Apple Inc. Organizational Analysis

Answer

Apple Inc. Organizational Analysis

            An organizational analysis is a critical tool that can be used to understand and evaluate how businesses and organizations ensure operation standards, provide quality products to societies, and offer employment to people. This paper provides history and background information of Apple Incorporation and analyzes the company’s strategy, structure, and culture. It evaluates the effectiveness of Apple’s design and recommends specific changes to the organization.

Background and History

             Apple Incorporation is one of the largest companies in the US that manufactures consumer electronics and computer software.  Founded by Steve Wozniak, Steve Jobs, and Ronald Wayne in the year 1976, the firm is famous for manufacturing products such as iPad, computers, iPod, and iPhone. It also offers IT solutions by designing quality software such as iLife, iOS, the safari web browser and iTunes among others. Currently, Apple Inc is operating more than 350 stores in different nations across the world in addition to an online store that offers hardware and software solutions (Backer, 2013). A recent ranking has seen the company placed as the largest in the world in terms of market capitalization (Barney, 1986). It is also considered a corporation with the largest market in the world in terms of profit and revenue generation. The company has more than 50, 000 permanently employed workers in its various stores across the world.

            Apple Inc. was founded on consumer products and competes with different companies offering consumer goods. Nonetheless, to promote competitive advantage over its competitors, the firm carries out a unique advertising strategy for its stock. Having created an exceptional reputation in various products that it offers, Apple enjoys a wide consumer base across the world. The organization has diversified its product and market range to improve its revenues and market share.

Organizational Strategy

             Apple Inc.’s organizational strategy relates to its marketing and pricing. As one of the leading technology companies in the across the world, Apple has proved that its organizational strategy is a key factor that determines its competitive advantage over other companies such as IBM, Amazon, Google, Microsoft and Huawei among others. Differentiation is a key strategy that Apple Inc. uses to remain competitive in the industry. This strategy focuses on major features that distinguish the firm and its IT products from other rivals. Using differentiation strategy, Apple Inc. outshines other competitors. In particular, stylish design as well as user friendliness of products together with quality branding effectively differentiates Apple Inc. Differentiation strategy has enabled Apple Company to gain competitive advantages based on  product design that attracts appeal to customers. Some of these designs encompass wireless connectivity among products, as well as innovative aesthetics.  Intuitively, Apple Inc. designs products for everyone and this supports its broad market reach. Studies have indicated that the company targets business organizations and individuals through its MacBook product line. Through this, the firm’s broad differentiation approach supports the organization in supporting its leadership, competitive advantage as well as positions as quality and high end technology business.

            Product development is another organizational strategy that Apple Inc. uses to achieve intensive growth. Product development demands that an organization should design appealing and lucrative technology products to grow and perform better (Chikhale & Mansouri, 2015). Apple Inc. adopts this approach through innovation in almost its research and development processes.  In particular, the organization uses innovation as a competitive advantage and a key success factor. It continues to design innovative devices such as Apple Watch, iPad and iPhone. This strategy enables the company to continue growing since new products enable the corporation to generate additional revenues. The stated strategy also promotes growth since it concentrates on technological innovation enhance profits and competitive advantage.

            Lowering the management and production costs provides Apple Inc. with a competitive edge over its rival this strategy enables the company to spend little in designing and producing quality products, making it to sell its products at affordable price. The stated strategy has improved Apple Inc.’s gross margins and maximized its profit levels. Effective control of labour and minimizing input costs has enabled Apple Inc. to control its overall costs.

            Market penetration is a key organizational strategy for Apple Inc. Market penetration as contended by Fogliasso and Williams (2014) encompassed attracting a significant share of the present market by selling high volume of the company’s present commodities (O’Reilly, Chatman, & Caldwell, 1991).  Apple Inc. sells several iPads and iPhones to present markets in North America. Further, the firm gains more sales by bringing on board additional authorized sellers to promote competitive advantages within its modern markets. This approach has enabled Apple Inc. to penetrate various markets where it has never attained a substantial position. To further penetrate the market, Apple Inc. carries out promotion through different media outlets and websites. Through these promotions, the company has been able to inform and persuade many people to buy its products thereby promoting the sale of more technological products to millions of customers across various markets.

            Concentrating in particular market niche by using cost leadership and differentiation model has contributed to the success of Apple Incorporation in the technology industry. Through market penetration, the company has managed to take its products to areas where other firms have been unable. This strategy has enabled the firm to establish its presence in these areas hence attracting more buyers that culminate into additional revenues for the organization. Apple Incorporation has been to adapt to the changes within the business environment and through this, it has remained relevant despite the constant changes in the business environment. Moreover, its workers continue to gain new technologies and skills that assist them to remain competitive with other workers across the globe (Peng & Mei, 2013). More importantly, well established core competencies in various business units and across the product lines has enabled Apple Inc. to design differentiated and cost effective products.

Organizational Design

             The success of an organization depends on its culture. As a fact, the way an organization is designed will directly influence its failure or success (Chikhale & Mansouri, 2015). Therefore, an organization should be designed and organized in a manner that will effectively meet its needs and goals. Apple Incorporation has a hierarchical organizational structure, with remarkable divisional features and a weak functional matrix. During the reign of Steve Jobs, Apple Inc. was known to exercise an autocratic leadership style. During this period, Steve Jobs micro- managed all business operations and ensured that everything happening in the company passed through him (Peng & Mei, 2013). Nonetheless, under the current leadership of Tim Cook, Apple Inc. has adopted a more collaborative organizational structure. Some of the critical aspects that have been adopted by Tim Cook encompass promoting decentralization regarding decision making to encourage innovation and creativity in various levels. Further, there is collaboration among various parts of the organization including hardware and software teams. Similarly, the company’s vice presidents have been given more autonomy that were restricted or almost lacking during the reign of Steve Jobs. Therefore, Apple Inc.’s current organizational structure is less rigid as compared to the past. However, the design still has a spoke and wheel hierarchy in which the CEO, Tim Cook is the overall leader. Similarly, the upper tier of the corporate structure comprises of a function based grouping that is a critical element obtained from functional organizational structure. Currently, the senior vice president who reports directly to Tim Cook performs business functions. In particular, the company has a vice president responsible for the retail, as well as, a senior vice president responsible for global marketing. In the stated structural design, the top leadership of the company handles business demands in terms of functional areas.

             Product based divisions is another critical feature of Apple Inc.’s organizational structure. This feature is common for the lower tier organizational structure. Under this design, senior vice presidents have other manager below them tasked with different outputs or products. For instance, Apple Inc. has a vice president for iOS apps, vice president for consumer products, as well as, vice president for iPad. Product based organizational structure enables the company and its managers to deal with issues emanating from a particular product (O’Reilly, Chatman, & Caldwell, 1991).

            One major advantage of product based structure at Apple Inc. is that it provides the firm with a strong control because of the hierarchy established. This according to Peng and Mei (2013) accords the chief executive officer autonomous authority to regulate and manage essential aspects of the organization. The structure also accords senior vice presidents an opportunity to demonstrate their leadership capabilities. However, one of the major limitations of product based division witnessed in Apple Inc. is that it makes the organization to have limited flexibility. Principally, forming a hierarchy makes it challenging for staff at the lower levels to effectively respond to business and market needs. Notwithstanding the improvement that Tim Cook has established to improve collaboration, Apple’s organizational design hardly supports rapid changes because everything must pass through the chief executive officer and senior vice presidents.

            Apple Inc. has a weak functional matrix that refers to the collaborative relations between different elements of the business. In weak functional matrix, top leadership defines project direction while project leaders have limited control and authority. Precisely, Apple’s corporate design allows hardware teams to partner with software teams. This partnership enables the company to expedite disseminate essential information for innovation process. The weak functional structure has contributed to the rapid and effective innovation process witnessed in Apple Incorporation.

Evaluating the Effectiveness of the Design

             From the detailed description provided above, it is evident that Apple’s organizational design is effective since it provides various opportunities for growth. In particular, the hierarchical design ensures that everyone in the company accounts for his or her actions, thus making it easier point out the sources of problem. Similarly, hierarchical design continues to support effective management control in the firm. Hypothetically, hierarchy empowers effective leaders such as Tim Cook to look over everything in the organization. Hierarchical design has ensured that business functions, as well as, product based teams are managed and controlled effectively by the decisions that the chief executive and other top leadership make. This has not only facilitated effective and rapid implementation of strategic management but also assisted in the creation of coherence in the entire organization.

            The effectiveness of Apple Inc.’s organizational design has been evident in conflicts resolution. Since Tim Cook became the CEO of Apple Inc., he has been striving to stimulate the concept of collaboration in the company. To achieve this, collaborative design has been implemented where various product teams have the chance to consult one another before making critical decisions that affect the entire company. This has been regarded as an effective way of handling departmental differences that usually emerge from the company. This organizational structure is effective because it depicts a win-win concept. Moreover, it ensures that the needs of both parties are fulfilled because after the resolution, each side gets something valuable.

Organizational Culture

            A company’s corporate or organizational culture creates and maintains the business values, philosophy, beliefs, as well as, related behaviors among workers (Backer, 2013). Reports have indicated that the organizational culture of Apple Incorporation is that of creative innovation (Fogliasso, & Williams, 2014). To foster the culture of creative innovation, the company has implemented a policy of recruiting competent and suitable talents in the labor market. Steve Jobs was famous for firing workers who failed to meet his expectations. However, this tradition continues under the leadership of Tim Cook. Essentially, such a tradition maintains and strengthens an organizational culture that stimulates, appreciates and anticipates best excellence among workers. This cultural characteristic is institutionalized in Apple’s Inc. for instance, the firm has enacted programs appreciate and reward merit among employees. Excellence is stressed as key success factor in Apple Inc., particularly in product development and design (Fogliasso & Williams, 2014).

            Creativity is an essential feature of Apple’s organizational culture. Creativity relates to new ideas helpful improving the business and its products.  In Apple Inc., the top leadership favors creativity among workers’ skills, knowledge, and abilities. This feature of the corporate culture allows the organization to ensure adequate creativity, particularly among workers who engage in designing and developing products. This kind of creativity is evident in the features and design of Macs, iPhones, and iPads. Besides creativity, the organizational culture of Apple Incorporation stimulates rapid innovation. The firm is often assessed as the leading innovative organization across the world. As a result of this cultural trait, Apple Incorporation trains and inspires its workers to innovate based on their individual performance and contributions in designing and developing a product. The organizational culture promotes rapid innovation that is regarded as the core of Apple’s operations.

            Steve Jobs also established Apple Company to inculcate organizational culture of secrecy. The culture of secrecy continues to describe Apple’s human resource development. As a critical element of its operation, secrecy helps Apple to reduce theft of its intellectual property. It is also considered a strategic management strategy that allows the company to gain competitive advantages over its rivals. Through this organizational culture, workers are supported and supposed to keep business operations and information within the organization. The stated cultural characteristic is strengthened through the firm’s rules, policies, as well as, employment contracts. Therefore, the organizational culture of secrecy assists Apple Inc. to safeguard its business from corporate espionage and detrimental impacts of worker poaching.

Conclusion

             Apple Incorporation has remained one of the leading companies for years. Numerous factors such as organizational culture, strategy, and structure have contributed to its success. The organizational design has provided the company with opportunities for growth. Essentially, the hierarchical organizational design ensures that everyone accounts for their actions thereby enabling executive members to identify genesis of problems within in the organization. Similarly, the corporate culture has helped the company to inculcate the preferred ideals among the appropriate stakeholders. Further, it has established a better blueprint for making the desired goals a reality.

            Despite the tremendous achievements described above, there are various things that should be changed or improved to ensure that Apple Incorporation remain competitive in the industry. First, the current hierarchical structure should be changed so that it can accommodate flexibility.  Principally, a hierarchical design hinders junior workers from operating effectively. It also reduces the essence of collaboration. Undoubtedly, this is quite undesirable for leading companies such as Apple that depends on innovation, creativity, and excellence to gain competitive advantage. Moreover, the design hinder implementation of rapid changes necessitated by the market because of the bureaucracy involved. Therefore, establishing a collaborative structure or environment would be critical for the company because it will improve various aspects of creativity and innovation.