Apple Inc. Organizational Structure: Features, Pros & Cons

Apple Inc. organizational structure characteristics features advantages disadvantages case study analysis
A close-up of two Apple iPhones. Apple Inc’s organizational structure supports extensive control but has limited flexibility. (Photo: Public Domain)

Apple’s organizational structure is one of the factors contributing to the company’s successful innovation. A firm’s organizational structure can create opportunities for business growth. However, it can also impose limits on how the firm develops. In Apple’s case, the organizational structure is mainly a traditional hierarchy, with some key elements from other types of organizational structure. The success of the company is linked to innovation and the leadership of Steve Jobs, but its organizational structure is partly responsible for ensuring support for such leadership. Now, under Tim Cook’s leadership, Apple has made some small changes in its organizational structure to suit market and industry demands.

Apple’s organizational structure is effective in supporting business performance to ensure leadership in the industry. However, further changes in this organizational structure can help improve Apple’s capabilities, especially in the area of rapid and creative innovation and design.

Features of Apple’s Organizational Structure

Apple’s organizational structure enables the firm to continue innovating rapidly. The creation of new products like Apple Watch is linked to the support from the firm’s organizational structure. The following are the most significant characteristics of Apple’s organizational structure:

  1. Spoke-and-wheel hierarchy
  2. Function-based grouping
  3. Product-based grouping

Spoke-and-Wheel Hierarchy. A bird’s-eye view of Apple’s organizational structure shows considerable hierarchy. In the past, everything went through Steve Jobs’ office. Jobs made all the major decisions. However, under Tim Cook’s leadership, this hierarchy in Apple’s organizational structure has slightly changed. There is now more collaboration among different parts of the company, such as software teams and hardware teams. Apple’s vice presidents have more autonomy, which was almost absent under Jobs. Thus, the company’s organizational structure is now less stiff, but still has a spoke-and-wheel hierarchy where Tim Cook is at the center.

Function-Based Grouping. The upper tier of Apple’s organizational structure has function-based grouping, which is an element derived from the functional type of organizational structure. Each senior vice president who reports to Tim Cook handles a business function. For example, Apple has an SVP for industrial design, an SVP for marketing, and another SVP for retail. In this aspect of the organizational structure, Apple’s top leaders address business needs in terms of function areas.

Product-Based Grouping. The lower tier of Apple’s organizational structure has product-based grouping, which is an element derived from the divisional type of organizational structure. Below the senior vice presidents, there are many vice presidents for different outputs or products. For example, Apple has a VP for iOS apps, a VP for iPad, and another VP for consumer apps. This aspect of the organizational structure enables Apple to address specific products or product components.

Advantages & Disadvantages of Apple’s Organizational Structure

Strong Control. The hierarchy in Apple’s organizational structure supports strong control over the organization. Theoretically, hierarchy empowers top leaders like Tim Cook to control everything that goes on in the organization. Through the hierarchy, function-based grouping and product-based grouping in this organizational structure, Apple ensures that Cook and the senior VPs control all organizational processes.

Limited Flexibility. Apple’s organizational structure has the downside of low flexibility. Hierarchy typically prevents lower levels of the structure to flexibly respond to business needs and market demands. However, Tim Cook has already made slight improvements by increasing collaboration among different parts of the firm. Still, Apple’s organizational structure does not support rapid changes because everything must go through Tim Cook and the senior VPs.

References
  • Apple Inc. Form 10-K, 2014.
  • Apple Info.
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  • Lehman, G., & Haslam, C. (2013, December). Accounting for the Apple Inc business model: Corporate value capture and dysfunctional economic and social consequences. In Accounting Forum (Vol. 37, No. 4, pp. 245-248). Elsevier.
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