Interdisciplinary Approach Involving the Interaction of Many Departments to Manage a Company Properly - Essay Example

Major Project Contents Introduction 4  Strategic Management 4 Porters Generic Strategies 5 Cost Leadership 5 Differentiation 6 Focus 6 Financial Management 7 Investment decision 7 Financing decision 7 Dividend decision 8 Marketing Management 9 Marketing strategy 9 Implementation of Marketing Strategy 10 Product 10 Price 10 Place 11 People 11 Physical evidence 11 Process 11 Human Resource management 11 Recruitment 12 Personal administration 12 Training and development 12 Performance based reward management 12 Talent management 12 Career planning 13 Labour relations 13 Hr planning 13 Conclusion 13 Introduction A company is not just brick mortar and stones but can be almost likened to a living entity. It comprises people, process, stakeholders, etc. So, to manage a company is a complex task and actually involves a multidisciplinary approach. To start with the company in the first place must have a well defined strategy in place. Strategy refers to the overall path that the entrepreneurs of the company decides or chooses for the company. Designing a strategy is like drawing the blueprint of a building. All the other processes and practices that the company will follow should be aligned to this strategy. This entire task falls under the broad head of strategic management. Other managerial disciplines essential in the efficient running of a company are financial management, human resource management and marketing management. Financial management refers to the efficient management of funds of the company in order to accomplish the business objectives of the firm. As money is the primary driving force of any business, so this discipline is one of the prime fields for a company’s management. A financial manager has to take three major decisions. They are investing decision, financing decision and dividend decision. Next in line is the marketing management. Marketing can be called to be the backbone of a company. A company’s success or failure depends upon its ability to efficiently sell its products. Without its ability to sell its product it won’t be able to generate revenue and sustain its operations in the longer run. Another important managerial segment is the human resource management whose main purpose is to look after the employees and ensure that they perform together as a unit. All these managerial disciplines are discussed in the following pages with respect to apple.  Strategic Management As it has been said before, strategic management deals with setting long term goal for the company. It helps in setting direction for the company and all other processes and functions are set to follow the overall strategic design. Let us analyze how a company such as Apple decides on the strategy it needs to follow by applying porter’s generic strategies. Porters Generic Strategies Among the many factors that decides the success of one company and failure of another, defining a perfect strategy is indeed one of the very important steps. Apple as a company is based in the fiercely competitive electronic and telecommunication sector. Porter states that based on the factors such competitive advantage and market scope there are three well defined strategies that a company may follow. These three strategies are differentiation, cost leadership and focus. (Porter, 2003) Cost Leadership Cost leadership as a strategy works well when the market scope of the product is large. In other words the company try to manufacture products that are aimed for the mass market. To achieve cost leadership the company either tries to bring down its cost of production or other operational cost to sell product at prices other companies can hardly dream of. But in a telecommunication and electronic industry such a strategy is very hard to maintain in the long run. It is further true in case of a company like Apple. Apple’s manufacturing unit and its registered business unit is located in USA. In addition to that it is a research and innovation based company which spends a lot of amount in funding research. So its manufacturing costs and operating costs tend to be generally on the higher side compared to a competitor from China. So, Apple cannot sustain with this strategy of low cost and hence has not adopted it. Differentiation The companies’ applying this strategy wants to cater to niche market and wants to differentiate itself from its competitors. Actually while adopting this strategy the company wants to create a blue ocean market for itself and its products. There can be lot of areas where differencing features can be applied such as design, technology, value added services, customer service. Apple as a company has always tried and has succeeded to project itself using the differentiation strategy. It was lead by Steve jobs who wanted that the project that the company manufactures should stand out in the competitive market as a blend of art and technology. The fact that the company has been able to successfully implement this strategy is evident from t5he fact that it is the second most valuable brand after Samsung. However differentiation strategy is pretty hard to follow. To be successful using this strategy the company has to know the pulse of your customers very well. As it is creating products that are different from other products that are available in the market the company must be very careful in deciding the price of the product. The company should ensure that the value it ascribes to its product should be equal to the value that the customer assigns to the product. Otherwise the whole effort in designing the product will go in vain and may spell doom for the company. Focus As is evident from the above table a company may have two types of scope. Either it can focus on a particular business category, geography or particular breed of customers or it can cater to a wide customer base and different business divisions. Apple as a company like to focus only one line of business and that to specialised category of computer, tablets, mobile phones and portable music player. Financial Management A Financial manager’s main aim is to manage the funds of the company efficiently and effectively in order to achieve long term objective3s of the firm. The point to be noted here is that irrespective of the fact whether the firm is a small or a large concern, the funds available are always limited. So the role of the financial manager is to manage that limited funds in such a way that it ultimately leads to the maximization of shareholder’s fund. There are three types of financial decisions that the financial manager has to normally take: - Investment decision, Dividend decision & financing decision. Investment decision Since funds available to a company are limited so to invest them in proper sectors which would generate long term returns and would serve as a profitable business opportunity is the need of the hour. There may be two types of investment decisions long term and short term. Before going on with any investment decisions the company has to analyze the viability of the decision in the sense that will the decision generate profit or is it not worth it. The two models normally considered are Net present value and internal rate of return. However making a long term investment does not only involve enquiring about the financial viability of the investment but there are lot of other factors involved. A good example of investment decision by apple was to acquire iPod from Tony fadell. Financing decision Firms must decide on financial mix of different sources it uses to finance its daily operation and to finance its new investment decisions. The sources of finance have different cost of capital and have with it associated advantages and disadvantages. The company should decide on an optical mix of different sources of finance to lower its overall cost of capital. An investment decision is profitable only if the rate of return of that investment decision is higher than the cost of capital of that decision. Apple as a company manages its financial resources quite well and as of 2013 was sitting on a cash pile of $ 145 billion and made $43.6 billion as revenue and gross profit of $9.5 billion. It had no debt and was entirely financed with equity. Dividend decision Dividend decision the company decides how much to pay as dividend to the share holders of the company. The major aim of the financial decision is to maximize shareholder’s wealth. Dividend decision is influenced by a no. of factors. Those are: whether the firm has other suitable investment opportunities in hand? Whether the firm wants more people to be attracted to buying its shares and thereby increase its share price and market capitalization? Etc. In last year Apple’s CEO Tim Cook announced that the company will buy back $60 billion worth of stock and give a dividend payout of 15 % to its shareholders. The company has decided to return $100 billion to its investors by 2016. Another thing to be noted here is that besides sitting on a cash pile of $145 billion the company has decided to borrow for this financial exercise. This decision taken by the company will have several positive effects. 1. Major portion of its 145 billion dollar is lying overseas. So it has to pay a huge sum of money in taxes to bring that money back home. 2. By borrowing the amount the company will be able to save money in the form of tax concession on interest. 3. It wants to buy back shares so that it has to pay less money in the form of dividends. Marketing Management Marketing management actually involves applying marketing techniques for proper management of firm’s marketing activities. Marketing management is the backbone of any company because a company has to sell the products it manufactures. If the company isn’t able to market its products efficiently then it won’t be able to generate cash and keep the enterprise running. All other departments of the company are depended on the marketing department. To create a good and efficient marketing strategy a proper analysis of the environment in which the company operates is essential. In this case the discipline of marketing management often overlaps with the discipline of strategic management. The various sub functions of marketing management can be broadly classified into: Marketing strategy Marketing strategy is the process of setting long term goals for the company. It involves analysis of the present situation and scenario for the company to analyze what are the strategies it can use to increase its current market share and increase its market dominance. The models that are used to analyze its present scenario in the market are SWOT analysis, PESTEL analysis etc, BCG matrix etc. After identifying the current position of the company can choose to increase its market share and market dominance by following Ansoff’s growth strategies, designing marketing mix, implementation of proper marketing segmentation, and Porter’s generic strategies. Applying SWOT analysis for Apple: STRENGTH 1. Unique product design which is hard to emulate. 2. They are leading innovators. 3. Apple’s financial position is quite good. WEAKNESS 1. High price. 2. Other operating systems are not compatible. 3. Market share, profitability and share price is on the decline. OPPORTUNITY 1. Tablet and Smartphone market is a growing market. 2. New products can be launched. 3. Able to earn through sale of copyright. THREAT 1. Designs may be copied and emulated to produce a duplicate cheap version. 2. Lacks the presence of visionary leader in the form of Steve Jobs. 3. Fierce competition from Samsung. Implementation of Marketing Strategy After identification of proper marketing strategy and selection of target market the next step is to implement the marketing strategy. The way to implement marketing strategy is through design of proper marketing mix. The marketing mix of Apple consists of 7 Ps. Product Apple designs a range of products ranging from portable computers, portable music players, mobiles, tablets, servers, developers, iTunes, and peripheral products. Price Apple designs premium products. It does not compete on price. It knows that maximum profit is generated in its initial launch. So to capture the initial hype of the customers and to generate maximum profit it creates hype about the product. Place Apple has its offices almost all over the globe. Apple has lot of retail stores all over the world. Promotion Before any product launch Apple does implement a pretty effective promotion strategy. It creates hype about the product, gives tantalizing hints about the product and its features. People The people at Apple are innovation oriented. The culture at Apple promotes innovation headed by its legendary CEO Steve Jobs. Physical evidence Apple’s website is www.apple.com. Its headquarters are in Silicon Valley. Its distinguishing feature of the outlook is its logo. Process Apple aims to create market dominion by engaging in building customer loyalty and long term relationships with its customers. Human Resource management Humans are considered as a resource for the company. It is the humans who help the company achieve its targets and actually are responsible for a company’s success or failure. As humans are such an important resource so to manage them properly is also essential. The job of a human resource manager is to maximize the performance of employees and to ensure that they function coherently as a single unit in achieving the strategic goals of the company. The functions of a human resource manager are as follows. Recruitment Recruitment process at Apple is not quite different than any other big technology companies. It aims to find out whether a particular candidate is suitable for a given position or not. It involves initial screening of the candidates to find out if they are suitable, then it organizes detailed interview of the company by a group of experts to find if the candidate is suitable or not. Personal administration At Apple the human resource and talent is its main resource. So managing it efficiently is the main concern for Apple’s personal administration department. Training and development As Apple is cantered on people’s ability to implement their abilities efficiently to meet the innovation standards; it spends quite an amount of resources in training and development of workers and managers. Apple trains its workers so that they know their rights and laws and teaches them new skills. Apple also trains its employees through its seed program to inculcate in them skills such as finance, computer skills and English language. Performance based reward management Although employees at Apple are rewarded through performance based incentives and other reward schemes but the major source of innovation that draws employees gravitationally towards the organization is its innovative culture. Talent management Apple has a culture in place at its company which supports talent and allows them to grow. The culture promotes and encourages the employees to continuously innovate and keep on innovating. Once an employee is successful with a particular product the culture motivates him or her to move into a new domain and seek new challenge. Career planning Apple provides enough opportunities for growth to its employees. It encourages its employees to learn several skills and also encourages them to grow in their career path. Labour relations Apple encourages and conducts special training program for its labours (Apple Inc., 2014). It actively supports skill development of its labours and encourages them to learn and know their legal rights and certain other skills such as finance, English and computer knowledge. Hr planning Apple is an innovation oriented organization with innovation as its main driving force and at the heart of its culture. It involves hr planning accordingly to plan and strategize for future human resource requirement for the organization. Conclusion To manage a company properly an interdisciplinary approach involving the interaction of many departments is required. In this report the particular case of Apple was considered and how the different departments’ helps apple to function efficiently was analysed. The 4 general streams of management that was considered were Strategic management, financial management, Human resource management and marketing management. First considering Strategic management it was found that the first major step is to identify a strategy a path to the goal of operating the company profitably in the longer run. All other processes and management should follow in the lines and blue print designed by the strategic management. The company in particular adopts a strategy based on its particular field of operation and keeping its strength and weakness in mind. Next in line comes the financial management whose main goal is to manage the finances of the firm efficiently so that the company can pursue its long term goals and achieve its target of maximizing shareholder’s wealth. For apple it was found that for the market that it operates in both the strategic and financial management departments’ have performed their task efficiently. Other departments are marketing management and Human resource management. The fact that all the departments and functionalities at Apple perform to their full efficiency level by its profitability and value it commands in the market and psyche of its stakeholders. References Apple Inc., 2014. Labour and human rights. [online]. Available at: https://www.apple.com/supplier-responsibility/labor-and-human-rights/. [Accessed 11 November 2014]. Porter, M. E., 2003. The competitive strategy: Techniques for analyzing industries and competitors. New York: Simon & Schuster. Read More