In the 2015 financial year Apple sold 231 million iPhones, a 37 per cent increase on the previous year; it also sold 55 million iPads, a decline of 19 per cent in 2014. It received revenue of $155 billion and $23 billion respectively from these two products, together accounting for 76 per cent of total sales that year. In the intensely competitive market for computer electronics, apple had had a good year - though in the management commentary with the financial results it cautioned investors about the difficulties it would face in maintaining that rate of growth.

the company began in 1976, designing and making personal computers. at the time these were a novelty: most computers then were 'mainframe' machines, operated by companies and public bodies. By 2013 the company's product range included the apple Mac personal computer, iTunes (launched in 2001), iPod digital music player (also 2001), iPhone (the company's first move into mobile phones - 2007), MacBook (2008) and iPad tablet (2010). the iPhone success was especially significant as it showed the ability of a computer maker to succeed in the mobile phone sector. the attractive design enabled the company quickly to become the leading player in the industry, helped by the thousands of applications available for the iPhone through the online Apple Store - which competitors such as Nokia and Motorola could not match.

When the late Steve Jobs and Steve Wozniak set up the business in 1976, each invested $1300. they secured funds from private investors, and in 1980 rapid growth again required more finance - which they raised by selling 4.6 million shares in the company to the public, for $22 each. In early 2016 these were trading on the New York Stock Exchange at about $110. a measure of the value it was adding to resources is the operating profit margin - broadly the difference between its expenditure and income. In 2015 this was over 40.1 per cent (38.6 per cent the previous year), helped by strong sales of the iPhone and the declining cost of producing each one as sales increased.

the table shows some measures of performance in the two most recent financial years.

Steve Jobs typified the distinctive business environment of 'Silicon Valley' - the area in California where many of the world's leading electronic businesses have their headquarters. He created a corporate culture characterised by an intense work ethic and casual dress code. Michael Moritz, who observed Jobs for many years, noted in his biography, published before Jobs' death:

Sent Steve is a founder of the company [and the best founders] are unstoppable, irrepressible forces of nature. . . Steve has always possessed the soul of the questioning poet - someone a little removed from the rest of us who, from an early age, beat his own path. [He has a sharp] sense of the aesthetic - that influence is still apparent in all Apple products and advertising. Jobs' critics will say he can be wilfull, obdurate, irascible, temperamental and stubborn [which is true, but he is also a perfectionist]. There is also. . . an insistent, persuasive and mesmerising salesman. (Moritz, 2009, pp. 13-14)

In 1983 Jobs was chairman and Mike Markkula, who had joined the company at the start, was chief executive. Markkula had never intended to stay as CEO and now wished to leave. the Board of directors (including Jobs) decided to appoint John Sculley, an executive from Pepsi-Cola, to the post. the two men frequently disagreed and in 1985 Jobs (then aged 30)

left the company. Apple did not perform well under Sculley, and in 1997 the Board persuaded Jobs to return to the company, and soon appointed him CEO.

He began to rebuild apple by an insistent focus on a limited product range - cutting costs, staff and undistinguished products. the focus was the iMac - an immediate success since it delivered what consumers wanted by combining compelling designs with advanced technology. apple again became known for its sleek design and an elegant user interface. He also hired new senior managers with whom he had worked, skilled in software, hardware, retail and manufacturing. they included Jonathan Ive, a respected designer, and Tim Cook who joined in 1999. He became Chief Executive when Jobs died in 2012.

Jobs had insisted that a named individual be responsible for every task, however large or small: 'at apple, you can figure out exactly who is responsible'. this principle is enshrined in the 'directly Responsible Individual' - DRI: this is the person the company calls to account if anything goes wrong:

The DRI is a powerful management tool, enshrined as Apple corporate best practice, passed on by word of mouth to new generations of employees. Any effective meeting at Apple will have an action list - next to it will be the DRI. (Lashinsky, 2012, pp. 67-8).

Functional structure

apple is organised by function, so people are hired and promoted for their ability in that function, not for their general management skills. Steve Jobs explained:

[As companies grow large, they] lose their vision. They insert lots of layers of middle management between the people running the company and the people doing the work. They no longer have an inherent feel or passion about the products. The creative people, who are the ones who care passionately, have to persuade five layers of management to do what they know is the right thing to do (quoted in Lashinsky, 2012, p. 71).

When Jobs returned to apple he found it had become like the companies he disparaged - good technical people had moved into general management roles.

What was wrong with Apple wasn't individual contributors . . . we had to get rid of about four thou- sand middle managers. (Lashinsky, 2012, p. 71)

at the top of the company is the CEO (since 2012, tim Cook), supported by the executive team, whose purpose is to coordinate the business and set the tone for the company. It comprises the head of each function directly involved in apple products - marketing, hardware and software engineering, operations, retail stores, internet services and design - together with heads of finance and legal. the team meets weekly to review the company's product plans - which it does in great detail. teams throughout the company prepare material for their respective bosses to inform the presentation by their functional head: Everybody is working towards these Monday presentations [says a former Apple designer]. There is executive review of every significant project. (Lashinsky, 2012, p. 71)

product innovation

Jobs continually stressed the significance of products rather than profit - believing that if management focused on providing high-quality, innovative products, profit would follow (Isaacson, 2011). He believed that:

putting products ahead of profit was the quality . . . responsible for the success that made it the world's most valuable technology company, with a stock market value (in late 2011)

two-thirds higher than its nearest competitor, Microsoft. (Financial Times, 25 October 2011, p. 18)

Apple engineers focus obsessively on the minutest details of how the customer will experience the prod- uct - including the box, the last thing the customer will see before the product:

Obsessing over details and bringing a Buddhist level of focus to a narrow assortment of offerings sets Apple apart from its competitors . . . good design subliminally telegraphs to consumers that the manufacturer cares about them. This, in turn, creates a bond between brand and consumer. The genesis of most Apple products is simply Apple's desire to make them. Not focus groups. Not reader surveys. Not a competitive analysis . . . The iPhone is a classic case in point. Prior to the device's introduction, Apple executives typically hated their smartphones. 'That's why we decided to do our own' said Jobs. (Lashinsky 2012, pp. 53-4) this involved analysing the other products and adapting ideas from them to create the distinctive iPhone. Moritz (2009) writes:

Jobs' achievement . . . was to ensure that tech- nology company employing tens of thousands of people could make and sell millions of immensely complicated yet exquisite products that were powerful and reliable, while also containing a lightness of being . . . [the achievement] is to steer, coax, nudge, prod, cajole, inspire, berate, organise and praise - on weekdays and at weekends - the thousands of people all around the world required to produce something that drops into pockets and handbags or . . . rests on a lap or sits on a desk. (pp. 339-40)

at apple, the design philosophy is that products start with their industrial designers (led by Briton Jonathan Ive). design is pre-eminent - everyone else must con- form to the designer's vision.

tight control

the company has traditionally used an 'integrated model', in the sense that it controlled the hardware and software components in its devices, as well as the services on which they rely. Jobs believed that integration is the only way to make 'perfect' products. as they design hardware and software, staff aim to give users an exceptionally good experience of the compatibility between all apple devices and the applications that run on them (see below - Collaboration).

once design is underway, the rest of the company moves in, especially engineering and supply-chain teams, working to the apple new Product Process. this details each stage in a product's creation, prescribes who touches it, assigns functional responsibilities and shows when assignments will be completed (lashinsky, 2012, p. 56).

the emphasis on control was extended when the company launched the Apple Stores. this was unusual, as manufacturers rarely become successful retailers. the apple network of dealers and apple Stores ensures that the image of the brand is closely dovetailed with the products themselves. the app Store has exceeded

expectations, with thousands of software developers offering their products on the site. Secrecy

as well as investing heavily in R&d, the company is intensely secretive and protective of its intellectual property (IP) - the ideas and designs behind the products. Most companies protect these from outsiders, but apple also has high internal secrecy. Staff do not discuss pro- jects outside their immediate team, and new recruits are briefed on the strict security regime, including the penalty for revealing apple secrets, intentionally or unintentionally:

swift termination (lashinsky, 2012, p. 36). When Apple launches a product, the secrecy creates curiosity and extensive media coverage - without heavy advertising.

It also helps to retain the 'start-up' mentality that the company values. as engineers work in isolated small teams they have little chance to contact those outside their team:

By selectively keeping employees from concerning themselves with colleagues elsewhere in a giant company, Apple creates the illusion that [they] work for a start-up. (Lashinsky, 2012, p. 73)

Small teams have long been integral to the apple way of working, and frequently major projects are assigned to very small teams - two engineers wrote the vast amount of code required for a feature of the iPad, which many companies would give to a team of ten. Small teams help foster the start-up mentality.

Collaboration

While internally apple displays tight control and secrecy, it is the hub of a creative network. It excels at cooperating with partners and rivals when this will benefit customers - an early example being when Jobs saw the value of 'mouse' technology in another company's product, which his engineers then incorporated into the first Macs. the company recognised that in the rapidly developing mobile phone industry, apple could never generate consistently strong products and services on its own, so encouraged selected independent developers to build applications for the iPhone. these sell through the app Store, earning revenue for both the developer and apple, while the huge range of apps available reinforces the iPhone's appeal to customers. developers can of course choose to work for other companies, if they appear to be moving ahead of apple.

In 2014 it significantly extended the scope of collaboration by opening up more aspects of the iPhone operating system to independent developers. this will enable them, for example, to develop and sell their own keyboards, which customers can download to use with their iPhone. analysts said this represented a big philosophical shift, as it will allow developers to design features for the iPhone, without Apple having to approve them.

In the same year it entered a partnership with IBM to sell iPads and iPhones to big corporate customers - a further sign that Apple is becoming more willing to work with other businesses.

It also collaborates in manufacturing, which it outsources to overseas suppliers, especially foxconn, an immense Chinese supplier that meets most of apple's requirements. Under TimCook, the company has committed to removing 'conflict minerals' (those from mines in conflict zones) from its products, and is seeking new agreements with suppliers like foxconn to improve working conditions - even though this will increase costs. It claims to monitor supplier performance closely, and acts swiftly when it finds violation of its required labour standards.

aspects of apple's context

Apple has succeeded by offering products that appeal to consumers in previously separate industries. Its continued success will depend on how well it can do this, especially as competitors develop rival products.

Before apple launched the iPhone the mobile phone industry was dominated by Nokia, with Sony Ericsson and Motorola having smaller but significant shares of the market. apple's success with the iPhone has been challenged by devices using google's android software, notably Samsung and its galaxy range. In 2012 Sam- sung had about 33 per cent of the

global smartphone market and apple 16 per cent: the rest of the market was fragmented among many companies.

apple's launch of the iPad helped to transform personal computing - one estimate was that tablets would take almost a fifth of the global PC market by 2013 (data quoted in Financial Times, 31 May 2011, p. 21). By late 2012 apple's share of the global tablet market had fallen from two-thirds to half since the middle of the year. Many lower-priced competitors such as Samsung and amazon had entered the market.

In 2015 China was apple's second-largest market after the US, with sales there valued at $59 billion (25 per cent of the total), 84 per cent more than 2014. It still faces tough competition in China from Asian suppliers such as Samsung and Huawei.

the many innovative companies in the industry vig- orously defend their product patents. Apple is involved in many disputes in which it accuses others of stealing its intellectual property, especially Samsung which it regards as an especially serious competitor.

So-called 'cloud computing' is likely to become a significant feature of the industry, allowing, for example,

iPhone users to float their music and apps on to an iPad or a TV and then back again. If apple were to position itself as a cloud-services company it would be competing with google, Microsoft and amazon.

Current management dilemmas

In 2016 apple was facing several issues to ensure that it retained its prominent position in the computing and telecommunications industry, especially ensuring that it continued the flow of innovations that its loyal customers and investors expected.

Strategic direction

a threat to the company's dominance could come from strong competitors such as Googleand Microsoft, both of whom were targeting segments of apple's market with new products. By 2015, over half of the company's revenue came from the iPhone. apple appeared to some to be becoming a handset company, which is fickle and subject to sudden changes of fashion.

It is considering offering more services (such as cloud computing) but, as a hardware and software company, can it be equally successful in services?

apple's shareholders have become used to high growth so they, and financial journalists, may have unrealistic expectations. they could begin to demand higher dividend payments, which would mean less money available to invest in the R&d essential for new products. Innovation

In 2015 about $155 billion of apple's revenue came from the iPhone and another $23 billion from the iPad - neither of which existed eight years ago. this remarkable achievement serves as a reminder of the need to keep investing heavily in new products - able to earn equally large revenues in just a few years. In early 2015 there were reports of investors becoming restless at the lack of significant new launches.

an opportunity the company has been publicising is 'cloud computing', which would enable users to integrate all the information they have on their several apple devices to be accessed at any time, often on other devices. this would enhance the user's experience, and also make it less likely that they would move to a rival device, since that would reduce easy access to their data. Apple may not have as strong a position in that market as companies that were created as services companies, such as google or amazon.

Management

By 2015 Tim Cook had emerged from Steve Jobs' shadow, and was imprinting the company with his values and priorities, bringing in new senior managers, opening apple to more collaboration and paying more attention to social issues. He has added three women to what was previously a white-male-dominated executive team and changed apple's Board charter to seeking out candidates from minorities when appointing directors.

In 2012 Cook appointed Jonathan Ive, the company's hardware designer, to be head of software as well. He became responsible for all the company's user interfaces, giving him final say in the design and 'feel' of products and services. this perhaps recreated the dominant role that Steve Jobs played in this regard, ensuring the deep integration typical of apple products.

2 -Which values and assumptions appear to be reflected in the company's practices?

3 - What examples of 'specialisation between areas of management' does the case mention?