Running head: Organizational Analysis (A Case Study of Apple Inc.

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Organizational Analysis (A case study of Apple Inc)

Okusolubo Gbenga Samuel

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Abstract

The essential components of carrying out an organizational analysis (a case study on

Apple Inc) include evaluating external factors that can affect the organization’s performance as

well as strategically assessing the organization’s own resources and potential. Internal strengths

and weaknesses along with outside opportunities and threats are keys to an organization’s

success. SWOT analysis, which stands for strengths, weaknesses, opportunities and threats, is a

strategicplanning method an organization’s leaders often use to aid them in establishing business

objectives or achieving the organization’s mission goals.

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Introduction

According to the business dictionary, organizational analysis can be referred to as the

process of reviewing the development, work environment, personnel and operation of a business

or another type of association. Performing a periodic detailed organizational analysis of a

company can be a useful way for management to identify problems or inefficiencies that have

arisen, but have not yet been addressed, and then develop strategies for dealing with

them.Organizational analysis, in management science, the study of the processes that

characterize all kinds of organizations, including business firms, government agencies, labor

unions, and voluntary associations such as sports clubs, charities, and political parties.

Organizational analysis is the process of reviewing the development, work environment,

personnel and operation of a business or another type of association. This review is often

performed in response to the crisis, but may also be carried out as part of a demonstration

project, in the process of taking a program to scale, or in the course of regular operations.

Conducting a periodic detailed organizational analysis can be a useful way for management to

identify problems or inefficiencies that have arisen in the organization but have yet to be

addressed, and develop strategies for resolving them. Organizational analysis focuses on the

structure and design of the organization and how the organization's systems, capacity and

functionality influence outputs. Additional internal and external factors are also accounted for in

assessing how to improve efficiency. Undertaking an organizational analysis is helpful in

assessing an organization's current well-being and capacity, and deciding on a course of action to

improve the organization's long-term sustainability. A restructuring of an Organization may

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become necessary when either external or internal forces have created a problem or opportunity

for improvement in efficiency and effectiveness.

Apple’s organizational structure is one of the factors contributing to the company’s

successful innovation. A firm’s organizational structure can create opportunities for business

growth. However, it can also impose limits on how the firm develops. In Apple’s case, the

organizational structure is mainly a traditional hierarchy, with some key elements from other

types of organizational structure. 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. Apple’s organizational culture is a key factor in the company’s

success. A company’s organizational culture determines capabilities in supporting changes, new

policies, and new strategies. In Apple’s case, employees are effectively developed and integrated

into an organizational culture that facilitates rapid innovation.

Growth of Apple Inc

Apple Inc. is an iconic United States technological company based in Cupertino,

California. Apple is engaged in the development of World changing consumer electronic

products such a mobile phones, music media devices, tablets, and personal computers. The

company also sells and creates operating system software, peripherals and delivery of third-party

digital content (iTunes) to consumers. Apple Inc’s current success is linked to the ability of the

company to use its strengths to overcome weaknesses and threats, and to exploit opportunities.

Apple’s SWOT analysis gives insights on the actions of the company to maximize its growth

based on such strengths and opportunities. This SWOT analysis also indicates the most

significant issues that Apple must address. For instance, the threat of competition is among the
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most notable. An understanding of the dynamics of internal and external strategic factors also

helps investors evaluate the value of Apple’s business. Thus, this SWOT analysis of Apple Inc.

is of practical use for investors and the company’s leaders and managers. Apple’s SWOT

analysis highlights the most significant strengths that Apple can use to improve its position and

financial performance, as well as the weaknesses and threats that should be addressed through

innovative strategies. Apple’s SWOT analysis also identifies the major opportunities that shape

the strategic direction of the company.

Features of Apple’s Organizational Structure

Apple’s organizational structure enables the firm to continue innovating rapidly. The creation

of new products like Apple Watch is linked to the support from the firm’s organizational

structure. The following are the 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
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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 is an element 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 is an element 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.

Apple’s Strengths (Internal Strategic Factors)

An organization’s strengths like Apple Inc are internal characteristics that can give it an

advantage over competitors. Evaluating organizational strengths usually involve assessing

current management, resources, manpower and marketing objectives. Generally, theinternal

analysis examines an organization’s available resources and core competencies. Determining the

organization’s capabilities helps its leaders make long-term plans and sound decisions. Other

factors included in an internal analysis include taking a look at the organization’s financial goals

and strategicplanning initiatives, in addition to its exceptional strengths. Offering high-quality

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products or services, building a solid reputation, maintaining strong financial health and

investing in new technologies are some of the strong points an organization can focus on

developing in order to improve its position within an industry. Efficient delivery of products or

services and providing excellence of customer service are other positive factors.This aspect of

Apple’s SWOT analysis identifies the biggest strengths that enable the company to withstand

threats in its business environment. These threats can reduce business performance. In Apple’s

case, the following are the most notable organizational strengths:

1. Global recognized brand image

2. High-profit margins

3. Effective innovation process

4. Product development. Doesn't invent the market, but its products set high standards

for the market.

5. Design and utility. Sleek, not clunky. For instance, the desktop computer is part of the

screen, not a separate box with wires; the iPhone has very few buttons and feels nice

in the hand. Products are easy to use, almost intuitive.

6. Marketing. Clever and takes advantages of people's frustrations with other hardware.

Apple is one of the most valuable and strongest brands in the world. This part of the

SWOT analysis shows that the company is capable of introducing profitable new products by

virtue of its strong brand image. In addition, Apple maintains its premium pricing strategy,

which comes with high-profit margins. This is a major strength because it creates flexibility for

the firm to adjust prices while ensuring significant profits. Also, Apple is known for rapid

innovation based on the company’s intensive growth strategies. Rapid innovation enables the

firm to keep abreast with the latest technologies to ensure competitive advantage. Based on this
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dimension of Apple’s SWOT analysis, the company’s strengths are difficult to compete with,

thereby supporting the firm’s continued leadership in the industry. Apple is also known for its

loyalty to their customers and the diversity in their product.

Apple’s Weaknesses (Internal Strategic Factors)

An organization’s weaknesses are another example of internal characteristics that can

affect its operations and level of performance. Identifying weaknesses helpan organization spot

problem so that it can make the necessary changes. This strategy allows decision makers to

develop other more appropriate alternatives in their strategicplanning objectives when operations

fail to perform as projected. Weaknesses may include poor leadership, low employee morale,

weak financials, low cash flow, outdated technology and inefficient organizational functions or

processes. One example of converting a weakness into a strength might be how an organization

that lacks adequate financial resources works to control costs in order to develop a more

competitive advantage. In this aspect of Apple’s SWOT analysis, the emphasis is on the

weaknesses or inadequacies of the company. Weaknesses can serve as obstacles to business

growth. In Apple’s case, the following organizational weaknesses are the most notable:

1. Limited distribution network

2. High selling prices

3. Sales limited mainly to high-end market

4. Very proprietary and controlling. Apple does not open the operating system to

outsiders to develop hardware to work with the products, keeping hardware sales to itself. While
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this keeps design control inside and up to standards, it has hurt wide adaptation of its hardware,

especially computers, where it has a relatively small market share.

Apple has a limited distribution network because of the company’s policy of exclusivity.

For instance, the company carefully selects authorized sellers of its products. This part of

Apple’s SWOT analysis shows that such an exclusive strategy supports control over the

distribution of products, but limits the company’s market reach. In addition, because of the

premium pricing strategy, Apple has the weakness of having most of its sales revenues from the

high-end market. This market is composed of customers from the middle and upper classes.

Customers from the lower class, which represents the majority of buyers in the global market,

are unable to purchase Apple products because of the relatively high prices. Thus, based on this

dimension of Apple’s SWOT analysis, the company’s pricing and distribution strategies impose

limitations or weaknesses in the business.

Opportunities for Apple Inc. (External Strategic Factors)

In general, external organizational analysis weighs the potential opportunities and threats

that are present outside of the organization. The external analysis may include market analysis,

sizing up the competition and evaluating the impact of new technological advances. When

assessing opportunities in the external environment, organizations must set out to identify current

market and industry trends, potential niche markets and the weaknesses of major competitors. An

organization should also consider recent developments in technology as vehicles of opportunity.

Innovation is a key to creating new opportunities; therefore, an organization that succeeds in

setting itself apart from others has the chance to develop a strong competitive position in the

industry. In order to achieve this success, an organization must offer something different that its
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chief competitors are unable to provide something better than the standard. This aspect of

Apple’s SWOT analysis pinpoints the most significant opportunities that the company can

exploit. Opportunities influence the strategic direction of business organizations. In Apple’s case,

the following are the most significant opportunities in its business environment:

1. Distribution network expansion

2. Rising demand for tablets and smartphones

3. Creation of new product lines

4. A loyal customer base which has expanded beyond the Mac-heads of the 1990s with

the iPod and the iPhone. The iPad has had a very successful launch. This seems to be

leading to more sales of computers.

5. Has a well-deserved reputation for high-quality products that work smoothly. New

products are generally well-received and have a built-in purchasing base.

6. Move into other computer or media product spaces that are not served well. Apple

can continue to design the standard-setter for those spaces.

Apple has the opportunity to expand its distribution network. Such opportunity directly

relates to the weakness of the limited distribution network for the company. This part of Apple’s

SWOT analysis emphasizes the need for the company to change its distribution strategy. An

expanded distribution network can help the firm reach more customers in the global market.

Also, Apple has the opportunity to explore new product lines. Its current product lines are highly

successful. Through further innovation, Apple can introduce new product lines, like what the

firm has already done with the Apple Watch. Developing new product lines can support the

company’s growth. Thus, this dimension of Apple’s SWOT analysis indicates that the company

has major opportunities for further growth despite aggressive competition.

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Threats Facing Apple Inc. (External Strategic Factors)

External risks aren’t always bad for an organization. For example, the labor market can

pose either a potential threat or an opportunity depending on the state of the local, national and

global economies. Legislation and government regulation are other factors that can have an

effect on how well an organization performs. Whatever the case, the goal of an organization

striving to succeed is to reduce the impact of external threats and work on improving its internal

weaknesses. Organizations must be able to adapt and keep pace with the constant changes that

occur in the environment outside of the organization. In this aspect of Apple’s SWOT analysis,

the focus is on the threats from various sources, such as competitors. Threats can limit or reduce

the financial performance of companies. In Apple’s case, the following threats are the most

significant:

1. Aggressive competition from other companies like Microsoft, Sony, Dell, Toshiba, HP

and IBM is now making it difficult for Apple to enjoy monopoly and market dominance.

2. Imitation: some firms are now producing the same type of product like apple. A very

good example is Samsung. It is almost impossible to differentiate the best product

between Samsung S7 and iPhone 6plus.

3. Rising labor cost in countries where Apple plants are located

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Tough competition in the industry is partly because of the aggressiveness of firms. Apple

competes with firms like Samsung, which also uses rapid innovation. This part of Apple’s

SWOT analysis highlights the limiting effect of aggressive competition. Because of the

aggressive behaviors of competing firms, it is necessary to have strong fundamentals for

maintaining a competitive advantage. In addition, Apple faces the threat of imitation. This threat

is significant because of a large number of firms that can easily imitate Apple’s products. Some

local and regional firms could partially imitate Apple’s product design. Moreover, rising labor

costs in Apple plants, such as in China, can reduce profit margins or push selling prices even

higher. Based on this dimension of Apple’s SWOT analysis, the company’s performance could

suffer because of aggressive competition and imitation of product design. Thus, Apple must take

appropriate action to prevent or overcome these threats.

Strategic Recommendations Based on Apple’s SWOT Analysis

Apple’s SWOT analysis indicates that the company possesses major strengths that can be

used to effectively address organizational weaknesses. The company can also use these strengths

to exploit the opportunity to expand its distribution network. In addition, Apple can use its strong

brand image and rapid innovation processes to successfully develop and launch new product

lines. However, the firm faces the significant threats of aggressive competition and imitation,

which are major challenges affecting players in the industry. A suitable course of action is to

address these threats through a stronger patent portfolio, along with continuous innovation to

ensure the competitive advantage of Apple products even when competitors try to catch up.

Conclusion and Summary

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Although Apple is a relative newcomer in the consumer electronics market through

innovation and fearless experimentation they have completely revolutionized the field. They still

appear to be somewhat entrenched in their older strategy as a PC hardware and software

manufacturer and also appear to be somewhat reluctant to change their business practices, this

could be a potential disadvantage. This strategy has so far been successful in the last decade as

their consumer electronics have developed, but as technology continues changing they could

easily be left behind by the next newest thing. Additionally, they appear to be repeating the same

mistakes with compatibility in that they are trying to be one company that does everything and

they are reluctant to relinquish control. Competitors should avoid their mistakes by being open to

collaboration and by partnering with other high-tech companies.

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