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Strategic Management II Núria Solana (1426004)

Andrew Tunnah (1425828)


Mariona Domingo (1425916)

Business Case:
Shazam vs Apple
1. According to the case, and thinking about the formal, informal and technological
dimensions of the organization, as level of analysis in chapter 1:

a. Why Shazam accepts the acquisition of Apple? (Keywords and Arguments)

Shazam has accepted the acquisition of Apple for several reasons that we will now
explain. It’s often difficult to understand why a company wants to be acquired from
another but if we stop thinking about the reasons we will see that it’s not that strange.
One could think that Shazam wanted to be acquired due to its bad business model, but
this is not the case. Shazam has been growing over the years and now is one of the most
used and downloaded apps in the world.

With the acquisition of Apple, Shazam saw a big opportunity to keep growing. But why
growing if now the firm depends on a bigger company? Shazam managers wanted to be
safe. Being part of Apple will ensure future investments and innovations for Shazam. The
company created by Steve Jobs and Steve Wozniak has more than 220 billion $ revenues
every year against 55 million $ of Shazam. Thus, Apple has more resources and more
money which will be invested in developing Shazam.

The company also accepts this acquisition to keep competing with other music-
recognition systems and applications like Pixel, owned by Google. As we all know,
Google is one of the big fishes of the industry, so Apple has the need of exploring and
entering new markets to keep its status.

Finally, Shazam will be more broadly used with this integration because Apple is a more
consolidated company known over the world. As we mentioned before, due to the huge
revenues of Apple, Shazam will have more promotion and will attract faithful apple
clients.

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Strategic Management II Núria Solana (1426004)
Andrew Tunnah (1425828)
Mariona Domingo (1425916)

b. Why Apple does the acquisition of Shazam? (Keywords and Arguments)

Apple is one of the biggest companies all over the world and specially in its industry.
Thus, the American company wanted to grow and expand the business by acquiring new
companies like Shazam. It’s true that Apple is not particularly prone to acquire new firms
compared with other technology giants such Microsoft. Even so, Apple needed to perform
this acquisition due to different reasons.

The technology industry is very competitive, especially nowadays that we are living a
“revolution” in terms of technology. Companies need to adapt constantly to the
environment and people to be successful. What Apple has done through this acquisition
is to improve some weaknesses in the music-recognition systems. Firms like Google
already had their own systems like Echo (equivalent to Siri) and Pixel (music-recognition
system). Following the case of Google, Apple needed to compete in the area of music.
Apple is not only acquiring an app dedicated to music but also to augmented reality.
Shazam can scan magazines and posters among others.

Acquiring Shazam also means more revenues. The application created by Chris Barton is
one of the most rated apps in the world. It has loads of loyal customers which now will
be also using Apple services. This translates to more revenues and more money to invest
in technology among other things. Where does this increase of revenues come from? The
thing is that when customers use Shazam, they are referred to download songs on apps.

Before the acquisition, customers were referred to different sites like Spotify. Now, they
will download their music via iTunes. Thus, there’s a third party called Spotify which is
affected with this acquisition. Spotify will lose those clients which are loyal to Shazam.
Other reasons why revenues will increase is that Shazam distinguishes music better than
other apps due to its big data base. This last concept is really important for many reasons.
With a big database, Apple can make better decisions in terms of music offer. It’s also
good for artists, for example, who can know better the customer trends when creating
new songs.

To conclude we can see that Apple, as an organization, has seen the need of acquiring a
firm to better achieve its goals. Thus, Shazam has now become a new member of the
Apple organization. The firm’s attitude of continuously improve has let them to acquire
Shazam which has strengthened its global competitiveness.

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Strategic Management II Núria Solana (1426004)
Andrew Tunnah (1425828)
Mariona Domingo (1425916)

2. According to the case and thinking about the firsts 2 key design questions of the
organization (as organizational structure design in chapter 2). What are the
differences between Shazam and Apple? (Keywords and Arguments)

Apple’s organizational structure is mainly a traditional hierarchy. However, Apple


organizational structure has been subjected to certain modifications since the leadership
role was assumed by Tim Cook to suit market and industry demands, in 2011.

Before 2011, everything went through Steve Jobs’ office, he made all the major decisions.
However, since Tim Cook’s leadership, it was adopted the decentralization of decision
making into a certain extent, having more collaboration among different parts of the
company, in order to encourage innovation and creativity at various levels. Nevertheless,
the structure remains to be largely hierarchical.

Apple’s organizational structure facilitate the firm to continue innovating rapidly. In the
company, they have a horizontal differentiation reflected in departmentalization. Apple
has differentiated the basic organizational units of the company by process (by functions,
processes, etc.) and by purpose (by products).
The function-based grouping consists on each senior vice president handles a business
function, so Apple’s top leaders address business needs in terms of function areas.

On the other hand, product-based grouping is another important feature of Apple


organizational structure. Below the senior vice presidents, there are many vice presidents
for different outputs or products. So, each product within Apple portfolio such as iPad,
iPhone, Apple Tv and iWatch is a result of collaboration of product-based groups.
This departmentalization by purpose allows Apple to address specific products or product
components.

Apple Board of Directors consists of 8 members with a solid leadership background in a


range of industries. Three members are acting as CEOs and two members are former
Chairman and CEOs of global companies. Moreover, the three other are proven leaders
that also serve in Apple Board of Directors.

The advantages of Apple hierarchical organizational structure are the strong control
carried by senior management over all aspects of the business.
The disadvantages of this structure arrange the limited flexibility of the business to reflect
changes in the global marketplace. Furthermore, the communication across different
departments in hierarchical organizations tends to be less effective than in flat
organizations.

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Strategic Management II Núria Solana (1426004)
Andrew Tunnah (1425828)
Mariona Domingo (1425916)

However, on the other hand, the organizational structure in Shazam’s company is organic.
Meaning that the company’s organization is very flexible and is able to adapt well to
changes, a feature very needed talking about startups. Its structure is characteristic of
having little job specialization, few layers of management, decentralized decision-making
and not much direct supervision.

Moreover, we find that in the organic structure of Shazam has a low level of complexity,
that means that it is a flatty structured entity with few layers of management. It has very
few rules and procedures with vague member responsibilities and duties, resulting in low
degree of formalization. As Shazam is a smaller business, because it only has 250
employees (comparing with the 123,000 employees of Apple), the organic structure is the
one that could fit more.

Some of the advantages of the Shazams’ organizational structure is that it elevates the
employees’ level of responsibility in the organization, it improves the coordination and
speed of communication between employees, the fewer levels of management encourage
an easier decision-making process among employees, it is inexpensive to maintain, the
accountability is clear, etc.

The disadvantages of the simple structure are that it may limit long-term growth the
organization, there are more generalists but no specialists, it is difficult to maintain in
anything other than small organizations, it is risky as everything depends on one person.

3. Which particular / organizational decisions i.e. measures should Apple undertake


– from Apple’s point of view-, in order to facilitate Shazam’s integration in the new
“Apple’s Universe”? (Keywords and Arguments)

To motivate its employees Apple uses both intrinsic and extrinsic motivation, so, they
reward them internally and externally. They need to make Shazam a part of Apple, and if
they make Shazam employees in love of Apple products so they get motivated to improve
the brand and its products. They also need to be given challenging tasks, so they feel
confident because the company trust them with important and difficult tasks.

Moreover, they can inform weekly of the results, the products, the developing products,
etc. to all the employees so they can know every aspect of the company, in this way they
will have the feeling of belonging in a company they know and trust, and that they are all
in the same page and no employee falls behind.

According to Maslow’s theory, low-order need should be taken as priority. In Apple


position, they have fulfilled their employee needs of psychological by setting a high
average salary which basically can ensure survival.

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Strategic Management II Núria Solana (1426004)
Andrew Tunnah (1425828)
Mariona Domingo (1425916)

Then, Apple also provides a wide range of application to protect the safety need of
workers such as the development of health and safety standard, training more employees
to identify hazards or providing safety equipment.

All these were intrinsic rewards, a way to make the employees feel part of the company,
giving personal satisfaction, and that they develop the want to improve it.
Now, extrinsic rewards are tangible and visible recompenses given to employees for
achieving the goals, as money, gifts (iPods, iPads, iPhones, ...), life insurance, among
others. That is the classic way of motivation.

Motivating the employees is critically important for the success of the company. And
Apple with the acquisition of Shazam, they should not only get employee to do something
or fulfill their needs, but also getting these employees want to do and work for Apple.

4. Which are potentially main drawbacks i.e. hurdles –under the daily-operational
view-- to overcome once the takeover gets completed? (Keywords and Arguments)

Before the acquisition of Shazam by Apple, both companies had a different organizational
structure. Shazam worked as a startup, so there were groups working in a specific product,
whereas Apple Inc. has a hierarchical type of structure but in the end, in a way, Jobs
though that it works like a startup. So, the main difference was the dimension of the
company, when Shazam had 250 employees, Apple had 123,000 employees; so, the more
employees the harder it gets to control everyone.

It is going to be hard to incorporate all the Shazam teams or individuals into the new chain
of command, the new spans of control and so on. Because when a company absorbs
another, the employees suddenly have to face a change of boss, co-workers and new
teams, in this case it will be an important drawback the fact that both companies come
from two countries where corporation culture is different and so is the environment.

So, one of the potentially main drawbacks would be, that the employees (Shazam) will
need some time to adjust to all the corporation changes.

Another drawback could be some aspects of the Apple Inc. organizational culture, such
as the combativeness. Steve Jobs, introduced a moderate degree of combativeness in the
company; he liked to challenge random employees, to see if they have what it takes to be
in the company. This sometimes can be hard on the workers, and even more if it is not
what you are used to. Regarding the other aspects of the culture of Apple, the Shazam
employees won’t have any problem adapting to them, because these are values that are
included in most of the technological companies.