Running Head: Apple Inc.

Apple Inc.

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Executive Summary

Apple is one of the most recognizable brands in the world. It is an organization that

makes a lot profits. For instance, in 2016, it was ranked as the most profitable company and it

was the third biggest company in the United States.

Apple Inc. has had an eventful history that has helped shaped its principles,

organizational structure, philosophy and leadership style. The charisma of certain leaders has led

them to the height of the corporate world. Though most of the success can be attributed to this

brand of visionary leadership, it has had some very conspicuous shortcomings. The continuity in

the generation of ideas has suffered when a charismatic leader leaves as did Steve Jobs during his

first tenure.

It is difficult not to consider Apple Inc. among the most remarkable stories in corporate

spheres. Apple has overcome many obstacles and gone ahead to dominate the technological

world. They have now become the most profitable company after almost going bankrupt in the

late 1990s.

Becoming the most profitable company and among the most recognizable brand has not

been a matter of happenstance but a combined product of leadership, experience and strategy.

The strategy they employ depends on internal factors and external factors such as

macroeconomic factors.

These macroeconomic factors such as exchange rates and the cost of labor if utilized well

can lead to more prosperity to the organization. Exploiting them in the right manner is crucial in

making sure that the organization maintains an upward trend.

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Introduction

Apple is among the most recognizable brands in the world. It is a company that

specializes in Digital distribution, Computer hardware, Consumer electronics and Computer

Hardware. As per 2017, Fortune ranked Apple Inc. as the third biggest company in terms of

revenue behind Walmart Stores and Berkshire Hathaway respectively. This was after the

Cupertino based firm generated $215 Billion in terms of revenue. Furthermore, it was ranked as

the most profitable company in 2016 after it generated $45.68 billion in profits (June 15, 2017).

History

Steve Jobs and Steve Gary Wozniak started making computers at the Jobs family living

room. They later moved their production into the garage when they needed extra space. At the

time, computers and their parts were very expensive. Consequently, they were out of reach for

the average consumer. Wozniak concentrated on making designs that were efficient on space and

that were also cheaper.

In 1975 when the price of micro-processors and memory chips had declined, Wozniak

saw it was the opportune time to actualize his designs that he had made on paper. He decided to

adapt his designs to the Intel 6502 processor which only cost $20. He then used the salary that he

earned at HP to build Apple I. When he showed it to Homebrew- a computer enthusiasts club,

Steve Jobs who was also in attendance was impressed and he saw an opportunity of producing

and selling computers to computer enthusiasts.

What was remarkable about the Apple I was not its processing speed, but rather its simple

design. Wozniaks Chip reduction strategy earned him a lot of plaudits and admirers. It was

easier to debug in the event there was a problem. Apple I also used a standard television as a
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display when most computers during those days had no monitors. Another feature that worked in

Apple Is favor was the fact that it had a boot code on the Read Only Memory, enabling it to

boot relatively fast. This was pivotal in convincing Paul Terrell their first client.

When he saw the Apple I in action, Terrell ordered 50 units at $666.66 each from Jobs.

Jobs then took his first purchase order to Cramer Electronics, to leverage it for the parts he and

Wozniak needed to build the first batch of Apple I computers. When the distributor was

dissatisfied at Jobs lack of credit, he flashed the purchase order from the Byte Shop for 50

computers and showed that the payment terms were Cash on delivery. The parts were needed to

assemble the Apple I kits. Jobs secured the parts while Wozniak and Wayne, who bought into the

company, built the first batch of 200 Apple Is.

Wozniak used proceeds from sales of the Apple I to start construction of its successor, the

improved and enhanced Apple II. The Apple I featured a much better television interface that

allowed it to display graphics, and eventually color. Jobs envisioned the Apple II to have an

improved case and built-in keyboard so that the new machine would be instantly usable, unlike

the Apple I models that required assembly.

Apple II

All the upgrades Wozniak wanted in the Apple II were taking shape, and consequently

Jobs knew it was necessary to source outside funding to bring the Apple II to reality. Daunted by

the task of raising money for the Apple II, Wayne, who had a previous failed venture, dropped

out of the company and sold his stake back to Jobs and Wozniak. Jobs faced numerous obstacles

in his efforts to obtain capital for the project.

Apple Computers Inc.

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On January 3, 1977 Apple became incorporated, by having an Initial Public Offering

(IPO) on December 12, 1980. The stock opened at $22 per share on December 12, 1980, closing

at $29. The Apple IPO made history after raising more money than any IPO in history since Ford

in 1956. They first Apple shareholder meeting was held at the Flint Center, in January 1981.

In the 1980s Apple faced stiff competition from established computer makers such as

Commodore and IBM began to grow. They saw the Apple II and VisiCalcs spreadsheet

software as a threat to their lucrative business computer market. Apple decided that the next

Apple computer, the Apple III, would be designed for business users and would challenge the

mighty Big Blue, IBM. However, it failed commercially due to the fact that it was very

expensive. Furthermore, it had design issues that made it difficult to use. The design issues also

led to malfunctions of the Apple III and future recalls of the computer. IBM then capitalized on

the failures of Apple by offering a reliable and cheaper option.

Due to the failure of Apple III, the role of Steve Jobs was diminished by the board. His

design roles were reduced and eventually, he decided to resign. As a result, Apple was left

behind in innovation, something that Steve Jobs could provide in abundance. They also departed

from the philosophy of simplicity. This led to poor performance against competitors such as

IBM. Poor sales translated to low confidence for investors and as a result, Apple recorded the

lowest share prices in 12 years. Furthermore, they incurred heavy losses. For instance, in the

second quarter of 1997, they incurred losses of $740 million and as a result, it led to the return of

Steve Jobs.

The return of Steve Jobs led to prosperity. This was due to the invention Mac OS X,

protected memory operating system. Then, they opened Apple retail stores and though this was a
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risk during those times, it eventually bore fruit. Finally, the invention of the iPod music player

was instrumental in changing how people consume music. It was these inventions and

modifications that led to the resurgence of Apple Inc., a company that was making losses to a

healthy company.

Organizational Structure

Bunge and Ardil argue that culture is a social structure that gives meaning to human

action. Culture is the consistent predictable behavior of the organization. Consequently

managing people requires someone to know the culture of the people.

In the 1970's when Apple Inc. was created, it deviated from the established traditional

corporate practices and organization of the times. They operated based in an informal corporate

culture favored in the technology industry. In this context, a flat organizational structure is

favored to the tall structure. Apple has adopted adhocracy structure due to the fact that it is suited

to solve the complex unique problems such as fierce competition and can improve its innovative

reputation.

Apple's corporate culture is a unique corporal style that is only suitable for Apple.

Measuring against the traditional classical organizational culture, it can be said that Apple's ad

hoc approach is out of date. However, in modern times it is an efficient method for collecting

information. In contrast to the tall hierarchical structure, a flat organizational structure is

characterized by relatively few layers or just one layer of management. As a result, the chain of

command from the top to the bottom staff is short.

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However, greatest shortcoming of this method of leadership or organizational culture is

the fact that it struggles to function properly in leadership transitions. For instance, if there is a

change in the leadership, the organization struggles. For instance, when Steve Jobs was

dismissed his successors struggled as did the organization till he was restored.

The organizational structure of Apple is also a functional structure due to its organization

along a functional line. In functional structures, people are often grouped according to common

factors such as expertise and experience. Employees perform specific tasks for their group

resulting in operational efficiency within the group. However, this method has its own

drawbacks. One major area where it falls short is that if the collaboration between groups is

insufficient, then the whole organization suffers like during the first phase of the leadership of

Steve Jobs.

Leadership

Leadership is the process in which an individual influences other group members towards

the attainment of group or organizational goals. Leadership entails the achievement of goals and

influence. Apple Inc. uses transformational leadership. This is because the leaders at Apple such

as Steve Jobs has led the organization to great success. He elicited strong emotions that were

necessary in identifying him with the other staff. Steve Jobs is an example of a charismatic

leader who values creativity and motivation. Much of the success of Apple can be attributed to

his unique personality and the expectations he places on the employees to perform and achieve

their goals.
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Transformational leaders such as Steve Jobs use their authority and influence to modify

the present culture. Steve Jobs inspired the employees at Apple to come out with unconventional

products by thinking differently.

Milestones

Apple is responsible for the creation of the personal computer. The personal computer is

an essential part of the daily private and corporate life. How music is produced, stored and

distributed have been revolutionized by Apple to the extent that they have outdone most major

record labels. Moreover, the companys exploits to portable media players, mobile devices such

as iPad tablets and iPhone are successful. They show the entrepreneurial strength of Apple and

the rewards they get for betting on innovation (OGrady, 2009).

Apple has helped shaped the history of corporate organizations. For instance, the number

of Apples staff has grown exponentially from 2 more than 20,000 across the globe, Apple had

worldwide sales of more than $24 billion and earned $3.5 billion in profit in fiscal 2007. Apple

has no debt and more than $15 billion in cash.

The most remarkable achievement by Apple is the steady rise after it faced numerous

solvency issues. After Steve Jobs had left, Apple struggled to have an identity in the technology

realm where it was a dominant force. The problem became worse after the Apple ROMs were to

third-party cloners. Instead of boosting their market share, Apples sales suffered.
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When Jobs came back, he made a lot of useful changes that have led to the growth of

Apple. He dropped all the products which were making losses. He also opted out of the toxic

agreements with third-party ROMs. As a result, Apple has achieved a lot, especially when the

financial dimension is considered.

Strategy

Apple has deservedly earned a strong reputation for beauty, simplicity, and quality over

the years, from award-winning design to meticulously crafted hardware, Apple focuses on the

entire user experience and is rewarded with strong sales and fierce loyalty as a result.

Apple is usually quiet on its future plans, especially on new products. However, even

with Surprisingly, Apple enjoys much commercial success with little, if any, focus group testing,

barely any beta testing, and a public relations department thats wound tighter than a drum.

Apple keeps mum because it builds suspense and theres big money at stake. A new Apple

product announcement generates millions of dollars in free publicity on the Internet and in the

mainstream media, and the bigger the surprise, the great the amount of free coverage.

Apple believes that their products should be beautifully designed and easy to use

(OGrady, 2009). They have simplified models of their products that users can identify with, in

contrast to the past where they had a myriad of products that users had no knowledge of. Their

products also have compelling features that attract users. Finally, Apple only explore markets

that have potential and exploit them to generate revenue.

Apple employ other strategies that contribute to their success. First they invest

significantly in aesthetics. Apple is committed to making visually appealing products. Apples

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iMac, iPod, and iPhone are recognized for their beautiful designs. This reputation is usually

crucial in generating sales. The user interface of Apple products is usually very consistent and

transparent. As a result, user manuals are not necessary for using Apple products.

Then, Apple decided to have low-entry points. This was to shed their previous negative

image of selling expensive products. Furthermore, this strategy inspires loyalty among users,

since they always provide an option of upgrading to more expensive and premium quality

products. Furthermore, they offer complete solutions and support enabling them to have a tight

grip on the quality of their products. Branding is another strategy that Apple has employed that

has contributed to its success. They offer insightful, and interesting campaigns that draw users

and potential users attention. Apple knows how to create buzz when they are about to launch a

product.

Macroeconomic principles policies and tools Affecting Apples strategy

The price of labor and availability of labor affects Apple significantly. First, since they

are committed to creating products which many users can afford, they have been forced to find

conclusive solutions. For instance, most of the parts for iPhone are usually separately

manufactured from different countries and companies.

Taxes is another macroeconomic issue that affects the strategy they employ. Tax is often

an important issue for Apple with tax reform being the most important issue the company lobbies

for in Washington. Taxes usually determines the final price of a given product. Areas that

provide cheap taxes are usually favorable. Apple had invested in other overseas countries such as

Ireland due to a favorable taxation policies (Farrell S. & Mc. Donald, 2016).They have however,
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recently lost a lawsuit in the European Union Courts and have been ordered to pay 13 billion

Euros. As a result, it may affect the amount of investments in Europe.

Foreign exchange is another issue that greatly affects Apple. Since Apple is a global

brand, exchange rates is a crucial part of the macroeconomic environment that greatly affects it.

The pressing concern for Apple is the strengthening of the dollar. The dollar has become strong

and this scenario often poses a threat to Apple. When the dollar is strong, the price of American

products will definitely rise and a result, they may be a little bit more expensive even at the entry

level for users and as a result, this may negatively affect their revenue.

Strategies That Apple Can Employ

The first strategy that Apple can employ is lobbying for reduced amount taxes and labor

costs. If this is done, then they can be able to have more jobs for Americans and in turn increase

the loyalty which will in turn generate more revenues in terms of sales. However, in the event

that lobbying is unsuccessful, Apple should then focus on having their investments abroad where

their manufacturing plants are.

Another strategy that Apple can employ is having foreign currency in terms of

investments such as stocks, bonds in countries where they sell their products or manufacture the

components of their products. This will help reduce the dollar price of their products and

consequently their prices.

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REFERENCES

Bunge M., Ardila R., (1987) Philosophy of Psychology New York, NY, Springer-Verlag

Essays, UK. (November 2013). Apples Organizational Structure And Leadership Styles

Management Essay. Retrieved from

https://www.ukessays.com/essays/management/apples-organizational-structure-and-

leadership-styles-management-essay.php?cref=1

Farrell S., McDonald H., (2016) Apple ordered to pay 13bn after EU rules Ireland broke state

aid laws

Fortune (2017, June) The Lists Largest US Corporations pp 220

OGrady J.D., (2009) Apple Inc., Greenwood Press.