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Case Study - Apple Inc.

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A literature-based research and analysis about the employment of the four basic managerial factors, namely planning, organising, leading and controlling, in the context of Apple Inc. operations throughout its history, and by the standpoint of all the Chief Executive Officers that passed from its Board of Directors.

Publié dans : Direction et management
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Case Study - Apple Inc.

  1. 1. BS15079 & BS15051 BA (Hons) in Business Studies, CITY College, An International Faculty of the University of Sheffield 4/1/2016 Word Count: 2597
  2. 2. Executive Summary Apple Inc. is a multinational company that was first established on 1976 by Steve Jobs and Steve Wozniak. Its headquarters now stand in Cupertino, California. It now is the one of the most profitable and valuable companies out there. Today Apple stands as the giant, but behind this tremendous success stands its exceptional and rather unique execution of the managerial tasks. Throughout the report, we have aimed to provide an elaboration of the four basic pillars of management: planning, organizing, leading, and controlling of the famous Apple Inc. Planning includes a thorough analysis of the strategic planning. Throughout the section we have analyzed the current strategies as well as the process that is being used to achieve them. Additionally, the distinctive moves and procedures are deconstructed in order to comprehend the operations that lead to the current global success the firm is experiencing. Furthermore, a SWOT and Porter analysis are presented and explained. The organizational section encompasses information on the company's organizational structure, chart and culture. A discussion will be made on the past and present CEOs' influence on the corporate culture and the employees roles on decision-making process, the motivation of employees and Apple Inc. as a workplace. In the leading part of the report, all company's leaders are presented along with each one's different method of leading and directing its subordinates. And last but not least, the controlling section where the controlling process is discussed along with Apple's controlling methods.
  3. 3. Apple Inc. Analysis Table of Contents 1. The Firm………………....……………………………….………….1 2. Planning ……………………..……………………………………..3 2.1. Current Strategy………………………………….…………………………3 2.2. Past Strategies & Implications ………….………………………………...5 3. Organizing ……...……………………………………………........7 3.1. Organizational Structure…...…………………………...…………………8 3.2. Organizational Culture.……………………………………………………9 4. Leading……………………………………………………………11 4.1. Apple Inc. Leaders…..……………………………………………………11 4.2. Leadership Approach ………..………………………………………….12 5. Controlling ………...……………………………………………..15 5.1. Control Mechanisms………..…………………………………………….15 6. Conclusions & Recommendations…………………………...17 7. References………………………………………………………..18 8. Appendices………………………………………………………22 Appendix 1: SWOT Analysis – Apple Inc. ………………...……………………22 Appendix 2: Porter’s Five Forces Model - Apple Inc. ………………………...26 Appendix 3: Fiscal 2015 – Apple Inc. Financial Performance…….………...28 Appendix 4: International Market Presence & Planning………….…………29 Appendix 5. Employee Motivation……………………………………………...29 Appendix 6. Apple Inc. Workplace & Corporate Culture…………………..30
  4. 4. Apple Inc. Analysis 1 1. The Firm Technology, in these days, has a major impact on the lives of people worldwide (Tar, 2013). All modern societies rely on it significantly and the advances that have occurred in the last decades have changed the way that people live, react and communicate (Tar, 2013). Apple Company, nowadays Apple Inc., has stunned and kept the world under its grasp in the last half of the century, by changing an industry radically (Linzmayer, 2004). From 1976, when the company was launched, until now, the technological advances and the products manufactured, have brought about a new generation of goods and services on the hands of the general public (Linzmayer, 2004). Stephen Gary ‘Steve’ Wozniak and Steven Paul ‘Steve’ Jobs co-founded the Apple Company in 1976, when they introduced the first Apple I computer (Isaacson, 2012). A few years later, the organization was incorporated, and in 1980 went public with a value per share of the amount of $22, a record Initial Public Offering, IPO, since Ford entered the stock market (Nair and Quay, 2012). Afterwards, in 1984 the Macintosh computer was introduced, which led the way in the mass business sector of the graphical client interface (Cusumano, 2008) Conversely, even though, it was a success, a year later, in 1985, Steve Jobs was overthrown from the corporation, due to the great cost of the device (Isaacson, 2012). But, in 1997 he was re-established in his position as CEO and directed Apple to its forerunner position in the industry of digital devices (Isaacson, 2012). Currently, the organization creates and promotes smart cell phones and devices, personal computers and transferable music players (Apple Inc., 2015). The main products manufactured are iPhones, iPads, Apple Watches, iMacs and Apple TVs (Apple Inc., 2015). Moreover, the firm is in charge of the iCloud service, the iOS and OS X operating systems and many more patents (Apple Inc., 2015). Furthermore, a range of correlated services, accessories, software and applications are marketed, as well as, a variety of retail Apple stores operating worldwide (Apple Inc., 2015). Lastly, it is a California based Figure 1. Apple Computer I
  5. 5. Apple Inc. Analysis 2 organization which not only vends to consumers but also to businesses of all sizes and governmental instruments (Apple Inc., 2015). Figure 2. An Illustrated Timeline of Apple. (WordPress.com, 2011)
  6. 6. Apple Inc. Analysis 3 2. Planning Planning, being one of the four primary functions of management, can be characterized as the ability of a manager to distinguish and select fitting objectives and courses of action, so as to fulfill them (Jones and George, 2014, Schermerhorn, 2010). The significance of planning is crucial, it sets the direction the organizations want to follow, and is the basis where the other managerial tasks and functions are built upon (Schermerhorn, 2010). The procedure followed consists of three stages (Jones and George, 2014). Firstly, is establishing the corporation’s main objectives, where you strive to form a competitive advantage. The second stage is evaluating the existing situation and devising an appropriate strategy based on the goals chosen. Lastly, the third stage is applying the strategy by allotting capital and duties (Jones and George, 2014). 2.1. Current Strategy Apple Inc. is focused on conveying the best client experience to their customers through their creative equipment, programming and benefits (Apple Inc., 2015). The organization incorporates, constructing and growing its Figure 3. Strategic Planning and Business Analysis in the Relevant Categories (Team FME, 2013)
  7. 7. Apple Inc. Analysis 4 own retail and online stores and its related circulation system to viably obtain more clients and offer extensive deals and post-sales support experience (Apple Inc., 2014). It has accomplished its remarkable performance through viably actualizing an unusual system: differentiation through innovation with concurrent serious degrees of efficiency, resulting in the most reduced expenses in its industry (Loizos, 2013). Yet, when companies endeavor to utilize both of these strategies, in the long-term, they get “stuck in the middle”, as, it is not feasible to differentiate a product at low cost (Jones and George, 2014). Nonetheless, this combination, called quantum strategy, is the key to success of the firm since producing innovative products enabled them to charge premium prices. Furthermore, by reducing the cost of production and outsourcing a low-cost strategy is attainable (Loizos, 2013). Differentiation Strategy Indicators Low-Cost Strategy Indicators  Winner of various innovation and design awards  Lowest SG&A costs  Highest inventory turnover  Ability to demand premium prices and achieve exceptional profit margins and revenue growth  R&D intensity lowest in this industry Table 1. Indicators of quantum strategy (Loizos, 2013) Differentiation Realization Low-Cost Realization  Focus and invest in, innovation know-how  Strategic focus in product- markets, types of product and product features  People strategy – employing the most qualified personnel and encouraging them to succeed  Distributed organizational design – high value added functions in California, manufacturing outsourced to inexpensive sites  Branding – image of nonconformist ingenuity,  Synergies – related diversification in terms of industries as well as products (e.g. technological platforms)
  8. 8. Apple Inc. Analysis 5 investment in Apple Stores in prominent areas  Apple’s patented ecosystem allows higher pricing control and consumer appeal  Intense focus on supply chain efficiency (less warehouses, reduction of supplier numbers)  Historically, Steve Jobs’ leadership – demanding, perfectionist, visionary  Flat organization and simplified processes increase efficiency Table 2. Differentiation and low-cost strategy realization (Loizos, 2013) 2.2. Past Strategies and Implications In 2001 inertia had ensued in Apple Inc., a loss of, approximately 6% of turnover was reported and the sales had decreased (Ashcroft, 2012). In order to capsize the situation a number of options was discussed, eventually though, music was chosen, since it was evident that it was beneficial by two basic strategy analysis tools, market growth rate and market share, best identified by employing BCG Matrix (Aschroft, 2012, Schermerhorn, 2010). The iPod was launched within an industry where no key competitor existed and, moreover, the trend for storing music within digital devices was in full swing (Ashcroft, 2012, Lynch, 2012). Its distribution was achieved by multiple mediums, such as the online and retail Apple stores but also through retailers around the world leading to full customer experience (Apple Inc., 2015, Ashcroft, 2012, Lynch,2012). Once, the company entered the music industry by forming alliances with the major record companies their market segmentation started to change dramatically, roughly, 74% of sales in 2000 were to businesses and professional markets but by 2011, approximately, 75% of sales were transferred in the personal user and education markets (Ashcroft, 2012, Lynch, 2012). In 2007, the company introduced the iPhone, just one year later they launched the upgraded iPhone 3G and each year after that a new, high quality gadget was unveiled including the iPad line (Ashcroft, 2012, Lynch, 2012). This incessant product development caused the “cannibalization” (Ashcroft, 2012, p.13) of
  9. 9. Apple Inc. Analysis 6 the previous editions, however, kept them a step ahead from their competition (Apple Inc., 2015, Ashcroft, 2012, Lynch, 2012).
  10. 10. Apple Inc. Analysis 7 3. Organizing APOrganizational structures are results of organizing process. They provide a clear portrayal of responsibilities and roles, relationships and lines of authority. (Jones and George, 2012) "By reviewing an organization’s structure, a manager will be able to determine which human, financial, and technical resources are available, how they should be allocated, and which resources are lacking." (Pathfinder, 2010, p.1). An unconventional and unique organizational chart with Timothy Cook at its centre.
  11. 11. Apple Inc. Analysis 8 3.1. Organizational Structure In Apple’s case, the organizational structure is in a hierarchical system. Its organizational structure contains rudiments from other organizational structures and has enabled the maintenance and sustainment of their leadership style. Now, under Tim Cook’s leadership, Apple has undergone some small changes in its organizational structure to match the market and industry demands. (Meyer, 2015) The following characteristics are the pillars of Apple's organizational structure: Spoke-and-wheel Hierarchy: Apple's organizational structure represents a hierarchical system. Previously, everything had to be run by Jobs, who did all the decision-making. Now, with the changes made, there is more collaborative work (e.g. software and hardware teams) and the vice presidents have more autonomy, which was almost non-existent under Jobs. The structure still remains spoke-and-wheel, with Timothy Cook at its centre (Meyer, 2015
  12. 12. Apple Inc. Analysis 9 Function- Based Grouping The upper tier of the organizational structure has elements embodied from the functional structure. This involves each senior vice presidents overseeing their specific functions of business (Meyer, 2015) Product-Based Grouping The lower tier that consists involves the vice presidents that deal with product elements or specific products (Meyer, 2015) Table 3. Apple’s Organization Structure (Meyer, 2015) Pros and Cons of the Organizational Structure Pro: Enables a strong control over the corporation. Top leaders of Apple are authorized to control everything going on in the organization and through function-based and product grouping, it certifies that Cook and Senior Vice Presidents control all organizational processes (Meyer, 2015) Con: The limited flexibility of the organizational structure. The structure foils lower levels of the chart from reacting flexibly to business matters. Furthermore, they cannot do rapid changes because everything has to be run by Cook's office. (Meyer, 2015) 3.2. Organizational Culture "Organizational Culture is the shared set of beliefs, expectations, values and norms that influence how members of an organization relate to one another and cooperate to achieve organizational goals" (Jones and George, 2012, p. 319). In Apple’s case, the following characteristics cement its organizational culture are: Top-notch excellence: Apple aims to employ people that are the best at what they do. Brilliance is accentuated as a crucial element of success, particularly when designing and producing products. Nothing short of excellent is
  13. 13. Apple Inc. Analysis 10 accepted and anyone whose performance does not meet the expectations is fired without hesitation (Meyer, 2015) Creativity: Creativity is a valuable asset at Apple, especially for employees who work in designing and developing products. Furthermore, this feature has served helpful in problem-solving and when determining what the consumers want (Meyer, 2015). Innovation: Innovation highly emphasizes in their organizational structure. Apple is applauded for its innovative spirit in the business and constantly encourages its employees to come up with inventive, original and contributive ideas on product design and production (Meyer, 2015). Secrecy: Secrecy is an important part of their organizational culture because it shields the company from thievery of information or espionage. Every employee at Apple agrees to a non-disclosure agreement that prevents them from spreading information (Meyer, 2015). Moderate combativeness: This feature was highly linked with Steve Job's way of leading. Steve Jobs even used to provoke his employees just to see whether they had what it took to be a part of Apple. Today, under Tim Cook, it is practiced but in a more abated manner (Meyer, 2015).
  14. 14. Apple Inc. Analysis 11 4. Leading According to Prentice (2004, p. 102), “the accomplishment of a goal through the direction of human assistants” is how leading is outlined. Moreover, recognizing and comprehending individual motivations, and enrolling employee involvement in a fashion that personal needs and interests are integrated to the corporation’s objectives, should be aims of a fruitful leader (Prentice, 2004). Each manager has a different approach and style in the manner they attempt to guide workers and associates (Jones and George, 2015). Consequently, there are three main types of leadership approach (Rauf, 2014, Schermerhorn, 2010). Firstly, there is autocratic, where managers keep authority and information within their absolute control and act in a command and control manner, which would be more efficient in a crisis condition (Rauf, 2014, Scermerhorn, 2010). Secondly, the laissez-faire style, represents managers who let the employees make decisions by themselves without having any control over them (Rauf, 2014, Schermerhorn, 2010). Lastly, when managers encourage personnel to contribute in the decision making process and assist them acquire knowledge and know-how, they are considered democratic (Schermerhorn, 2010). For example, in order to manage the marketing department, the last two approaches could be more beneficial (Rauf, 2014). 4.1. Apple Inc. Leaders Apple Inc. has witnessed the leadership styles of five individuals since 1976 that it was created (Nair and Quay, 2012). When Steve Jobs was overthrown from the company in 1985, he was, already, not the company’s CEO for the duration of two years (Nair and Quay, 2012). However, that caused a “power struggle” (Nair and Quay, 2012, p. 21) between the two men, thus being one of the reasons Jobs departed from the firm (Nair and Qauy,2012). Figure 5. Strategic Leadership (Public Domain, 2016)
  15. 15. Apple Inc. Analysis 12 Therefore, from 1983 to 1993 the company’s CEO was John Sculley, a Pepsi sales and marketing executive (Isaacson, 2012), who even though managed to pull the corporation through the economic crisis in the USA, in the 80s, effectively, with a stock market price up by 75%, afterwards, was replaced by Michael Splinder (Nair and Quay, 2012). Moreover, Sculley had to compete the major rival that was Microsoft at that time which was a futile endeavour (Nair and Quay, 2012). As a result, in 1996 he, too, was dismissed in favour of Gil Amelio (Nair and Quay, 2012). Gil Amelio, tried to transform the company by implementing new programmes and instigating numerous dismissals (Nair and Quay, 2012). Nonetheless, in 1997, Steve Jobs was reinstated as the firm’s CEO, who initiated the change in the gadget technology we have today (Isaacson, 2012). Unfortunately, he passed away in 2011 and Tim Cook is in charge for the company until today (Tar, 2013). 4.2. Leadership Approach Steve Jobs was the CEO who revolutionized the organization from its core, after he retook control in 1997 (Isaacson, 2012). His leadership style is characterized as an integration of all three types depending on the circumstances, since he was a visionary leader (Kutsar et al, 2014, Rauf, 2014, Nair and Quay, 2012). When he returned he focused and simplified the procedures in the production process but also, took into consideration the creative proposals of his subordinates, giving them the freedom to conceive innovative ideas (Isaacson, 2012). Tool Assessment Support Myers-Briggs Type Indicator ENTJ (extraversion, intuition, thinking, judgment)  Possessed vision, meticulous planning, natural leader qualities, and took charge  Carried out plans, regardless of fierce opposition Figure 6. Tim Cook in the cover of Times magazine (Public Domain, 2016)
  16. 16. Apple Inc. Analysis 13  Surveyed every department and product Fiedler’s Contingency Model Task-Oriented Leader  Intimately involved in task progress  Regularly evaluated employee task progress  Struck deals to achieve task-oriented goals Leadership Grid Authority- Compliance Management  Promoted the need for efficiency with low regard for employees  Set goals based off of preference  Employees often worked extended hours to achieve goals Vroom-Jago Contingency Model Autocratic  Made most decisions  Capitalized upon strengths  Delegated based on weaknesses Tuckman’s Group Development Model Adept in forming, storming, norming, performing, and adjourning  Presented clear goals  Followed every component of completing goals by taking an active role and ensuring the team worked together  Definitively concluded goals, following completion Trait Theory Independent thinker, courageous, motivator, proactive  Proposed new projects  Radical ideas changed the market  Set intrinsic and extrinsic rewards  Set weekly meetings and was intimately involved in the progress of products Table 3. Steve Jobs Leadership Analysis (Kutsar et al, 2014) On the other hand, John Sculley’s approach is considered more autocratic (Nair and Quay, 2012). Unfortunately, even though he was an exemplar choice for the firm at that time he did not manage to face the competition effectively (Nair and Quay, 2012). Whereas, Michael Splinder was a strong advocator of expanding globally but was dismissed early (Yoffie and Baldwin, 2015). Following that, Gil Amelio’s stay was brief as well but his influence was great
  17. 17. Apple Inc. Analysis 14 (Nair and Quay, 2012). The style he favored was autocratic and systematic, he sacked a number of employees and recommended strategies that promoted them in the Internet and audiovisual fields (Nair and Quay, 2012). When Tim Cook took over in 2011, an amount of Apple’s staff quit their jobs because they could not imagine the firm without its visionary leader (Nair and Quay, 2012). However, the company continues to prosper financially, the revenues between 2011 and 2014 increased by 70% while the stock market price at the same time frame doubled (Yoffie and Baldwin, 2015). Moreover, his leadership method is thought to be autocratic by some but democratic by others, since, innovative devices such as Apple Watch and Apple Pay continue to be produced this integration of styles is considered effective in the organization (Yoffie and Baldwin, 2015, Nair and Quay, 2012).
  18. 18. Apple Inc. Analysis 15 5. Controlling The controlling function of management is the most important because here you see the results of the three afore mentioned functions: planning, organizing and leading. In the controlling process, managers keep a close eye on people and their performance of the job, and then assemble and interpret the information and make any corrective changes that need to be made. Nothing is guaranteed to go as planned, so plans must be adjusted and improved to ensure future success. (Schermerhorn, 2010). 5.1. Controlling Mechanisms The first step to controlling process involves set a quantitative evaluation process on the execution of future objectives. Apple's current goals are constructing and growing their retail and online stores, operating systems and innovative products. The second step is measuring the measurement of the current performance of the objective. Their performance standards are assessed by the following criteria: 1. Revenue per Square Foot - productivity of Apple Stores (Rowland, 2015) 2. Product Units per Time - productivity of Apple suppliers and supply chain (Rowland, 2015) 3. Milestone per Time - productivity of Apple employees in product development (Rowland, 2015) On the third step, they make a comparison of the current performance and execution of the goals opposed to the criteria (Jones and George, 2015, Schermerhorn, 2010). If the outcome is positive managers may change the assessment criteria making them more adaptable to more challenging situations. Moreover, a bonus may be given to celebrate the successfulness of the endeavors (Jones and George, 2015). However, if the performance does
  19. 19. Apple Inc. Analysis 16 not meet the standards, then corrective steps may be followed, for instance, if the Apple retail stores do not procure enough revenue, then the managers should research the problems and act upon them (Jones and George, 2015). Lastly, the fourth step includes the exact corrective measures the firm might use (Schermerhorn, 2010). If a negative outcome occurs in the long-term, managers may decide upon altering the whole infrastructure of the firm (Jones and George, 2015, Schermerhorn, 2010).
  20. 20. Apple Inc. Analysis 17 6. Conclusions & Recommendations After Steve Jobs’ passing many were frightened for the company’s future, speculations were on the negative side and even employees resigned in fear of the upcoming circumstances (Yoffie and Baldwin, 2015). However, the company by applying its unique and tested planning strategy continued to grow even further and stay on the lead, in the aggressive and highly competitive industry of personal communication (Yoffie and Baldwin, 2015). Only, in 2015 three distinctive and innovative devices were launched (Yoffie and Baldwin, 2015). If Apple Inc. manages to continue differentiating their products and keep the costs of manufacturing reduced the growth will be perpetual (Yoffie and Baldwin, 2015). Nonetheless, there are further enterprises the firm may pursue. For example, customized smartphones for business people could be built, with extreme levels of protection, guarding them from not only online espionage but also corporeal (Frank, 2015) by further developing the existing fingerprint option or creating a new one. Additionally, the firm could co-operate with its main competitor, namely Microsoft, and create a monopoly (Frank, 2015). By employing these plans, however, the firm should be aware and cautious not to divulge main components that provide its competitive advantage. For instance, the know-how of operating systems. Moreover, a meticulous market research is advised to be utilized before allotting resources in the manufacturing of a customized smartphone.
  21. 21. Apple Inc. Analysis 18 7. References Apple Inc. (2015). Form 10-K. Annual Report. [online] Washington, DC. United States Securities and Exchange Commission, pp.1-85. Available from: http://www.edgar-online.com [Accessed 1st January 2016]. Aschroft, J. (2012). Apple from the iPod to the iPad: A Case Study in Corporate Strategy. 2nd edition [ebook] Manchester, pp. 5-23. Available from: http://www.johnashcroft.co.uk/wp-content/uploads/2012/06/Apple- From-the-iPod-to-the-iPad-Case-study-2012.pdf Biddle, S. (2014). Apple Sounds Like a Terrible Place to Work. [online] Valleywag.gawker.com. Available from: http://valleywag.gawker. com/apple-sounds-like-a-terrible-place-to-work-1520812217 [Accessed 1st January 2016]. Cusumano, M. (2008). Technology strategy and management: The puzzle of Apple. Communications of the ACM, [online] 51(9), pp.22-24. Available from: http://www.acm.org/dl [Accessed 1st January 2016]. Denning, S. (2012). Apple's Employees Have A Hell Of A Ride. [online] Forbes.com. Available from: http://www.forbes.com/sites/stevedenning /2012/06/25/apples-employees-have-a-hell-of-a-ride/ [Accessed 1st January 2016]. Dudovskiy, J. (2015). Apple Porter's Five Forces. [online] Research Methodology. Available at: http://research-methodology.net/apple-porters-five-forces- analysis/ [Accessed 1st January 2016]. Ferguson, E. (2015). Apple Inc. Five Forces Analysis (Porter’s Model) - Panmore Institute. [online] Panmore Institute. Available from: http://panmore.com/apple-inc-five-forces-analysis-porters-model-case- study [Accessed 1st January 2016]. Frank, B.H. (2015). Apple CEO says the future of enterprise is mobility. CIO [online]. pp. 1 Available from: web.b.ebscohost.com Accessed 1st January 2016]. Gyawali, Prasad and Tao, Yin (2009). How organizational control mechanisms
  22. 22. Apple Inc. Analysis 19 vary across different types of projects executed by non-project based organizations ?. 1st ed. Umeå, Umeå School of Business, pp.1-80. Isaacson, W. (2012). The Real Leadership Lessons of Steve Jobs. Harvard Business Review, 90(4), pp.92-102. Jones, George and George, Jennifer (2015). Contemporary management. 9th edition. New York, McGraw-Hill Education. Jurevicius, O. (2016). Apple SWOT analysis 2016 | Strategic Management Insight [online] Strategicmanagementinsight.com. Available from: http://www.strategicmanagementinsight.com/products/swot- analyses/apple-swot-analysis-2014.html [Accessed 1st January 2016]. Kutsar, Vadim et al. (2014). Leadership Analysis Using Management Tools: Steve Jobs. American International Journal of Contemporary Research, 4(2), pp.125-130. Linmayer, O. (2004). Apple confidential 2.0. San Francisco, No Starch Press. Lozos, H. (2013). Quantum Strategy at Apple Inc. Organizational Dynamics, 42(2), pp.92-99. Lynch, R. (2012). Strategic Management Case plus Case Answer - Apple's Profitable but Risky Strategy. [online] Global-strategy.net. Available from: http://www.global-strategy.net/apples-profitable-but-risky-strategy/ [Accessed 1st January 2016]. Maverick, J.B. (2015). Analyzing Porter's Five Forces on Apple (AAPL). [online] Investopedia. Available from: http://www.investopedia.com/articles /investing/111015/analyzing-porters-five-forces-apple.asp [Accessed 1st January 2016]. Meyer, P. (2015). Apple Inc. Organizational Structure: Features, Pros & Cons - Panmore Institute. [online] Panmore Institute. Available from: http://panmore.com/apple-inc-organizational-structure-features-pros- cons [Accessed 1st January 2016]. Nair, Praveen B. and Quay, Ai L. (2012). The Sweet and Sour Apple: The Case
  23. 23. Apple Inc. Analysis 20 of CEO Strategies at Apple Inc. The Indian Journal of Management, 5(1), pp.21-23. Prentice, W.C.H. (2004). Understanding Leadership. Harvard Business Review, 82(1), pp.102-109. Rauf, M. (2014). Antecedents and Consequences of Leadership Styles: Evidence from Successful Entrepreneurial Ventures. International Journal of Innovation, Management and Technology, 5(5), pp.378-381. Rowland, C. (2015). Apple’s Vision Statement & Mission Statement - Panmore Institute. [online] Panmore Institute. Available from: http://panmore.com/apple-mission-statement-vision-statement [Accessed 1 January 2016]. Rowland, C. (2015). Apple Inc. Operations Management: 10 Decisions, Productivity - Panmore Institute. [online] Panmore Institute. Available from: http://panmore.com/apple-inc-operations-management-10-decisions- areas-productivity [Accessed 1st January 2016]. Schermerhorn, J. (2010). Introduction to management. 10th edition. New York, John Wiley & Sons. Smithson, N. (2015). Apple Inc. SWOT Analysis & Recommendations - Panmore Institute. [online] Panmore Institute. Available from: http://panmore.com/ apple-inc-swot-analysis-recommendations [Accessed 1st January 2016]. Smyth, W. (2014). Tim Cook Coming Into His Own. [online] Mobilitydigest.com. Available from: http://mobilitydigest.com/tim-cook-coming-into-his-own/ [Accessed 1st January 2016]. Tar, A. (2013). Apple Inc. SWOT Analysis. 1st edition. [ebook] Munich, GRIN Verlag, pp.1. Available from: http://www.grin.com/en/e-book/215816/ apple-swot- analysis [Accessed 1st January 2016]. Thompson, A. (2015). Apple Inc. Stakeholders: A CSR Analysis - Panmore Institute. [online] Panmore Institute. Available from: http://panmore.com/apple-inc-stakeholders-csr-analysis [Accessed 1st January 2016].
  24. 24. Apple Inc. Analysis 21 UKEssays, (2015). Motivation And Rewards Of Apple Inc Business Essay. [online] Available from: http://www.ukessays.com/essays/business/motivation- and-rewards-of-apple-inc-business-essay.php [Accessed 1st January 2016]. WordPress.com (2011). An Illustrated History of Apple. [image] Available from: https://flatworldbusiness.wordpress.com/flat-education/intensify/ creating-a-flat-business/case-apple-inc/ [Accessed 1st January 2016]. WordPress.com, (2013). Motivation. [online] Available from: https://managementofapple.wordpress.com/motivation/ [Accessed 1st January 2016]. Yoffie, David B. and Baldwin, Eric (2015). Apple Inc. in 2015 [Case Study]. Boston, Harvard Business Publishing, 2015. pp. 15-30. Available from: http://secure.expertsmind.com/attn_files/1341_Apple.pdf [Accessed 1st January 2016] Yoffie, David B. and Baldwin, Eric (2015). Apple's Future: Apple Watch, Apple TV, and/or Apple Car? [Case Study]. Boston, Harvard Business Publishing, 2015. pp. 1 Available from: https://hbr.org/product/recommended /an/716401-PDF-ENG?referral=02542&cm_vc=rr_item_page.rr1 [Accessed 1st January 2016]
  25. 25. Apple Inc. Analysis 22 8. Appendices Appendix 1. SWOT Analysis – Apple Inc. After having decided on the future goals and missions, the next step in the strategic management process would be to examine the organization and its environment using SWOT analysis, which serves as a tool to determine the right strategy a company should follow by setting forth its internal strengths and weaknesses along with external opportunities and threats. (Schermerhorn, 2012). SWOT ANALYSIS Strengths (Internal) Weaknesses (Internal) -Strong brand image -High profit margins -Effective innovation process -Marketing and advertising capability - Strong financial performance -High prices -Limited distribution network -High selling prices -Sales limited mainly to high-end market Opportunities (External) Threats (External) -Aggressive competition -Imitation -Rising labor cost in countries where Apple plants are located -Distribution network expansion -Rising demand for tablets and smart-phones -Creation of new product lines
  26. 26. Apple Inc. Analysis 23 Internal Strengths Internal Strengths represent the company's strongest pillars. (Jones and George, 2012). One of many valuable asset of Apple is its brand image. This SWOT analysis depicts that is able to extract profit by way of its brand image. Furthermore, Apple's pricing strategy allows it to gain a significantly great profits because it enables flexibility for price adjustment ( See profit margins below). Innovation is a great strength of Apple too, because it enables it to gain a competitive advantage towards its competitors and always be on the cutting- edge(Smithson, 2015). Apple, in addition, is one of the most profitable companies in the world, having a total revenue of $39.5 billion in 2014, 6.7% more than the previous year (Kell, 2015). Its exceptional marketing and advertising capabilities contribute to the overall brand awareness (Jurevicious, 2016). 2012 2013 Change from 2012 2014 Change from 2014 2015 Change from 2014 Apple 1 1.1 10% 1.2 9.1% 1.8 50% Samsung Electronics 4.3 3.8 (11.6)% 3.6 (5.7)% - - Microsoft 1.6 2.6 38.5% 2.3 (11.5)% - 17.8% Amazon.com 2 2.4 20% 3.3 37.5 1.9 - Google 2 2.4 20% - - Table 5. Marketing and Advertising, Budget (Jurevicious, 2016) Apple invested only 0.77% of its total revenues on advertising in this context and brings back a higher revenue than its competitors. This depicts not only the Apple's capabilities in marketing, but also shows that Apple spends its money more effectively than its competitors, and get greater in return not only in the
  27. 27. Apple Inc. Analysis 24 profit context, but also contribution to its overall brand image and value (Jurevicius, 2016). The strengths of Apple are quiet difficult to contend with, and therefore they justify its perpetual on top position (Smithson, 2015). Internal Weaknesses Internal weaknesses are the ones that hold back a company from performing well and need to be addressed (Meyer, 2015) One of its inadequacies is closely linked to an aspect of its organizational culture that is secrecy. Apple scrupulously chooses its sellers of its merchandise. This enables control over distribution, but confines its market reach. Apple is known for its high prices. This confines most people to buy the product and the large majority of the market belongs to the lower classes. This may increase the need for substitutes (Meyer, 2015). Therefore, according to the analysis, the high prices and limitations on distribution may impose restrictions in the business (Meyer, 2015) External Opportunities The external opportunities section addresses the opportunities that the company can choose to exploit. These opportunities affect strategic route of a corporation. Apple can exploit the opportunity to enlarging its distribution network, which would effectively address the company's weakness in this point and enable it to reach a larger number of customers. Also, Apple could get into new product lines, as they have done with the Apple Watch (Meyer, 2015). Furthermore, they could start producing Apple TV and Apple car. These two new products are pose great opportunity and have potential to happen, but not without their challenges. The television industry is facing great consumer dissatisfaction due to online streaming, cable packages, etc. But could Apple come up with a breakthrough and solution here too? Also the expenses and engineering challenge make getting into automobile industry a bit risky (Yoffie and Baldwin, 2015) External Threats
  28. 28. Apple Inc. Analysis 25 External threats are possible events or forces outside the company’s control that can harm the company's overall financial performance (Meyer, 2015). The aggressive competition that it faces is partly due to the aggressiveness of the companies. Apple competes towards companies such as Samsung, who also implement the innovation strategy. Because of this competition, it is crucial that the company has the basis to for upholding its competitive advantage. Furthermore, Apple risks the threat of imitation that generated because of the large number of companies that can copy its products. The increasing labor costs in China, for example, can cause the reduction of the profit margins or even the increase of prices themselves (Meyer, 2015). Therefore, the analysis shows that the company faces potential threats because of what could cause damage and harm to the company (Meyer, 2015). Recommendations Based on Apple’s SWOT Analysis According to the SWOT analysis, Apple can employ the major strengths that it owns to effectively tackle its weaknesses and also utilize them to make use of the company's potential opportunities. Furthermore, Apple can use its exceptional brand image and innovation to get into producing new and innovative product lines. However, the company also stands in front of many threats and with the threats that it faces, an appropriate course of action would be to tackle these threats using a stronger patent portfolio together with innovation to ascertain a competitive advantage even under threat (Meyer, 2015)
  29. 29. Apple Inc. Analysis 26 Advantages & Disadvantages of Apple’s Organizational Structure Strong Control. The hierarchy in Apple’s organizational structure supports strong control over the organization. Theoretically, hierarchy empowers top leaders like Tim Cook to control everything that goes on in the organization. Through the hierarchy, function-based grouping and product-based grouping in this organizational structure, Apple ensures that Cook and the senior VPs control all organizational processes. (Meyer, 2015) Limited Flexibility. Apple’s organizational structure has the downside of low flexibility. Hierarchy typically prevents lower levels of the structure to flexibly respond to business needs and market demands. However, Tim Cook has already made slight improvements by increasing collaboration among different parts of the firm. Still, Apple’s organizational structure does not support rapid changes because everything must go through Tim Cook and the senior VPs. (Meyer, 2015) Appendix 2. Porter’s Five Forces Model – Apple Inc. According to Schermerhorn (2010), Porter’s Five Forces Model is a forecasting analysis, used in the second level of planning, where internal and external environmental threats are evaluated. The threats are the power of both suppliers and consumers, the availability of substitutes in the industry, the possibility to enter the industry and the main factor the competitors that exist (Schermerhorn, 2010). Moreover, it provides the help needed to make strategic choices and analyze effectively the present conditions (Jones and George, 2014).
  30. 30. Apple Inc. Analysis 27 The industry competition is extremely aggressive in the technological field due to low switching costs (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015). As a result, the industry’s main competitors are companies such as Google Inc., Samsung Electronics and Amazon Ltd. (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015). Moreover, again due to the low switching costs customers power is excessive (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015). As far as Apple is concerned it does not affect them greatly since the innovative products and services are keeping them afloat and prospering (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015). Since, entering this particular field requires not only high initial capital but also specialized know-how, it is neither easy nor applicable to enter the industry (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015). Furthermore, the ability to acquire brand recognition and brand name are another factor of the difficulties new businesses face (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015). Figure 4. Apple Inc. Porter's Five Forces Model (Loizos, 2013)
  31. 31. Apple Inc. Analysis 28 Additionally, the negotiating influence of suppliers is weak within this market, since there are numerous competitors and high demand of establishing business relationships with a prestigious company like Apple Inc. (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015). This enables Apple to choose the suppliers it desires with, relatively, reduced cost, instead of the suppliers choosing whom to work for (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015). Lastly, substitute goods and services do not affect Apple’s revenue throughout the last ten years, as the brand recognition they have established and due to the fact that they are offering a complete and exclusive customer experience, from the Apple stores, in which the merchandise is promoted and the unique operating systems to the after sale support (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015, Issacson, 2012). The rivals or new entries have to compete not with a stand-alone product but a whole system (Dudovskiy, 2015, Ferguson, 2015, Maverick, 2015). Appendix 3. Fiscal 2015 – Apple Inc. Financial Performance Figure 4. Apple Inc. Financial Performance (Apple Inc., 2015)
  32. 32. Apple Inc. Analysis 29 Appendix 4. International Market Presence & Planning The Company deals with its business essentially on a geographic premise. The Company's reportable working sections comprise of the USA, Europe, Greater China, Japan and Rest of Asia-Pacific. The Americas portion incorporates both North and South America. The Europe section incorporates European nations, and, in addition, India, the Middle East and Africa. China, Hong Kong and Taiwan are incorporated within the Greater China fragment. The Rest of Asia- Pacific portion incorporates Australia and those Asian nations excluded in the Company's other reportable working fragments. Albeit, each reportable functional portion offers identical software and hardware items and comparable amenities, they are overseen independently to better adjust to the area of the Company's clients and dissemination accomplices and the unique business sector flow of each geographic district (Apple Inc., 2015). Consequently, it is evident that the company utilizes many market penetration strategies (Apple Inc., 2015). To begin with, they are franchising and licensing the Apple retail stores, secondly, they are outsourcing since the manufacturing part of the production process is operated in Asian countries, and lastly, they are exporting their devices and operating systems globally (Apple Inc., 2015, Schermerhorn, 2010). Thus, by applying these methods they have not a direct involvement in the ownership of their transcontinental operations (Apple Inc., 2015, Schermerhorn, 2010). Appendix 5. Employee Motivation Motivation is a process by which a person's desire or willingness is directed towards achieving an objective goal. Abraham Maslow's Theory of needs is being used by Apple managers, who have analyzed how needs fit into task design, payment and managerial technique and formed managerial methods (EssayUK, 2012) Apple fulfills its employees' basic needs by providing them with a monthly salary. Additionally, they provide numerous financial incentives such as, saving plans, investments, etc. Secondly, Apple fulfills the safety need by presenting
  33. 33. Apple Inc. Analysis 30 its employees job security, pension or retirement advantages and a safe work habitat. This makes them feel safe and secure. Thirdly, it satisfies their social needs by making them feel as if they are a part of a community. In addition, it satisfies their esteem by fostering a respect for oneself and for others around, and also give recognition and applaud them for their work. And finally, Apple Inc. fulfills its employees' self-actualization needs. This part is closely linked to Steve Jobs way of commanding and how he pushed people to follow a certain direction and towards certain objectives. As an example can serve Steve Job and Macintosh incident. When Jobs left the company, Mac began its decline in profit and direction, but as soon as Jobs returned it quickly returned to its former position and profitability. All in all, motivation stirs and inspires hard work. Apple has managed to keep its employees loyal and motivated, which is very important because the work done by employees will determine the success of the whole company. And look where Apple is today! (EssayUK, 2012). Appendix 6. Apple Inc. Workplace & Corporate Culture According to a former employee, Jordan Price, who worked as an app designer, has criticized the corporate culture for its inflexibility of the working hours that never afforded him the time to spend with his daughter; the frequent meetings held made the work less productive and the criticizing and degrading behavior of the managers. Many have criticized the firing of employees after a short time, once they were worn out completely. The low pay-check also bothers most of them because the workers see what they earn and compared to that amount, the amount they pay seems too low (Biddle, 2014). However, it is stated that Apple provides above average pay-checks when compared to its competitors. Aside from everything, many employees still as an unparalleled experience that they would never forget. Working for the world's fastest growing industry has its perks. (Denning, 2012) Apple's annual reports are full of firings or resigns, but rarely anyone speaks out because they're either afraid or simply adore and revere the company too much to criticize it (Biddle, 2012). Jobs' often appalling and dictatorial behavior was forgiven because, in the end, it was for a greater good. However, eventually, the majority of the employees deemed their job at Apple as the ultimate
  34. 34. Apple Inc. Analysis 31 experience, and despite the long hours, the belittling, and low pay-checks most of them would not have changed it for anything in the world (Denning, 2012). However, these answers make an improvement in the corporate culture almost demanding. Changes that would be greatly appreciated.

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