Implementation

Apple
Bailey Montavon, Nick Irmeger, and Jenna Breen

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1. Embed an organizational chart into your response and, for the company as a whole,
discuss the vertical hierarchy (number of employees, centralized/decentralized decision-
making, tall/flat structure, narrow/wide span of control), as well as the type of
horizontal structures used (functional, product, matrix, etc.). How are the various
horizontal units integrated?
Apple's hierarchy structure is centralized since the majority of decisions are made by
CEO Tim Cook. A centralized hierarchy is when decision-making is concentrated at the top of
the organization. In the past, all decisions were made by the previous CEO, Steve Jobs. Now that
Tim Cook has taken over, he still makes decisions, but he takes on a more collaborative approach
among different departments. This supports strong management control in the firm. In 2020 they
had about 147,000 full-time employees. Apple has a flat structure and a wide span of control. A
flat structure means that the firm has few or no levels of management between management and
staff level employees. Apple has very few. A wide span of control means that a manager can
oversee a large number of people at a time. The company has few layers of management but each
of the 13 departments has its own groups of employees. This allows the different departments to
have more collaboration with each other and more flexibility. Each senior vice president of the
different departments handles the business’s functions and is responsible for reporting to Tim
Cook.
Apple uses functional and product structures. The upper corporate structure is functional
because each division has a senior vice president. For example, retail and worldwide marketing.
For the product-based divisions, there are different senior vice presidents for the software,
engineering such as the Mac, iPhone, iPod, and hardware technologies. This enables Apple to be
able to manage all the different products that they have (Meyer, 2019). The units are integrated
because each of the teams are able to collaborate with each other. The software team is able to
work with the hardware team. Apple is known for rapid innovation and the horizontal units are
what keep that happening.

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2. Describe the organizational culture at the company.
Organizational culture is the values, norms, and artifacts of a company. Some of Apple's
values include equity and justice, education, diversity and inclusion, and privacy and
accessibility. They know their responsibility in fighting racial injustice. They donated 100
million dollars to the REJI to help dismantle racism in communities (Apple, 2021). They also
have a motto “we’re all in” meaning they have made it a priority to make the workplace
inclusive. They value inclusion and diversity in their work environment. Apple believes that the
most innovative companies are also the most diverse (Apple, 2021). Other values are supporting
education and a planet-sized plan. They donate products to schools. To over 100 schools Apple
donated MacBook’s, iPads, and Apple TVs to teachers and students. Apple also makes sure they
are not leaving a carbon footprint from the production of their products. A lot of their facilities
run on renewed energy, and they are always trying to improve and be more environmentally
friendly. They also value the privacy of their customers. It is a fundamental design in all of their
products. In the new iOS update, they made a feature where it is impossible for digital
advertisers to get their information without the user being aware. Everyone knows what is being
done with their information and their consent must be given.
Artifacts can be symbols, rituals, and behaviors. One artifact of Apple would be a name
tag or ID to enter the premises of Apple. They also have an open floor plan so everyone is
working next to a coworker (Apple, 2021). Norms of a company are behaviors and appropriate
attitudes of the firm's employees. Some behaviors and attitudes of Apple’s employees include
creativity, innovation, secrecy, and combativeness. Apple is a very innovative company always
coming up with new designs and features. Management looks for employees with creativity
when it comes to those involved with the designing of the products (Meyer, 2019). The next
norm is innovation. Apple motivates its employees to be innovative in group and individual work
performance. This is what ensures that the company will continue to come up with new products
that their target market wants (Meyer, 2019). Secrecy is a big part of Apple when it comes to its
intellectual property from getting stolen. Employees are highly encouraged to keep business
information within the company. Lastly, combativeness. This was mostly encouraged when
Steve Jobs was the CEO of Apple. He was always challenging employees to see if they had what
it takes to be at this company. Under Tim Cook's leadership, combativeness is still encouraged,
but it has become more sociable (Meyer, 2019). Apple's organizational culture has improved
tremendously while keeping some of the same values under Tim Cook’s leadership.

3. Identify the main stakeholder groups in your company. For the top three, discuss the
claims that they place on the company, how the company is attempting to satisfy those
claims, and whether or not the company is doing a good job.
Apple’s success is partly due to its ability to satisfy stakeholders and corporate social
responsibility. The stakeholder groups within Apple impose demands that translate into
corporate social responsibility, which in turn affects firm performance. Apple’s stakeholders
significantly affect the business in terms of customer perception and sales revenues. Apple has a
firm and holistic approach in addressing the interests of stakeholder groups significant to the
business. The stakeholder groups compel Apple to improve, and Apple affects them by
satisfying their interests. The top three stakeholder groups within Apple are their
customers/consumers, their employees, and their investors (Thompson, 2017).
Apple prioritizes customers as its top stakeholders in devising corporate social
responsibility strategies (Thompson, 2017). This stakeholder group is composed of individual

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and organizational buyers of Apple products. The main interest of customers is to have effective
and efficient products that are reasonably priced. Apple products have higher price points.
However, Apple’s premium pricing strategy is acceptable because it matches the high quality
and aesthetics of these products. The company also has environmental programs for recycling
and responsible sourcing to address customers’ demands for business sustainability (Thompson,
2017). Based on this information, Apple’s corporate social responsibility efforts satisfy the
interests of customers as the top stakeholders of the business.
Employees are the second-priority stakeholders in Apple’s approach to corporate social
responsibility (Thompson, 2017). This stakeholder group is composed of employees at Apple’s
facilities. The main interests of these stakeholders are proper compensation and career
development. Employees as a stakeholder group are important because they directly determine
Apple’s human resource capabilities to innovate and develop profitable products. The firm
addresses the interests of its employees through compensation packages competitive in Silicon
Valley (Thompson, 2017). Thus, Apple’s corporate social responsibility efforts satisfy the
concerns and interests of employees as a major stakeholder group.
Investors are the third main stakeholder group and are typically major stakeholders and
determinants of corporate social responsibility programs in businesses. In Apple’s case, investors
are interested in maximizing the returns on their investments (Thompson, 2017). The company
effectively addresses this stakeholder group through excellent financial performance. For
example, Apple is now one of the most profitable companies in the world. The firm maintains
high profit margins. Apple also has a strong financial position, which involves high liquidity
through large amounts of cash (Thompson, 2017). The company has also managed to avoid debt.
Based on these corporate social responsibility conditions, Apple effectively satisfies the interests
of investors as stakeholders.

4. Discuss the activities of the board of directors, as well as one other governance or
control mechanism used by the company. For each, are the controls doing a good job of
aligning stakeholder interests with those of the firm? Why or why not?
The board of directors is one of the primary internal governance solutions. The board of
directors has a long list of duties as it pertains to corporate governance. One such duty is that of
selecting, evaluating, and compensating the CEO. This process had occurred multiple times for
Apple having gone through several CEOs over the years. The most notable being when John
Sculley took over as CEO beginning the “Sculley Era” who led the company into had time with
infighting among top managers before being removed as CEO by the board. (InsideView, 2011)
This prudent move by the board of directors was directly in line with the shareholder’s interest as
Sculley was leading the company into financial ruin and replacing him with a CEO who was
more open to new ideas allowed for Apple’s recovery.
Another activity that the board is tasked with is overseeing large strategic initiatives and
corporate actions like large acquisitions, of which Apple has made quite a few over the years
some of the more notable acquisitions are Shazam in 2018, Beats Electronics in 2014, and Siri
Inc. in 2010 (Reiff, 2021). All of these had to be reviewed and evaluated by the board prior to
execution. Whether or not all of these acquisitions aligned with stakeholder interests is a gray
area, with some approving and some not as while some of the acquisitions made the company
more profitable which was well received by shareholders, they also meant restructuring and
firing in the acquired companies, which was not as well received.

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 Apple also uses one of the most common forms of governance control mechanisms that
lie outside of the board of directives in how it decides to compensate its current CEO Tim Cook.
Apple seeks to prevent the principal-agent problem as well as empire-building, directly linking
an impressive 98.8% of his $265 million in compensation in 2020 to the firm's performance.
Apple does this by providing Cook with having 94.5% of his compensation come from stock
options alone with the other 4.3% coming in the forms of bonuses and other performance-linked
incentives. This compensation method is commonplace nowadays in most Fortune 500
companies; however Apple is unique in the fact that even though Apple is one of the largest
companies in the work, Cook is only being the eighth highest-paid CEO, and has an average pay
without stock options that is roughly that same as other CEOs across S&P 500 companies when
excluding stock options (F.E. Online, 2021). This performance-linked compensation plan is ideal
for aligning shareholder interests with those of the firm by essentially making the CEO himself a
shareholder. However, it's not always the most useful in aligning stakeholder interests, as the
absolute size of the CEO’s pay package on average is 300 times the average salary of that firm's
employees which can lead to ethical questions when considering the stakeholder’s point of view
(Rothaermel, 2021).

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 Bibliography

Apple's corporate structure [interactive chart]. Organimi. (n.d.). Retrieved October 29, 2021,
from https://www.organimi.com/organizational-structures/apple/.

Apple Mission Statement, Vision, & Core Values. Business Strategy Hub. (2021, June 8).
Retrieved October 28, 2021, from https://bstrategyhub.com/apple-mission
-statement-vision-core-values/.

F.E. Online. (2021, August 5). Trillion dollar question: So, how much did Tim Cook make as
Apple CEO in 2020? The Financial Express. Retrieved October 27, 2021, from
https://www.financialexpress.com/industry/technology/trillion-dollar-question-so-how-
much-did-tim-cook-make-as-apple-ceo-in-2020/2304872/

InsideView. (2011, August 25). The History of Apple CEOs. Retrieved October 28, 2021, from
https://www.insideview.com/blog/the-history-of-apple-ceos/

Meyer, P. (2019, February 15). Apple Inc.'s Organizational Culture & its characteristics (an
analysis). Panmore Institute. Retrieved October 29, 2021, from
http://panmore.com/apple-inc-organizational-culture-features-implications

Reiff, N. (2021, July 8). 6 Companies Owned by Apple. Investopedia. Retrieved October 29,
2021, from https://www.investopedia.com/investing/top-companies-owned-apple/

Rothaermel, F. (2021). ISE Strategic Management: Concepts (5th ed.). McGraw-Hill