CHAPTER 1
ORGANISATION PROFILE
1.1: History Founders Steve Jobs and Steve Wozniak created Apple Computer on April 1 1976,and incorporated the company on January 3, 1977, in Cupertino, California.For more than three decades, Apple Computer was predominantly a manufacturer of personal computers, including the Apple II, Macintosh, and Power Mac lines, but it faced rocky sales and low market share during the 1990s. Jobs, who had been ousted from the company in 1985, returned to Apple in 1996 after his company NeXT was bought by Apple. The following year he became the company's interim CEO, which later became permanent Jobs subsequently instilled a new corporate philosophy of recognizable products and simple design, starting with the original iMac in 1998.With the introduction of the successful iPod music player in 2001 and iTunes Music Store in 2003, Apple established itself as a leader in the consumer electronics and media sales industries, leading it to drop "Computer" from the company's name in 2007. The company is now also known for its iOS range of smart phone, media player, and tablet computer products that began with the iPhone, followed by the iPod Touch and then iPad.
1.2: Geographical region and country
Apple inc was established in Cupertino, California,United States of America. Apple Inc largest geographic markets are United States of America, Europe, China, Japan, and Asia Pasific(NASDAQ;APPL).
Figure 1: The percentage of Apple Inc Total Net Sales by NASDAQ for the year 2014
1.3: Type of organization
1 Apple Inc., formerly Apple Computer, Inc., is a multinational corporation that creates consumer electronics, personal computers, servers, and computer software, and is a digital distributor of media content. The company also has a chain of retail stores known as Apple Stores. Apple's core product lines are the iPhone smart phone, iPad tablet computer, iPod portable media players, and Macintosh computer line.
1.4: Business Process
- In the business process management world(BPM), there is not much said about Apple Inc, and people do not associate Apple Inc with BPM. Some say the association is more like Apple with Innovation instead of BPM. There is a bit of method to Apple’s innovation madness and the business process of Apple Inc can be better understand through its value chain activities as the value chain analysis highlights important tasks or activities that provide Apple Inc competitive advantages that rivals its competitors. Inbound Logistic: Apple Inc has secured hundreds of suppliers worldwide and maintain good supply chain management. Apple’s usually will purchase its material that will cover up to the periods of 150 days. In this process, its CEO Tim Cook is known for his specialty of getting suppliers to compete with each other to secure a contract with Apple Inc, which benefits the company. Operations: The company operations are divided into several segments such as United States of America, Europe, China, Japan, rest of Asian Pasific countries, and other retails company. Their operations are helped by 92,600 full-time employees and around 4,400 full-time equivalent temporary employees and contractors. Majority of Apple’s hardware products are assembled by outsourcing partners primarily located in Asia which is to cut labour costs. Outbound logistics. Apple’s net sales through its direct and indirect distribution channels accounted for 28% and 72% of total net sales respectively. Apple strives to minimize the volume of its inventory due to cost considerations. Marketing and sales: Apple Inc distribute its products into the markets through several channels. Every year, the company spends billions of dolars on utilization of marketing communication mix that focus on integration of advertising, public relations, events and experiences or direct selling. Service: Apple Inc is well known of its exceptional quality of customers support and services during all three stages: pre-purchase, during the purchase and post-purchase. The company established Apple experience centers in major cities around the globe where customers can try its products to become convinced about the quality. Apple sales workers also are usually wel- trained and polite young males and females who are technically experienced to demonstrate product features and capabilities. Post-purchase customer service is also impressive with unique iPhone trade-in programs that allow iPhone users to upgrade their phone to newer models with additional payment.
2 1.5 Website address and homepage image
- http://www.apple.com/
Figure 2: Homepage of the Apple Inc Website.
CHAPTER 2
DESCRIPTION OF IS STRATEGY TRIANGLE OF APPLE INC.
3 After Jobs resigned as CEO and became chairman of the board, Cook was named the new Chief Executive Officer of Apple Inc. on August 24, 2011. Thus bringing major changes in the successful company. Both CEOs has different management style and philosophy thus, affecting the balance of the IS Strategy Triangle of Apple Inc. Major comparison between the old and new IS Strategy triangle are shown in diagrams below followed with explainations.
Business Strategy Focused on innovation
Organizational Strategy IS Strategy
“Dictatorship” style and IT investment to complicated work support innovation- madness
Diagram 2.1 OldBusiness IS Strategy Strategy Triangle(Steve Job as CEO, 1997-2011).
Organizational Strategy IS Strategy 4 Focus on improvement of products
Decentralization of decision making and Effective and efficient improved work investment in IT within
Diagram 2.2 New IS Strategy Triangle(Tim Cook as CEO, 2011-2016)
Business Strategy
Under Jobs' leadership, Apple kicked into high gear in terms of the products it released to the public. Jobs oversaw the introduction of the iMac, the iPod, iTunes, the iPhone, the App store and the iPad. This suite of products still makes up the core business of Apple.
Cook, however, has only overseen the introduction of the iPad mini, the iPad retina and the Apple Watch in his three years as CEO. However, Jobs was the CEO of Apple for a much longer term than Cook's current tenure, so he had more time to implement new products.
Cook's focus on Apple's core business and his decision to pump the brakes on new products is typical of his style and ideology. While Jobs was looking to constantly innovate, Cook seeks to focus on products that are already doing very well. For example, the Apple Watch is an expansion of the iPhone, rather than an entirely new and innovative product.
Dr. Panos Mourdoukoutas also asserts that, “Under Tim Cook, Apple has been churning out new versions of old products that are destined to reach their limits. Tim Cook’s Apple has not yet launch a new product that may replace the iPhone, the iPad and the MacBook. The business model of Apple has shifted from the Steve Jobs to the Tim Cook era,Steve Jobs emphasized the construction of brand new
5 innovative technologies whereas Tim Cook has only been producing slightly improved versions of existent Apple products.
For example, instead of having any true innovation with the newly released iPhone 5, Cook focused on tightening up many aspects of the existing smartphone model such as the iPhone 4, he increased its size, allowing it to compete with other larger phones such as those created by rival Samsung and cut Apple’s contract with Google for its Maps service and replaced it with a proprietary map system this let Apple inc to rely less on Google and shore up its own service platform, which will pay off in the future. However, this does not conclude that under Tim Cook’s management the company is failing. Contradictory to the pessismistic view of the new CEO, the stock price for Apple Inc increase drastically.
Diagram 2.3 Difference in Apple Inc Stock values
Organizational Strategy
Apple’s organizational structure is one of the factors contributing to the company’s successful innovation. The success of the company is linked to innovation and the leadership of Steve Jobs, but its organizational structure is partly responsible for ensuring support for such leadership. Now, under
6 Tim Cook’s leadership, Apple has made some small changes in its organizational structure to suit market and industry demands.
Most significant characteristics of Apple’s organizational structure:
1. Spoke-and-wheel hierarchy 2. Function-based grouping 3. Product-based grouping
Spoke-and-Wheel Hierarchy.
A bird’s-eye view of Apple’s organizational structure shows considerable hierarchy. In the past, everything went through Steve Jobs’ office. Jobs made all the major decisions. However, under Tim Cook’s leadership, this hierarchy in Apple’s organizational structure has slightly changed. There is now more collaboration among different parts of the company, such as software teams and hardware teams. Apple’s vice presidents have more autonomy, which was almost absent under Jobs. Thus, the company’s organizational structure is now less stiff, but still has a spoke-and-wheel hierarchy where Tim Cook is at the center.
Function-Based Grouping.
The upper tier of Apple’s organizational structure has function-based grouping, which an element is derived from the functional type of organizational structure. Each senior vice president who reports to Tim Cook handles a business function. For example, Apple has an SVP for industrial design, an SVP for marketing, and another SVP for retail. In this aspect of the organizational structure, Apple’s top leaders address business needs in terms of function areas.
Product-Based Grouping.
The lower tier of Apple’s organizational structure has product-based grouping, which an element is derived from the divisional type of organizational structure. Below the senior vice presidents, there are many vice presidents for different outputs or products. For example, Apple has a VP for iOS apps, a VP for iPad, and another VP for consumer apps. This aspect of the organizational structure enables Apple to address specific products or product components and not to forget improving Apple Inc work environment.
The figure below illustrates the top level of Apple organizational structure:
7 Diagram 2.4 Apple Inc Organizational Structure
IS/IT Strategy
During Steve Jobs era, the company focus on spending its money on Research and Development that solely focus on innovation and creative creation of its main product, such as iPod,iPhone,iMac,etc. However, during Tim Cook era, the current CEO tends to invests in multiple sectors and eventhough the value of the investments comparison are very high, Tim Cook is playing safe by guiding the company into the future by coping with other future potential beneficial technology. As we can see down below are the diagrams that shows the comparison between the investment made by the company under the reign of two different CEOs.
8 Diagram 2.5 Research and Development under Steve Jobs
Diagram 2.6 Research and Development under Tim Cook
Based from the above financial statements, spending on research and developments are drastically increased during Tim Cook era, which are contributed by the company investments in other related technology, such as, Apple Inc investments of $1 billion in Chinese ride- hailing service Didi Chuxing. A move that Apple Chief Executive Tim Cook said would help the company better understand the critical Chinese market. The company also involve in spending millions of dolars in establishing new technology centers all around the world under Tim Cook reign in order to encourage more creative and innovative invention from their employees. Apple Inc set to open new $25 million tech center in Hyderabad, India by June 2016(Dilger,2016). Apple Inc also has R&D facilities under construction in Yokohama, at the site of a former Panasonic factory. That site is said to be intended to tap in to local talent specializing in materials science, vehicles and health science.
Figure 2.7: The former factory site for Panasonic Corp. in Yokohama's Kohoku Ward (Ayako Oikawa)
9 Figure 2.8: $25 million tech center in Hyderabad, India
Recently it has emerged that Apple has spent $10bn in research and development costs, which is more than triple of what it spent just four years ago ($3bn). This massive increase in R&D costs, does suggest that Apple is developing something a lot bigger than simply a new iPhone, iPad or Mac device. There are some rumours that under Tim Cook supervision, the company is trying to enter automotive industry by introducing new type of car under the name “Project Titan”. Not to forget, under Tim Cook reign, Apple Inc also had formed strategic alliances with other information technology leaders such as IBM to transform enterprise mobility, AT&T in production and launching of the iPhone, Microsoft in developing Microsoft Office software for the Mac and in return, Apple agreed to bundle Internet Explorer in all of Apple’s computers, Intel for the processors used in their products,etc. Those alliances benefits the company and securing its position as one of the most profitable high technology company in the world.These evidences shows that, eventhough the company currently is not introducing new innovative products, the future of the company will always be bright and successful under the management of Tim Cook, as it was under Steve Jobs.
CHAPTER 3
CONCLUSION
In conclusion, based from the analysis on IS strategy triangle for Apple Inc during Steve Jobs and Tim Cook era, we can see how different CEOs bring different life to the company with their own management styles. From the business strategy side, under Steve Jobs , the company succeed to gain massive market share with their innovative products such as iPhone,iMac,iPod, etc, however, during the Tim Cook era, the company also able to survive and focused on improving existing products because the current CEO believes that offering the perfect products
10 to the customers will help the company in the future. Next, from the organisational strategy side, “Dictatorship” management style of Steve Jobs are able to force the company to continuosly create new innovation, however, the work environment during that time is not very pleasant to the employees. Contradictory to Tim Cook era, he introduced better concept in their working environment which are spoke-and-wheel hierarchy, function-based grouping, product-based grouping and not to forget, decentralised decision making. Thus, gaining the trusts of the subordinates and allow more creativity to emerge compared to the Steve Jobs era. Last but not least, from the IS/IT strategy side, Tim Cook is believed to be able to guide the company into a better future. Despite, slow rate in introduction of new products, Tim Cook had evidently involve the company into new market sectors such as Chinese ride-hailing service Didi Chuxing, opening up new technology centers in Hyderabad and Yokohama and forming strategic alliances with their former rivals such as IBM, Microsoft, and AT&T which cannot be done during Steve Jobs era.Even if there were many speculations on whether the company will be able to survive without Steve Jobs at first, Tim Cook had definitely win the trusts of all people around the world with his capabilities to continuosly making the company the leader in the technology world and also as a trend setter.
References
1. A breakdown of Apple's five largest geographic markets.
- http://www.fool.com/investing/general/2015/04/01/5-largest-markets-for-apple.aspx
2.Apple Inc website
- www.apple.com
3.Apple Inc Business Process Management
11 - http://www.bp-3.com/blogs/2009/01/apple-and-business-process-management/
4.Apple Value Chain Analysis
- http://research-methodology.net/apple-value-chain-analysis/
5. Apple, Inc set to open new $25 million tech center in Hyderabad, India by June
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6. Apple Inc Ethical Success and Challenges
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7. Apple and IBM Forge Global Partnership to Transform Enterprise Mobility
- https://www.apple.com/pr/library/2014/07/15Apple-and-IBM-Forge-Global-Partnership
8. Apple Inc Annual Report
- http://investor.apple.com/secfiling.cfm?filingid=1193125-14-383437
9. Apple’s Commitments To Your Privacy.
- http://www.apple.com/privacy/
10. Apple’s Inc OS X
- http://www.apple.com/osx/
11. A study on Apple’s Inc Information System
- https://www.scribd.com/doc/45851282/Managing-Information-Systems-by-Apple
12. Apples to Apples: Steve Jobs Vs Tim Cook
- https://www.entrepreneur.com/article/232865
13. How Does Tim Cook's Management Style Differ from Steve Jobs? (AAPL)
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14. Apple Leadership and Apple Organizational Structure.
- http://research-methodology.net/apple-leadership-and-apple-organizational-structure/
12 15. Apple Inc. Organizational Structure: Features, Pros & Cons.
- http://panmore.com/apple-inc-organizational-structure-features-pros-cons
16. Apple Financial Report 2008
- http://investor.apple.com/secfiling.cfm?filingid=1193125-08-224958&cik=
17. Apple Financial Report 2015
- http://investor.apple.com/secfiling.cfm?filingid=1193125-14-383437
18. After $1B Didi investment, Tim Cook continues charm offensive at Apple-hosted event in Beijing
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19. Apple's electric vehicle project
- http://www.macrumors.com/roundup/apple-car/
APPENDIX
1. Sales Data from Apple Inc Annual Report
13 2. Operating Expenses from Apple Inc Annual Report
3. Apple’s Inc Revenue by Product from Silicon Valley Insider
4. Product development during Steve Jobs and Tim Cook era
14 5.Steve Jobs vs Tim Cook management styles
15