What organizational structure is apple

Apple’s Organizational Structure

May 24, 2020 By Hitesh Bhasin Tagged With: Management

Apple Inc is a multinational company of American origin. It was found in the year 1976 by its co-founders Steve Jobs, Ronald Wayne, and Steve Wozniak. The company is associated with several technological industries like computers, electronics, artificial intelligence, financial technology, etc. ad deals in hardware, software, mobile devices, etc.

Currently, Apple Inc is one of the most popular and valuable companies in the world, valued at over one trillion dollars and this is because of the organizational structure that has helped it to create the groundwork for an effective system.

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Understanding Apple’s organizational structure

An organizational structure of a company includes an amalgamation of resources and workforce. It is the organizational design that lays the groundwork for developing and managing an effective organizational structure. It is this structure that creates opportunities for enhancing growth and development in the company.

Apple Inc has created an organizational structure that encourages rapid innovation and technological advances. It has adopted a traditional hierarchy and included some significant elements from various other types of organizational structures.

The company has deviated from a typical corporate structure that was being practiced in most companies and implemented a unique method to manage its organization. It had an informal corporate culture that favored a flat organizational ad hoc structure and not the tall structure.

The company faced intense competition because of its dynamic technology and innovation abilities. It needed an organizational structure suited to its sophisticated culture, and this is why it decided to adopt its existing organizational structure.

During Steve Job’s time, the company adopted an autocratic leadership style where the CEO or the leader was entrusted with micro-managing every operation. With time and under the new leadership of Tim Cook, the company has made some small changes in its organizational structure to meet the changing demands of industry and the global market. It has started with a bit of a collaborative approach and is prepared to decentralize on specific issues.

The organizational structure of Apple Inc believes in A-grade business performance to ensure leadership in its related industries. It has been going from strength to strength in product design and creative innovation to improve its capabilities and boost competitive advantage in international markets.

Apple Inc follows a hierarchical organizational structure where there are few layers of management. It is a large-sized company with an innumerable workforce that works in tandem under one head its CEO Steve Jobs, and after his resignation, the new CEO, Tim Cook.

The company Apple Inc gives credence to effective and intensive collaboration between various divisions and groups in its organization. Most of its products are the result of its product-based group strategy. Apple Inc has a board of directors in place that includes eight members belonging to a distinguished background.

Types and characteristics

The main features of Apple’s various corporate structures are

1. Spoke-and-wheel hierarchy

Earlier when the company was in the hands of Steve Jobs, all the major decisions related to strategic management had to be approved by him. Under the new management, the corporate structure has seen some changes.

For instance, there is more collaboration amongst its departments, like the software team is in touch with the hardware team to consider each other’s inputs. The vice precedents have now more powerful and can make autonomous decisions that were not possible under the earlier management. The organizational structure, in other words, is less rigid and a bit flexible.

Despite these changes, the company has a spoke-and-wheel hierarchy system with the new leader Tim Cook at its center. The innermost or upper-tier includes function-based grouping, and under it, the senior vice-presidents handle all the business functions and report to Tim Cook.

2. Product-based divisions

You will find product-based divisions in the upper and lower tiers of the corporate structure of Apple Inc. This element is taken from the divisional type of organizational structure where the vice presidents and senior vice presidents are appointed for various products or outputs. In the case of Apple Inc, there are senior vice presidents for several outputs like Hardware Technologies, ( hardware components) Hardware Engineering ( iPhone, iPod, iPad, Mac) and Software Engineering (macOS, iOS).

Its corporate structure is effective in managing product components or specific products that the company deals with to serve its target customers.

2. Weak functional matrix

The term weak-functional matrix about Apple Inc refers to the collaboration amongst the various departments or elements of the business. In this system, it is the responsibility of the top management to determine the direction the project is going to take.

The authority and control of the project head, in this case, is limited, and they have to report every detail to the top management, which gives them the necessary direction and input to move forward. The weak-functional matrix encourages collaboration between two teams of two different products or departments for the rapid innovation process.

Advantages

The benefits of Apple’s organizational structure are as follows-

• The hierarchy organizational structure in Apple Inc supports robust control by the management. It gives its top leaders the necessary power to make crucial decisions.
• The control rests in the hands of the top leaders, and it ensures a quick decision-making process.
• An essential advantage of Apple’s organizational structure is that it makes it easy to control product-based groups and business functions through the decisions of its CEO as well as top leaders.
• The organizational structure of Apple Inc encourages effective and quick strategic management process and its implementation that results in establishing a coherent thought process throughout the organization.
• The company encourages a multinational workforce, and this gives job opportunities to talented people from all over the world.
• As the organization is involved in many industries and products, the scope and opportunities for employees automatically increases
• Working with different types and mindset of people helps in improving the working style of the employees
• The company offers several incentives to its employees to encourage employee retention and job satisfaction
• Apple Inc has a highly developed beneficial program for its employees that includes insurance coverage schemes, employees stock purchase program, product discounts for employees, flexible spending account, investment plans, site fitness programs, etc.

Disadvantages

The problems of Apple’s organizational structure are as follows-

• The organizational structure of Apple Inc shows very little flexibility.
• It does not approve of any quick or rapid changes without the approval of top brass
• The hierarchy system prevents employees at lower levels to take part in any decision-making process
• It is not possible to meet or implement sudden changes at the drop of a hat because the decision-making authority is only with the CEO or very few top leaders
• There is a lack of transparency, and this is why information is not readily available
• The unique corporate culture at Apple Inc has resulted in several cases where unfair promotions and compensations have been doled out.
• The organization believes and promotes work culture without giving relationships any preference or due
• The employees are encouraged to work long hours, and this has a direct impact on their physical and mental well-being
• The stress level at the job is very high

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Apple Inc.’s Organizational Structure & Its Characteristics (An Analysis)

Apple Inc.’s organizational structure contributes to effective and rapid innovation, which is a critical success factor of the business in the information technology, online services, and consumer electronics industries. A company’s organizational or corporate structure is the combination of workforce groups, resources, and interconnections among these groups and resources in the business. The organizational design determines how the organizational structure is developed and managed. In this business analysis case of Apple Inc., the corporate structure supports strategies that push for further technological innovation. The company’s structural characteristics maintain a traditional hierarchy, with some key elements from other types of organizational structure. Apple Inc.’s success is linked to innovation and the leadership of Steve Jobs, and its corporate structure is partly responsible for ensuring support for such leadership. Now, under Tim Cook’s leadership, Apple has made some small changes in its organizational structure to suit current global market and industry demands.

Apple’s organizational structure is effective in supporting business performance to ensure leadership in the industry, especially with regard to competing against Google, Microsoft, IBM, Intel, Amazon.com, Sony, PayPal, and many other firms. The Porter’s Five Forces analysis of Apple Inc. determines that these competitors impose the strong force of competitive rivalry in the company’s external environment. Still, through the effective use and evolution of its corporate structure, Apple continues to improve its capabilities and competitive advantages, especially in the area of rapid and creative innovation and product design for competitive products in the international market.

Apple’s Organizational Structure Type and Characteristics

Apple Inc. has a hierarchical organizational structure, with notable divisional characteristics and a weak functional matrix. The hierarchy is a traditional structural feature in business organizations. The divisional characteristics refer to the product-based grouping within Apple, such as for iOS and macOS. The weak functional matrix involves inter-divisional collaboration, while the hierarchy is preserved. The following are the main characteristics of Apple’s corporate structure:

1. Spoke-and-wheel hierarchy
2. Product-based divisions
3. Weak functional matrix

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. Jobs made all the major strategic management decisions. However, under Tim Cook’s leadership, this hierarchy in Apple’s corporate structure has slightly changed. The company now has more collaboration among different parts of the organization, such as software teams and hardware teams. Apple’s vice presidents have more autonomy, which was limited and minimal under Jobs. Thus, the company’s organizational structure is now less rigid, but still has a spoke-and-wheel hierarchy where Tim Cook is at the center. The upper tier (innermost tier in the spoke-and-wheel circle) of the corporate structure has function-based grouping, which is an element derived from the functional type of organizational structure. Senior vice presidents who report to Tim Cook handle business functions. For example, Apple has a senior vice president for retail, and a senior vice president for worldwide marketing. In this structural feature, the company’s top leaders address business needs in terms of business function areas.

Product-based Divisions. The upper and lower tiers of Apple’s corporate structure has product-based divisions, which is an element derived from the divisional type of organizational structure. There are senior vice presidents and vice presidents for different outputs or products. For example, Apple has a Senior Vice President for Software Engineering (iOS and macOS), a Senior Vice President for Hardware Engineering (Mac, iPhone, iPad and iPod), and a Senior Vice President for Hardware Technologies (hardware components). Apple Inc.’s marketing mix or 4P is linked to this structural characteristic. This aspect of the corporate structure is used to manage specific products or product components that the company delivers to its target customers.

Weak Functional Matrix. Apple Inc.’s weak functional matrix refers to the collaborative interactions among various components of the business. In a weak functional matrix, top management determines project direction, while project heads have limited authority and control. For example, the corporate structure allows hardware teams to collaborate with software teams. In this way, the company facilitates information dissemination that is necessary for innovation processes. This structural feature contributes to effective and rapid innovation processes, which are a major business strength shown in the SWOT analysis of Apple Inc. Through this characteristic of the organizational structure, the company maintains strong innovation processes that support brand development and the use of premium-pricing strategies.

Apple Inc.’s Corporate Structure – Advantages, Disadvantages, Recommendations

Strong Corporate Control. The hierarchy in Apple’s organizational structure supports strong management control in the organization. Theoretically, hierarchy empowers top leaders like Tim Cook to control everything in the organization. Through the hierarchy, business functions and product-based groups are effectively controlled through the decisions of the CEO and other top executives. This advantage of Apple Inc.’s corporate structure facilitates rapid and effective strategic management implementation, and helps in establishing coherence throughout the entire organization.

Limited Organizational Flexibility. Apple’s corporate structure has the downside of low flexibility. Hierarchy typically prevents lower levels of the structure to flexibly respond to current business needs and market demands. For example, the company’s product-based divisions must wait for directives from the CEO or other top executives to proceed in implementing changes that address trends in the market for consumer electronics. However, Tim Cook has already made slight improvements by increasing collaboration among different parts of the firm. Such collaboration improves organizational flexibility. Still, Apple’s organizational structure does not support rapid changes because everything must go through Tim Cook and the top management.

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