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Discussion

One of the major downsides of the scandal is the fact that Apple has to allocate additional resources to restore its public image. Clearly, the public trust in the company has been violated, and efforts that exceed a standard apology were taken. However, public trust is not easily regained. The new long-term strategy will be required to alleviate the issue and get over the crisis. Given the fact that such scandals are usually sudden and cannot be pre-planned, emergency business mechanisms need to be activated (Taylor, 2003). Such a situation means an additional load of work for financial analysts who need to define how much Apple will lose as a result of the scandal. Consequently, the current budget estimates need to be recalculated. All these responsibilities are paralleled with day-to-day operation tasks, which marks the need for prioritization of one over another. Additional workload often means loss of productivity due to fatigue, stress, stricter deadlines, and other things, which, essentially, undermines performance.

Among other things that might undermine Apple’s conduct are the legal cases against it. According to different sources, Apple’s scandal will be accompanied by mass legal actions by a variety of companies and individuals (Palmer, 2018; Tsukayama, 2017; Paresh, 2017). Since the company already publicly acknowledged the fact of willingly slowing down older smartphones without customer’s knowledge, most of these cases can be expected to be lost. Legal loses often mean that financing of new projects, research and development can be put into jeopardy. Consequently, for Apple as an IT company falling behind in innovation and technology could mean poor performance on the market.

Lessons to be learned

The main lesson to be learned from this situation is the importance of integrity. Any service provided by a company needs to be as transparent as possible, especially for a huge company such as Apple. Willful non-disclosure of the information that can potentially lower the quality of customer’s experience is the matter that courts in the U.S. and abroad take seriously. The reputational damage and financial loses can be rather unpredictable depending on the scale of media coverage and actions of the company officials. However, it is widely believed that possible gains in demand can be outweighed by such disastrous consequences (Taylor, 2003).

Another valuable lesson is that no matter how noble the cause is, customers should know that the product they buy meets the specifications listed. Apple’s main argument against the accusations was that the company had in mind the stability of the device when slowing down the performance (Leswing, 2017; Kulwin, 2018). Again, the courts will likely to ignore such an intention and focus on the concealment instead. The implications for the whole industry here are disastrous as it becomes evident that one of the major players had indirectly forced users to buy new models to compensate the performance loss. Other producers, if they have the same policy are faced with the choice of either concealing it better or come clean now. For a customer, the key takeaways are to be always alert for possible flaws of the products they buy and report them as soon as possible. Had this issue surfaced sooner, Apple fans could save millions of dollars on upgrading their “slow” and “outdated” smartphones. In addition, scandals like these can help make the IT industry more transparent.

References

Taylor, B. (2003). Corporate Governance: the crisis, investors’ losses and the decline in public trust. Corporate Governance: An International Review, 11(3), 155-163.

Tsukayama, H. (2017). Apple will offer discounts on replacement batteries, following lawsuits over iPhone slowdowns. Washington Post. Web.

Paresh, D. (2017). Apple faces lawsuits after saying it slows down aging iPhones. Reuters. Web.

Leswing, K. (2017). Tim Cook needs to take responsibility for Apple’s battery scandal. Business Insider. Web.

Kulwin, N. (2018). Apple’s iPhone slowdown scandal is now a full-blown federal investigation, report says. Vice News. Web.

Palmer, A. (2018). Apple faces at least 60 lawsuits in wake of iPhone throttling scandal. Daily Mail. Web.

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