Apple- Problem Identification and Analysis, Pertaining to Organisational and Change Communication - Example

1. EXECUTIVE SUMMARY To manage business strategically can prove to be a competitive edge for any company. This needs to balance the expectations and accountabilities of all the relevant stakeholders. Information Technology (IT) plays a very vital role in finding a web based solution in this regard. IT helps channelizing free and real time communication among the stakeholders. In this competitive business world, it is the information network of various companies which competes with other and not the individual firms as such and hence information is the most powerful war fare. Any management needs to adopt contemporary changes. Change is a panacea for sustainability and it is a universal law of nature too. Change can either fetch fortunes or it can be detrimental. This depends on how one handles and manages change. In technical terms this is what is called as “Change Management”. It needs a great deal of managerial analysis, introspection, strategic layout and strong will to sustain a change. This assignment endeavors to highlight issue regarding a communication problem from the perspective of information technology. It will analyze the communication affairs of Apple Inc. from the standpoint of its information network. It will also tackle issues pertaining to initiatives Total quality management (TQM). Accordingly this assignment will deal with all important aspects of change management. It will also critically analyse the way in which change was managed. This assignment will put forward some recommendations considering the requirements of customers and employees, keeping in view the value generation for the company. 2. INTRODUCTION Apple Inc., which was formerly know as Apple Computer, Inc., is involved in designing, manufacturing and marketing of personal computers, allied software, services, peripherals and other application based solutions.  Products and services include the Macintosh line of desktop and notebook computers; the iPhone, Smartphone; the iPod line of portable digital music players a portfolio of consumer and professional software applications; the Mac OS X operating system and the iTunes Store. Being a truly global company, Apple operates in various geographical locations which include European, Asian, Japanese markets and of course the domestic market of United States. It is headquartered in Cupertino, California, USA. The Apple Inc. has a philosophy of continuous improvement and innovation. This is evident from the fact that company has always come out will new and enhanced version o its products and services. Management and operations with non hierarchical and teamed based structures is designed to promote employee commitment and involvement. But at the same time if one takes a look at flow of communication among various stakeholders then it casts shadow on the sustenance of the company itself. The flow of information among different managerial hierarchies was hampered. The reasons were both structural and operational. Figure 1: Internal Value Chain Analysis of Apple Inc. (Adapted from Porter’s Value Chain) Apple Inc. has always been very quick in trying to improve itself when confronted to the gaps between its strategy and the environment. The change management imperative has always been at the centre stage. The company invested a lot in various resources in order to respond the communication needs and to improve quality and capacity as per the TQM initiatives. Apple Inc. is now equipped with state of an art information network that enables it owning an effective managerial communication strategy in order to introduce advanced process technologies and to expand capacity. Strength of Apple Inc. is its product and design quality compared with competitors. The company prides itself on offering innovative products and services that really fit the needs of its wide customer base. 3. PROBLEM IDENTIFICATION AND ANALYSIS The management is layered in the company. Broadly it can be categorized into three layers. They are namely strategic, operational and support level. They are at top, middle and entry level of management. There use to be a communication channel between these layers for the flow of information. Forward Communications Figure 2: The communication chart of the firm Various problems with this communication channel are discussed below in detail. 3.1. How to get rid of one way communication? The most prominent problem from the managerial perspective is the one way nature of the information flow. The strategies and relevant information effectively percolated down the hierarchy in form of the forward integration. But the feed back mechanism in the form of backward communication was absent. This setup had a major setback. The top management almost remains aloof of the ground realities. The customer and the partner touch points were mostly at the bottom of the pyramid. The feedback regarding the response and expectations customers and suppliers were not at all reaching to the top management. Thus the firm lacked the strategy buildup relevant to the ground realities of the market. This is also apparent from the lackluster performance of the company in spite of having the best in class products. There were various gaps existing at the customer touch points. The support staff was unable to brief up the top management regarding these gaps. The gaps went on widening and it was indicated through the lost market share of the company. Gap 1 Management perceptions of client/customer service expectations VS Actual or perceived service levels Gap 2 Management perceptions of client/customer service expectations VS Service specifications (mandatory requirements/standards) Gap 3 Service specifications (mandatory requirements/standards) VS Service delivery Gap 4 Service delivery VS External communications to clients Table 1: Service Performance Gaps in the company 3.2. How to achieve employee involvement? Due to this very nature of the communication channel, the employees across the hierarchy was not feeling involved in decision making. It was rather an imposed decision process which was top down in nature. This is also evident from the high rate of attrition in the company. The lack of ownership for the decision made reduced the accountability form the part of employees. The strategic decisions were not shared among all the employees. The company was in fact not adamant to make changes in the existing state of affairs. But it is always very difficult to change the prevailing culture of the company. Apple incorporation initiated few change management initiatives. 3.3. How to implement change management initiatives? Change management involves staff psychology which needs critical analysis as their attitude needs to change. Employees seem to be adamant to get involved in the two way communication process. The long standing culture of one way communication was ingrained and was difficult to change. The products of the company have been innovative. But the cost of quality for the company had been proving very high. This was evident from the contemporary financial statements of the company. Thus it decided to implement TQM initiatives. 3.4. How to achieve TQM results? The quality is no more considered as the competitive advantage. Rather it has become an order qualifier, especially in the industry to which the company belongs. At the same time the onus of maintain high standard of quality cannot be confined to the company only. There are so many suppliers and other partners involved. Thus there remains a challenge to involve everyone in these quality initiatives. The result of TQM initiative cannot be achieved unless the stakeholders also commit for the same. There need a free flow of information among all the stakeholders for the same. The major problem here faced by the company was to achieve such an integrative level of communication and commitment among partners. TQM results in bringing down cost of quality only with the integrated efforts. 4. LITERATURE REVIEW The foundation of control and coordination in any organization is always communication. It also supplies vital information to valuable achievement of the organizational mission. But, it is very important to understand the exact meaning of communication. In generic terms, communication is the exchange of information between two or more people. According to Farace, Monge and Russell (1977), “communication as the exchange of symbols that are commonly shared by the individuals involved, and which evoke quite similar symbol-referent relationships in each individual.” Organizational communication goes a little far from here as it is “both similar to and distinct from other types of communication” (Shockley-Zalabak, 1999, p. 28). It is not just the regular interaction of persons within organizations, but actually the procedure of shaping and creating events by the organizations (Shockley-Zalabak, 1999). Shockley-Zalabak (1999) points out further that “the study of organizational communication focuses on process of interactions ways by which people obtain information, form opinions, make decisions, merge into the organization, leave the organization and create rapport with one another.” Via communication, people synchronize their deeds to accomplish organizational and individual goals (Shockley-Zalabak, 1999). According to Huse and Bowditch (1973), a company is said to be effective and if it has the capability to be integrated. It must also consider three entirely different view points at a time: structural design, flow and human factors. Moving further on Organizational change, Van de Ven and Poole (1995) said it to be a pragmatic observation in an organizational entity of variations in shape, quality or state over time after the deliberate introduction of new ways of thinking, acting and operating (Schalk, Campbell and Freese, 1998). The general aim of organizational change is an adaptation to the environment (Barr, Stimpert and Huff, 1992) or an improvement in performance (Boeker, 1997). The body of literature has dealt in detail about the outline for quality improvement (Martinez-Lorente et al., 2000). Ozden and Birsen (2006) highlighted that TQM is categorized by the view point of customer focus and continuous improvement through teamwork. It has also been argued that customer satisfaction is the most decisive factor of TQM implementation (Dinh & Tritos, 2006; Han et al., 2007). Some studies have indicated a strong correlation between TQM implementation and customer satisfaction (Das et al., 2000). According to Nusrah et al. (2006) “Employee empowerment, information and communication, customer focus, and continuous improvement all have significant relationships with performance”. Ismail (2006) highlighted a great deal parameters like leadership, strategic planning, customer focus, information and analysis, human resource management, process management, supplier management, human resource results, customer results, and organizational effectiveness.  5. RECOMMENDED SOLUTIONS 5.1. Pertaining to organisational communication The solutions for the above mentioned problems are very logical and realistic. But their proper implementation is very crucial. Here Information Technology tools serve strategic purpose. Forward Communications Feed back and reporting Figure 3: New communication chart Adding a backward communication channel seems to be a very simplistic approach to the problem. But it takes tremendous effort to achieve. To make the flow of information free and on real time basis needs IT initiatives. The proposed network of the IT infrastructure is represented below. Figure 4: Visual representation of the IT network systems The proposed system would help in maintaining the two way communication channel among all possible stakeholders. The organisational communication is established along the various hierarchies and hence the issues like employee involvement are taken care off. This setup also helps in creating a shared decision support system which caters to all possible touch points of the customers and partners. At the same time it also helps in sharing the responsibility and accountability of the strategic decisions taken. 5.2. Pertaining to implementation of change management Now the management of the change process will be discussed so that the proposed changes to be made in Apple Inc. should be taken care of. 5.2.1. Facilitation Facilitating a change process means taking it through four steps of Diagnosing, Planning and Implementing, Evaluation (Dyer, 2004). 5.2.1.1. Diagnosis This step deals with primary question of what, who and how. Figure 5: Diagnosis stage of change facilitation 5.2.1.2. Planning and Implementation This stage of interventions should be conceded collaboratively with all the members of the organization. This will ensure the collective ownership and understanding of change by everyone in the organisation. It should be taken into consideration that the required intervention must be designed in a way to achieve the goals arising from diagnosis (Blake and Mouton (1964)). 5.2.1.3. Evaluation The evaluation phase should start once the intervention has been implemented. This will help to recognise the desired effect of the intervention. Evaluation during and after the implementation, will help providing M & S, with feedback about the intervention. 5.2.2. Nature of Change The nature of change to be implemented varies from organisation to organisation and from situation to situation. In this case all the following three kinds of change need to be implemented. They are namely as follows. 5.2.2.1. Cultural Changes This will include Apple Inc. to formulate a clear strategic vision which will display top-management commitment. It has to adopt top down approach. Top management need to modify the organizational structure to support the proposed change (Dutton & Duckerich, 1987). At the same time the company will have to develop ethical and legal sensitivity (Millward, 2005). 5.2.2.2. Self Design Changes Opposed to quick ‘off the shelf’ solutions, the self design changes will transform Apple Inc. in order to meet the challenges of competition (Mohrman and Cummings (1989)). This is multi- layered approach. Here Apple Inc. will have to continuously resort to designing and implementing change at all levels. It emphasizes the need for self design as. 5.2.2.3. Knowledge Management and Learning based changes Organizational learning and knowledge management will add up to the ability of Apple Inc. to get hold of new knowledge. But for this Apple Inc. need to focus on team building along with structural design and employee involvement. It emphasizes on the issues associated with human resources. 5.3. Pertaining to Implementation on TQM Initiatives IT infrastructural setup is usually measured as an enabler of TQM. An information system has a crucial role in the TQM initiative. In fact these initiatives involve strategic, human resources and technology. IT is more and more being used to gauge, recognize, and progress of company's level of sustainable quality. The TQM initiatives can be facilitated by IT through the application of various tools like statistical process control and quality function deployment. This can also be aided by the development of real-time collection, storage and retrieval of data regarding customer satisfaction, control of internal processes and other measurement systems which are necessary to support TQM. The communications initiatives described above can also help in collecting and storing data regarding customers and partners. This will directly or indirectly help in reducing the gaps. The communicational and computational tools along with data storage and retrieval systems are crucial for the success with TQM. 6. REFLECTIONS This assignment assisted me in developing a real understanding in learning how to analyze various complicated situations and develop an effective means for dealing with them in any kind of organization in the world of business. As IT technician I got hands on experience of various strategic tools and techniques capable of dramatic change in performance of the organisation. At personal level it helped me to become a mature team player. Academically, through various training sessions like TQM, I am benefited a lot. 7. REFRENCES Alan Deutschman (2000), The Second Coming of Steve Jobs, Broadway Apple Inc. (October 21, 2008). Apple Reports Fourth Quarter Results. Press release. http://www.apple.com/pr/library/2008/10/21results.html. Retrieved on 2009-06-13. Barr, P.S., Stimpert, J.L. and Huff, A.S. (1992) “Cognitive Change, Strategic Action, and Organizational Renewal”, Strategic Management Journal, 13 (Special Issue), pp. 15-36 Blake and Mouton (1964) cited in Millward L. (2005-in press), Understanding Occupational and Organizational Psychology. London: Sage Publications Ltd. Boeker, W. (1997) “Strategic change: The influence of managerial characteristics and organizational growth”, Academy of Management Journal, 40 (1), pp. 152-170 Cummings, T.G. & Worley, C.G. (2005). Organization Development and Change (8th ed). Ohio: South-Western. David, S. (2004): Management Control Systems Theory and C/SCSC; National Estimator, pp. 29-34 Dinh, T. H., & Barbara, I., Tritos, L. (2006). The impact of total quality management on innovation Findings from a developing country. International Journal of Quality & Reliability, 23(9), 1092-1117. Dyer, W. (2004): Strategies for Managing Change. Reading, Massachusetts: Addison Wesley Publishing Company, Inc Farace, R., Monge, P., & Russell, H. (1977). Communicating and organizing. Reading, Mass: Addison-Wesley Gil Amelia, William L. Simon (1999), On the Firing Line: My 500 Days at Apple Hiatt, J. (2006): A Model for Change in Business; Government and the Community; Learning Centre Publications; Loveland Hilltop, J. (2002): European Human Resource Management in Transition; Prentice Hall; New York Ismail, S. (2006). Examining the effects of contextual factors on TQM and performance through the lens of organizational theories: An empirical study. Journal of Operations Management, 25(2007), 83-109. James, H. (2001): Business Process Improvement; the Breakthrough Strategy for Total Quality, Productivity, and Competitiveness; McGraw-Hill Trade Lewin (1951) cited in Cummings, T.G. & Worley, C.G. (2005). Organization Development and Change (8th ed). Ohio: South-Western. Linzmayer, Ronald W. (1999). Apple Confidential: The Real Story of Apple Computer, Inc. No Starch Press. http://extras.denverpost.com/books/chap0411h.htm. Retrieved on 2009-05-28 Mark M., and Donald M. (2003): Advanced Access: Reducing Waiting and Delays in Organizations. JAMA, pp 1039-1045 Martinez-Lorente, A., Dewhurst, F. D., & Barrie, G. (2000). TQM and business innovation. European Journal of Innovation Management, 2(1), 12-19. Maundy, L. (2001): An Introduction to Human to Human Resource Management: Theory and Practice: Macmillan, Palgrave Millward L. (2005-in press), Understanding Occupational and Organizational Psychology. London: Sage Publications Ltd. Murray, D. (2004): Changing Ways: A Practical Tool for Implementing Change within Organizations. New York, New York: AMACOM, A Division of American Management Association. Nusrah, S., Ramayah, T., & Norizan, M. S. (2006). TQM practices, service quality, and market orientation: Some empirical evidence from a developing country: Some empirical evidence from a developing country. Management Research News, 29(11), 713-728. Ozden, B., & Birsen, K. (2006). An analytical network process-based framework for successful total quality management (TQM): An assessment of Turkish manufacturing industry readiness. International Journal of Production Economics, 105(2007), 79-96. Palmer, I and Akin, G. (2006): Managing organizational change; a multiple perspectives approach, McGraw- Hill Irwin Parasuraman, A, Berry, L.L, Zeithaml, V.A. (1988): SERVQUAL: A Multiple Item Scale for Measuring Consumer Perceptions of Service Quality, Journal of Retailing, 64:1, p.12-40 Paulus, P.B. & Nijstad, B.A. (2003). Group creativity: Innovation through collaboration. USA: Oxford University Press. Rampton, L. (2003): Human Resource Management. Melbourne press, New York Richard. A, (2000): Terms Of Engagement: Changing The Way We Change Organizations. San Francisco, California: Berrett-Koehler Publishers Riggins, F. J. and Mukhopadhyay, T., (1994): Interdependent Benefits from Inter-organizational Systems: Opportunities for Business Partner Reengineering, Journal of Management Information Systems, Vol. 11, No. 2, pp. 37-57. Schalk, R., Campbell, J.W. and Freese, C. (1998) “Change and employee behaviour”, Leadership & Organization Development Journal, 19 (3), pp. 157-163 Shockley-Zalabak (1999). Fundamentals of organizational communication: knowledge, sensitivity, skills, values, 4th Ed. New York: Longman Thomson, C. and Rampton, L. (2003): Human Resource Management. Melbourne press, New York Van de Ven, A.H. and Poole, M.S. (1995) “Explaining development and change in organizations”, Academy of Management Review, 20 (3), pp. 510-540 WISE, Richard and Peter BAUMGARTNER, "Go Downstream: The New Profit Imperative in Manufacturing." Harvard Business Review. September-October 2008. 133-152 8. APPENDICES APPENDIX 1A – INTERNAL ANALYSIS OF APPLE INC. AREA RESOURCES Financial resources Very good gross Margin 31% Zero Liability (Debt free company) Integrated equity base over the years Organizational resources Philosophy and methodology for continuous innovation Management structures and working methods designed to promote employee commitment and involvement: non hierarchical, teamed based structures Physical resources Continuous investment in R&D through development centres Increasing the marketing channels i.e. company owned stores, online stores, other retail stores Technological resources Achieving continuous technological breakthrough Access to microprocessor and other allied technology through alliance. Human resources Dedicated and capable CEO like Steve Jobs But at the same time overdependence on one man is risky too. Frequent leadership change Absence of any proper succession planning Reputation resources Established market reputation as innovative firm Market reputation for quality and performance Value for money products and services APPENDIX 1B – INTERNAL ANALYSIS OF APPLE INC. FUNCTIONAL AREAS CAPABILITIES Distribution Increasing the marketing channels i.e. company owned stores, online stores, other retail stores Almost equal share of domestic and international sales. Human resources Capable and visionary leadership Importance of employee commitment and job satisfaction favouring motivation, innovation and learning Marketing Effective brand-name products: values of individuality (i-phone, i-pod and i-Tune) Build customers’ loyalty through various application based services like i-Tune and Apple stores. Product strategy: Range of products to suit wider choices Wide price range with added and core features Importance of style and image with innovation Management Dedicated to innovation an performance Open to changes Manufacturing Effective capacity to introduce advanced process technologies and to expand capacity Product innovation and design quality Effective balance between product differentiation and economies of scale and scope R&D Innovative design features Continuous investment in R&D APPENDIX 2 – MACRO ANALYSIS OF APPLE INC. FACTOR ISSUE ANALYSIS EFFECT ON INDUSTRY International World economy changing rapidly, becoming highly competitive and unstable. Reduction in trade barriers, through establishing trade agreements. The Globalisation movement - improvements in IT, and telecommunication Emergence of new economies & country development – causing new markets for opportunity. Increased competition (Negative) Acquisition of cost-effective labour & material(Positive) Reduction in trade barrier (Positive) New market avenue (Positive) Ruling: Positive Economic Increasing individual income. Ongoing global slowdown Increasing Unemployment levels. Interest & taxation rates. Increased affordability (Positive) Reduction in overall demand (Negative) Reduction in affordability (Negative) Falling Margins (Negative) Ruling: Negative Political Impact of international trading barriers. Government & attitude towards IT industry Creating international trading agreements (Free trading agreements) with countries Regulations & agency – uncertainty with international trading, (Negative) Encourage industry expanding (Positive) International trading agreements ease entry into country (Positive) Ruling: Positive Technological Improvements & development of technology. IT revolutions & innovation in telecommunication & transportation. Technology integration into the industry Telecommunication / Internet capability. Improved communication & innovation at global level (Positive) More efficient manufacturing operations/procedures (positive) Achievement of economy of scale and scope (Positive) International marketing, fast product delivery to Markets (Positive) Ruling: Positive Legal Industry regulations, patent protection and copyright laws. Class action lawsuits (Like that against Microsoft Inc.) Corporate social responsibility. Patent & Copyright – supports innovation & growth (Positive) Prevents monopoly & dominant control (Positive) but at the same time damage industry reputation (Negative) Brings corporate ownership (Positive) Ruling: Positive Social / Cultural The change in social attitude & behaviour towards product quality of computers and phones Influence of education / literacy Social issues – concern for obesity Recent movements of multiculturalism immigration into the Western world. Quality innovative products bring satisfaction and enjoyment (Positive) Increase product acceptability. through more rational to buy product (Positive) Reduces physical movement to great extent. Also attracts youngsters to remain in door. (Negative) Multiculturalism – change in religious beliefs & country custom, must change marketing & software and application platform (Negative) Ruling: Balanced Demographic Changes in work – knowledge workers have become the focus, thus people have become highly mobile. Need faster, mobile aids (Positive) Ruling: Positive APPENDIX 3 – INDUSTRY ANALYSIS OF APPLE INC. Items ISSUE ANALYSIS New Entrants Economies of Scale: Reluctance of new players supports it. Product Differences: Product differentiation is no longer sustainable. Brand Identity: Brand identity becomes more important and sustainable. Expected Realisation: More prominent. Impact Ranking: Low Industry Rivalry (Competitors) Industry Growth Rate: Rapid because in increasing market size. But Individual share is diminishing. Brand Identity: Frequent Attempts to tarnish rival’s brand identity. Switching Costs: Switching cost is low for consumers. Exit Barriers: Exit barrier is low for firms due to less capital and more intellectual intensive nature of industry. Impact Ranking: High Suppliers Differentiation of Inputs: High as supplier is specific to firms. Switching Costs of Suppliers: High as compatibility issue is concerned.. Presence of Substitute Inputs: Immense because of ongoing technological breakthrough. Threat of Forward Integration: Very less as it is highly knowledge intensive. Impact Ranking: Moderately High Buyers Switching Costs of Buyers: Low as abundant availability of options. Buyer Concentration (relative to industry): company wise it is very fragmented. But is overall high relative to industry per se. Buyer Profitability: Greatest among all stakeholders as market is majorly price sensitive. Threat of Backward Integration: Almost difficult being highly knowledge and capital intensive. Impact Ranking: High Substitutes Relative Substitutes: Abundant for general purpose but scares for specific applications. Switching Costs: Very low as because of abundant options available. Buyer Propensity to Substitute: Very high as buyer is the real gainer of the improved situation. Impact Ranking: High Read More