ATW151: PRINCIPLE OF OPERATION MANAGEMENT

Semester 1, 2023/2024

School Of Management

Group Assignment (30%)

Date of Submission: 5 January 2024

Lecturer: Dr Ng Wei Chien

Matric Level of Comments on the

Group Member Name Number Contribution area of contribution
(0-100%)

NAFISA NUHA 165382 100% Strategic Decision

NURUL SOFIA MAISARA BINTI NOR HAZLAN 22302875 100% Strategic Decision

NUR ALIF LUQMAN BIN MOHD ZAIDE 22302485 100% Strategic Decision

MUHAMMAD AIMAN BIN MOHD HATTA 22302874 100% Recommendation

NUR SAZLEIN BINTI MOHD FIRDAUS 22302864 100% Recommendation

NAJIHAH SOFEA BINTI ABD MANAN 22302880 100% Introduction

 TABLE OF CONTENT

Details Page
1.0 Introduction – Apple Inc.
1.0 Apple Background 3
1.0.1 Mission
1.0.2 Vision
1.1 Apple strategies of organization 4
1.1.1 Differentiation strategy
1.1.2 Cost leadership strategy
1.1.3 Diversification / Vertical Integration
1.1.4 Internalization
2.0 Strategic Operation Management Decision
2.1 Strategic Area of Operation 5
2.1.1 Design of Good and Service
2.1.2 Layout Strategy
2.1.3 Quality Management
2.2 Operation Management Challenges 9
2.2.1 Supply Chain
2.2.2 Economic Instability
2.2.3 Technological Adaptation
3.0 Recommendations 13
3.1 Design of Good and Service:
3.1.1 Understanding of The Market
3.1.2 Prototyping and Testing
3.2 Layout:
3.2.1 Improve Supplier and Manufacturing Network
3.2.2 Increase Collaboration With Supplier

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 3.3 Quality Management:
3.3.1 Customers Focus
3.3.2 Continuous Improvement
4.0 Discussion and Conclusion 15
5.0 References 16

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1.0 APPLE INC. BACKGROUND

On 1st April 1976, college dropout Steve Job and Steve Wozniak founded Apple Computer
Incorporation which is then called Apple Incorporation. Apple Incorporation is an American first
successful personal computer company and the popularizer of the graphical user interface. Its
headquarters are located in Cupertino, California. It also has a market cap of over 2 trillion dollars
among the largest companies globally. The Company designs, manufactures and markets
smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related
services.

1.0.1 Vision

The vision of Apple is to make the best product on earth and to leave the world better than
we found it. The vision statement guides Apple in decision-making processes, strategic
management and operation. It safeguard the decision made by the company to take it closer to
accomplishing its mission and goals. First component of the vision is leadership in product design.
Apple has always been known to present high-quality products to the market . They are determined
in keeping their leadership in product design and development by achieving exceptional
innovations. The second component is carbon neutral. Apple strives to attain zero net climate
impacts for all its operations.

1.0.2 Mission

The mission of Apple is to bring the best user experience to customers through innovative
hardware, software and services. This mission focuses on Apple's commitment to offer the best
products and services to meet each customer's individual needs. It consists of 3 core components.
Firstly, best user experience. Apple focuses on its design to be user-friendly to deliver the best
experience to the users. Secondly, innovative products. Product design, usability and functionality
have always been important aspects in addressing the different needs of Apple's users. Lastly,
quality service delivery. Apple highly regards its customer services.

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1.1 APPLE INC. STRATEGIES OF ORGANIZATION

1.1.1 Differentiation Strategy

Apple was able to design and develop its own hardware and software, continued
innovation, and have done excellent research and development. Apple has always continuously
introduced better technologies in its products such as the iPhone and iPad. The company has also
opened retail stores around the world. High quality and design, user-friendliness, advanced
innovation ensure maximum profit.

1.1.2 Cost Leadership Strategy

To ensure Apple's ability to compete successfully in the rapid technological advances

industry, Research and Development (R&D) is heavily invested in to ensure a continuous and
timely flow of competitive products, services and technologies in the market. Valuable and
acceptable product is provided to customers at a relatively low and competitive price. Cost
leadership strategy gain the company competitive advantage in the market.

1.1.3 Diversification / Vertical Integration

Apple has advanced expertise in hardware, software and services at the same time.
Diversification of Apple products is at middle and high level including home and personal
computers, apps stores and software. Customers have access to high quality and design standard
as all Apple product are running on the same operating system and highly integrated.

1.1.4 Internalization

Apple has established a production base in China . This is to benefits from low labor cost,
access to raw materials, a high potential market and the stability of China's market. The company
has also outsourced its hardware products mostly from Asia and some from the U.S and Ireland
for Mac computers.

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2.0 STRATEGIC AREAS OF OPERATION

Embark on a journey into the world of Apple Inc., the company's success is intricately tied
to strategic mastery across diverse operational dimensions, a key driver in maintaining its status
as an industry trailblazer. At the core of Apple's prosperity is its adept handling of operations,
ensuring flawless conception, delivery, and support for cutting-edge products. From
groundbreaking designs to supply chain orchestration, this investigation explores core strategic
domains and underscores the organization's steadfast commitment to quality, creativity, and
effective resource management.

2.1 Strategy I: Design of Goods and Services

Goods are things that consumers buy from businesses. They can be articles, products, or
commodities. They are actual objects with physical characteristics like colour, size, shape, and
weight that we can touch, feel and see. Apple's iPhone, iPad, iMac, iWatch and other products are
a few excellent examples. Services are then defined as intangible tasks, facilities, advantages, or
help that a person, business, or other entity performs or offers to another. iTunes, App Store, Icloud
and other services are examples of their offerings. Apple's business strategy states that the
company has adapted its advanced features and capabilities to focus on design and services that
improve user’s experience overall.

Apple designs its products with simplicity and minimalism in mind. This is a recognition
of the fact that users, particularly those who are relatively new to technology, are often
overwhelmed by complex designs. Regardless of the model, the unique design of the iPhone is
easily noticeable when observing people using smartphones on a busy street. The final piece of
evidence is whether or not the Apple logo is visible. Apple has done a great job of combining
straightforward products with distinctive looks.

Improvements to the design process have been made repeatedly. In actuality, each new
product is produced using a successful and well-established process of development, testing, and
review. Every product goes through several iterations that are produced, tested, and then brought
back to the design team for enhancements. The duration of each improvement cycle is

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approximately four to six weeks, and it is repeated until the company's exacting design
requirements are satisfied. So, Apple's ability to consistently improve is what allows it to uphold
its reputation for high quality.

Recently, Apple revealed its redesigned services plan, which included new content for the
Apple TV that is only available through Apple, product improvements, and the introduction of
News+. Usually, Apple has integrated its services with its hardware. Sales from the App Store,
AppleCare, cloud, digital content, payment, and other services were included in the $68.4 billion
net sales generated by Apple’s services segment as of September 25, 2021. (Apple Report 2021).
App Store has been a significant source of income for Apple from its services, with the company
retaining a commission from sales of applications and digital goods within the platform.

The application of customer care initiatives like Apple Care and tech support is a
component of Apple’s Service offerings. All of the employees that work for these services have
undergone intensive training in order to enable them to provide customers with top-notch support
for any products or software-related question or issue, from simple troubleshooting tips to more
intricate technical difficulties. All issues will be promptly handled by qualified experts with access
to the necessary tools for a successful conclusion. Services' net sales in 2022 totaled $78.1 billion
of Apple's total net sales. This is a 14% rise over the same period last year.

2.2 Strategy II: Layout Strategy

Determining the long-term operational efficiency mostly involves choosing a layout

approach. Because it determines an organization's competitive priorities in terms of capacity,
procedures, flexibility, and cost as well as quality of work life, customer interaction, and image,
layout has strategic ramifications. A business can accomplish its three primary operating strategies
which are differentiation, cost, and response with the use of an efficient layout. In order to meet
client demand, earnings and organization brands can expand more quickly in the global market by
implementing these three key methods.

Apple’s layout design and strategy emphasize customer expectations. Apple distributes its
products through cellular network carriers, wholesalers, retailers, and resellers, many of whom

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distribute products from competing manufacturers. Apple also sells its products and resells third-
party products in most of its major markets directly to consumers, small and mid-sized businesses,
and education, enterprise and government customers through its retail and online stores and its
direct sales force. For example, company-owned and authorized-reseller stores are spacious with
minimal décor to ensure focus on the products for sale, such as smartphones, laptops, AirPod, iPad,
Apple Watch, and accessories.

There were at least 511 Apple shops worldwide as of 2021, where half of them were located
in the United States. Certain stores are specifically made to function as prominent locations for
raising brand recognition. Compared to the Company's more conventional retail outlets, these
stores need a much higher investment due to their distinctive design aspects, locations, and sizes.
A decline in sales, the closure or underwhelming performance of one or more stores,could result
in significant lease termination costs, write-offs of equipment and leasehold improvements, and
severance costs due to the high cost structure associated with the Company's retail stores.

Based on Apple’s 2019 report, Apple manages its business primarily on a geographic basis.
The company’s segments consist of the Americas, Europe, China, Japan, and Asia Pacific. All the
income or sales are generally based on the location of customers through the Apple’s retail store
located in those locations. For example, Americas has accumulated higher net sales in 2017, 2018,
and 2019 compared to another segment. Instead of showing that America has the largest Apple’s
retail store in the world, it also shows the efficiency and the effectiveness of the retail management
from the segment.

2.3 Strategy III: Quality Management

Apple's commitment to quality management lies in an unwavering dedication to design

excellence. It transcends mere aesthetics, embracing a philosophy of human-centered design that
prioritizes user ergonomics, simplicity, and overall functionality. Every product is meticulously
crafted to not only be visually appealing but to seamlessly integrate into users' lives. This emphasis
extends to material selection, where careful curation ensures not just a premium appearance but
also durability and resistance to wear and tear. This holistic approach to design, considering both

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form and function, stands as a cornerstone of Apple's quality management strategy, contributing
not only to the allure of their products but also to their enduring quality and user satisfaction.

Innovation and research lab

Within the hallowed halls of Apple's innovation and research labs, the layout is a carefully
curated canvas fostering the spirit of collaboration and ingenuity. Designed with a keen
understanding of the creative process, these spaces embody flexibility, allowing teams to
seamlessly adapt to the dynamic demands of diverse projects. Collaborative spaces echo with the
hum of interdisciplinary work, encouraging the cross-pollination of ideas. Here, the layout is more
than just physical arrangement; it's a catalyst for innovation. Dedicated prototyping areas stand as
sanctuaries for experimentation, where the alchemy of ideas transforms into tangible technologies.
Each corner is a testament to Apple's commitment to pushing the boundaries, where the layout is
not merely a blueprint but a living embodiment of the relentless pursuit of groundbreaking
possibilities.

Stringent Quality Standards

Apple's commitment to quality is a cornerstone of its success. The company's exacting

standards permeate every aspect, from the drawing board to production lines. Rigorous criteria for
performance, durability, and user experience are not just benchmarks but part of Apple's cultural
DNA. This unwavering dedication to excellence ensures that each device not only meets but often
exceeds the lofty expectations set by both the company and its discerning customers. It's not merely
a commitment to quality; it's a relentless pursuit of perfection that defines Apple's brand and
resonates with users worldwide.

In-Depth Testing Protocols

In the crucible of Apple's commitment to quality, thorough testing stands as a linchpin.

Each product undergoes a gauntlet of scrutiny, from the conceptual stage to market readiness.
Stress, reliability, and performance tests are meticulous rituals, revealing and rectifying potential
flaws. It's not just about launching a product; it's about ensuring that every device emerges battle-
tested, ready to uphold the standard of excellence synonymous with the Apple brand. This
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meticulous testing regimen underscores Apple's unwavering dedication to delivering not just
products, but reliable, high-performing experiences to its users.

3.0 CHALLENGES

In the midst of unprecedented global challenges, operations management has become a

crucial battleground for businesses navigating a complex and ever-evolving landscape. This topic
explores the diverse challenges faced by organizations in upholding operational resilience,
adapting to market conditions, and navigating uncharted territory. In the face of uncertainties, it
sheds light on critical issues for operations managers to emphasize adaptability, strategic foresight,
and resilience as essential components for thriving in the current global instability.

3.1 Supply Chain

Pricing and Affordability Challenges

The high cost of Apple is one of the many supply chain challenges it faces. Lower income
earners may not be able to purchase them because they cost more for consumers who are wealthy
and middle-class. Due pressure to maintain its premium pricing and defend it to customers, the
company must adhere to its pricing strategy. This price strategy limit Apple's market share in
certain markets. Particularly costly when compared to other options with comparable features are
iPhones, Macs, iPads and other electronics gadgets such as AirPods and the Apple Watch. They
also charge more for their services than other versions, such as iTunes and iCloud storage. These
products and services are out of reach for many consumers due to the larger financial commitment
required to purchase them.

Innovation-Driven

Apple's technological innovation contributes to the higher cost of its products. Every year,
Apple invests a significant amount of time, resources, and money into enhancing the processors in
its iPhones. As of right now, the company's processor designs have been one or two years ahead
of those of its rivals, and the most recent innovation changed the technology sector. A good
example would be the introduction of the M1 CPU chips recently. Apple also improve the

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performance of its Macs and iPads by swapping out Intel's CPU with its own ARM-based silicon,
but it also completely changed the CPU market. According to Apple, their research and
development costs rose by $1.9 billion in 2022 over the prior year.

Semiconductor Industry Demand and Supply

Semiconductors are a necessary component of many of Apple's products and play a crucial
role in Apple’s supply chain. Based on Apple report 2022, there has been a lack of supply due to
high demand in the global semiconductor industry, which has made it difficult for Apple to get
enough semiconductors and other essential parts for its products. A number of factors contribute
to the high demand for semiconductors. Apple's capacity to satisfy consumer demand and complete
orders has been restricted by these supply chain difficulties. For instance, Apple issued a warning
in April 2021 that the shortage of semiconductors might affect its ability to produce iMacs and
iPads. Apple also stated that it was having trouble finding supplies of other parts, such as displays
and specific kinds.

Quality Control

Design and manufacturing flaws in Apple products and services have a negative impact on
the company's operations and damage its reputation. Apple provides advanced software, hardware
products and services that may be impacted by manufacturing and design flaws. Defective parts
may render the products dangerous, harm to people or property and may cause environmental or
property damage. Thus, the services have not fulfilled customer expectations and not performed
as expected. Based on Apple Report 2021, Apple’s accrued warranty and related costs for 2021
were $3.364 billion.

3.2 Economic Instability

Economic Instability in the economic system results when the elements that impact an
economy are not in a state of equilibrium. On the other hand, instability in the economy causes a
rise in prices, a loss of confidence among consumers, and an increase in the amount of effort that
must be expended just to survive. Stated differently, it appears that individuals are not content.

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Because of their low financial resources, they no longer invest and are unable to make many
purchases. This adds to an already severe economic slump.

Based on Apple’s 2018 annual report, the majority of total net sales is from outside the
United State. The reason for this is that Apple is a worldwide business, with all of its suppliers,
manufacturers, and assembly facilities situated outside of the United States. Uncertainty or a
downturn in world economic conditions might have a substantial effect on the company's suppliers,
contract manufacturers, logistics companies, distributors, cellular network carriers and other
channel partners in addition to negatively affecting demand for the company's products.

Inflation and Rising of price

The global surprise of 2019 was the Covid-19 pandemic's spread, which originated in
Wuhan, China. The pandemic's expansion has had a negative impact on the world economy.
particularly in the rate of inflation. According to the examination of worldwide inflation rates, the
majority of countries during the Covid-19 epidemic suffered from severe inflation as a result of
closed borders and the nation's economic sectors. This has also had a significant impact on the
specific corporation operating in that nation, which includes Apple. Price increases and exchange
rate fluctuations have an impact on Apple's earnings in 2020 and 2021. For instance, the overall
net income for 2019 is $4.245 million less than it was in 2018. But the net income has increased
dramatically in the year 2020 due to the opening of the economic sector and national borders.

Exchange rate and Currency change

In a currency situation, When a company's foreign currency is valued in U.S. dollars and
the foreign currency rate is lower than the U.S. currency, the depreciation of the foreign currency
in relation to the U.S. dollar has a negative impact on this value. As a result, the company's products
will cost more abroad, which will inversely affect consumer demand for its goods. For instance,
in 2018 the company's net sales from both domestic and foreign markets accounted for 37% and
63% of its earnings. Around half of the sales are generated by Apple's global business. This
demonstrates how crucial the currency rate is to the business since a poor currency rate will have
an impact on product pricing, which will obliquely allow competitors to join the market.

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3.3 Technological Adaptation

Software development

In the ever-evolving landscape of the tech industry, Apple confronts the dynamic challenge
of staying abreast of incessant advancements. As new technologies, programming languages, and
development methodologies continuously emerge, Apple is committed to navigating this
transformative terrain. The imperative lies in not merely keeping pace but leading the charge,
ensuring that users consistently encounter software experiences that embody innovation at its core.
This commitment to perpetual evolution underscores Apple's unwavering dedication to delivering
cutting-edge and forward-thinking solutions to its global user base.

Customer expectation

Apple's user base, known for their discerning taste, holds expectations for software
experiences that seamlessly fuse intuition, creativity, and fluidity. The bar is set high, demanding
a continuous stream of updates encompassing crucial security patches, innovative features, and
performance enhancements. This perpetual demand propels Apple into an unceasing cycle of
software development and refinement, where the pursuit of excellence is not just a commitment
but a necessity. The relentless dedication to meeting and exceeding consumer expectations
underscores Apple's unwavering commitment to delivering a superlative user experience that
evolves in tandem with the ever-changing tech landscape.

Security and Privacy Concern

In the realm of app creation, Apple's unwavering commitment to customer privacy and
security stands as a paramount directive. These principles, entrenched as the company's top
priorities, necessitate meticulous consideration when integrating new features or adopting
emerging technologies. The imperative lies in ensuring that every facet of app development aligns
with Apple's foundational values, creating an environment where user privacy is sacrosanct, and
data security is non-negotiable. This steadfast dedication not only defines Apple's ethical
framework but also underscores its leadership role in fostering a private and secure user experience
within the ever-evolving landscape of technology.
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4.0 RECOMMENDATIONS

4.1 Design of Goods and Service:

4.1.1 Understanding of The Market

In order to improve the design of goods and services, delivering better outcomes for the
Apple users and enhancing the operations, Apple should understand the problem that they are
trying to solve and the context in which it occurs. They need to empathize with their users, pain
points, goals, and behaviors. Apple should use various methods to understand their users such as
interviews, surveys, observations or personas to gather qualitative and quantitative data about the
Apple users and their needs. Apple can also use tools, such as problem statements, user stories, or
jobs to be done, to frame the problem and define the scope of Apple’s solution.

4.1.2 Prototyping and Testing

Other than understanding the problem, prototyping and testing are essential steps in
Apple’s design of goods and services, as they allow Apple to validate their assumptions, gather
feedback and improve their solutions. Different types of prototype that can be used by Apple are
sketches, wireframes, mockups, or interactive models, depending on the level of fidelity and
functionality they need. Different methods of testing such as usability testing, user testing, or A/B
testing, depending on the type of data and insights that Apple wanted to collect can also be used.
Prototypes and tests should be early and often and iterate on the Apple product design based on
the result.

4.2 Layout Strategy:

4.2.1 Improve Supplier and Manufacturing Network

Supply chain diversification includes improving the network of supplier and manufacturing
firm beyond various countries. This strategy helps reduce risks related to disruptions caused by
geopolitical tensions or unforeseen events in some locations. Apple Inc can continuously scouting
for new suppliers and tending relationships with multiple suppliers. Next, Apple can make a
geographical spread which establishing manufacturing facilities in different locations globally to
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knock off dependency on a some region. Then, Apple can plan a risk assessment and emergency
planning. They can commonly assessing geopolitical risks and developing contingency plans to
quickly adapt to unexpected disruptions.

4.2.2 Increase Collaboration With Suppliers

At the same time, Apple need to make a collaboration with other suppliers. Apple should
collaborating intimately with suppliers to make sure there are agility in the supply chain, allowing
for swift adjustments in production if an unexpected case occurs such as there are an increasing in
product cost. Then, Apple inc can enhancing the technology integration. Apple can exploiting
technology like data analytics and real time monitoring to upgrade supply chain visibility. Through
diversifying supply chain, Apple can enlarge its flexibility against disruptions, and they can serve
their customers better even in times of global instability.

4.3 Quality Management:

4.3.1 Customer Focus

Satisfying and maintaining good relationships towards customers is one the best strategies
to improve quality management. Success is when they exceed the needs of their customers and
their expectations. To do so, Apple managers should put some effort in following up on some
Apple product users service situations, which will help them define areas that require improvement
towards any product. With them performing this strategy, customer loyalty will be built thus
increasing Apple’s revenues. A customer-focused managers are not immune to making mistakes,
but they learn from their mistakes and continuously improve their processes to stand out as the
best.

4.3.2 Continuous Improvement

Continuous Improvement is a number one method that every top managements use to
reduce the wastage of time and effort. Continuous Improvement can minimize Apple’s project
costs and help prevent overages. In some cases, most teams cannot practice continuous
improvement constantly but rapid improvement events can solve it. These kinds of events can last

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sometimes up to 5 days based on what it covers. It is important for Apple to become actively
involved in continuous improvement because it reflects on Apple Inc’s performance and increasing
their ability to embrace new opportunities. Continuous improvement can help Apple to create some
new ways to stay in the market and also adapt in all kinds of new market situations.

5.0 CONCLUSION AND DISCUSSION

This report has successfully discussed Apple Incorporation operational management

strategies and adaptations to survive and thrive in unfavorable conditions. It shows that Apple is
capable of implementing effective ways in maintaining its capabilities in the global market
through design of goods and services, layout strategies and quality management. Based on the
result, Apple Incorporation is encouraged to keep improving in these respective sectors.
Overall, this study has provided important insight on Apple Incorporation operational strategies
and the relationship between the need for improvement in strategies and global instability.

WORD COUNT
OF PROJECT REPORT: 3985 WORDS

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