7/13/2017 Apple Inc.

Organizational Structure: Features, Pros & Cons - Panmore Institute

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BUSINESS, MANAGEMENT

Apple Inc. Organizational Structure:

Features, Pros & Cons
UPDATEDJAN 29, 2017 | PAULINE MEYER

Apples organizational structure is one of

the factors contributing to the companys
successful innovation. A rms
organizational structure can create
opportunities for business growth.
However, it can also impose limits on how
the rm develops. In Apples case, the
A close-up of two Apple iPhones. Apple Incs organizational
organizational structure is mainly a
structure supports extensive control but has limited exibility. traditional hierarchy, with some key
(Photo: Public Domain) 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 Cooks leadership, Apple has made some small changes in its
organizational structure to suit market and industry demands.

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7/13/2017 Apple Inc. Organizational Structure: Features, Pros & Cons - Panmore Institute

Apples organizational structure is effective in supporting business performance to ensure

leadership in the industry. However, further changes in this organizational structure can help
improve Apples capabilities, especially in the area of rapid and creative innovation and design.

Features of Apples Organizational Structure

Apples organizational structure enables the rm to continue innovating rapidly. The
creation of new products like Apple Watch is linked to the support from the rms
organizational structure. The following are the most signi cant characteristicsof Apples
organizational structure:

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

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7/13/2017 Apple Inc. Organizational Structure: Features, Pros & Cons - Panmore Institute

Spoke-and-Wheel Hierarchy. A birds-eye view of Apples organizational structure

shows considerable hierarchy. In the past, everything went through Steve Jobs of ce.
Jobs made all the major decisions. However, under Tim Cooks leadership, this hierarchy
in Apples organizational structure has slightly changed. There is now more collaboration
among different parts of the company, such as software teams and hardware teams.
Apples vice presidents have more autonomy, which was almost absent under Jobs. Thus,
the companys 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 Apples 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,
Apples top leaders address business needs in terms of function areas.

Product-Based Grouping. The lower tier of Apples 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 speci c products or product components.

Advantages & Disadvantages of Apples Organizational

Structure
Strong Control. The hierarchy in Apples 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. Apples organizational structure has the downside of low exibility.
Hierarchy typically prevents lower levels of the structure to exibly respond to business
needs and market demands. However, Tim Cook has already made slight improvements
by increasing collaboration among different parts of the rm. Still, Apples organizational
structure does not support rapid changes because everything must go through Tim Cook
and the senior VPs.

References
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7/13/2017 Apple Inc. Organizational Structure: Features, Pros & Cons - Panmore Institute

Apple Inc. Form 10-K, 2014.

Apple Info.
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