Incorporating Stakeholder Impacts into Business SustainabilityAnalyses and DecisionsJack’s Apps Company researches, develops, and sells traditional applications (i.e., apps) formiddle-aged mobile phone device users. In an attempt to tap into the large young adult appmarket to boost sales and advertising revenues, Jack’s CFO, Daniel, is considering hiringstudents from area high schools and universities to drastically increase the innovativeness ofthe company’s apps. Specifically, Daniel hopes that Jack’s new student employee pool will makeJack’s next wave of phone apps inventions popular with young adults by providing innovativeservices, such as exchanging payments for late-night food deliveries, arranging informal datingand other social gatherings, exchanging perspectives on different professors, and identifyingunusual debit card purchase patterns to assist with early fraud detection notification. Basedon cost estimates from Jack’s finance team and surveys of its new target customers (i.e., NewCustomer Financial Survey), Daniel estimates that this new customer market would increaseJack’s annual net income by $10,000,000. In addition to the New Customer Financial Survey, Jack’s management team conducted a Business Sustainability Analysis. Specifically, the stakeholder engagement portion ofthe Business Sustainability Analysis revealed that four of Jack’s most important stakeholder groups (advertisers, regulators, employees, and customers) would react strongly—somefavorably and others unfavorably—to the decision to push its app business in the directionof the young adult market. Specifically, ten percent of its existing advertisers would dropJack’s as a client, thereby reducing its annual advertising revenue of $10,000,000. Also,confidential discussions with competitors suggest that the new fraud detection app wouldrequire sensitive customer information that Jack’s would be unable to protect perfectlyfrom data hackers, thereby resulting in annual fines of $1,500,000 from regulators. Inaddition, employee engagement meetings indicated that they would strongly favor theexpansion into the young adult market. Daniel estimates that improved employee moralewould significantly increase their productivity and creativity, thereby increasing annualsales revenue by $2,000,000. Finally, focus groups with existing customers revealed thatthey would highly value the increased workforce diversity of Jack’s hiring a large numberof talented young female employees with an expertise in technology. Daniel estimates thatthis positive customer sentiment would translate into an additional $3,000,000 in annualtraditional apps sales.Required:1. Using the New Customer Financial Survey and the Business Sustainability Analysis,calculate the net change in Jack’s Apps Company’s net income that would be expectedfrom pursuing the young adult app market.2. Based on the calculation in Requirement 1, should Jack’s Apps pursue the young adult appmarket? Explain your answer.3. CONCEPTUAL CONNECTION Describe two additional considerations that Jack’s AppsCompany management might be wise to consider before making a final decision onwhether or not to pursue the young adult apps market.
Incorporating Stakeholder Impacts into Business Sustainability
Analyses and Decisions
Jack’s Apps Company researches, develops, and sells traditional applications (i.e., apps) for
middle-aged mobile phone device users. In an attempt to tap into the large young adult app
market to boost sales and advertising revenues, Jack’s CFO, Daniel, is considering hiring
students from area high schools and universities to drastically increase the innovativeness of
the company’s apps. Specifically, Daniel hopes that Jack’s new student employee pool will make
Jack’s next wave of phone apps inventions popular with young adults by providing innovative
services, such as exchanging payments for late-night food deliveries, arranging informal dating
and other social gatherings, exchanging perspectives on different professors, and identifying
unusual debit card purchase patterns to assist with early fraud detection notification. Based
on cost estimates from Jack’s finance team and surveys of its new target customers (i.e., New
Customer Financial Survey), Daniel estimates that this new customer market would increase
Jack’s annual net income by $10,000,000.
In addition to the New Customer Financial Survey, Jack’s management team conducted a Business Sustainability Analysis. Specifically, the stakeholder engagement portion of
the Business Sustainability Analysis revealed that four of Jack’s most important stakeholder groups (advertisers, regulators, employees, and customers) would react strongly—some
favorably and others unfavorably—to the decision to push its app business in the direction
of the young adult market. Specifically, ten percent of its existing advertisers would drop
Jack’s as a client, thereby reducing its annual advertising revenue of $10,000,000. Also,
confidential discussions with competitors suggest that the new fraud detection app would
require sensitive customer information that Jack’s would be unable to protect perfectly
from data hackers, thereby resulting in annual fines of $1,500,000 from regulators. In
addition, employee engagement meetings indicated that they would strongly favor the
expansion into the young adult market. Daniel estimates that improved employee morale
would significantly increase their productivity and creativity, thereby increasing annual
sales revenue by $2,000,000. Finally, focus groups with existing customers revealed that
they would highly value the increased workforce diversity of Jack’s hiring a large number
of talented young female employees with an expertise in technology. Daniel estimates that
this positive customer sentiment would translate into an additional $3,000,000 in annual
traditional apps sales.
Required:
1. Using the New Customer Financial Survey and the Business Sustainability Analysis,
calculate the net change in Jack’s Apps Company’s net income that would be expected
from pursuing the young adult app market.
2. Based on the calculation in Requirement 1, should Jack’s Apps pursue the young adult app
market? Explain your answer.
3. CONCEPTUAL CONNECTION Describe two additional considerations that Jack’s Apps
Company management might be wise to consider before making a final decision on
whether or not to pursue the young adult apps market.
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