Apple Change Management: Function & Levels | StudySmarter

To bring the best user experience to customers through innovative hardware, software, and services. “

This is Apple’s mission statement. It is clear from this statement that user experience and innovation are very important for the company. But managing change in a company is not easy. Then how does Apple manage to innovate and maintain smooth management in the company? Read on to find out!

How is strategic management implemented in Apple Inc.?

Strategic management is the practice of managing an organisation’s resources to achieve its goals and objectives.

Apple’s strategic goal puts emphasis on designing and developing new products. The process of simultaneously designing and developing new products has been beneficial for the company, as they allocate their resources in a very planned and thought out manner. Apple’s financial resources are directed to developing better and superior designs.

Apple reduces its production costs by outsourcing the production to China. This helps them create superior designs at a cheaper cost. Apple has also implemented measures to make sure that its products have the best quality. The company has superior products in the market owing to its continuous innovation. Apple uses these superior capabilities to gain a better market position compared to its competitors.

Providing bonuses for employees exhibiting excellent performance helps to keep them motivated. It also rewards the employees for achieving key strategic goals. These motivation tactics help employees create better-performing and better-looking products.

Communication is a key element for the company’s smooth operation. For a company as big as Apple, it is important to make sure that communication is efficient, so as to make sure that no resources are wasted. Apple has operation and support centres set up at numerous locations to ensure seamless communication between the levels of hierarchy in the company.

Scientific management is used in Apple’s management.

Scientific management is the process of using scientific methods to optimise production processes to increase productivity.

Apple uses scientific management by using innovative assembly lines which reduce production time.

Take a look at our explanation on Managing Strategic Implementation and Management Implementation to revise the concepts mentioned above.

What are the levels of management at Apple Inc.?

Apple has four main levels of management – board of directors, top executives, vice presidents or second-tier management, and third-tier management. Figure 1 shows an overview of Apple’s management levels.

The Board of Directors appears on the top of the hierarchy. They have the highest power and are the members that are most affected by the success and failure of the company.

Top executives include members such as the CEO, COO, CFO, Chief Design Officer (CDO), and all the Senior Vice Presidents across departments. All the Senior Vice Presidents answer directly to the Board of Directors. They are also answerable to the CEO even though they fall under the same level of hierarchy. Some examples of Senior VPs in the company under this level of the hierarchy are:

• Vice President, Retail & Online Stores

• Senior Vice President, Internet Software & Services

• Senior Vice President, Software Engineering

• Senior Vice President & CFO (Chief Financial Officer)

• Senior Vice President, Hardware Engineering

• Senior Vice President, Worldwide Marketing

• Senior Vice President and General Counsel

• Senior Vice President, Hardware Technologies

Vice presidents or second-tier management is managed by the Senior VPs. The VPs include:

• Vice President, Senior Projects

• Vice President, User Interface Design

• Vice President, Communications

• Vice President, Industrial Design

• Vice President, Environment, Policy & Social Initiative

• Vice President and Dean, Apple University

• Vice President, Worldwide Human Resources

All VPs report to their respective Senior VPs. The VPs lead a team of managers and other members.

Third-tier management is the team that comes under the VPs of the company. The strength or the number of members that are included in this level of management depends on the department’s requirements.

What are Apple’s management functions that help the company manage change and innovation?

Figure 2 shows the four pillars of Apple’s management function: planning, organising, leadership, and controlling.

Planning

Planning is done by the manager and is the process where he identifies suitable objectives for the company and develops the steps to fulfil them. It guides an organisation’s course of action and leads it in the right direction. It is the basis of managerial tasks and functions. Planning is composed of three main steps: establishing the company’s main objectives, evaluating the existing situation, and application of strategy.

Strategic planning consists of the strategic analysis and the strategic definition of a company. The strategic analysis analyses the internal capabilities and external environment of an organisation. The Boston Box helps in understanding the internal capabilities of an organisation, whereas, PESTLE and Porter’s five forces help to analyse the external environment. Tools such as the Ansoff matrix and SWOT analysis help with the strategic definition.

The Boston box, or Boston matrix or the BCG matrix is an internal analysis technique used for portfolio management, by categorising products into 4 groups.

The products are categorised into groups such as stars, cash cows, dogs and question marks, based on their relative market share and market growth.

• Stars – high market share, high market growth

• Cash cows – high market share, low market growth

• Dogs – low market share, low market growth

• Question marks – low market share, high market growth

This tool will help Apple in estimating its products and understanding which product needs more attention or innovation.

The PESTLE analysis is used to examine the external factors of an organisation.

It examines the Political, Economic, Social, Technological, Legal, and Environmental factors of Apple and helps its decision-makers by helping them gain a better understanding of the company’s external environment.

The strategic planning tool, the Ansoff matrix helps Apple to analyse its growth strategies and analyse their associated risks. Its four strategies are as follows:

Market penetration – increasing sales with existing products in existing markets. This has the lowest risk.

Product development – selling new products in an existing market.

Market development – selling existing products in new markets.

Diversification – selling new products in new markets. This has the highest risk.

SWOT is a strategic planning technique that will help Apple identify its Strengths, Weakness, Opportunities, and Threats.

Based on this analysis, the company can assess its market position and decide on a new strategy if necessary.

Organising

The organisational structures portray the roles, responsibilities, relationships and lines of authority. Apple’s organisational structure is hierarchical and helps to maintain its leadership style.

The following are the characteristics of Apple’s organisational structure:

• Spoke-and-wheel hierarchy

• Function-based grouping

• Product-based grouping

Spoke-and-wheel hierarchy: Managers have more autonomy under this form of hierarchy, which enables more collaborative work.

Function-based grouping: Apple’s organisational structure has a function-based grouping or a weak functional matrix that allows the collaboration between the various departments across the business. This contributes to the rapid innovation process and effective information dissemination.

Product-based grouping: This is a divisional type of organisational function, which means that there is a Senior VP and a VP for each product or service. This structure helps the company to manage the products it delivers to its customers.

Leadership

The leadership style at the company plays an important role in making it what it is today. The CEO of Apple, Tim Cook follows a democratic leadership style. This is the type of leadership where the leader listens to and accepts opinions from his group members in the decision-making process. This way, everyone is a part of the process. Such leaders portray characteristics of courage, fairness, creativity, intelligence and job satisfaction.

Controlling

Controlling focuses on the results of the aforementioned functions. In this process, managers check the employees and their output and take corrective actions if required.

The first step involves the quantitative evaluation process of the company’s future objectives. Measuring the current performance of the objective is the second step. The next step involves comparing the current performance and the execution of goals. Lastly, the company takes corrective steps, if needed, to achieve its objectives.

These management functions are the core of Apple’s management and are the very factors that help the company cope with change and innovation. As every department has its own Senior VP and VP, it has its own individuality. The function-based grouping and spoke-wheel hierarchy make innovation, and changes within a department easier and smooth.

For instance, Apple’s collaborative debate allows people from various departments and functions to gather, innovate, promote, reject or build on each other’s ideas. This is how the company comes up with innovative ideas and solutions. This is possible due to their freedom to voice opinions and suggestions, and the willingness of the senior management to consider and accept them. This type of management or leadership promotes everyone in the team to come up with their best, and perform better.

Check out our explanation of Change Management, Leadership, and Strategic Direction, as a revision of this topic.

The characteristics of Apple’s management structure such as Apple’s functional organisation is rare and is what help the company stand out. Over the years, their management style has evolved to accommodate innovation and change smoothly.

Apple Change Management – Key takeaways

• The strategic goal of Apple puts its emphasis on designing and developing new products.
• Apple reduces its production costs by outsourcing the production to China. This helps them create superior designs at a cheaper cost.
• Providing bonuses for employees exhibiting excellent performance helps to keep them motivated.
• Communication is a key element for the company’s smooth operation.
• Scientific management is used in Apple’s management.
• Apple has four main levels of management – the board of directors, top executives, vice presidents or second-tier management and third-tier management.
• The four pillars of Apple’s management function are planning, organising, leadership, and controlling.

Sources:

Sources:

Slideshare, https://www.slideshare.net/SofiaDZ/case-study-apple-inc-61103768

Panmore, http://panmore.com/apple-inc-organizational-culture-features-implications

Harvard Business Review, https://hbr.org/2020/11/how-apple-is-organized-for-innovation