Integration Of Business Functions And Analysis Of Apple Company
Apple was founded on April 1, 1976. Apple was started as a computer company. This report traces the changes of strategy and strategic decisions of Apple in the last ten years. For this, the report provides background and leadership of Apple. In the background of company, different leadership styles, leaders, resources, capabilities and macro environmental analysis have been explained. SWOT analysis, PESTAL analysis and Porter model have been discussed under macro environmental analysis of company. Further the corporate culture and shareholder’s value are described. Finally Apple’s internal functions such as marketing, human resources, operations management and accounting and finance have been discussed.
Apple was established by Steve Paul jobs and Stephen Gary Wozniak. The company is a predominant manufacture of personal computers. Apple was redesigned in 1996. Steve join as CEO of company in 1996. He made every successful effort to make Apple leader in consumer electronic industry. Currently Apple is one of the biggest technology companies of the world. The company deals mainly with consumer electronics, computer software and commercial servers. Apple is a multinational company. It operates in more than 50 countries. The company relies on best quality to deliver it’s customers (Rahimi, Møller & Hvam, 2016).
Steve Jobs served from initiation of company to 2011. Tim Cook became CEO of Apple in 2011. The vision and leadership of Steve Jobs helped Apple in becoming innovative and valuable technology company. Jobs made countless contributions towards success of company. He attracted and inspired skilled employees and world class exclusive team. Tim was selected as CEO after serving Apple for thirteen years. He was previously responsible for the worldwide sales and operations of company, including sales activities, supply chain, service and support in all markets (Panayides, 2017). Tim announced a planned expansion of company towards Apple’s Swift curriculum.
Apple is well known for the Autocratic leadership. Steve Jobs covered a period of 1997-2011 and managed a wide range of business operations. Steve was architect of many of the Apple’s mazing products. He is also the reason behind success of company. Steve Jobs focused on autocratic leadership in which leaders subordinate employees what to do and company expects them to do. Steve demanded excellence from his employees. The subordinates of these leaders are not involved in decision process. In this leadership, leaders have absolute power on the working of team and individuals. The members have opportunity to make suggestions (Saxena, 2014). The autocratic leadership includes five components, passion, vision, innovation, motivation and effective communication.
Steve Jobs was charismatic and vision oriented as a transformational leader. He encouraged intellectual development of staff by inspiring and motivating them to higher level of effectiveness. He encouraged innovations and made change in the thinking of staff. As a transformational leader, Job brought innovative digital technology to the consumers ((Fairhurst & Connaughton, 2014).
Steve Jobs as a transactional leader converted knowledge into valuable products for instance, Macintosh personal computer (Niebuhr, Voße & Brem, 2016). The transactional leadership was used by incorporating vision into reality. It was made possible by making products with the help of employees. This leadership helped Apple to manage the whole business, different departments and people of company.
Tim Cook is the current CEO of Apple. Tim became CEO in 2011 before that he was chief operating officer at Apple. Cook Tim Cook has been praised for the inspirational leadership. He introduced Apple Watch which was developed from scratch. Cook as a situational leader lead in different situations. It is composed of both directive and supportive dimension. Tim Cook is able to lead in any situation. He focused on the existing products and employee relations. Cook also took an exceptional step which threatens security of customers. He addressed the issue and provided legislation to support. He believes in taking risks in order to succeed. He values diversity and considers people to be themselves. Being a great leader, he believes to have faith in you to make the right decision. The actions of staff should reflect the belief. Cook considers transparency a crucial step and values it in daily operations of business.
The SWOT analysis represents strength, weakness as well as opportunities and threats of company.
Advertisement capabilities: The advertisement capabilities increase the brand awareness. As a result, it creates strong demand for the products of company.
Leadership position: Apple is the leading technology company in terms of revenue generated. It also ranks second in the manufacturing of smart phones. Apple is the largest publically traded company in the world which defines the leadership position of company (Bull, et. al. 2016).
Innovative products: Innovation is the key strength of company. Apple has launched hit products like MacBook, iPOd, Ipad, Iwatch and Iphone. The company has attained leadership in innovations.
Incompatibility: The key issue with Apple is that various products of company are incompatible with third party software. Whenever a person purchases products of company than that person enters into the different universe and has to continue with Apple only.
Company background and leadership
Dependency on selected products: The company has only 8-9 products in comparison to it’s competitors like Google and Microsoft. So dependency of company on it’s products is very high. It is a huge loss to company if any of it’s product fails.
iCloud security concerns: iCloud is a big concern for the security reasons. The awareness of customers is increasing whether it is safe to use iCoud.
Technology advancement: The technology advancement is always an opportunity for the company. It can leverage technology to it’s best by advancing Iphones, Iwatches, Ipads and Macbook’s in the coming time.
Electric car project: The company can plan building an electric car. The reports also indicate that Apple has been offering employees of Tesla to join Apple (Doncic, Peric & Prodanovic, 2015).
Growth of android: Apple has threat from the companies which are running on Google’s android platform. There is risk to market share of company.
Competition from Samsung: The company has competition from Samsung as it is technology giant. The products of Samsung are relatively cheap.
PESTEL analysis is used to identify external forces in situation analysis.
- Apple manufactures various parts and products from outside United States like Ireland, Korea, China and Cork.
- Apple has dependence on China for manufacturing. The deteriorating relationship between US and China has bad outcomes for the company (Song, Sun & Jin, 2017).
- More than the half of the sales of products of company comes from the countries other than USA.
- The increased labour cost in China could snatch cost advantage of some products of Apple.
- Due to the recession and economic crises, the revenue of company can be affected to a large extent due to premium price policy.
- The exchange rates are increasing due to the rising value of US dollar. It can affect the cost of products of company.
- The company has made some brand acquisitions to satisfy and fulfil need of customers, Such as acquisition of Embark Prime Sense and alliance with Sony, Motorola and Philips.
- Due to the higher prices it has become a symbol of social status. The people who are from higher class can afford products of Apple.
- The company has marked it’s presence in the international market (Vahlne & Johanson, 2017).
- Technology keeps on updating. So it is required for the company to upgrade products more often so that it does not become outdate.
- The company has made huge investment in research and development. So, the products of Apple are at top in new innovative products.
- The most technologically advanced product of company is iPod which vanished the trend of Walkman.
- Apple’s commits towards environment by disposing of electronic equipment. It recycles the products at the end of useful life.
- The side effects from manufacturing of products in China are a growing concern such as pollution and other environmental side effects (Grünig & Kühn, 2015).
- The company is participant in various legal proceedings since it’s inception.
- The regulations and government can be increased by entry of company in financial services via Apple Pay.
- Apple can face increased level of lawsuit by making entry in new sectors.
The porter’s model supports the current position of company.
Threat of new entrants:
The threat of new entrants is moderate. There is presence of substantial entry barriers such as massive capital requirements and creativity to possess intangible assets. The time of entry is also another barrier for new entrants. There is one significant factor in favour of new market entrants that is innovation potential.
Bargaining power of suppliers:
Apple experiences low bargaining power of suppliers. Apple has bargaining power based on high number of suppliers and overall supply. The company has less than 200 suppliers for it’s products. But there is availability of more suppliers around the world. This situation makes suppliers weak in imposing their demand on company.
Threat of substitutes:
There is weak threat of substitutes which can affect business of Apple. There is high availability of substitutes in the market but their low performance cannot affect Apple. For instance, people can use digital camera instead of iPhone but the substitute have low performance. So, customers would rather like to adapt apple products because of their advanced features (Fitzpatrick, Nguyen & Cayan, 2015).
Bargaining power of buyers:
The bargaining power of suppliers is strong in the case of apple. The buyers can impact the business they want. It is important to provide customer satisfaction as the buyers can easily change the brand if they are not satisfied. Apple should include bargaining power of buyers as one of the important variables.
Leadership styles and leaders link to theory
There is strong competitive rivalry. Apple is having competition from the companies like Samsung, Blackberry, LG and more. It is easy for the customers to switch to another brand so innovations should be focussed to attract customers.
The corporate culture is a key factor behind success of Apple. The corporate culture is sufficient enough to support changes, new policies and strategies. The culture is based on self-motivated individuals who work hard. The culture supports the firm leadership and includes the following features:
The corporate culture of Apple includes workers who can give their best. Steve Jobs was well known for firing employees who did not used to meet his expectations. Excellence is determined as most of the critical factor for product design and development of company (Guiso, Sapienza & Zingales, 2015).
The employees are selected by Apple on the basis of their knowledge, skills, creativity. The corporate culture shows the importance of creativity. The employees involved in product design and development processes are most creative. The culture has the capacity to develop solutions for the needs of business and consumers.
The corporate culture of company is very innovative. Apple is praised and known for the innovations. The employees of organisation are trained to innovate products in terms of individual work performance. The employees contribute ideas for the development of products (Jiang, et. al. 2017).
Steve Jobs developed policy of secrecy to maintain at corporate culture. Secrecy has role in minimising leakage of information. At the time of hiring, employees agree to the secrecy of corporate culture. It is also reflected in the policies, regulations and employment contracts.
This characteristic is linked to the combative approach of leadership. The employees re challenged to know the skills required for the company. Apple changed it’s corporate culture to more sociable and less aggressive under the leadership of Tim Cook.
Apple is continuously increasing it’s shareholder value. According to a report of 2014, Apple increased share repurchases authorization to $90 billion from $60 billion. The company declared dividend to shareholders through a series of share buybacks. The company repurchased shares of $6 billion which ended on 31 December, 2015 (Market realist, 2016).
On April 27, 2015, the company proclaimed that the board of directors permitted an increase of more than 50% to the company’s capital return program. The company increased share repurchases authorization to $140 billion from $90 billion in 2014 (Market realist, 2016). The company returned in excess of $153 billion to the investors from 2012 to 2015. It also included $110 billion through share buybacks.
Resources, capabilities and macro environmental analysis
Apple has been focusing on providing dividend to shareholders. From 2012 to 2016 Apple returned $43 billion dividend to shareholders. In the fiscal year 2016, the company returned $3.6 billion in the form of dividend to investors. It was higher than the previous years, as $3.3 billion was returned in the first quarter of 2015 and $3.2 billion in the fourth quarter of 2015 (Yahoo Finance, 2016). The company spent $45.9 billion on share buybacks of technology sector. The IT sector leads in buyback of shares. Qualcomm, Microsoft and Oracle lead in the buyback of shares. The company marks up 16% of technology select sector. Apple has also done acquisition of Beats Music and Beats Electronics for the consideration amount of $3 billion. The company aggressively look for the acquisition opportunities to aid shareholder value creation through acquisition of exciting technologies and innovations (Teo, Nishant & Goh, 2017).
Apple has developed a marketing strategy to focus on expectation of customers. The company attempts to understand need of customers and provide tools and skills to enhance use of Apple’s products. The company makes use of marketing to move products from company to customers. It includes four elements, product, price, place and promotion (Sandlin, Croxton, Knemeyer & Rebolledo, 2015). The company focuses on marketing by considering these points:
- Keep it simple: The customers do not require complex marketing campaigns. Apple makes sure that the marketing is as simple as possible. The company features the price, lists, voice overs and special effects. The marketing messages are also often straight forward.
- Focus on value proposition: A big part of company’s marketing is that it does not involve in price wars. It sticks to the price which is much higher than any competition. The company focuses on providing great user experience with advance features and extensive applications (Khan, Alam & Alam, 2015).
- Speak to audience in their language: Speaking with customers using their own language creates a deep bond and encourages more sales. The terms and explanations should be avoided as it can overwhelm and confuse customers.
- Use visuals: The visuals have a great impact on customer’s experience. The company uses fewer words and more images to make it simple and approaching.
- Leverage reviews: The company believes in getting views from it’s customers. The customers feel privileged if company asks for reviews. A free trial can be offered that appears on review website.
The people involved in the human resource of Apple are at marketing, technical and staff positions. The company has employed different human resource practices to retain it’s employees. The human resource focuses on minimising financial risks with maximising return on investments. The human resource functions of Apple are:
- Recruitment and selection: The recruitment and selection have great role towards success of company. Apple has done huge investment on the recruitment process. The company focuses on getting the right talent who can fulfil expectations of company. The employees who can fit in the organisation are hired.
- Diversity and equal opportunities: The company provides equal opportunities to the employees. It does not difference on the basis of gender, race, religion or disability. Apple attracts different workforce from various parts of world (Brewster, 2017).
- Employment benefits and compensation: Apple provides competitive package to employees. The benefits are provided on the basis of status and geographic location of staff. The benefits include insurance cover, investment and savings plan and more. The employees are also entitled to get product discounts.
- Employee appreciation and recognition: The company has Apple Fellows Program to identify the employees who make extra efforts towards company. The employees who get this reward are entitled as leaders.
- Training and development: Apple operates a unique training approach to equip right skills to employees. This program can enhance skills development. It encourages people to develop self-reliance (Tracey, 2014).
The operations management considers the important aspects such as quality management, process design, location strategy, layout design, job design and human resources, supply chain management, inventory management and more. The different approaches to operations management are:
TQM and Lean: TQM is helpful to company in achieving corporate and social goals. The focus of TQM is to maximise profits. It keeps in mind to provide innovative solution that does not harm society anymore. The employees are motivated to perform at their best level. This approach has helped company to understand need of employees. It helps to fulfil the need of employees in the best way possible. The TQM principle teaches that each employee should be treated with respect and dignity. This model also ensures proper training of employees (Harvey, Heineke & Lewis, 2016).
Globalisation, Green and supply chain management: This approach commits renewable energy and waste reduction in the production of the company. It involves wind energy which covers all energy consumed producing Apple products. The globalisation approach has strong influence on revenue generation. It ahs enabled company to enter into new markets (Bromiley & Rau, 2016). The company has restructured it’s operations to operate at global level to take advantage of international global markets.
Apple is one of the country’s most valuable companies. The accounting is tackled by the accountants in two major fields, Management accountants and financial accountants. Management accounting analyses and provides information to decision makers to help them run the organisation. The management accounting helps company in running it’s operations. It has great role in helping mangers to carry out their duties and responsibilities. The reports are prepared according to the requirement of individual mangers. The purpose of these reports is to provide significant, accurate and timely information which aid managers in making decisions (Loughran & McDonald, 2016).
Financial accounting provides information to individuals and groups. The information is provided inside and outside the organisation to assess financial performance of company. However the main focus is given to external users. The financial accounting informs to outside people about operations of business. The financial accounting is liable for preparing financial statements of company. It summarises the past performance of company. Accounting evaluates the current financial position on the basis of past performance of company. These financial statements of Apple are public. It adheres a uniform set of rules known as GAAP.
From the above report it can be concluded that Apple has successfully faced changes of strategy and strategic decision in the last ten years. It reflected changes in leadership, organization, culture and market forces. The background provided justifies the performance of company. The different leadership styles and contribution of CEOs linked to Apple have been discussed. The background includes the resources, capabilities and macro environmental analysis of company. The corporate culture and increased shareholders value shows the success of company. The annual report of company clearly shows the growth of company in terms of current ratio which was 108% in 2014 and it increased to 128% in 2017. The cash ratio was 40% in 2014 and improved to 74% in 2017. The internal functions of company are competent to take strategic decisions. Finally the internal functions such as marketing, human resources, operations management, accounting and finance have contributed towards growth of Apple.
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