apple-organizational-structure

Apple Organizational Structure In A Nutshell

Apple has a traditional hierarchical structure with product-based grouping and some collaboration between divisions.

Understanding the Apple organizational structure

Former CEO Steve Jobs is credited with transforming Apple from a struggling company to one dominating the world with its innovative products.

How exactly was this accomplished?

When Jobs returned to Apple in 1997, the company had a typical product-based structure divided into business units with their own P&L responsibilities. However, Jobs noted that this approach hampered innovation.

He laid off each business unit general manager and put the entire company under one P&L, effectively combining unrelated units into one functional organization. Under this new arrangement, product managers could work insulated from short-term market pressures. They were also encouraged to share their work with other divisions to ensure innovations were not duplicated.

Jobs argued that the function-based structure required two crucial elements. First, product managers had to be product experts and not rely on others for decision-making expertise. Second, senior research and development personnel should receive a bonus based on the performance of the entire company – not simply on their own products. This gave them the freedom and impetus to focus on innovation not involving the iPhone.

Components of Apple’s organizational structure

Today, the company combines the functional and hierarchical structure instituted by Jobs with the somewhat more collaborative approach implemented by successor Tim Cook.

But there are also some other important characteristics to consider. Following is a look in general terms at the Apple corporate structure.

Hierarchical mixed with functional

Apple is a predominantly hierarchical organization. In the past, every strategic decision would have to go through Jobs. When Cook took the helm, however, he introduced a more collaborative approach between managers and employees.

To address business needs in the context of functional units, Apple employs several senior vice presidents. For instance, there are senior vice presidents for worldwide marketing, design, finance, and retail, among others. This level of management has to report to the CEO but is given more autonomy than they were under Jobs.

A functional structure is more suited to the holistic culture of a compact start-up and is uncommon in a company the size of Apple. But this approach ensures there is no competition for resources between product division heads. Furthermore, it allows Apple to neglect short-term financial targets when developing resource-intensive products.

Product-based grouping

Apple also incorporates a product-based leadership model embodying the divisional approach.

Product managers (vice presidents) report to the senior vice presidents. Product managers lead product divisions responsible for iOS apps, human resources, policy, environment, and policy and social initiatives.

Ultimately, this helps the company address specific product components before releasing them to the market. It also helps Apple evaluate marketing or manufacturing requirements.

Group and division collaboration

Under Jobs, hardware and software teams would have to run their ideas by the CEO with little interaction between the teams themselves.

The development of each Apple product now involves an intensive collaborative effort between various groups and divisions. In other words, some degree of functional rigidity has been sacrificed to enable creative and efficient innovation.

Key takeaways

  • Apple has a traditional hierarchical structure mixed with elements of function and product-based grouping.
  • Former CEO Tim Cook relaxed the highly rigid hierarchy present under Jobs. Instead of routing every decision through the CEO, divisional senior vice presidents and product managers are now given more autonomy.
  • Collaboration between divisions and teams is now a non-negotiable part of every Apple product. This creates an environment where creative innovation has a chance to thrive.

Related to Apple

Apple Business Model

apple-business-model
Apple has a business model that is divided into products and services. Apple generated over $394 billion in revenues in 2022, of which $205.5 came from iPhone sales, $40 billion came from Mac sales, over $41 billion came from accessories and wearables (AirPods, Apple TV, Apple Watch, Beats products, HomePod, iPod touch, and accessories), $29.3 billion came from iPad sales, and $78.13 billion came from services.

Apple PESTEL Analysis

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Apple Organizational Structure

apple-organizational-structure
Apple has a traditional hierarchical structure with product-based grouping and some collaboration between divisions.

Apple SWOT Analysis

apple-swot-analysis
Apple can leverage a strong consumer brand and set of successful products as a strength. Yet the company is still too reliant on the iPhone as a primary revenue stream. Though Apple is working to open up new markets as an opportunity, it has to make sure to sustain its stores’ sales.

Market Expansion Theory

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Apple Value Propositon

apple-value-proposition
Apple is a tech giant, and as such, it encompasses a set of value propositions that make Apple’s brand recognized among consumers. Apple’s brand’s three fundamental value propositions leverage the “Think Different” motto; reliable tech devices for mass markets. Starting in 2019, Apple also emphasized more privacy to differentiate itself from other tech giants.

Economics of the iPhone

how-much-profit-does-apple-make-per-iphone
It costs Apple $501 to make an iPhone 14 Pro Max, and the company sells it at a base price of $1099. This makes Apple’s base markup on the latest iPhone model at 119% Apple is the only tech company able to sell its tech products at a such a premium, thanks to a combination of hardware, software and marketplace.

Apple Business Growth

how-much-profit-does-apple-make-per-iphone
It costs Apple $501 to make an iPhone 14 Pro Max, and the company sells it at a base price of $1099. This makes Apple’s base markup on the latest iPhone model at 119% Apple is the only tech company able to sell its tech products at such a premium, thanks to a combination of hardware, software, and marketplace.

How do Apps Make Money

how-do-apps-make-money
Apps in the Apple Store follow five primary business model patterns: the free model, where the app might make money via paid ads. Freemium model where the app charges for premium features; subscription-based model, paid model, and paymium model is a mix of paid and freemium.

Apple Business Strategy

apple-business-strategy
When looking at the Apple Business Model, it is easy to assume that it is solely a product company which sells devices that are beautifully crafted. However, there would have been no success for the Mac without its OS operating system. There would not have been iPod success without iTunes. And no success for iPhones without the Apple Store. What’s next for Apple’s success?

Read Next: Organizational Structure, Apple Business Model, Apple SWOT Analysis, Apple Pestel Analysis.

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