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Organizational structure outlines a system which is used to achieve goals of an organization. The activities within a system include rules, roles, responsibilities and it also determines how information is spread throughout different levels within a company. Apple used an organizational structure which can be best defined as a hierarchical structure. Hierarchical organization structure “contains a direct chain of command from the top of the organization to the bottom” This structure was developed by the founder of the company and the former CEO, Steve Jobs.
This structure was enforced to ensure the realization of his innovative ideas and vision for the business. Although Apple had changed CEO’s in the summer of 2011 due to a unfortunate scene of events causing the passing of Mr. Jobs, Tim Cook became the new CEO. Mr. Cook had made a few modifications since he become CEO to the organizational structure of Apple, one change was decentralizing decision making a bit to encourage more innovation and creativity.
How it works
The Board of Directors for Apple Inc. Consists of eight members who themselves have great leadership background in an array of industries. Three of eight members are currently active CEOs/Chairman of global companies, One including Apple Inc. CEO himself Tim Cook and Walt Disney Company’s Chairman and CEO, Robert A. Iger.
Two of eight are former chairman and CEOs. Apple’s Board of Directors has proven leaders such as a former US Vice President, Al Gore as well as a Former CFO from The Boeing Company, James A. Bell. Also including Susan Wagner who is the director and co-founder of BlackRock. These are the individuals who make up Apples Board of Directors. Apple has rounded their board of directors with known and proven leaders from many industries which can help lead and keep good control of the company. These individuals with a solid track record in leadership are a perfect fit for the hierarchical organizational structure.
Apple’s hierarchical organization structure is effective to support their business performance to help ensure leadership in their industry. With big competitors such as Google, Microsoft, Intel, Amazon, IBM, Sony and many other companies. Porter’s 5 force analysis of apple determined that the competitors impose strong force of competitive rivalry in Apple’s external environment. With effective use and evolving their corporate structure, Apple continued to improve their capabilities and competitive advantage. Apple had rapidly improved in areas of creative innovation and product design for competitive products in the global marketplace.
The hierarchical organizational structure was adopted by founder Steve Jobs for a reason. The advantage of this structure is that it has a tight control over all aspects of the business by senior management. This structure gives leaders to control everything in the organization such as business functions and product-based groups which are effectively controlled through the CEO and other top executives. As employees perform well there are many promotion opportunities which motivate employees within this structure. The structure shows clearly who are the authorities and who is responsible for what.
As there is a upside for the hierarchical structure there also is a down side. The structure does not support rapid changes because all things must go through the CEO and top management before doing so. The negative is that it may compromise flexibility of the business which will reflect changes in the marketplace globally as well as communication across intracompany departments tend to not be as effective as it would be in another structure.
This prevents the lower levels in the structure to respond to current market demands. Apple’s product-based divisions have to wait for direct orders from the top executives to proceed with changes that are addressed in trends within the market. Tim Cook has made a slight change by increasing collaborating efforts among different parts of the divisions which will improve the flexibility problem within the hierarchical structure.
In class we spoke up divisions within a structure and one we spoke of is product-based division. Both tiers of Apple, upper and lower, has these divisions. They have senior vice presidents and vice presidents for different product divisions. Apple’s software engineering division which develops and programs iOS and macOS has a senior vice president designated to that division and they have a separate senior vice president for their hardware technologies department.
Weak functional matrix refers to the businesses many components which work together for the best of the firm. If a company has a weak functional matrix, the top management has to determine the projects direction while the projects heads have limited authority/control. This structure allowed the software and hardware teams to work together and this helps facilitate information that is needed for innovation in the industry. In Apple’s SWOT analysis it shows that weak functional matrix is a major strength because it helps Apple contribute effective and rapid innovation processes. This allows Apple to keep their premium pricing strategy and maintain a strong innovation process which helps brand development.
Organizational culture is a critical component in a company which dictates the operations of the employees. The organizational structure adopted by a company should serve the goal of the company whether it may be to maximize profitability or increase production. Apple’s long-term growth and dominance of the market is not by mistake, the decision making and strategies are key components as well as their organizational structure.
The well-rounded board of directors and the senior team lead the company to great success with their hierarchy structure. The weak functional matrix of Apple has encouraged collaborative efforts within the firm and has focused on increasing productivity. The hierarchy structure which was once implemented by founder of Apple Inc., Steve Jobs, and later adapted by his successor, Tim Cook, has lead them to the top of their industry.
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