit sales declined 42% year over year, indicating that online sales cannot compensate for store closures due to the novel Coronavirus.Through our analysis, our team also discovered a significant reduction in average selling prices and a severe slow down with their online delivery performance.With the disruption, devastation and strain put on the Apple’s value chain, where can Apple improve their current operations? Our team has developed a three-step recommendation approach to improve the working value chain of Apple that centers around supply chain, regional market distribution and servicing, and transportation efficiencies.Furthermore, we will address mitigating further manufacturing and supplier risks by diversifying Apple’s major suppliers outside of China, develop increased capacities for the major regional markets, and improving the transportation risks with moving manufacturing sites to regional locations.These Adaptations to these three areas of Apple’s value chain can significantly alleviate the localized strain due to the ongoing economic effects of COVID-19 and other regional pressures.