Apple Inc. Strategic Analysis - Organizational Strategy and Leadership

This report provides a strategic analysis of Apple Inc. including its general strategy, organizational culture, and formal organization structure. It discusses the company's product differentiation strategy, open and innovative culture, and flat organizational structure. It also covers its supply chain, products, leadership, and more.

ORGANIZATIONAL STRATEGY AND LEADERSHIP
Apple Inc. Strategic Analysis
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ORGANIZATIONAL STRATEGY AND LEADERSHIP
Executive Summary
The following report is strategic Analysis report of Apple Inc. It also includes
general strategy, organizational culture and formal organization structure of the
company. Apple Inc. uses product differentiation strategy, have open and innovative
culture and the organization structure of Apple is flat. In spite of being such an old
company, the company is recognized as biggest startup. The report describes various
aspects like its supply chain, its products, its culture, its leadership etc.

ORGANIZATIONAL STRATEGY AND LEADERSHIP
Introduction
Apple Inc. is U.S. based global Consumer Electronics Company. The company is
spread across world. The company is famous for its innovative product and services.
Apple has a unique position in market. It has competitors like Samsung, OnePlus etc.
But none of them could meet the same brand value. The company is master in
attracting international and national customers.
Steve Job started a company in year 1976 which was named as Apple Inc. The
company used to deal in computers. The company is famous for updated technology,
product design, vision of the executives. Initially the company started out as I.T.
companies. Later it started focusing on consumer products due to high competition in
tech sector. The company offers laptops, tablets, television, music players, mobile
phones and computers etc. Apple has gained high customer loyalty and brand
recognition. Apple has been accepted as a brand. Their design and technology are
appreciated by customers. Initially it launched personal computers. That was huge
success. But after expanding its product line, it has experienced high growth of sales
and managed cash flow. The company soon became the number 1 brand in consumer
electronics. Steve Job’s approach for the company is innovation and creativity. The
company has also controlled its supply chain which further enhances its brand
recognition. However, the company faces issue in direct sales in some parts of country.
The company has its operating system named iOS. The products are priced premium
so are the luxury products. The company is trend setter in terms of its offering advanced
technology and unique product.

ORGANIZATIONAL STRATEGY AND LEADERSHIP
Generic Business Strategy of Apple
The companies follow generic business strategy to achieve above average
returns. This includes differentiation, cost leadership and focus (Grant, 2016). However,
there are mainly two types of competitive advantage : low cost or product differentiation
(Ogbari & Ibidunni, 2018). Low cost or cost leadership means company tries to become
low cost producer. It includes various factors like economies of scale, technology. In
case of differentiation strategy, the company aims to be unique and different in the
industry along some attribute which are valued by organization (Johnson, 2016).
Porter has given the theory of generic business strategy. Porter divided the
business level strategies into four quadrants wherein each quadrant represents the
business strategy that organization use. These four strategies can be shown as:
Cost Leadership Product Differentiation
Apple uses this strategy
Cost Focus Cost Differentiation
With the product differentiation strategy, Apple Inc. has been able to create a niche in
the market. One of the strategies of Apple’s current CEO Tim Cook is to create halo
effect in order to create excitement in the minds of customers for Apple’s new products
(Perry, 2016). Apple tries to increase demand in the market for its products using
product differentiation strategy (Wheelen & Bamford, 2017). It thrives to make its
product attract and unique. Apple designs its products much before its peers thought

ORGANIZATIONAL STRATEGY AND LEADERSHIP
about such product. Steve Job’s “One Button” phone is one of the examples here. Apple
has successfully created market for its product despite of large competition. Through
product differentiation, brand loyalty, innovative advertisement and hype for new
products the company has gained edge over prices. There is kind of artificial barrier
which Apple has created for its competitors. Apple sells its products directly to
consumers. It also sells SMBs through its online stores, retail and using direct sales
force. Apple also has indirect distribution network such as wholesalers, retailers, cellular
network carriers and resellers.
Apple provides products which are unique in design. The company has iOS, its
own operating system. Apple also offers its own application software, hardware,
services. It focuses on to offer seamless integrated, easy to use, innovative design
products and solution. Its unusual advertising campaign and aesthetic design have
helped the brand to create loyalty. Its high quality purchasing experience is added on to
retain and attract customer. The strategy of Apple also includes expanding and
enhancing its supply chain network. The network includes retailers, online stores and
third party distribution networks (Marshall & Harrigan, 2016). The company is committed
to provide excellent sales and post sales experience.
(MAP) Minimum Advertised Price is the retail strategy which Apple has used.
This strategy prohibits or restricts dealers or reseller legally to advertise Apple’s
products below a certain minimum price. Apple maintains its niche by offering limited
wholesale discount to Best Buy or Wal-Mart. However this does not give much benefit
to end customer and they end up paying MSRP i.e. Manufacturer Suggested Retail
Price. The retailers however can give small discount to customers to attract more

ORGANIZATIONAL STRATEGY AND LEADERSHIP
customers. Apple tries to use incentives for the retailers who sell at Minimum Advertised
Price and not less than this.
Recently, there are claims and new CEO is pressured to bring innovation. From a
long time Apple has not brought any groundbreaking innovation (Coccia, 2018). The
company needs to maintain its brand personality. So there are speculation for iTV and
iWatch in regards to differentiated product. The company invested huge amount in R&D
to facilitate innovation.
Some of the best-known products of Apple are Macintosh Computers, the iPad,
the iPhone and the iPod (Lewis, 2014). Apple introduced its sleeker products like iPad
Mini and iPad Air. There are many other hardware products which Apple has
recognized for. Its software products include the iTunes media browser, Mac OSx
Operating System, the iWork suite of productivity software, the iLife suite of creativity
and multimedia software, Aperture, Logic Studio, Final Cut Studio, iCloud and service,
accessories and support offerings. One if its innovative products are iBeacon
technology. IBeacon helps in sensing exact location of user within Apple store using
Bluetooth wireless technology. It then updates the user by sending message about
events, products and other information related to user’s location.
Apple also delivers and sells application and digital content using App Store,
iTunes Store, Mac App Store and iBooks Store. Apple has also introduced Apple TV
(iTV). ITV is set top video device that set to bridge the sale from iTunes with HD TVs.
The other product includes iTunes radio (internet radio service).

ORGANIZATIONAL STRATEGY AND LEADERSHIP
Apple has used product differentiation strategy to distinguish itself from other
companies. The company has expertise in hardware, software and services. Apple
carries the capability to innovate and generally other tries to catch up its pace
(Brinkmann, 2015). Apple has addictive, innovative and integrated system. The software
and devices which Apple makes work excellently. They can be synched with each other
easily to share and copy content and media. Just with a single purchase, the same
application can work on multiple devices simultaneously. Apple always has head start
with pioneering technologies like touch screen. The seamless access and unique
features of Apple results in repurchase behavior. The company tends to create most
harmonious customer experience through its innovative product and service offerings.
Organizational culture
Organizational culture is the underlying assumption, beliefs and ways of
interacting that contributes to psychological and social environment of organization
(Alvesson & Sveningsson, 2015). Organizational culture also influences the employees.
It explains how organization act and perform in the organization (Hogan & Coote, 2014).
This provides behavior and guidelines of the organization.
The organization culture of Apple is one of the key factors of its success. The
company follows open and innovative culture. Apple’s employees are highly skilled and
are part of the culture which facilitates innovation (Khan & Alam, 2015). This innovation
can be experienced from its products like iPad, Apple Watch and iPhone. The
organization’s culture is properly aligned with business environment (Veit & Spann,
2014). Its culture is the significant contributor to its leading position. There are certain

ORGANIZATIONAL STRATEGY AND LEADERSHIP
challenges like optimizing Human Resources. The normative culture is followed in the
company. The employees are focused on achieving company’s vision and mission.
Employees understand the responsibility of delivering the best (Rahim, 2017).
There are certain characteristics of Apple’s Organization culture:
Excellence: The Company selects the best workers across the industry. The company is
known for readily fire professionals who do not meet the company’s expectations.
Excellence is given top notch priority in terms of product development and designing
(Islam & Hasan, 2015).
Creativity: The creative ability, knowledge and skills of Apple employees are very
strong. Priority to creativity is the essence of Apple. The processes which constitute
product development and designing are also creative. Apple’s this characteristics helps
in developing solution to meet customer and business needs.
Innovation: It is one of the renowned innovative organizations. It is also popularly
considered as one of the most innovative companies in the world. The employees are
trained and motivated to innovate with regards to contributing ideas to new product
development and individual work performance. At the heart of organization lies its
innovation culture which is responsible for company’s success.
Privacy and Secrecy: Another aspect of Apple’s culture is Secrecy and Privacy. In order
to minimize theft of intellectual property or proprietary information, the company is
following this strategy of privacy or secrecy. At the time of hiring, the employees are
supposed to agree on this part of organization culture. This is portrayed in terms of

ORGANIZATIONAL STRATEGY AND LEADERSHIP
employment contracts, rules and firm’s policies. This protects the organization culture
from employee poaching and company espionage.
Openness: The employees are randomly challenged to deliver new and innovative
product. In order to make a mark the employees are provided with all the resources.
There is no line of hierarchy. The employees are empowered to put their opinion
upfront. The culture is social and less degree of combativeness. Every individual has its
own values. In a Company where workload is more, the employees are dedicated to the
work. Organization’s policies are informal. So it decreases the number of
documentations unlike other companies.
These characteristics of organizational culture create competitive advantage and
enable success. The culture runs in the veins of the organization and it leads Apple to
stay ahead of competition (Piao & Kleiner, 2015). All these aspects are in aligned with
each and thus making Apple what it is today. However, certain challenges like
dependency on brand name of ex- CEO Steve Job is major drawback. The company
has high expectation of delivering performance. There is division of power which form
negative image in the mind of employees. There is autocratic style of leadership
(Bolman & Deal (2017). Apple Inc. tries to fulfill the basic need for employees’
inspiration. Apple believes that employees should be given complete flexibility so that
they can think out of the box and come up with innovative solutions. There is a lot to
learn from the culture of Apple and various startups has been using the culture of Apple.
The openness and the flexible culture of Apple Inc. is developed for employees and
employees are the biggest strength of the organization.

ORGANIZATIONAL STRATEGY AND LEADERSHIP
Formal organizational structure
Organizational Structure describes how activities like coordination, task allocation
and supervision are aligned together to achieve vision and mission of company (O'Neill
& Scholl, 2016). The efficient organizational structure helps in providing sustainable
competitive advantage. Organizations are clustered and complex entities. The
organization structure defines the “who is responsible for what” kind of philosophy. The
structure of organization depends upon its objectives. It also explains how organization
performs and operates.
There are different types of organization structure like Simple or Flat structure,
Functional Structure, Multidivisional structure and Matrix Structure. Flat Structure does
not have much formal system in place. There are less level of hierarchies and
organizational charts. There is little management level between senior executives and
employees. Functional structures assign different responsibilities to different
departments that handle different functional areas like customer service, information
technology, human resources, production and marketing. Employees are part of
respective department. In case of multidivisional structure also organization is divided
into different departments based on different regions and products. The last is matrix
structure. In matrix structure reporting is set up as matrix or grip. Employees have both
project and functional manager assigned. Functional manager looks or evaluates the
regular performance of employee and project manager is assigned to manage certain
project for a limited time.

ORGANIZATIONAL STRATEGY AND LEADERSHIP
Apple uses system theory of organizational structure. Systems theory describes
the interrelatedness of all parts of an organization and how one change in one area can
affect multiple other parts. With the system theory, focus of Apple is to have a flexible
structure in place where things are process dependent rather than people dependent. In
terms of the specific organizational culture, Apple has flat organization structure. There
are not many layers. It is one of the biggest startup in world who would like to maintain
this identity. This structure has helped Apple to make rapid decisions at the top and
excellent execution at the bottom. In the era of smaller product cycles, this kind of
structure is advantageous. The structure is like there are multiple contractors at the
bottom, there are chiefs and a robust chain of performance which binds them together.
The senior management has tight control over multiple aspects of businesses. Due to
less hierarchy, there is more flexibility in terms of product development for the global
marketplace. The company has drifted itself from common or traditional structure
followed by many technical companies (Kane & Buckley, 2015). It continues with its
unique method of managing the organization. This structure is suited to match
innovative culture and solve complex problems. It is in line with current requirement for
success. Here the chain of command is short from top to bottom (Wenzel & Koch,
2018). The main benefit of this kind of structure is it boosts innovation and
empowerment. It is quicker and easier to implement policies. There is increased level of
coordination. This proves why the company is popular for distinctive competencies in
innovation and product design. The major repercussion is change in culture or
leadership. The company can face issues in case of changing leadership. Employees
are expected to do clear defined job in excellent and innovative way.

ORGANIZATIONAL STRATEGY AND LEADERSHIP
Apple has aversion of mergers and acquisition which stops managers from
tedious path to growth. Apple is very small group with talented diversity. These very few
groups of people work hard and there is not much of office politics. The ideology is that
a great employee can work of 5 inefficient employees without any need of cc’d mails,
human interventions and bickering (Shinde & Ramakumar, 2015). Apple is consistent
with these lines. The employees are mostly full time. Most of the employees are
university graduates. The company has majority of employees in marketing and sales.
The company does have contract employees for manufacturing across Asia. These
manufacturers assemble products of Apple at companies like Foxconn. Apple has
control over its suppliers. Apple follows collaborative approach. Few years back, its
hardware and software teams are collaborated. Apple has kind of structure where a
main guy makes the call. This reduces the time for decision making but it also make
them slower sometimes. Apple has uncomplicated organizational structure. There are
no committees and general management concept is ruled out from its books. The
company utilizes maximum caliber of people. The main area of Apple management
includes marketing, iPhone software, general counsel, industrial design, device
engineering, and retail and software design (Salavou, 2015).
It is also important to mention that Apple Inc. has made some changes in its
organizational structure to manage its global operations. The company has use a direct
approach to enter the developed nations like Australia and at the same time Apple, has
partnered with Reliance to enter the developing nations like India (Salavou, 2015).
Conclusion

ORGANIZATIONAL STRATEGY AND LEADERSHIP
Apple Inc. is US based consumer electronics multinational company. The
company is renowned and it has achieved loyalty for its products. The company has
created special position in the global market. Various factors like its leadership can take
credit for this. So more importantly it is important to study such kind of organization. The
company’s structure, culture and its strategies are aligned to achieve its vision and
mission. Apple Inc. is able to make its differentiation because unlike many other
companies it wants to deliver innovative products to the customers. The company is
investing a lot in Research and Development. It has tried to reduce product cycle for its
new product. Innovation and creativity are the aspect which company looks for. This is
in tune with its culture. The company hired only skilled employees. They are supposed
to work very hard to achieve the desired result. The line of control is given to one
person .So this tells about the structure of the company. The company does not have
much hierarchy. So this reduces the innovation cycle and time. This explains how
company is able to achieve long term strategy of product differentiation. This
differentiation allows Apple to charge premium from its customers. The company looks
at even small aspects of user experience. There is hardly any product which can beat
superiority of Apple products. In addition to this are its exclusive showrooms which
portray its exclusiveness. The company also has introduced many software and
operating system versions. This explains company does not leave any stone unturned.
This describes employees are very efficient in understanding the market requirement
and delivering the products. The innovation is brought out in short interval of time
because there is no big organizational chart of hierarchy (Bortolotti & Danese, 2015). So
decision making is quite simple and efficient. This explains how strategy is important

ORGANIZATIONAL STRATEGY AND LEADERSHIP
aspect for the culture and structure of the organization. In recent time, there are many
claims like after Steve Job Company would not be able to achieve its mark. It needs to
change its structure to meet its long term strategy of product differentiation. The new
products do not deliver much innovation. However, Apple is not a small brand which can
be eliminated so easily. The company needs to maintain its identity by strengthening all
elements of strategy. No doubt that the elements like structure, culture will take
precedence here. With the product differentiation strategy, Apple Inc. has been able to
establish itself as a true disruptive company in the market. It is expected that Apple
would continue to disrupt in the market with its focus on innovation and creativity.

ORGANIZATIONAL STRATEGY AND LEADERSHIP
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Appendix
Apple organizational culture