Management Environment Discussion: Apple Case 7
MANAGEMENTENVIRONMENT DISCUSSION: APPLE CASE
ManagementEnvironment Discussion: Apple Case
Acompany’s financial and operational success is attributable toseveral factors both within the organization, within the industry andin the global arena. In understanding these factor and businesssuccess, this report will analyze Apple Inc as a company and globalorganization. This report will critically analyze the contribution ofApple’s operations function towards value addition in theorganization. This report will also adopt a leadership model tocritically evaluate Apple’s approach to leadership and how itsleadership has influenced the organization’s strategy andcompetitive advantage. Moreover, this report will assess the PASTELof the company and the organization structure behind the success andoperations at Apple Inc.
Applehas experienced an upward growth in business operations and valueover time since it was founded in 1976. The company has become aleading supplier of computer and revolutionary Information Technologydevices and solutions. Today, Apple Inc. sells variety of computers,the Macintosh, iPhones as well as the iPod, which has compatibleproducts, applications and software as well as digital content(Apple, 2013). The company’s operations have extensive expansion inthe U.S. and in international markets with 273 stores open in over 80countries as at September 26, 2009 (Investor Apple, 2014). Thissuccess can be attributed to sound operations function of the companyin managing internal and external business environment.
Thecompany is founded on sound organizational structure and excellentmanagement function as laid in by their revolutionary leader, SteveJobs. The business strategy and plan for the company was to introducerevolutionary products and unique computer and electronic gadgets. Itwas the main factor that shaped the operations of the company and wasthe reason why the company adopted its organizational structure. Thecore purpose of the company was not to align to the existing computerand information technology environment its main purpose was torevolutionize the market (Porter, 2006). This explains the reason forthe unique leadership that shaped the company’s operations byproducing the products they sell today.
Worthingtonand Britton (2006) argue that a sound company must have a wellestablished function of managing its organizational resources. Theseare the assets that not only help the production process, but alsodefine its performance and success strategy. At Apple, the operationsdepartment and the financing department have comprehensive resourcemanagement functions. The operations department ensures the goodstate of the technological assets of the company as well as thenon-current tangible assets. Through the right technologicaldepartments, the company maintains the state of the fragile hardwareand software assets to be in line with the company’s strategicgoals. The software and hardware resources and assets of the companyare well protected against depletion by continuous update through aresearch and development team (Apple, 2014).
Thecompany’s core business is development of IT hardware and softwarewhich are the main products of the company. Therefore, the companymust protect its intellectual property rights through patents andcopyrights. This way, the firm’s asset protection function becomesone of the most important functions that involve the software andhardware development teams in line with the legal department. Inaddition, the company has established constant supply of theresources needed for the development of sound solutions. Apple (2014)illustrates that the company has a stable source of raw materials,logistics and market resources. Moreover, the company has factoryestablishments in different countries where resources are available.
Managingthousands of employees, the company has strong human resource andemployee development function. According to Apple (2014), the companyhad 60,000 full time employees and over 3000 temporary employees.This is because a company has to establish an effective humanresource function that addresses the needs of the employees as wellas meeting its demands (Bitner, 2010). The company has adopted a flatstructure of management that enables there is a personal relationshipbetween the management and employees. In addition, the company has aclear employee improvement and development programs. As a companythat leads the world in technology and revolutionary products, Applehas to develop their employees to match the high technologicalstandards.
Thecompany has performed relatively well with an increasing trend inrevenues. In 2009 for instance, the company made $42.905 millionwhich increased to 62.225 million in 2010 reflecting a 45% increasein revenue in just a year (Nasdaq, 2014). In 2011 the revenueincreased to $108.249 million reflecting a 74% rise in revenues. In2012, the company made $156.508 which is 45% rise in revenues. Theserevenues increased with a less corresponding increase in costs asreflected in their income statements for the years ended 2007 to2012.
Earningper share of the company, both basic and diluted has an increasingtrend because of an increase in the company profitability over thelast three years. Further analysis also shows that the market to bookvalue of the firm also has been on the decrease trend (InvestorApple, 2013). However, the ratio increased to 5.85 in 2009. This isin addition to the price to earning ratio which has also decreasedfrom 37.99 in 2007 to 23.40 in 2008 and the ratio has increased to28.54 in 2009 (Hoovers, 2013). This increase in 2009 is because ofincrease in the market price of the company’s share.
Risksand Litigation Function
Interms of risks, the company has taken risks in increasing number ofresellers that could compromise on standards. Apple has also takenrisks by adopting new revolutionary technological advancements andproduction of more unique products. The company also faces the riskof financial loss, business value loss and integrity due to propertyrights infringements. This may be loss in patent cases or violationof the intellectual rights of its products or competitors.
Justlike many other technology companies, Apple Inc has commonly beeninvolved in intellectual property litigation and cases that it mighthave infringed on various intellectual property rights. This is Inaddition to patent holding companies search to benefit fromintellectual property rights claims against Apple’s significantpatent portfolios. However, Apple has vigorously defendedinfringement of property rights in the courts as well as other U.S.International Trade Commission such as in Europe and Asia (InvestorApple, 2014). Despite the consequences of the validity of thesepatents and property rights, Apple may be required to engage inprotracted litigation which is often financially expensive anddisruptive to its operations, in addition to distractions it bringsto the management.
TheCompany sells its information technology products worldwide throughits retail stores, direct sales, third-party partnerships, onlinestores, resellers, and value-added resellers. Additionally, theCompany sells a variety of computers, the Macintosh, iPhones as wellas the iPod, which has compatible products, applications and softwareas well as digital content (Apple, 2014). As per the management andfinancial analysis of condition and results of a company’soperations Apple has extensive expansion in the U.S. and ininternational markets with 273 stores open as of September 26, 2009(Investor Apple, 2014). The company has further enhanced resellersales through the Apple Sales Consultant Program. Apple has reportedfor revolutionary technological advancements and sales in iPhone withnearly 40% of sales from the United States customers only (InvestorApple, 2014).
Thecompany’s market covers a global market of over 80 countriesthrough its direct channel and multi-year agreements signed withdifferent cellular network companies authorizing them to sell andsupply cellular network support and services for iPhones. Thecompany’s consumer and customer base include individuals, small andmid-sized business, educational institutions, governments, largecorporations and general creative customers (Apple, 2013). This paperuses financial statements of the company’s financial reports forthe year 2009, 2008 and 2007.
Leadershipat Apple Inc
Useof sound communication shapes the success of leadership models andapproaches in any organization set-up (Worthington & Britton,2006). At Apple Inc, leadership was the main driving force of thesuccess of the business through well structured communication.
Revolutionaryleadership and innovative skills of Steve Jobs made him the greatestasset that the company has ever had besides their unique products.The leadership model that Steve Jobs adopted in managing this companyis portrayed as complex. This is because he installed severalleadership values in the company that can be attributable todifferent leadership styles. However, the selected leadership modelfor this report is revolutionary servant leadership at the company.As Berglof (2011) argues, not all leadership approaches can beconclusively described by one model especially in internationalbusiness. This is the case for Apple where both revolutionary modeland servant model blend to the effectiveness of its leadershipcomplexity.
Revolutionaryservant leadership is the model that best describes the company’sapproach to leadership in regard to communication. Steve Jobs wasmostly not a manager in the eyes of the world but an innovator in thecompany. He was known to be behind the success of the company in theintroduction of all products that the company produces. Not only didJobs introduce new products in the industry, he also introduced newmethods of handling people that he worked with at Apple. This makesthe leadership model that he adopted at the company to be complex andnot easy to be copied by any other organization manager if they arenot true servants of their companies.
Apple,the main leadership approach that has propelled the company toachieve its current success is its effectiveness in taking risks. Thecompany has succeeded in all of its unique products by taking risksover the development and commercialization of new products. Toestablish Apple’s business line, a lot of risks were taken to comeup with products that were not the day to day gadgets of theconsumers (Investor Apple, 2014). All the products were revolutionarydue to the risks taken by the leaders. In particular, Steve Jobs isknown to have taken great risks in introducing the Macintosh and theiPhone brands.
Theability to invest large sums of capital in the company in theproducts that were best known to Steve Jobs and a few team members isthe company’s defining leadership approach. In the year 1976, thecompany developed Macintosh, a product that defined the future ofApple Inc (Apple, 2014). In launching this product to the market,Steve Jobs made a deliberate bit of the future of the whole companyon the success of the Macintosh. It was such risky leadershipdecisions and the success of the company that they resulted to thathas influenced the culture and communication at the organization todate. The communication in the company is focused towards what isperceived to be impossible and taking the risks to achieve it byinnovation.
Oneof the main leadership approaches in the company is the visionarynature of the leaders and people working within the company. Sinceits foundation in the year 1976, Apple Computer was guided by thevision of the founders to provide affordable and effective personalcomputers. Steve Jobs was led by this vision that they sold to thecompany’s internal and external investing policies. Through theability of the company to adapt to this vision was based on thecommunication channels and the strength of the influence that thisvision instilled in the organization. For example, the innovation ofthe iPod and the iPhone was purely based on the ability of thecompany and investors to believe in the vision behind the twodevices.
Thesuccess of iPod and iPhone shows how communication of the visionbehind the company was instrumental in delivering a long-termleadership approach for the company to believe in. Porter (2006)argues that believing in a company’s vision makes a companysuccessful and develops a communication framework which inspired therest of the organization. Through such mechanism, Steve Jobs was ableto not only provide the vision, but also be the leaders of the samevision. This means that without the vision, the leaders could havehad challenges in inspiring people into believing that Apple Computerwas a going concern let alone a revolutionary company.
Throughthe use of communication in the organization, leaders at Apple wereable to influence support of the people at the tech giant and outsideits business scope. As a visionary leader, Steve Jobs was able toinspire the outside world, especially the investors to believe in thevision of a successful Apple Computer. This was achieved throughsound internal and external communication channels that served theinterests of the company’s financing function. Through theircommunication and believe in their vision, Steve Jobs and Wozniakwere able to counter the challenges presented by competition,specifically for Microsoft in the computer hardware and softwaremarket.
Nothinghas influenced the leadership approaches at apple computer and itscommunication modules other than the element of innovation.Innovation has been the main component of apple’s success since itsfounding in 1976. The company’s main goal and purpose find itsfoundation in innovation with the aim of making a PC experiencefriendlier at the interface at affordable prices (Apple, 2014). Thelanguage of operation of the firm is inspired by how the company canrevolutionize the existing technology environment. Through the use ofinnovation and communication, Steve Jobs wanted to ensure that thecompany gained from the demand for friendlier products that wasincreasing among the consumers in the fast-modernizing world.
Forexample, the company’s biggest innovation to take advantage of themarket demands was the iPod. The revolutionary digital music playerthat was portable was a unique product that Apple presented to theworld through pure innovation. From the inception, the iPod took overthe market and went on to command over 70% of the market share in theMP3 music industry (Apple, 2014). This innovation was the result of aculture at the firm that was well communicated within the firm theeach worker knew what was expected of him or her. It was a show ofthe how a consistent leadership approach to a vision can lead torevolution in the market by just invoking a bit of innovation.
Aperfect example of the use of communication for success of innovationat the company is the success story of iPod and iTunes. Through thecommunication of such success and inspiration from the innovation ofrevolutionary solutions to the market, apple went on to developfurther devices to support its previous products and what was alreadyin the market. The company, for instance developed the iTunes alongwith the success of the iPod (Apple, 2014). The iTunes issynchronization software that enabled the iPod users to manage thecontents of their devices. This innovation did not just end theresince the iTunes was introduced along with an online iTunes store.This made the company’s venture in the music industry not only asuccess, but also a revolutionary innovation.
Themain driver for the unique leadership style at Apple is the cultureof the service installed in the company’s culture and communicationframeworks. The leadership approach at apple is not based on themanagement structures but on the service that each person ispresented to the firm. This is because of the servant-hood leadershipstyle adopted and communicated to the people at the firm. This makesthe firm one of the most envied organizations in terms of leadinginnovation and market success through service. Service in the companyis highly credited to the leadership that was shown by theco-founders. In particular, Steve Jobs is credited with having ledthe organization into appreciating the importance of leading throughservice and hard work.
Thisapproach to leadership made the organization an example of hard workand dedication to fulfilling the company’s short-term and long-termstrategy. According to (2006), effective leadership is critical indesigning a company’s organizational communication culture toachieve its goals. The process of aligning the company’s workforceto its goals and ambitions is based on sound communication of thevalue of hard work. The use of communication in the servant hoodleadership approach is not only an organizational practice, but alsoa tool for instilling the value to the management and humanresources. Porter (2006) argues that managing people and teams ismade easy for the company since hard work makes teams to work withautonomy due to their proven performance.
Theservant hood approach to the leadership of the company as exemplifiedin Steve Jobs made all the difference in communicating the source ofthe success at Apple Inc. It is through the service of the leader,Steve Jobs that the organization is defined by both the people thatwork inside the firm and people outside the organizational scope ofenvironment. Steve Jobs was instrumental at personal levels in thedevelopment of almost all the products that the company produced. Theelement of management involvement in the work aspect of the companyis the main lesson that many modern day management can draw from thelate leader.
Veryfew companies have adopted an innovation as a core business strategy,especially with the current dynamism in the world that presentsuncertainty. However, the leadership at Apple was focused on adoptinginnovation as the primary business strategy since its foundation in1976. The key goal of the operations of the company as formulated bySteve Jobs was to lead the world in the field of computer and alliedmarketing. According to Hoovers (2013), the strategy that the companyadopted is to revolutionize the market and then dominate it beforecompetitors take the market. Through the leadership style, leadershipin Apple is not only a position, but in the involvement in the day today hands-on work at the company.
Thestrategy was based on the influence on the leaders on the humanresources in the organization and the market. The first way that themodel was influential was the focus on the future when approachingthe market. As a tool of market leadership, the company alwaysfocused on the future and not the present. The development of Mac,iPad, iPod and the iPhone was based on the future needs of the usersthat will make the market favorable to Apple products (InvestorApple, 2014). This is because the leadership of the organization wasfocused on the future market domination and not the market at thetime.
Whatmakes Apple Inc revolutionary as a company and also as a solutiongiver is the ability of the leadership to listen to the needs of thecustomers. This is because of the keen interest that the companytakes on the current and future needs of the market. This directs thecompany’s leadership and innovation energies in product developmenttowards the voice of the consumer on one hand and the voice of thefuture on the other (Mcloughlin & Aaker, 2010). An example of thesuccess of this model is the development of the iPad and the frequentre-launches that the device has experienced.
Sincethe initial launch of the iPad in 2010, the company has presented newmodels that address the growing consumer markets. In addition, thecompany has maintained a consistent pricing policy that has seen thecompany’s products affordable. The relative low pricing allows thecompany to lead in earnings by capturing small but massive margins.This is consistent, even in its re-pricing of new models of its rangeof products.
Afterthe announcement that over half of Apple’s sales came fromnon-American countries in 2009, the decision making of the companyhas been influenced by the both local and international politicaldevelopments (Mcloughlin & Aaker, 2010). As an American company,the firm has received preference from countries with friendlypolitical ties in marketing it products in Europe and most of theAfrican countries. Manufacturing of its products in factories inother countries has also been affected by global political and peaceissues such as terrorism threat and international relations such aswar.
Inflationand recession are some of the most significant economic factors thatinfluence Apple in marketing it products worldwide. For example, thelast recession and past inflation periods affected the sales levelsthat the company recorded especially in 2008. In addition, the changein value of the dollar and the fluctuating foreign exchange rates hasaffected it pricing decisions both at home and in the internationalmarket.
Changein the lifestyle by people to embrace the world as a global villagehas impacted positively to Apple’s next business frontier. Due tothe need for sharing and exchange of ideas among people, the need forpersonal computers has risen which establishes a market for Apple.With increasing demand for portable entertainment and social mediadevices, the market for Apple’s iPod, iPad and iPhone are on thepositive growth curve if well targeted for. By fulfilling thesedemands, Apple has risen to be an image of social life of modern daypeople.
Porter(2006) argues technological advancement within the globe haspresented equal opportunities for all companies in all countries toestablish their market and presents their products to the world. Thishas led to equal playing field of the tech-companies including Apple.Therefore, to be relevant now and the future, the company mustcontinue with innovation policy that will make it products as uniqueas they have been (Williamson & Jordan, 2004).
Withcontinuous global consciousness on green products and green energy,many companies have invested in research on how to conform to the newbusiness environment (Chen & Ching-Hsun, 2012). The next frontierin business competitive advantage is shaping up to be the productionof products that respond well to green energy that pollutes theenvironment. The business environment is being shaped by the need forproducts that are favorably responsive to the changes in theenvironment (Chen & Ching-Hsun, 2012). Apple is therefore workingto ensure that it surpasses the ISO standards and global energyratings as well as approval as a firm with a low carbon footprint.
Thetechnology industry has faced increasing demands in regard to patentand copyright protection of their products and intellectual property.The industry has faced increased challenges in developing theirproducts in a way that they do not infringe the rights of otherswhile giving the customer the service they need (Porter, 2006). Forexample, Apple is facing a case with Samsung over mobile deviceintellectual property rights. This makes the company more sensitiveto current and future legal demands.
Theorganization structure of the company is functional in nature withproduct line differentiations. Each product is considered to be aseparate internal Apple business and is managed by a separatedepartment. Despite the top management, overseeing entire Apple Inc,each department is autonomous in the production and marketingstrategies. The top management has still remained the overalldecision maker and the approving body of material business decisions.At the top is Tim Cook, who is the Chief Executive Officer and isassisted by the recently hired Paul Deneve as the Vice President.Their roles are however, cut out such as Paul will be responsible for“special projects” but will report to Tim.
Themain organization structure after the CEO and the Assistant CEO arefunctional departments in charge of overall functional management.According to (Apple, 2014), these structures are communicationdepartment, international sales and domestic sales. In addition, thecompany has a legal department for legal management and retaildepartment responsible for retail market management. The company alsohas human resource management responsible for all the employees andthe finance department that is responsible for financing, accountingand auditing functions. Moreover, the company has the engineeringdepartments the software engineering and the hardware engineeringdepartments handle all the innovation and produce developmentfunctions (Apple, 2014). These two departments do not include aseparate internet software department, design and technologydepartments that each operating differently. Other main departmentsare the marketing department and the operations management.
Underthe top management its line managers that are responsible for each ofthe product departments. These departments are essential in theestablishment of the whole company structure due to their functionalapproach to their structures. The departments have differentorganizational setups due to the technicalities that each producthas. However, many decisions that regard the management of each ofthe brands are made by the vice president or the CEO. This means thatthe line managers are more of supervisors and creative managers thanbrand managers. In earlier times, Steve Jobs was responsible forbrand management, but currently, the vice president is playing therole.
AppleInc. has been regarded as one of the world’s most admired companiesover the past few decades. This is due to the sound internaloperational functions and the ability of the management to maintainhigher levels of performance in the company. In addition, theleadership approach that has been adopted by the company is suitedfor the current organizational challenges and future vision of thefirm. Through visionary, service-oriented and risk-taking actions ofthe management, the company has been able to manage its internal andexternal environment to ensure current success and future dominationin the industry.
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