Apple inc. is an America firm that deals with the manufacture and selling of consumer electronics, software and personal computers. Macintosh brand of computers, iPod, iPad and the iPhone are the hardware products produced by Apple. Software marketed by Apple include : Mac OSX operating system, iTunes media browser, iLife suite of multimedia and creativity software, iWork suite of productivity software, Aperture (expert photography package), Final Cut Studio( for professional audio and film- industry software facilities), Logic Studio(music production tools), the travel web browser(Safari) and the iOS mobile operating system.
As of July 2011 the company had 357 functional stores spread over 10 countries and an online retail store that sold hardware and soft ware products. As of July the same year, it overtook Microsoft as the largest company in the world in terms of market capitalization. It also led in income and profit. Founded in the year 1976 as Apple Computer Inc, in Cupertino California, the company was incorporated in 1977 and dropped the name the word “computer” in 2007 to portray the company’s shift to consumer electronics while still retaining its central business of personal computers. As of the year 2010, apple had 46,600 fulltime and 2,800 part time staff with global sales of $65.23 billion (Linzmaer 1999).
The founders, Steve Jobs, Steve Wozniak and Ronald Wayne established the company with the primary intention of selling the Apple 1 personal computer which was assembled by hand by Wozniak. By the time of incorporation Wayne had sold his share to the other partners. The necessary businesses know how and the capital of $250,000 was provided by millionaire Mike Markkula.
This essay is going to discuss the management structure and the international strategy of the company, analyzing if they are essential in achieving the company’s mission and objectives. It will also explore possible ways in which the firm can alter its strategy and structure highlighting how the changes can be successfully implemented.
Apple is headed by the company’s chief executive officer. Under him are ten senior vice presidents who are in charge of : internet software and services, iOS software, Industrial Design, Hardware Engineering, Chief Financial officer, World wide Marketing, General counsel , and Operations.
Apple’s board of directors is composed of; Arthur D. Levinson (Chairman of the Board Apple , Chairman and former CEO Genentech), Bill Campbell (Chairman and former CEO Intuit Corp),Tim Cook (CEO Apple), Millard Drexler (J. Crew), Albert Gore Jr. (Former Vice President of the United States), Robert A, Iger (President and CEO The Walt Disney company), Andrea Jung (Chairman and CEO Avon Products), and Ronald D. Sugar ( Former Chairman and CEO Northrop Grumman).
Under the Chief Finance Officer is the control manager. The Chief Operations Officer exercises control over managers in charge of: Global Outsourcing, Apple Online Store, Americas and Asia Regions, AppleCare, Education, and Emerging Markets Region. Vice president responsible for Software Engineering supervises managers in charge of Consumer and Product Application and Mac operating system Engineering. Vice president concerned with Product Marketing supervises managers under Internet Services and iPhone and iPod marketing. Global communications vice president is responsible for managers in charge of: Communications in Emerging markets, Communication in Asia Pacific, Communication in Japan, Communication in Latin America, and corporate communication.
One of the strengths of Apple Corporation is that, the people involved work as a team eliminating the need for committees. Its organization is like that of a new company. The management meets for three hours daily to discuss the issues of the corporation, and then responsibilities are delegated to teams which are viewed to be competent. The work of the CEO is to meet with these teams. In this type of organization the CEO appears to in charge of all affairs of the firm, as the most important people report to him. There have been complaints that former CEO the late Steve Jobs was very much in control of everything and the company revolved around him (Apple Library Users Group 1992).
This form of organization seems to have favored Apple, putting into consideration the successes it has achieved. In contrast with a structure where the decisions are made by a group then there are chances that the performance of the company will retard as employees perform dismally due to the lack of a strong figure.
Apple generally uses the geographical structure in running its businesses. The firm’s geographical segments are the Americas, Europe, Japan, and retail. The Americas comprises of the north and south except that of its retail section, Europe takes in European countries including Middle East and Africa. The Japanese section is in charge of Japan alone while the retail section deals with the affairs of retail stores within and outside the United States of America. The Asia pacific region is another section which covers Australia. All the geographical sections offer the same software and hardware products and also same services.
This form of organizational structure allows the company to cater for the specific needs of regional clients and at the same time drastically reducing transport expenses. The core functions at apple are clustered together hence the company can equalize expertise in all regions.
Net sales is used as an index to measure the performance of each section, while that of the retail segment is measured on operating income. Further more the net sales of a particular section are determined by customer location.
To rid itself of coordination challenges between staff, roles, and sections, Apple has made use of integration programs and control systems. In fact, the integration is aimed at facilitating coordination between different functions and communication. The corporate culture at Apple can be described as transparent and unofficial. Direct contact forms the major form of integration. Personal contact among Apple’s top executives facilitates them to work in tandem when solving a problem and when handling other critical issues affecting the company.
Control systems are aimed at meaningful evaluation, and enable the company reach higher standards in efficiency, quality delivery, creativity, and receptiveness to clients. For example, bothering on efficiency it can be claimed that apple manufactures its goods and services efficiently, but efficiency in many other sections remains an illusion. Apple further utilizes control at the personal level as it demands that their workers perform their duties efficiently, openly, and to share skills. The company is actively involved in the molding and determining the conduct of its employees by furthering the company’s aims and worthiness in daily interaction.
Apple can be used as a classical example of the “American Dream” due to its unique past. At the moment Apple has ceased to be a local company but has assumed the status of a global entity considering its market, workforce and the source of its raw materials.
As Apple’s business model is based on geographical sections, it shows the company’s international efforts despite the United States remaining the core market representing 58% of its net sales. Nevertheless, international markets contribute a large chunk of the firm’s sales. Most of the raw materials used in developing Apple’s products are sourced internationally (Bahareth 2010).
The last phase of assembly of products internationally, is carried out at Apple’s manufacturing facility in Cork Ireland and by external vendor in Taiwan, Korea, Netherlands, china and Czech Republic. At the moment the production of Apple’s PC parts and the final assembly of all moveable products are done by contracted third parties in Taiwan, Japan and china.
Apple’s income from foreign sales can be greatly affected by fluctuation in foreign currency exchange rates, international trade restrictions, stress on cost reduction and the reaction of clients. Some of the factors that encouraged apple to move abroad were the need to raise its profits through increasing its sales. This strategy functioned as the company reaped from economies of scale and reduction of costs over the life-cycle of its products. A clear example is the manufacturing plant in Ireland. Apple transferred its expertise to Ireland which is defined by its low taxes and a well educated labor force. Apple benefited as it was able to lower its costs as shipment of products to Europe was eliminated. Consequently value was realized as Apple achieved faster delivery, improved services and client satisfaction (Grant&Meadows 2006).
Another strategy is the methods of entering a fresh market. Factors to be considered are: which markets to enter, when and on what magnitude. This necessitates studies to determine the size of the market, potential clients, their worth, and purchasing strengths and competition. Its assessment o of political risks and expenses facilitated the expansion to Europe as it is the same like the US in many aspects. Apple started its foreign ventures by making small steps so as not to be exposed to excess risk incase the venture failed. The first step was to export which proved to be costly due to foreign currency fluctuations, transport costs, and established competitors then finally putting in place fully functional branches in specific countries. Franchising was never an option as apple wanted to guard its skills.
Diversification has presented Apple with an opportunity of increase its profitability. It has added digital music player business to its established operations. By introducing the iPod, Apple was able to show its diversification strategy as it took advantage of it unique competencies in the computer industry. These characteristics were transferred to the digital music industry resulting in a creatively high quality devise which was attractive to customers. The launch of new products illustrates how Apple utilizes internal developments as its key entry strategy.
Possible strategies that can be implemented by Apple include: utilizing technological forces by innovation. Innovation is core strength of Apple, while technological forces a window of opportunity. The strategy is to promote innovation and maximize technological forces hence raising innovation to new heights. Another way is by making use of technology in a manner that it eliminates substitute products. Substitute goods from competitors make it hard for the firm to distinguish on the market for pulling new clients. Raising Apples innovative efforts is the only way of combating this challenge. Reducing operating costs and eliminating rivalry is also another strategy. Competition has forced Apple to invest heavily in marketing hence raising its expenses. Avoiding rivalry will have the impact of lowering costs (Linzmayer 2004).
The success of Apple in the future will not only depend on strategy, but on other factors like ways of carrying out business and commercialization of ideas. It is paramount that the company continues to strengthen itself in innovation and creativity. The company has been lucky to have a visionary leader like Steve Jobs. How it performs after his departure, will determine if the company was about Steve or it has strong structures and workforce to continue with the excellent work.