Organizational Performance of Apple Inc - Case Study Example

ORGANIZATIONAL PERFORMANCE OF APPLE, INC By (Name of Student) Student ID Number Subject Code Due Date 1) Introduction Organizations thrive in their operations depending on their management and operational strategies as a whole. A well strategically organized company has a bigger market share and in terms of popularity, customer majority and higher sales returns as opposed to lower strategized companies. This report intends to unveil the operational position for Apple Company in terms of its structure, organizational strategies objectives, personnel hierarchical structure, geographical location and specific performances position in the global business community. Apples, Inc. Background Apple, Inc. came to inception in 1976 by Steve Jobs and Steve Wozniak. It was among the first companies than entirely focused on technology with the aim of not only serving large computers but individual customers. Johnson (2012), stated that Apple, Inc. core purpose is to make computer available or accessible to an average customer hence being the first and leading company in marketing of personal computers. Apple, Inc. has a strong and wide market orientation by the virtue that its decisions are mainly based on client needs. Apple’s, Inc. vision is to the commitment to bring the best experience in computing to educators, students, customers and creative professionals globally through its internet offerings, hardware and software. Their mission statement upholds one main value; “superiority” by simply outshining their competitors (Johnson 2012). Apple, Inc.’s Core Values In reference to Bookwalter (n.d.), Apple among others, believes that it is the greatest producer of great products, it believes in simplicity and not complexity, furthermore it participates in markets where it can contribute significantly and consequently, it believes in cross pollination and deep collaboration within company groups, which promote innovation in ways that its competitors cannot match (Bookwalter n.d.). Apple, Inc.’s personnel structure Banjarin (2017), states that Apple personnel structure is among the core factors that makes it extremely successful. Under the CEO, it has eleven departmental executives who directly report to the CEO. He controls all departments that are headed by the vice presidents of among others; legal, design, operations, iOS software, software engineering, retail, global communications and product marketing. The company employs “simplicity and straight” as their key approach in personnel structure, this approach is applied to as well promote centralized decision making. Through simplicity and straight approach, the decisions made that relate to services and products is instantaneous. This helps the company to quickly grab opportunities whenever the board of directors identify any obvious missing idea on their products (Banjarin 2017). Apple, Inc. Environment The company has several factors influencing its environment. This factors include; a) Technological segment In regards to Minter (2017), in computing industry, the top most factor that influences a company’s success is technology. Innovation in technical progress enhances better, cheaper and faster electronic products each year. It also creates a larger market segment through production of new products, therefore, technological innovation makes an entire industry fiercer all subsequent years. Apple, Inc. has taped in to increasing demand created by this paradigm. Since the large increase indicates that clients are shifting their interest and use from personal computer to tablets and smartphones. However Apple, Inc. is of the opinion that products manufactured by rival companies might lead to decrease in demand for their (Apple, Inc.) products. Therefore it is a mandate for Apple, Inc. to keep up with the technological advancement trends or else the rival firms might outplay them. b) Demographic segment In comparison to the past, domestic use of computers, cell phones, tablets and electronic books has drastically increased in recent times. This increased use of the internet especially with tablets and smartphones has automatically led to increased demand for applicable devices. Apple, Inc. has expanded its sales through utilization of these opportunities and in return it has retained its leading position. c) Social-cultural segment Culture is a critical factor in company’s effectiveness and profitability. Due to multicultural aspect, it is difficult for an organization to be successful in international segment. According to the author, Apple, Inc. faces difficulties in selling their well innovated and developed products in Asia. Fact being, Asian countries have not fully adopted technologies like 3G and 4G. the author further indicated that there lacks cash trading habits in Asian countries, hence targeted customers have problems in meeting higher initial costs of purchasing computers (Minter 2017) Issues affecting Apple, Inc.’s performance Khan et al (2015) noted that Porter’s five forces analysis enable more reliable and effective decision making (Khan et al 2015). The five forces will be applied to evaluate the main issues that affect Apple, Inc.’s performance. Also the report will review on SWOT analysis to identify more issues concerning the company. Porter’s five forces analysis Rivalry within competing sellers; (High) Borrowing from Khan et al (2015), Apple, Inc.tech products are diversified. It sells software and hardware that make a tough situation to compete with other manufacturers globally. The author indicated that Apple is losing its smart-phone market share, the author indicated that the company declined by 14% basing on their quarterly report and its iPad growth stagnated at 13% compared to 79% of their competitors. The upholding positive issue of Apple, Inc. is the fact that it has less product line that is expensive and requires customized operating system. This features limit their sales as opposed to their competitor who have wider varieties for customers and that run on operating systems like android which are easy to use. Apple faces the issue of pricing in developing markets since their products are expensive as compared to substitutes. (Khan et al 2015). New competitors’ potential entry: (Low) Mcgarry (2015) states that although Apple, Inc. faces low threat of new entrant’s competition. Apple’s faces limitations in creating market share in developing countries, this gives other competitors. This creates a reasonable barrier for Apple to secure market share that is meaningful (Mcgarry 2015). Substitute products competitive pressure: (Moderate-High) Moren (n.d.) indicated that for every Apple product there is a substitute. Some of this product substitute include: iPad- Samsung tab iPod- Sony and Samsung mp3 players iPhone- Samsung (galaxy and Note), Nokia and HTC Substitutes that are mostly copy-cats of apples products also restrict its production and sales in the market share since users will prefer products that serve the same purpose and are affordable. Furthermore Apple products use their own software customized for their products while substitutes use android platform that is easy to install on third party products. Supplier bargaining power: (Low-Moderate) Apple products are unique to manufacture. This limits the bargaining power of the suppliers, all though the number of Apple suppliers is reasonably high, the company faces challenges of supplier adherence to supplier code of ethics. This promotes supplier-worker and supplier-buyer conflicts. Customers bargaining power: (Low) Product switching cost is high since new hardware is likely to require new software. This consumer concern give them upper hand when it comes to choosing between Apple products and other substitutes. Most of the customers will prefer substitute to Apple products mainly because of the incurred costs that come with the product. Customers also have a variety of products to choose from. This products are manufactured by different companies like: Microsoft and Samsung that compete with Apple products but cheaper to acquire (Moren n.d.). SWOT Analysis: (Internal aspects) Lim and Tepper (2015) elaborated that “SWOT analysis summarizes the key issues from the business environment and the strategic capacity of an organization that are likely to impact on strategic development”. Therefore, weaknesses and strengths form the internal environment while the threats and opportunities form the external aspects of business environment. In the process of identifying issues affecting Apple, Inc. performance, we will mainly concentrate on its weaknesses and threats. Weaknesses Apple is number one information technology company in the world. The position brings along various challenges and responsibilities. By the fact that Apple Company has strong strategies for promoting direct sales outlets, unfortunately its outlets are limited since they only had distribution channels in only 13 countries as opposed to other competitors. Secondly it highly depends on sale of iPods and iPhones as a domineering factor in its overall sales. Another shortcoming is that Apple’s hardware is only compatible with difficult to use operating system customized to fit only Apples products, while hardware by other competitors support android which is perceived to be more friendly, easily available and can be used in different company’s products. (Lim and Tepper 2015). Threats Apple, Inc. faces a number of threats in the competitive environment it operates in. most of the competitors go for lower profit margin on substitutes making customers to re-evaluate before investing on an expensive apple product. In return this affects Apple’s sales return. On the other hand, competitors’ products do not have their own software (Harrer 2017). SWOT Analysis: (External Aspects) 1) Political and legal aspect In reference to Grossman et al (2016), Apple, Inc. faces several political problems. Presence of political insurgence leaves the company to danger, furthermore, in recent times, Apple Company faced supplier-worker issues and political pressure. The author also noted that Apple, Inc. facing is facing several domestic legal stress imposed by U.S government. In chine Apple face challenges of piracy. This leads to copy-cat Apple products into the market which in return has negative impact on Apple sales. Economic aspects Apple Company has been affected by global advanced economies crises which has lead countries into recess. This economies and issues of unemployment has affected Apple growth in sales. These situations have lead Apple Company in to financial dilemma. The US stringing dollar is another source of issues that face prices of Apple products, profit margins and transportation costs. Apple is not attracted to invest in developing countries. This has limited its diverse growth only to developed countries while leaving the untapped market in developing countries to its competitors. Apple’s Mac has less market value than PC because Mac is more functional and expensive compared with PC which is cheaper and more available to users Technological Aspect Apple faces issues of technological advancement. Technology is evolving at very rapid speed which influences product use and customer needs. Technology makes faster updates that affect Apples position at the top in the industry. Just like any other company Apple is required to often evaluate it product line in efforts to accommodate technological changes. This is an expensive activity that requires more financing by the company (Grossman et al 2016). Other notable issues Apple, Inc. faces other issues as reflected by Sawyda (2011). This notable issue include: Product quality It was noted by Apple company has been criticized by experts in the public relations for not adequately eliminating some issues noted by customers concerning their products. For example of Apple introduced iPhone 4, customers complained that its reception was wanting and this highly affected customers’ communication. It has been noted that Apple has minimized the issue other than eliminating it. Privacy issues Privacy was noted as another issue facing Apple Company. In 2011 report Apple disclosed that features in their mobile phones collected and availed information on the phone’s location. This was view as infringement on individual’s privacy although the company further communicated that users could disable the feature if need be, though this was not exactly true since some Apple phones still continued to avail the data after customers had disabled the feature. Upon passing the mobile privacy bill by the US government, Apple is bound to encounter sales drop-down effect. Sustainability issue It is indicated that Apple electronic production contributes a 3 percent of toxic gas emission. This is an environmental concern especially when facing the fact that Apple production is consistently developing. Main concern is relocating people to facilitate its technology expansion or upgrade which in return may lead to older or obsolete equipment being disposed outside. Issue on intellectual property Theft of intellectual property is another issue facing Apple, Inc. Apple Company is concerned about competitors stealing and implementing its ideas, this has led to lawsuits for competitors for example Apple sued Franklin Computer Corporation for unlawfully formatting Apple’s operating system to enable use on Franklin Computer Corporation computers. Patents issue Apple has sued several competitors for technology theft. Apple case verses Samsung claiming that Samsung had imitated the designs of iPad and iPhone for its products. It is advisable for Apple to be strict on its designs and innovations in order to protect the products from competitors’ theft and development (Sawyda 2011). Possible solutions Tanwar (2013), states that a strategy encompasses two aspects: 1) the decision of where you want the company to go and 2) the decision on how the company will get there. Apple’s issues require strategic approach in attempt to solve its issues. The research indicated that Apple is losing its smart-phone market share. This is due to existence of cheaper substitutes from competitor. Apple can counter this by ensuring that it focuses on lowering it production cost for smart phones and return lower its pricing in the market share. Borrowing from Tanwar (2013), competitive advantage is the value a company creates to its customers that exceeds the product cost of production. Therefore, Apple management ought to employ “low-cost leadership strategies” through the use of cheaper manufacturing materials for smartphone but uphold its standards. This solution is in line with both power political and structural perspectives which argues that certain measures have to be taken into consideration in order to achieve require goals, therefore it is upon the Apple management to develop applicable strategies to promote sales in affected areas. On issue of quality, Apple should ensure efficient quality testing of their products before releasing them to the market. Product issue can damage product strength in the market share since customer feedback and opinion on a product may endorse or reject it. Furthermore, Apple should discount Mac’s price to affordable level of many clients and develop software with more compatibility in order to gain more market share in microcomputers. By adopting low-cost leadership strategy, Apple can develop products with few modification that suit customers’ needs at very low cost Tanwar (2013). This is in line with Power political perspective which view company achievement of goals as a result on good and applicable standards. Apple, Inc. encounters issues of patents theft and infringement on intellectual property writes. Apple should take a defensive or offensive strategic measure to defend its product innovation and creativity. In reference to world intellectual property organization (n.d.)This strategies include; tacking lawful actions on any company that attempts to copy, imitate, duplicate or use their innovation and creativity without its consent. Apple should seek compensations that match the damages caused. World Intellectual Property Organization (n.d.). Institutional perspective view on organizational survival is applicable in viewing this suggestion. Apple, Inc. should employ all available resources to ensure that it survives in the industry Apples should also locate its products in developing or less developed countries where raw materials and labour force is of low cost. Diaconu (2007), stated that this approach will enable Apple, Inc. to secure larger market share at a penetration price, this strategy will at the long run gain high profits for the company. Social-cultural issues can be countered by Apple’s involvement or interaction with the surroundings. This is archived by Apple’s involvement to social initiatives like sponsorship of educational centres, educating the society on immerging trends in information technology and creation of employment opportunity to the locals and consequently Apple’s should address its sustainability issue by ensuring that it manufacture’s its products with recyclable materials, long lasting products and ensure that recycle in a responsible manner. Develop recycling training program for their product customers (Diaconu 2007). This proposed solution is supported from structural perspective. The perspective advocates for reward according to individual performance. In the case of Apple, through its support to the society, the same society will rewarded it by purchasing their products or even marketing the same. According to Bordes (2009), Apple, Inc. main supplier issue can be countered by ensuring that all contracted suppliers adhere to the suppliers laid down code of ethics. Strict measures should be designed by the management team to be applied to suppliers who violate the code. Apple, Inc. should ensure that materials supplied, personnel employed and operations of the suppliers meet required standards. Failure to which actions like termination of contract and filling of lawsuits can be applied by Apple Company Bordes (2009). This solution can be viewed from the power political perspective. Organizations must adhere to laid down rules and regulations as fur as operational standards are concerned. Summary Apple has great tendency of innovation and design and production of state of the art telecommunication devices. It holds a better share of the global market that is composed of enthusiastic customers. In order for Apple Company to remain in the number one sport it needs to continuously review its operational strategies, uphold innovativeness and perform its operation basic on its core principle of client satisfaction. 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