This paper assesses Apple’s organizational structure with a comprehensive analysis of the significant operational and management decisions, preceded by a detailed description of the company and its operations. In addition, the review provides an assessment of the organization’s actions during the pandemic and the activities that Apple undertakes to comply with corporate social and environmental responsibility requirements. Finally, recommendations for the management based on the analysis are given.
Apple Inc., American corporation headquartered in California, USA, but with offices and factories around the world, is a manufacturer of advanced intellectual equipment from players to personal computers and their components up to software. The innovative approach allows Apple to remain a market leader, having acquired a cult reputation over the history of the company’s existence, which has a scientific, cultural and technological impact on the world. The company’s legal name does not differ from the above; the form of ownership is corporate.
Steve Jobs significantly revised the organizational structure in 1997. If earlier, each department of the company was headed by its director and kept its financial statements, then Jobs fired the general managers of all business units, merged disparate departments into one functional organization (Podolny and Hansen). With this structure, the company is broken into hundreds of specialized teams. Dozens of teams may be working on a single component of a new product.
Apple has over 150,000 employees worldwide. The company has about 230 factories that produce electronics, design, software, and other products (Apple Environmental Report 2021). Apple has many assets, primarily intellectual property and rights to various brands, including, for example, The Beatles and Pixar. The main persecutors in the market are Samsung. The South Korean corporation is practically haunted the Americans, and in specific years the sales of phones of this brand were much higher than the iPhone’s. Another company that has recently broken into the smartphone market is Xiaomi, and it has a competitive advantage in terms of pricing policy. For the most part, however, Apple’s business is the most diversified of its competitors and unrivaled in all of its markets. As a result, the target audience of the company’s clients is also quite diverse, but as a rule, it is middle to high income consumers willing to pay more for outstanding quality and better experience.
The Apple main goals combine activities for the benefit of people and the planet with operational objectives to create innovative, convenient, high-quality products accessible to everyone. A company’s planning is measured by innovation and sustainability, not financial performance. Decisions in the company are made only by employees with the most experience and expertise in a particular area. Apple competes in markets with a high rate of technological change. Therefore, it is essential to rely on employees’ decisions with deep knowledge. The company is betting on technologies that must be successful even before they become popular in the market ̶ experts increase the likelihood of a successful product. If the company relied primarily on financial performance, it would slow down the work on innovative products. For example, top research units are paid bonuses based on the entire company’s performance and not on the financial results of individual products. Moreover, the finance team does not participate in development team meetings, and the engineering teams do not determine the price of products.
The company’s organization echoes the goals set during planning: each group has its task, and success is measured globally by the achievements of the entire company, not by a single product. Like Jobs before, Tim Cook now occupies the only management position in the entire organization. He oversees design, development, marketing, sales, and every other process at Apple. Otherwise, there are no general managers in the company who could have such a direct influence on processes. Consequently, the organizational culture is focused on functionality instead of betting on management: this approach has advantages in that each employee is responsible for his work at the highest level of the company. The downside is lack of control, but Apple solves this problem through motivation, which encourages employees to be deeply involved in processes that serve the organization interests. Corporate social and environmental responsibility reflects major global trends in these areas, from promoting diversity and inclusion to reducing harmful emissions into the atmosphere, conserving trees and water, and switching to fully renewable energy (Apple Environmental Report 2021). At the same time, the company’s values include the individuality of employees, their career paths, the integration of cultures, and the wide availability of the company’s products. The resulting culture is built on mutual respect, individual success within the interests of Apple, and the encouragement of innovation – as the flagship of the industry, the company must be ahead of trends and set them itself.
Leadership in the company is based on experience and deep immersion in the issue, so leaders identified, recruited, selected by these characteristics. Employee motivation perks or rewards is reinforced by rewards in the case of overall success. In a functional organization, the reputation of the individual and the team is the mechanism for controlling decisions. Following the introduction of the functional organization by Steve Jobs, Apple managers at all levels needed to have three key characteristics: a profound experience that allows meaningful participation in all processes around a particular function; diving into the details of these functions and being open to discussion about other functions during collective decision-making. As a result, only qualified employees influence the company’s actions (Podolny and Hansen). Innovative development of the company and leadership in the market are the main indicators of the success of employees. Conflicts are resolved in several steps and require an integrated approach to listening to each side and clarifying the company’s position on this matter. Disciplinary structures include monitoring performance: tardiness, poor performance, violations of company rules are punishable by fines up to and including dismissal.
Financials play an essential role in controlling the success of any company, but at Apple, the focus is on product sales only in the context of the company’s overall success. Employee engagement is a measure of success and a requirement for workers, who are in the vast majority compared to managerial jobs. With a small number of management representatives, it is difficult to control every process at the highest level; a single CEO will not have enough time for everyone. However, the engine of control and prevention of ineffective strategies is motivation, which is regulated according to the success of the company, where each employee can contribute. As a result, working groups are interested in achieving the goals of each employee, which means they are open to help and searching for new ideas to solve any problems.
Analysis and Recommendations
Apple uses a rather unusual organizational structure with a minimum of managerial positions. Steve Jobs explained this because the action is essential for a company and not just possible effective management (Podolny and Hansen). At the same time, the formation of working groups on each issue almost equally distributes the share of responsibility between employees, contributing to their involvement in the work process. Evaluation of individual performances of groups or employees is carried out through the prism of the overall situation in the company. In this way, engagement is associated with an impact on every business process at Apple, contributing to a sense of belonging to the most significant events and contributing to satisfaction. As a result, efficiency is achieved in each procedure. Performance is viewed through the overall context of the organization, which is essential in the sustainable development of each of the departments. Finally, stakeholder satisfaction is achieved through high-quality control without additional authorities and positions, as well as a constant view of the entire wide range of company departments. The main recommendation, in this case, is only possible further business diversification through acquisitions and implementation of this organizational structure to new enterprises, one way or another, related to intellectual property.
In general, due to its comprehensive capabilities, Apple gave the fastest response to the spread of coronavirus. The company’s financial performance even maintained a slight increase in 2020, fully recovered, and even showed a jump in gross and net profit at the end of 2021 (Apple Financial Statements 2009-2022 | AAPL). However, the impact of the pandemic continues and new outbreaks, along with the escalating geopolitical situation in Ukraine, give management reason to expect a significant drop in sales and a slowdown in the development and distribution of new products in the third and fourth quarters of 2022 (Paresh and Balu). However, the company already has experience in overcoming the challenges of the pandemic by organizing social distancing, providing personal protective equipment to employees, switching to a remote work model where possible, and financially supporting colleagues affected by the virus.
The unique organizational structure of the company allows it to remain a leader in the market, despite the potential developments of competitors and global crises caused by external factors. I want to work in such a company in order to acquire relevant competencies in the field of information technology, as well as to be able to act independently. Within the working groups, employees are fully responsible for their actions, constantly evaluating performance in the overall context of the company’s success. Apple can give me essential leadership qualities, even in junior positions, by helping me develop decision-making skills and other critical soft qualities of effective communication.
Apple Environmental Report 2021. Apple.
Apple Financial Statements 2009-2022 | AAPL. Macrotrends.
Paresh, Dave and Nivedita Balu. Apple sees bigger supply problems after strong start to year. Business Standart, 2022.
Podolny, Joel M. and Morten T. Hansen. How Apple is organized for innovation. Harvard Business Review, 2020.