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Organizational Case Analysis
Apple Inc. is a multinational companies specializing in the designing, manufacturing and marketing of mobile communication devices such as personal computers and digital music players. The company also sells varieties of mobile telecommunication devices such as iPhone, iPod, iPad, and Mac. Additionally, Apple Inc. sells some professional software application such as Mac OS, iOS, iCloud and other varieties of communication accessories. Apple Inc. sells its products through retail stores, online stores, value-added resellers, direct sales, wholesalers, and through third party cellular network carriers. (Apple Annual Report, 2011). Apple Inc. was Incorporated in 1977 in California, and presently Apple Inc. has become one of the most successful companies in the United States and globally. Apple Inc. is committed to bring best computer experience to its customers, and the company business strategy is to develop high quality products to reach more customers. Major customers of Apple Inc. are the small and mid-sized business organizations, educational institutions, and government enterprises. Apple Inc. operates under mobile communication & media industry, and the company is facing aggressive competition within the industry. The industry is characterized by the frequent introduction of new products, aggressive pricing practice, and price sensitivity from customers and product advancements by competitors. "Price competition has been particularly intense as competitors selling Windows-based personal computers have aggressively cut prices and lowered product margins." (Apple Inc. Annual Report, P 10). Apple main competitors in the computer hardware sector include some heavyweight companies such as Dell Inc., Hewlett-Packard, Toshiba, Acer, EMC Corporation, Microsoft and International Business Machines (IBM). Apple also faces aggressive competitions in other communication devices from Nokia, Sony, Motorola, Samsung and Blackberry.
The company's success depends on the business conduct of top management, middle management and operating employee, and Apple organization chart consists of Wheel and Spoke Organizational Chart where
"a pattern of information flow between the person at the end of each spoke and the person in the middle. Those at the ends of the spokes do not directly communicate with each other. The wheel network is a feature of typical work group, in which the primary communication occurs between the member and group managers." (Griffin & Moorhead 2011 P. 305-306). (See Appendix 1)
Senior manager and lower level employee within Apple Inc. conduct business ethically with full compliance of laws and regulations. Typically, management of Apple Inc. implements integrity in their business conducts, and Apple business principles include the following practice:
Honesty: Apple Inc. demonstrates high ethical standards and honesty in its business conducts.
Respect: Management of the company also treats customers, employees, suppliers and other stakeholders with respect and courtesy.
Compliance: Apple management also tries to comply with applicable laws and regulations. (Apple Annual Report 2011).
Apple Inc. is also committed to enhance the company public image through the application of corporate social responsibility. Typically, Apple always ensures that its employee is treated fairly and they work in the safe and healthy condition. Apple also lays emphasis on reducing the activities that could affect the environment. Typically, Apple is working hard with its suppliers to ensure that the company does not use hazardous materials for the manufacturing of its products. One of the techniques that Apple employs to enhance its public image is by minimizing the carbon footprints. The company understands that carbon emission is one of the major factors leading to the health problem. Thus, at the end of 2011 fiscal years, the company has been able to reduce 90% of the carbon emission from the production of Apple TV, 50% reduction of carbon emission from the production of iMac, 50% reduction of carbon emission from the manufacturing of MAC mini, and 21% reduction of carbon emission from the manufacturing of MacBook Pro.
Despite the strategies that Apple Inc. management employs in enhancing the company public and organizational success, there are issues that affect the optimal performances of Apple Inc.
SWOT analysis to understand the major issues impeding optimal performances of Apple
The paper uses SWOT analysis to understand the major issues impeding optimal performances of Apple Inc.:
Strength: The strength of Apple Inc. lies in the superior products that the company offers to the market. The company has been able to differentiate itself by manufacturing high quality and innovative products. Additionally, the bulk of the company strength comes from its finance. Presently, Apple Inc. is one of the most successful companies in the United States. The company total asset is $116 billion at the end of 2011 fiscal year. The company also recorded net sales of $108 billion and $25 billion in the net income at the end of 2011 fiscal year.
Weakness: The weakness of Apple Inc. is that the company has not been able to compete effectively with reference to Desktop Computer. Typically, Apple Inc. recorded lowest sales from the sales of desktop computer at the end of 2011 fiscal year. Additionally, the company recorded a decline of 38% in the net sales in Japan between 2010 and 2011.
Opportunity: The company has the potential opportunity to tap the emerging markets of the Asia pacific, and at the end of the 2011 fiscal year, the company recorded highest net sales of $143 billion at Asia Pacific region. With large population of India, China and other emerging market in the Asia Pacific coupled with the increase in the people standard of living in the region, the company will enjoy significant growth in the region.
Threat: Apple Inc. has faced aggressive competitions from several companies such as HP, Dell, Toshiba, Microsoft, and Acer. The aggressive competitions that the company is facing are having impact on the pricing of the products. Additionally, the company has faced series of credit risks in the domestic and international operations. The company is also confronting with series of domestic and international regulations, which is having impact on the company operations. More importantly, the company is facing the problem of shortage of the materials that the company is using for the manufacturing of its products.
Based on the analysis conducted on Apple Inc., it is revealed that the company is facing international and domestic problem, which is having impact on the optimal performances of the company. Part of the problems is the credits risks, compliance with international & domestic regulations and shortage of materials used in the manufacturing of the company products.
Issues affecting the Optimal performances of Apple Inc.
One of the major issues impeding optimal performances of Apple Inc. is the varieties of credit risks. The company financial condition is often being affected by the fluctuation of dollars against other foreign currencies. Over the years, the U.S. dollars have significantly being devalued in the face of other international currency such as the UK pounds, Swiss Francs, Japanese Yens and other major foreign currencies. Typically, the company foreign operations are significantly being affected by the movement foreign currency exchange rates. Weakening of dollars against other foreign currencies generally affect the company sales and earnings. In these circumstances, the company may not be able to increase the prices of its products due to the intense competitions facing Apple products overseas. Essentially, the strengthening of foreign currency against dollar normally increases the company cost of production in domestic operations. Interest rates fluctuation is another credit risks facing Apple Inc. In its business operation, which may have impact on the company business performances.
Another issues having impact in the company performances are the series of local and international regulations that the company has to comply. The U.S. And foreign laws include law related to the quality of service, import and export requirements, foreign exchange controls and compliance with these laws may be very expensive. Major U.S. business regulation that has significant impact on the Apple Inc. business activities is Sarbanes-Oxley Act (SOX) of 2002. The U.S. government introduced SOX Act to address the financial fraud, which was very common among the some big corporation in the United States, and part of the SOX Act is Section 404. (Caixing & David, 2011). Section 404 of SOX Act mandates all the public companies to implement the internal control within their organizations. The purpose of the internal control is to enhance the quality of financial reporting among the public companies in the United States. While Section 404 may be aimed to address the financial irregularities among public companies, however, compliance with Section 404 is very expensive and lead to the increase of the operation costs. (Miller, 2011). Apple Inc. being a public company in the United States has to bear the burden of the costs in order to comply with the SOX Act in the United States.
Another issues having impact on the optimal performances of Apple Inc. is the shortage of the materials that Apple uses to manufacture its products. Although, most of the components that the company use to manufacture its products are generally available from the multiple sources, however, there are some essential components that are only available from the limited sources, and these issues have made the company to face…[continue]
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