Apple Incorporation: Corporate Renewal

Subject: Organizational Management
Pages: 12
Words: 3549
Reading time:
12 min
Study level: PhD

Introduction

Utterback (2005) asserts that businesses undergo a cycle of development comprised of growth, maturity, and decline stages. In the course of their operation, firms experience challenges emanating from micro and macro environments. The challenges experienced can lead to financial loss, decline in market leadership and market dislocations. Consequently, it is important for businesses to determine the most effective strategies to improve their operational excellence (Boros, 2008). To deal with these challenges, it is important for firms to undertake corporate renewal. Over the past few decades, organizations have increasingly incorporated corporate renewal as one of their most important business growth strategies. Carmeli, Atwater and Levi (2010) define corporate renewal as the capability of an organization to sustainably re-invent its business strategies, systems, processes, human capital, products, services and models in order to survive. Alternatively, Stabryla (2012) defines corporate renewal as the ‘process of adjusting business models, making dramatic changes to strategies in order to meet stakeholders’ needs’ (p.65). In addition to meeting the stakeholders’ needs, corporate renewal is also aimed at improving the effectiveness with which organizations position themselves in the market. Thus, corporate renewal is one of the survival tactics that organizations consider in their quest to respond to market changes.

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Apple Incorporation is a private limited company that operates in the US personal computer industry. The firm was established in 1977 in Cupertino, California and has been very successful since its inception. The firm specializes in designing and manufacturing different media and mobile communication devices, portable digital music players, and personal computing products. The firm’s operation also entails development of computer hardware and software applications. Examples of software products that the firm deals with include OSX and iOS operating system software.

Over the past 3 decades, Apple Incorporation has experienced high and low business seasons which is expected of a highly competitive industry. The high rate of industry concentration is one of the factors that have increased the intensity of competition. There are approximately 1500 firms in the US personal computer industry. However, the market is dominated by five main companies which include Apple, Lenovo, Dell and Acer, Hewlett-Packard. A significant proportion of the US personal computer market is covered (Boros, 2008).

Despite the market changes, the firm has been committed to undertaking corporate renewal. One of the ways through which the firm has achieved this is by revitalizing its product line and by adopting a comprehensive market strategy. During its formative years, Apple Incorporation considered these strategies necessary in order to stimulate its competitiveness hence its survival. Apple’s success can be explained by a number of reasons. Firstly, Apple Inc. has adopted product differentiation as its core business level strategy in order to attain an optimal market position (Harrison & John, 2010). The firm undertakes continuous product improvement in order to align with market changes.

In the course of its operation, Apple invests heavily in research and development. During its 2012 financial year, the firm invested $3.4 billion in research and development. Investment in R&D has considerably contributed towards improvement in the firm’s competitive edge. Investment in R&D has led to the firm introducing new products such as iPods, Apple TV, iPhones and iTunes. Secondly, the firm’s success has also arisen from adoption of an effective distribution strategy by establishing retail stores and using direct sales force. Additionally, the firm has also incorporated digital distribution strategy. Blyth & Zimmerman (2005) are of the view that it is significant for firms to target large customer groups in order to maximize profitability.

Apple has adopted a hierarchical organization structure with the Chief Executive Officer being the head. The firm has a number of departments with each department being headed by a vice president.

Despite the effectiveness of the above corporate renewal strategies adopted by Apple, corporate renewal does not end with technology and market innovation. However, adoption of effective organization and communication processes is essential in improving firm’s ability to deliver its products and services to the market more effectively and efficiently. The objective of this paper is to evaluate how organization and communication processes contribute towards effective and efficient product delivery.

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Analysis on the importance of organization and communication processes in corporate renewal

Organization and communication process

Organizations in different economic sectors are motivated by different goals and objectives. Some are motivated by profitability while others are motivated by the need to provide services to the society. Despite the difference in their motivations, every organization should be well organized in order to achieve their strategic goals. To guide their operations, firms develop organization structures whose objective is to identify job positions and relationships between the various positions established. According to Madura (2007), the organization structure adopted by firms affects the effectiveness and efficiency with which they produce and deliver products to the market hence generating value.

According to Gitman and Daniel (2009), the organizational structure adopted by a firm depends on the strategy that has been incorporated. Therefore, it is important for firms’ management teams to ensure that their firm’s organization structures are optimally aligned with the firm’s strategy. Previous studies conducted reveal that planning is one of the most important elements in the process of formulating organizational structure. Poor planning can adversely affect an organization’s ability to implement the set strategies. Additionally, poor planning limits an organizations innovative capability. Gitman and Daniel (2009) are of the opinion that most business failures are as a result of internal reasons. One of the major internal reasons cited by scholars relates to management’s inability to implement change their organizations structure in order to respond to market changes.

The business environment has become very dynamic over the past decade as illustrated by the recent global financial crisis and the Euro Zone sovereign debt crisis. Despite these changes, business leaders are charged with the responsibility of ensuring that their entities succeed. Consequently, they must incorporate survival strategies such as cost reduction. The need to survive in such an environment underscores the importance of organizations undertaking corporate renewal. One of the ways through which organizations can achieve this is by investing in innovation and incorporation of optimal market strategies.

Despite adopting effective market strategies and developing a strong workforce, it is important for organizations to ensure that their corporate renewal efforts succeed. Stabryla (2012) asserts that renewal incorporates other aspects in addition market innovation and a strong workforce. One of these aspects relates to organizational structure.

In the process of undertaking corporate renewal, it is fundamental for organizations to ensure that an effective organizational structure is adopted. Moreover, optimal communication processes should be adopted. According to Stabryla (2012), firms’ management teams should ensure that effective information processing procedures are adopted. Additionally, the organizational structure adopted should enhance the firms’ decision making process. Consequently, it is important for organization’s management teams to reorganize their organization structure. According to Cornelissen (2011), ‘reorganization is an important mechanism through which corporations align strategy and organization hence increasing the likelihood of developing competitiveness’ (p.56). A study conducted by Harvard Business Review (2011) showed that it is difficult for firms that have adopted formal systems and organization structures to be successful in their corporate renewal processes. The importance of undertaking organizational restructuring is well illustrated by the case of HP. Upon taking its leadership, HP’s Chief Executive Officer Mark Hurd was committed at restructuring the firm’s organizational structure.

Today’s business environment is characterized by technological change, demographic changes and intense competition. Surviving in such an environment requires businesses to incorporate effective operational strategies. Additionally, firms have to continuously renew the business model and operational strategies adopted in order align with changes in the external business environment. Despite effective formulation of operational strategies, their execution usually fails hence demanding organizations to invest in corporate renewal.

Currently, the US personal computer industry has become very competitive. Most industry players are adopting similar strategies in an effort to increase their market share. This is well illustrated by the high degree of industry rivalry and emergence of numerous substitute products. In the course of its operation, Apple Incorporation is increasingly experiencing a challenge emanating from an increment in the number substitute with regard to mobile devices (Platt, 2004). This highlights the importance of Apple Incorporation ensuring that it differentiates itself effectively.

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To survive in such an environment, it is paramount for Apple Incorporation to adopt an organizational structure that will ensure that it is effective and efficient in its decision making process. Currently, the Apple Incorporation has adopted a hierarchical organizational structure that is comprised of a large number of vice presidents. The organizational structure in the firm limits the employees’ effectiveness with regard to reporting. To eliminate this limitation, the firm’s management team should consider dissolving and reformulating its organizational structure. This will enable the firm to eliminate internal boundaries that might limit execution of the strategies formulated. The resultant effect is that the various business units in the firm will attain sufficient autonomy to enable them to executive their duties. Providing business unit with autonomy in their operation is essential in promoting productivity and accountability. As a result, various business units are able to align their operations with the firm’s structure. Cummings and Worley (2009) are of the opinion that organizations should replace command-and-control organizational structure and adopt organizational structure that provides employees with sufficient level of autonomy.

Currently, communication is increasingly regarded as one of the most important organizational asset. This transformation has arisen from the fact that organizations are composed of individuals which diverse goals and who are continuously evolving. Consequently, communication is critical in ensuring that an organization aligns with the changing environment. Cummings and Worley (2009) further opine that the organizational structure adopted by an organization impacts the effectiveness and efficiency with which it makes decisions. For example, the organization structure affects communication which is critical in decision making. According to Platt (2004), ‘departmental structures inhibit communication and impair process’ (p. 296). Organization management teams should ensure that the organization structure adopted provides employees with an opportunity to participate in the decision making process.

Product reengineering is one of the strategies that organizations incorporate in their effort to attain corporate renewal. The process of reengineering is constituted of two main strategies which include rethinking and redesigning the firm’s operational process. The reengineering process improves the effectiveness and efficiency with which the products developed meet the prevailing market needs. According to Platt (2004), organizations should expect to reap maximum gains with regard to profitability and customer satisfaction after undertaking reengineering process. However, these gains might be hampered if they preserve their corporate structure and procedures. Thus, effectiveness with which the desired outcome is attained is limited. Upon undertaking organizational restructuring, firms management team should ensure that the new structure adopted should promote interaction between employees. This emphasizes the importance of management teams’ conducting an internal fit in order to enhance interaction between employees hence promoting organizational performance. Consequently, it is important for Apple Incorporation to consider undertaking an ongoing review of the design that its organizational structure has adopted. Firms’ management teams should also ensure that the organizational structure adopted is aligned with the business strategy. The structure should also promote the firm’s capability in delivering the customers’ products and services needs effectively and efficiently.

According to Fuchs (2012), the performance of an organization is affected by the employees’ behavior. Consequently, it is fundamental for management teams to ensure that the structure adopted contributes towards positive behavior change amongst employees. One of the ways through which this can be attained is by fostering open communication between employees. Fuchs (2012) asserts that open communication is critical in promoting knowledge sharing amongst employees. On the other hand, Platt (2004) is of the opinion that sharing knowledge is vital in organizations’ success because it promotes continuous organizational learning.

Currently, knowledge is ranked as one of the most important organizational asset. Firms in different economic sectors are increasingly considering on the best strategies to enhance knowledge sharing amongst their workforce. This arises from the fact that knowledge sharing increases the effectiveness with which an organization delivers value to its target customers (Jong & Gutteling, 2006). Organisations that do not foster knowledge sharing amongst their workforce will experience a challenge in their effort to develop competitiveness. During the 21st century, the US personal computer industry is undergoing significant transformation as emanating from investment in research and development. However, such investment cannot be valuable if there is no sufficient collaboration between various parties. The organisational structure adopted by an organisation determines the extent to which employees in an organisation interact. In the course of its operation, Apple Incorporation should ensure that sufficient collaboration between employees is created. According Madura (2007), collaboration leads to creation of mutual trust which is a fundamental component in corporate renewal. Therefore, the effectiveness and efficiency with which organizations introduce new products to the market is influenced by the organizational structure that a particular organization has adopted.

Consequently, it is fundamental for organization management teams to ensure that their organizational structures are evaluated continuously in order to determine whether they contribute towards creation of an environment that encourages organizational learning (). The review will enable the organizations to undertake the necessary adjustments that will contribute towards improvement in the effectiveness and efficiency with which an organization positions itself in the market. The hierarchical organizational structure adopted by Apple Incorporation may limit communication across departments. This arises from incorporation of a rigid reporting relationship amongst employees.

According to Miller (2012), the importance of coordination and communication processes have increased significantly over the past few years. Miller (2012) further asserts the communication and coordination processes adopted by an organization can significantly determine the effectiveness of the business model adopted by an organization. Considering the changes in the personal computer industry, it is critical for Apple Incorporation to consider integrating the best strategies that will contribute towards the firm being effective in knowledge management. Integration of communication processes that promote information sharing is one of the aspects that the firm should consider. The firm should ensure that the organization structure adopted does not lead to information anarchy whereby eve very employee managers his or her information network without sharing. On the contrary, organizations should ensure that an optimal information hierarchy is adopted. The communication process should provide room for vertical and horizontal communication. Moreover, information and knowledge sharing across departments and teams should be encouraged. Consequently, it is important for firms’ management team to ensure that any form of information asymmetry is eliminated in order to promote new product development and introduction of new products to the market.

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Factors that Apple Incorporation should consider in fostering communication process

The success of any organization is dependent on the effectiveness with which the various stakeholders interact. According to Hitt, Ireland and Hoskisson (2009), organizational communication is wide in nature. This arises from the fact that it incorporates both internal and external processes. As a result, it is important for firms to ensure that both internal and external stakeholders are involved in the renewal efforts. Employees constitute the most important category of stakeholders who should be involved in the corporate renewal process. Their involvement culminates in development of a high level of motivation in undertaking corporate renewal. One of the avenues through which organizations should involve the employees is by establishing clear communication regarding the intended corporate renewal. According to Miller (2012), employee involvement is significant in fostering a high level of buy-in and communication.

Designing effective corporate renewal strategies is one of the ways through which organizations can develop their competitiveness. However, the strategy cannot be effective if it is not optimally executed. The communication process aids in ensuring that the strategy is effectively understood by the employees who are charged with the responsibility of ensuring that it is implemented successfully. Miller (2012) asserts that an organization that keeps its strategies secret from its employees and other stakeholders such as the shareholders does not add value to the organization’s future success. As a result, it is important for firms to ensure that they disclose the intended strategy at the right time.

Upon implementing the strategy, it is important for firm’s management team to ensure that the strategy is continuously reviewed and monitored. Findings of the reviews conducted should be communicated to the relevant stakeholders such as the employees. This will help the employees determine whether their efforts are effective or not. The communication process should also incorporate sufficient metrics to aid in the process of assessing the performance of the employees. One of the metrics that organizations management teams should consider entails setting benchmarks that evaluate the employees’ performance.

Conclusion

Corporate renewal has become one of the most important strategies that organizations are incorporating in an effort to attain sufficient competitiveness. Decision to adopt corporate renewal has been motivated by a number of factors. One of the factors relates to the need to attain a high rate of growth. Secondly, changes in the external business environment are increasingly motivating firms to adopt various corporate renewal strategies such as product reengineering and innovation. Moreover, firms are also reviewing their market strategy in an effort to determine their effectiveness. By adopting corporate renewal strategy, organizations are able to manage the complex business environment within which they operate. Corporate renewal strategies enable organizations to adopt strategies that increase their long term competitiveness.

Despite this, formulation of effective market strategies and innovation is not a guarantee that an organization will attain corporate renewal. This arises from the fact that the strategies might not be optimally executed. To eliminate this limitation, it is important for managers of highly innovative firms such as Apple Incorporation to consider other elements which include organization and communication processes.

The organization structure adopted by a firm impacts the effectiveness and efficiency with which it implements its strategies. One of the aspects that organizational structure impacts relate to the communication process developed. Studies conducted by various scholars reveal that the organization structure may hinder or promote communication. In the course of their operation, firms are faced with a wide range of options with regard to the organizational structure to adopt. Examples of organizational structures that firms can adopt include flat and vertical organizational structure. Formal organizational structures hinder communication amongst employees. This arises from the fact that the organizational structure requires employees to follow a specific laid down process in communicating to their counterparts. Consequently, the level of collaboration between employees is hindered.

To eliminate this challenge, it is important for innovative firms such as Apple Incorporation to restructure and redesign their organizational structure. The restructuring process will aid in eliminating boundaries that might limit implementation of various operational strategy that the firm might intend to incorporate. However, it is important for firms’ management teams to ensure that the restructuring process does not adversely affect the employees. Consequently, it is imperative for managers to incorporate change management.

In the process of executing the laid down strategies, it is important for organizations to ensure that a high level of collaboration between the various stakeholders is created. This arises from the fact that collaboration aids in promoting exchange of information which is critical in corporate renewal. Consequently, the restructuring process should contribute towards increment in the effectiveness with which the various stakeholders share their ideas and opinions. Therefore, one can assert that communication is essential in corporate renewal process in that it aids in fostering teamwork hence increasing the efficiency and effectiveness with which corporate renewal strategies are executed. Additionally, a high level of employee involvement should be ensured. This can only be achieved if the organization communicates to employees on the importance of the communication process.

To be effective in its corporate renewal efforts, Apple Incorporation will be required to undertake continuous review of its organizational structure and communication process. This will aid the firm in the process of making the necessary adjustments.

Reference

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