Apple Inc. is a company that has specialized in the manufacture of software and electronics, among other online solutions. The company was founded by Steve Jobs and Steve Wozniak in 1976. It has experienced substantial growth over the years and succeeded in establishing itself as one of the major players in the global market. In Fortune (2020), it was ranked 4th in the Fortune 500 list Part of its success is attributed to its organizational structure. According to Apple (2021), the present executive team comprises the following individuals:
Apple Inc. has established an organizational structure that fosters technological advances and rapid innovation. It has adopted the traditional hierarchy that includes the spoke-and-wheel hierarchy, product-based divisions, and a weak functional matrix structure. Regarding the spoke-and-wheel hierarchy, the innermost tier in the spoke-and-wheel circle is organized based on the functionality difference. The senior vice presidents report to the chief executive officer who manages the business functions. For instance, the company has a senior vice president for retail and people and another for marketing and communication. In such a structure, the organization’s executives address business issues in terms of function areas. On the other hand, the lower and upper tiers of Apple Inc.’s organizational structure comprises product-based divisions, which stems from a divisional type of organizational structure. The company has senior vice presidents and presidents for different products and services. There is a senior vice president for hardware engineering (iPhone, Mac, iPod, and IPad) and a senior vice president for software engineering (macOS and iOS). Apple Inc.’s marketing strategy depends on its structural features, which aim to manage specific products or services targeted to particular customers.
Conversely, the weak functional matrix structure describes the collaboration between the various departments in Apple Inc. In this structure, it is the primary role of the top management to drive the direction of a project. In Apple Inc.’s case, the control and authority of project heads are limited as they have to report every detail to the top management. This form of information flow provides room for collaboration between teams involved in producing different products; hence, encourage innovation.
Apple Inc. is a large-sized company with hundreds of thousands of employees globally to meet the high demand for its products and services. The organization is headed by a CEO and an executive team consisting primarily of senior vice presidents (VPs). The senior VPs directly report to vice presidents who oversee the Machine Learning and AI Strategy, Worldwide Marketing, Marketing and Communication, Software Engineering, Hardware Engineering, and Internet and Software Service departments, among others. Furthermore, the product-based division corporate structure allows the project heads to focus on the specialized segments; for instance, internet software and services are separated from software engineering. Consequentially, the senior VPs and VPs can efficiently allocate resources in their specific departments to conduct research geared to particular segments. This also trickles down to the employees as it makes them aware of their job roles, management expectations, and specialized roles.
Apple Inc.’s integrative organizational structure offers a broader span of control and greater unity of command to corporate managers. Although the company has a flat design, all VPs, and senior VPs report directly to Tim Cook; therefore, the chain of command can be categorized as top to bottom. The top-tier managers oversee all operations conducted with Apple Inc., thus enabling them to focus more on strategic plans of the company’s various functional divisions. In addition, the organizational design supports a centralized decision-making framework in which the executives integrate the employees’ opinions and welfare in the decision-making process. This enables Apple Inc. to identify distinct strengths and weaknesses develop appropriate improvement plans.
The words “mechanistic” and “organic” depict both organizational structure and culture. Apple Inc.’s nucleus is its unique “design” approach that has given it a market advantage. This sphere is regarded to have an organic structure, based on the significant innovation trend that has been witnessed over the past years. The collaborative relationship fostered by the weak functional matrix provides an atmosphere in which the employees’ decisions are respected, and they are given the freedom to integrate ideas into projects (Tasnim, 2018). As a result, this promotes creativity and innovation. The company has a design team independent of the finance, manufacturing, and other departments and reports directly to the executive team. It is granted the autonomy to set its distinct budget and the ability to ignore manufacturing practicalities (Tasnim, 2018). In some instances, the team might implement physical controls to prevent the design team members from interacting with other employees from different departments. At the center of the design department is the Industrial Design studio, to which only a selected few of the company’s employees to have access (Tasnim, 2018). However, the organic feature does not apply to other departments, such as operations, retail, and sales, with a more mechanistic approach. In these departments, significant decisions are made by the executive team; the employees cannot implement their choices.
Organizational structure is classified as either formal or informal. In the formal system, employees are directed to perform actions in a specific manner depending on the directions given by their superiors. Apple Inc.’s organizational design possesses the features of both the formal and informal structure; regardless, it is highly likely to be categorized as a formal organization. This is due to the fact that there is a clear division of labor, vertical and horizontal differentiation, and a wide span of control. Furthermore, Tim Cook has all the authority, and he makes principal decisions. The company has a set of clear and well-defined goals and objectives, responsibility, and accountability guidelines for employees. Nevertheless, Apple Inc. is famous for its secrecy, including fewer written rules and procedures (Tasnim, 2018). This suggests the existence of informal organizational elements in the organization.
Differentiation describes the way through which organizations categorize their tasks into roles in various subunits. Apple Inc. has a diverse product differentiation approach as it provides a vast portfolio of products in the technology industry. For instance, it has specialized in the production of hardware (iPhone, Mac, iPod, and IPad) and software (macOS and iOS). The company also has a strong vertical integration as it controls the most critical part of the chain used to manufacture and retail its products. It builds the hardware, owns the primary software experience, optimizes that software for the hardware, and finally controls the selling experience through their retail stores. As a result, a dilemma might arise from product differentiation and vertical integration. It is essential to note that Apple Inc. embraces both concepts and has still managed to dominate the global technology market. This is attributed to the fact that the company keeps these two elements separate by using the hierarchy of authority. Various senior VPs are assigned to different departments that are subdivided based on products offered. Another solution to the dilemma is the collaborative approach amongst other departments.
By personalizing its organizational structure, Apple Inc., has established itself as one of the most prominent startups in the 21st century. One of the hierarchical organizational structure strengths is that it has granted the company robust corporate control. The top-tier management is vested the power to make crucial decisions, with Tim Cook, the CEO, at its center. Furthermore, by control resting in the hands of the executives, business and product-based choices are made in a quick, coherent, and efficient manner. Moreover, this organizational structure encourages collaboration among employees from different teams, hence, facilitating rapid product innovation. Lastly, separating core departments, such as product design, from the rest of the departments has further compounded innovation within the company giving it a marketing advantage.
Nevertheless, Apple Inc.’s organizational structure also has its limitations, with the major one being limited flexibility. Besides the design, other departments have a relatively mechanistic system that limits the low-tier employees to respond to the changing market demands and business needs flexibly. This is because approvals have to be given by the CEO or top-level executives. Furthermore, Apple Inc. is known for its secrecy; the lack of transparency between departments might cause power imbalance between functions and cause uncertainty. It is therefore recommended that structural changes be made to achieve a power balance. This might be attained by delegating responsibility and authority to allow low-levels employees to implement their decisions. A decision-making framework that is specific to each department should be provided so that employees are aware of the confines of the process.
Apple. (2021). Apple leadership. Web.
Fortune. (2020). Apple. Web.
Tasnim, M. (2018). An organizational analysis on Apple. European Journal of Business and Management, 10(11), 35-40. Web.