Management Analysis of a Technology Company - Apple Inc - Case Study Example

Management Analysis of a Technology Company: A Case Study of Apple Inc. Name Registration Number Table of Contents Table of Contents i 1.0 Introduction 1 2.0 Apple Company 1 3.0 Research, analysis and discussion of sustainability related strategies and issues 2 3.1 Role of organisational behaviour at Apple Inc. 2 3.2 Human resource management practices at Apple Inc 4 3.3 Role of international business in Apple Inc 5 3.4 Role of technology management at Apple Inc 6 4.0 Entrepreneurship and Innovation at Apple 8 5.0 Future Strategies 10 5.1 Strategic positioning 10 5.2 Market Focus 11 5.3 Outsourcing 11 6.0 Conclusion 12 Journals 13 Books 13 Websites 14 Appendices 16 Appendix 1: Apple Inc. Products 16 Appendix 2: Apple Inc. Revenue & Earnings Per Share (EPS) 17 Appendix 3: Worldwide Smartphone Sales to End Users by Vendor in 3Q13 (Thousands of Units) 17 Appendix 4: Smartphone OS Sales Share (%) 18 1.0 Introduction Management plays an integral role in steering a company towards a path of success by strategically choosing options that should be pursued within the context of macro-environment, competitiveness within the industry and internal factors as argued by Thomson & Martin (2010). Companies which engage in management process such as strategic management have been found to outperform those that do not according to Alkhafaji (2003, p.3). One way to learn from various firms and the strategic choices they have employed over time so as to drive their success is to conduct management analysis. Additionally, management analysis can pinpoint the weaknesses in approach taken by various leaderships during their tenures. The aim of this paper is to conduct management analysis of a technology company. By utilising the case example of Apple Inc., the paper discourse analyses five important parameters so as to highlight the management at Apple. 2.0 Apple Company Apple Company was founded in 1 April, 1976 when Steven Wonziak and Steven Jobs launched the first computer known as Apple I. However, the business did not pick up well until 1977 when they launched Apple II which resulted into exponential purchase followed by the launch of Apple Disk II in 1978 & Apple III in 1980 (Apple, 2014a). Despite of these later challenges, the firm superseded their expectation as at the inception their goal was to grow by $ 500 million according to Iliev, et al, (2004, p.11). From 1993 through to 1996 the firm went under turbulent period under leadership of Spindler and Di Amelio as argued by Apple (2014b). 1997 marked Jobs second stint at the firm and he immediately inculcated new changes in corporate strategies that breathed new lease of life in Apple (Apple, 2014c). Presently, the firm is engaged in designing, manufacture and marketing of personal computers. They equally produce digital music players under the brand of iPod, Tv, Smartphones under the brand of iPhone and Tabled under the brand of iPad as stated by Richey (2008, p.3); (see appendix 1). In 2012, the total revenue & 156, 508 (m) and in 2013 the firm realised $ 170, 910 (m) revenue (NASDAQ, 2014; see appendix 2). In terms of the global market share especially Smartphone, Gartner (2013) notes that in the third quarter of 2013, Apple accounted for 12%. This was 2% less as compared to 2012 which they accounted for 14%. During the same period, Samsung was the market leader accounting for 32%. While in terms of percentage there was no decline in terms of absolute value as in the same period Apple sold more than 30 million as compared to 2012 (see appendix 3). However, Whitney (2014) observes that in terms of smartphone OS Apple ranked third in Germany, Great Britain, China and USA (see appendix 4). 3.0 Research, analysis and discussion of sustainability related strategies and issues 3.1 Role of organisational behaviour at Apple Inc. Organisational behaviour aims at analysing how individuals operate at work place as stated by McGinnis (2006, p.38-39). Kaifi & Noori (2011) indicates that organisational behaviour presents a platform where managers can recognise, explain and finally to develop the attitudes and behaviours of people (p.89). According to Locke (2009); Knights & Willmott (2007); Kreitner, Kinicki & Buelens (2001) organisational behaviour domain is applicable in areas such management of people; management of individuals; making decisions & managing social processes; managing organisational processes and managing culture change in organisation. The role of organisational behaviour at Apple focussed on coming up with products that would set the company apart in the PC market. This strategy aimed at differentiating the company from the rest by ensuring that the employees would ultimately be part of this success story (Longenecker & Fink, 2013). One way that Apple has inculcated sustainable management through organisational behaviour is through creation of new way of doing things so that it becomes part of the system. the three critical organisational behaviour inculcated to employees through the organisational culture of sustainability at Apple Inc. These include reduction in consumption of energy; reduction in waste emission and elimination of harmful products (Apple, 2014). For instance, the organisation has created a culture where they rank as the only company in the telecommunications industry that exceeds energy star requirements in the market. Further, the company presently powers its data centre with renewable energy drawn from solar. Finally, the firm has totally eliminated harmful substances such as lead and mercury in their products (Apple, 2014). Such achievements are not easy to attain without having an appropriate organisational culture that conforms employees behaviours and attitudes towards respecting the natural capital and not focusing on profit recouped. Krosinsky (2012) equally observes that sustainability culture at Apple is exhibited through voluntary disclosures. In this regard, the company on annual basis makie public how they are addressing environmental issues that arise out of their operations. in this regard, they appreciate that climate change as result of carbon dioxide emission, other green houses gases and harmful products is their key concern. In this regard, the employees are obliged to conform too the organisational expectation through innovative ways so as to curtail waste production and unwanted energy use that contributes to climate shange within the industry. 3.2 Human resource management practices at Apple Inc Employees are one of the integral resources in the production process and ultimately competitiveness and success of an organisation as stated by Longenecker & Fink (2013, p.30). The position and role of human resource greatly lies on the strategies or strategic approach fronted by management so as to align human resource requirements with the company aspirations as stated by Ferguson & Reio (2010, p.472-473). The whole process of attaining these relies on how an organisation conducts human resource development, reward, conduct appraisal and selection as stated by Lopez-Cabrales, Real & Valle (2011, p.345). One of human resource practices at the company is the opportunity they accord their employees for career progressions (Iliev et al., 2004, p. 89). Such opportunities leads to increased satisfaction and thus, reduced turnover (Skinner & Chapman, 2013, p.1). Secondly, they allow for personal development in terms of technical skills on the relevant field of specialisation according to Iliev (2004, p.88). This empowers employees to acquire additional and latest skills that aid the company in addressing issues such as productivity and innovation. Third, the company’s focuses on “providing equal opportunities to all potential employees” (Iliev, 2004, p. 92). Iliev (2004, p.91) notes that the success of the firm is hinged on their ability to attract and retain employees. Such practice empowers organisations to address turnover cost, retention of talent and enhance employee attachment to the organisation (Allen, Bryant & Vardaman, 2010, p.50). To attain sustainability, human resiource development is at forfront at the Apple company through training of employees. Secondly, the company has a fully fledge human resource line right from board of director dealing with corporate environmentalism. To shoe seriousness in addressing environmental issues & green initiatives, the company hired former US EPA Administrators Lisa Jackson to oversee projects such as solar cell farm in North Carolina (Appleinsider, 2013). 3.3 Role of international business in Apple Inc As a multinational enterprise, Apple Inc cannot limit its business to the local American economy albeit the fact that it one of the largest consumers of her products. In globalised environment, international business is critical in various fronts. First, it allows firms to access international markets and thus, expanded product threshold. Secondly, it allows businesses to source raw materials and locate manufacturing at low cost zones. Finally, it allows firms to access wider pool of employees and technology as observed by Levitt (1993). For instance, international business market has allowed Apple Inc to access foreign markets. This has seen the units sold annually rose to 30, 330 million units in the third quarter of 2013 as compared to 24, 620.3 million in the third quarter of 2012 (NASDAQ, 2014). Such figures are not possible without presence in international market. In terms of percentage of smartphone sold in international markets, iOS accounted for 36.1 in Britain market by November 2012 as compared to 30.6 in November 2013. In China, it accounted for 18.5 percent in November 2012 and 17% in 2013. In Germany, iOS accounted for 21.1 percent by November 2012 and 17.3% by November 2013 (Whitney, 2014). While in percentages this presents a decline in absolute figures this was an increment. Additionally, international business has allowed Apple to outsourced production of various components of their products. For instance, Apple Smartphone is manufactured by Samsung whose manufacturing plants are located in China as stated by Hughes (2013). According to Iliev et al. (2004, pp.85), Apple Inc. has manufacturing capabilities based overseas. These external vendors are found in the Netherlands, the United States, China, Taiwan, the Czech Republic and Korea. Theses manufacturing capabilities are vital to meeting the high demand of Apple products. This was evident especially after the introduction of the iMac. At that time, demand was high and this was followed by an increase in sales of the iMac. The sustainability issues addressed by Apple Inc under international business platform is to reduce their global footprints. The essence is to ensure green economy in all points of operations such as china which host their manfucturing plants. Equally, they seek to reduce their carbon footprint by churning out green products that have limited energy use, limited toxic substances nad develop various collection points for recycling (Appleinsider, 2013). 3.4 Role of technology management at Apple Inc Technology management is premised on the urge to ‘improve the competitive position of a company’s technology exploitation’. This encompasses appropriate management of technology, motivation and leadership so as to create and sustain synergy in all functions such as research & development, planning, engineering, machines, software, production and communication so that they can interact in a constructive manner by availing the most appropriate path of production so as to ensure profitability according to Kropsu-Vehkapera, Haapasalo & Rusanen (2009, p.1). Strategic positioning of research and development aids in new product development through innovation and invention therefore ensuring value innovation that addresses customer needs. In a nutshell, technology management is about making things work together so that business realises profitability (p.2). For instance, Apple is known as one of the most innovative companies (Iliev, 2004). The ultimate premise is to merge art and technology to produce products that ‘wows’ customers. Mourdoukoutas (2011) indicates that “Apple iPhones do not just perform better than competing products; they look better, as they marry art with technology, which makes people feel good in carrying one around, and even showing to their friends”. This has seen the company launch ground breaking innovative products that are not easily imitable therefore guaranteeing the company profitability. According to Apple Insider (2012), Apple is emerging as the top in the mobile telephony market. The iPhone largely accounts for the company’s sales. “The company's sales of 37 million iPhone accounted for a highest-ever 8 percent market share. Apple’s growth was fuelled by intense demand for its refreshed iPhone 4S, as well as the availability of three generations of iPhones at a variety of price points at operators like AT&T in the United States” (Apple Insider, 2012). For example, Satariano (2012) observes that “The iPhone (AAPL) is Apple’s top-selling product, accounting for 53 percent of its sales in the quarter that ended last December”. With the new iPhone 5 coming with new features like faster internet connection and new body design, the sales are expected to increase. The company has utilised innovation to drive environmental sustainability agenda. The company has exhibited innovation in utilisation of energy especially for their products & utilisation green material; recycling of waste products especially electronic ones and elimination of harmful elements from their products. This is exhibited both in the operations & production process and within the supply & logistic network. For in the present iMac utilises 0.9 wats while at sleep mode. This is 87% less than the first iMac. Additionally, the company is investing in solar cell farm in North Carolina so as to power its data centre (Apple, 2014). Additionally, Krosisnsky (2012) observes that the company has been able to exceed European Directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment by avoiding mercury in its display, arsenic in its glass, BFRs (brominated flame retardants) and PVCs (polyvinyl chloride) especially for their tablet products. However, in certain circumstances the company has been wanting in regard to sustainability issues. For instance, inability by the company to produce products that can be diassembled by consumers which is a requisitite under Electronic Product Environmental Assessment Tool and for a frim to in Green Rigistry in city of San Fransisco. Such disagreement saw them dropped from the list of green products (Price, 2012). Additionally, there has been concern on the serious ness of the firm on enrgy utilisation before they embarked on construction of solar farm in North Carolina (Appleinsider, 2013). 4.0 Entrepreneurship and Innovation at Apple Wooten (2010, p.8) capture the whole theme at Apple Inc. in regard to innovation by observing that “Innovating is the dominant value of Apple’s culture. Employees are rewarded for experimenting, risk taking, and creativity”. In this regard, innovation is highly embedded in the organisational culture of the company. This is anchored on the aspiration to produce products that emphase on “design, ease-of-use, and functionality” and “marrying art with technology” according to Muehlhausen (2010). For instance, Mourdoukoutas (2011) notes that “Apple iPhones do not just perform better than competing products; they look better, as they marry art with technology, which makes people feel good in carrying one around, and even showing to their friends”. This has allowed the firm to create a distinct organisation under core capability of technology and with new market spaces, allowing it to capture new demand through value innovation. In Jobs second stint the aspiration was to seize opportunities and distinctly differentiate the company from other competitors. In this regard Jobs ensured that new organisational cultures had to be created. By use of innovative technologies, the company has been able to create demand for its consumers. Here, by analysing what the future needs of the consumers could be, the company comes up with products that are customised to meet these needs (Wooten, 2010). Apple is out to study the market and find out what the customers’ unmet needs are. “Typically, a new Apple product starts with a big idea for an unmet customer need. For the original iPod, it was for an MP3 player that, unlike earlier models, could hold and easily manage your entire music collection” (Burrows, 2005). Therefore, other than wait for its rivals to come up with products meeting these needs, Apple sets the pace. It comes up with products meeting these needs. This is what seizing opportunities has been to Apple. The company takes risks and creates products that anticipate future changes in consumer needs. To ensure that they do not innovate for sake of innovation customer input is critical in the whole process. “The customer service encompasses product tours, consultations on the right product for a consumer’s usage, workshops, and Apple “geniuses” that are on-site and will help you troubleshoot hardware and software problems” as argued by Wooten (2010, p. 7). Apple has been able to come up with better products compared to its competitors. These include the Mac (Pro, Mini, iMac, MacBook, Air, Pro, and Xserve), iPhone, and the iPod (Shuffle, Nano, Classic, and Touch) (Modi et al, 2010). Indeed, Mourdoukoutas (2011) posits that “this marriage of art and technology transforms the company from a computer and iPhone maker into a branding machine that churns families of blockbuster products rather than single products”. As such, the company has to ensure that it remains as the pace setter in the industry for as long as possible. 5.0 Future Strategies 5.1 Strategic positioning The one area that the company should consider is the strategic positioning. The context for this recommendation is premised on Bowman’s strategic clock. The clock postulates that company can operate in low price/ low added value zone; low price; hybrid; differentiation; focused differentiation; risky margins; monopoly pricing & loss of market share zone (Sengupta, 2012, p.12). Apple seems to be operating in focused differentiation where they produce high value products at higher prices as stated by Burrows (2008, p.34). While presently it is profitable as since the trend shows that Apple accounts for 60% of smartphone, this in the future might not be sustainable as that market share is small and is getting saturated. Such positioning has negatively on their market leadership and share in smartphone as the present leader is Samsung who accounts for 32%, while Apple accounts for 12% (Gartner, 2013). To counter such negative experiences, the ultimate solution lies in adoption of Blue Ocean strategy where value innovation is at the core of operations. In this regard, Apple should seek to drive costs down and at the same time maintain the quality or even enhance it further as argued by Kim & Mauborgne (2004, p.7). 5.2 Market Focus The company records high sales in the American market compared to all other markets where it has its operations. From the company’s sales report 2010-2011, the American market recorded net sales of $ 17,714 in 2011 compared to European markets that recorded $11,254. However, the operating income of the American market is higher ($ 7,262) compared to Europe’s $ 4,668 in 2011. Apple has pegged much of its sales to the American market where it accounts for 40% of smartphone sold according to Hodgkins (2014). While this is a positive approach as America constitutes one of the largest consumers of products such as smartphone, the company should diversify her markets so as to curtail the cut throat competition existing in such markets which perhaps might get saturated. The solution lies to capturing new demand outside the existing narrow and turbulent markets. This will allow them to capture new customers especially ‘soon-to-be’ non-customers or ‘unexplored’ non-customers (O’Gorman, 2009, p.100-101). 5.3 Outsourcing The management of Apple has instituted a strategy that ensures that product manufacture is done by third parties. Furthermore, outsourcing has meant that the company looks for a third party to do the management of logistics, as well as transportation of manufactured products. According to Apple Inc.’s management, the outsourcing strategy is aimed at reducing operational costs. Moreover, by outsourcing, there is reduced control over product production and distribution. However, given that there is limited control; chances are that this could impact negatively on the product quality or quantity. There is a likelihood that reduced control lowers flexibility of Apple when it comes to responding to any changes in the prevailing market conditions (Iliev et al., 2004). Thus, the firm should institute certain measures so as to ensure that they directly manufacture certain products of theirs so as to limit loss of control and enhance protection of intellectual property. This would reduce protracted legal battle experienced between Apple and Samsung who their direct competitor and manufacturer of most of their smartphones (Hughes, 2013). 6.0 Conclusion The aim of the paper was to conduct management analysis at Apple Inc. the paper realised that management at Apple as engaged in various management strategies so as to push the company to the current level it is in. The paper found out that company has instated organisation behaviour practices; human resource practices, technology management and innovation so as to empower them seize competitive opportunities. However, the paper recommends that the firm should review its strategic positioning, market focus and outsourcing. References Journals Allen, D.G., Bryant, P & Vardaman, P 2010, Retaining Talent: Replacing Misconceptions with Evidence-Based Strategies. Academy of Management Perspectives, p. 48-64. Ferguson, K & Reio, T 2010, Human resource management systems and firm performance, Journal of Management Development, Vol. 29, No. 5, p. 471-494. Kaifi, B & Noori, S 2011, Organizational Behaviour: A Study on Managers, Employees, and Teams, Journal of Management Policy & Practice, Vol. 12, No. 1, p. 23-56. Kim, W & Mauborgne, R 2004, Blue ocean strategy: How to create uncontested market space and make competition irrelevant, Harvard Business Press. Kropsu-Vehkapera, H., Haapasalo, H & Rusanen, J 2009, Analysis of technology management functions in Finnish high tech companies. The Open Management Journal, vol. 2, p. 1- 10. 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Apple IPhone 5 May Debut in October, Analyst Munster Says, viewed 21st May 2014 from http://www.businessweek.com/news/2012-04- 19/apple-iphone-5-release-may-come-in-october-piper-jaffray-says Whitney, L 6th January, 2014, iPhone market share shrinks as Android, Windows Phone grow, viewed 21st May 2014 from http://www.cnet.com/news/iphone-market-share-shrinks-as- android-windows-phone-grow/ Wooten, L 2010, Building a Company the Steve Jobs’ Way: A Positive Deviance Approach to Strategy, viewed 21st May 2014 from http://www.bus.umich.edu/NewsRoom/pdf/wootenjobspaperFINAL1.pdf. Appendices Appendix 1: Apple Inc. Products Products Example photos iPad & iPhone MAC Software iPod & iTunes iCloud Source: Apple, 2014f Appendix 2: Apple Inc. Revenue & Earnings Per Share (EPS) Source: NASDAQ, 2014 Appendix 3: Worldwide Smartphone Sales to End Users by Vendor in 3Q13 (Thousands of Units) Source: Gartner, 2013 Appendix 4: Smartphone OS Sales Share (%) Source: Whitney, 2014 Read More