NATIONAL ECONOMICS UNIVERSITY

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INTERNATIONAL BUSINESS 2
A12. Identify and discuss the organizational chart and
international strategy of Apple

Group 12 – International Business 64D

Lecturer: Dr. Mai The Cuong

Members: Nguyen Minh Khue – 11223125
Nguyen Thi Phuong Chi – 11221031
Dam Thi Hong Phuc – 11225129
Tran Thi Van Anh – 11220645

Ha Noi, 2024
 TABLE OF CONTENTS
INTRODUCTION..........................................................................................................................3
I. HISTORY OF APPLE INC......................................................................................................4
1. The development of Apple.................................................................................................4
2. Strategies that lead to Apple’s success.............................................................................6
II. ORGANIZATIONAL CHART AND INTERNATIONAL STRATEGY............................7
1. Organizational chart of Apple..........................................................................................7
1.1. John Sculley Era (1985-1997): A Divisional structure...........................................7
1.2. 1997- Now: Apple’s functional organizational structure.......................................8
1.2.1. Steve Jobs Era and Initial functional organization (1997- 2011).............................8
1.2.2. 2011- Present: Tim Cook and the transition to a fully functional structure..........10
1.3. Apple’s reasons to remain its functional structure...............................................11
2. Apple’s International Strategy.......................................................................................12
2.1. SWOT analysis of Apple.........................................................................................12
2.2. Apple’s International Strategy...............................................................................16
2.2.1. Pressure to reduce costs............................................................................................16
2.2.2. Pressure for local adaptation....................................................................................17
2.2.3. Global Strategy..........................................................................................................18
III. EMERGING ISSUE OF APPLE’S ORGANIZATIONAL CHART AND
INTERNATIONAL STRATEGY...............................................................................................20
1. Emerging issues of Apple’s organizational chart..........................................................20
1.1. Lack of listening to employee opinions, strict work culture................................20
1.2. Inflexible organizational machinery......................................................................21
1.3. Problems with top management.............................................................................21
1.3.1. Searching for Tim Cook's successor........................................................................21
1.3.2. A wave of key leaders leaving the company.............................................................22
2. Emerging issues of Apple’s international strategy.......................................................23
2.1. Heavy reliance on China for manufacturing.........................................................23
2.2. Sales problems in international market.................................................................25
2.3. The App Store fee dispute in the UK and EU.......................................................26

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 2.4. The failure of Vision Pro.........................................................................................27
CONCLUSION.............................................................................................................................29
REFERENCES.............................................................................................................................30

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 INTRODUCTION
Global technology giant Apple has gone through a journey of nearly 50 years
filled with innovations, groundbreaking strategies and incredible adaptability. The
company's success can be explained by its focus on user experience, premium products,
and a tightly integrated ecosystem. This report will delve into Apple's history, from its
early days to its current dominance in the technology industry. At the same time, the
report will also analyze Apple's organizational structure and international strategy,
highlighting key strengths and weaknesses.
Despite its many significant achievements, Apple is now facing new challenges
from both an organizational and international perspective. The company's rigid
organizational structure and culture of secrecy are creating internal conflict, hindering
flexibility, and discouraging open communication. This leads to concerns about employee
morale and the ability to innovate, especially in the context of many senior leaders
leaving and the question of Tim Cook's successor remaining open.
Internationally, Apple's overreliance on manufacturing in China poses significant
risks amid geopolitical tensions and supply chain disruptions. The company's efforts to
diversify production are still nascent. Declining iPhone sales in China, regulatory
pressure in Europe and disappointing Vision Pro results further complicate Apple's global
operations.

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I. HISTORY OF APPLE INC.
1. The development of Apple:
Apple Inc. was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald
Wayne in Cupertino, California. The company quickly gained recognition with the
launch of the Apple II in 1977, one of the first highly successful mass-produced
microcomputers, which helped establish a foothold in the emerging personal computer
market. In 1980, Apple went public, making it one of the largest IPOs in history at that
time. The introduction of the Macintosh in 1984 marked a significant milestone, featuring
a revolutionary graphical user interface and a mouse, which set the stage for future
personal computing experiences.

Ronald Wayne, Steve Jobs and Steve Wozniak - 3 founders of Apple

Throughout the 1990s, Apple faced challenges, including stiff competition and
declining market share. The introduction of the Apple Newton in 1993, an early personal
digital assistant (PDA), was innovative but ultimately not commercially successful. In
1996, Apple acquired NeXT, the company founded by Jobs after he left Apple, paving
the way for his return as an advisor in 1997. This period marked a turning point for Apple
as Jobs revitalized the company’s product line and vision.

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 NeXT - founded by Steve Jobs after he left Apple in 1985
The 2000s were transformative for Apple, beginning with the opening of its first
retail stores in 2001 and the launch of the iPod, which would go on to revolutionize the
music industry. The introduction of the iTunes Store in 2003 allowed users to purchase
and download music legally, changing how consumers accessed media. In 2007, Apple
dropped "Computer" from its name and unveiled the first iPhone, which combined a
phone, an iPod, and an internet communicator, fundamentally changing the smartphone
landscape.
The 2010s saw continued innovation with the introduction of the iPad in 2010,
creating a new category of mobile computing. In 2011, Tim Cook became CEO
following the resignation of Jobs, who passed away on October 5 of that year. Under
Cook's leadership, Apple expanded its product offerings, launching the Apple Watch in
2015 and introducing Apple Pay, which transformed mobile payments.
Entering the 2020s, Apple made a significant transition to its own Apple Silicon
chips, starting with the M1 chip in 2020, enhancing performance and efficiency across its
Mac lineup. The company also introduced the AirTag in 2021, adding a new dimension
to personal item tracking. As of 2023, Apple continues to innovate with regular updates
to its iPhone, iPad, and Mac products, alongside expanding its services like Apple TV+,
Apple Music, and the App Store. Throughout its history, Apple has not only
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transformed

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technology but has also profoundly influenced consumer culture and the way we interact
with digital devices.
2. Strategies that lead to Apple’s success:
Apple’s exciting journey offers many lessons for young, ambitious entrepreneurs.
Some of the key strategic takeaways are as follows:
Innovate Your Way to Success
Apple began with an electronic board that came without a keyboard or screen. This
was by no means a 'new' invention considering that MITS computers had already existed.
What was new was the design of the computer. This was later enhanced with the release
of Apple- II, which came with a built-in keyboard and was beautifully encased. As a
result, the Apple- II broke the market as people clustered to buy the convenient - and
aesthetically-pleasing
- model. The company continued the tradition of innovation throughout its history. The
Macintosh similarly flooded the market, and the iPod music player disappeared off
shelves as customers placed orders to buy it.
Apple also developed software, applications, and operating systems, to go along with
its products, which was a nod to its innovation strategy. All these things combined made
Apple a successful company.
Be Creative With Your Advertisements
Apple’s “1984” advertisement is well-known even today.
Its commendable use of the renowned novel to mark the arrival of Macintosh won
customers over. The brand was inevitably linked with ideas such as liberation, as Apple’s
products stood in direct opposition to Orwell’s literary world. Apple’s “Think Different”
advertisement was produced with a similar sentiment in mind. The company’s product
represented a certain mindset, which was present in the great thinkers of history, such as
Albert Einstein. So, when customers went to buy Apple’s products, it triggered certain
feelings and thoughts within them, inexorably increasing the company’s sales.
Offer Customers A Wholesome Experience
Apple-II’s sales were carried by the killer application that accompanied it. Visicalc -

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the first spreadsheet program - was the reason why both businesses and schools
scampered

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to buy the company’s second product. Similarly, the LaserWriter and the PageMaker
became the reason for Macintosh's popularity. Apple realized early on that it needed to
create a complete experience for its customers. Taking this lesson to heart, the company
kept improving its products and adding features to them to boost sales. For example, the
introduction of "Siri" and, later, multitasking in its products were meant to enhance the
consumer experience.
Build a Consistent Brand Image
Apple built a robust brand image through its advertisements but struggled to articulate
its primary purpose in the 1990s. With Jobs’s arrival on the scene, the situation improved,
as Jobs removed all unnecessary products from the company’s portfolio.
Narrowing the product range was necessary, as it allowed Apple to achieve
specialization in its main field. Plus, with a more manageable number of products, the
company was able to rebrand itself as a consumer-electronics company. The brand image
was now consistent, and its energies were directed in the right field.
Apple is hitting its 50th anniversary, yet it has a remarkable list of accomplishments
attached to its name. Over the past years, the company has contributed greatly to the
technological market by innovating user-friendly and aesthetically-pleasing products. The
journey has been tumultuous, but Apple has shown its resilience, promising a bright
future ahead.
II. ORGANIZATIONAL CHART AND INTERNATIONAL
STRATEGY
1. Organizational chart of Apple
1.1. John Sculley Era (1985-1997): A Divisional structure
The John Sculley era at Apple (1985-1997) was characterized by a divisional
organizational structure. During this period, Apple was divided into separate business
units, each responsible for specific product lines such as Macintosh, Apple II, peripherals,
and software. Each division operated semi-autonomously, with its own research,
development, and marketing teams.

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 While this approach allowed for focused management of different product lines, it
also led to challenges such as internal competition between divisions, duplication of
efforts and resources, and a lack of cohesive strategy across the company. The divisional
structure ultimately contributed to inefficiencies and fragmentation within Apple, and by
1997, Apple had been losing profits for years.This required a structural change, which
occurred with Steve Jobs' return in 1997.
1.2. 1997- Now: Apple’s functional organizational structure
1.2.1. Steve Jobs Era and Initial functional organization (1997- 2011)
Steve Jobs' return to Apple in 1997 marked the beginning of a shift towards a
functional organizational structure. This shift was driven by Jobs' vision of creating
tightly integrated products and services that worked seamlessly together: the Apple
Ecology.
The preliminary organizational structure of Apple during this period can be
simplified as follows:

The organization structure of Apple under Steve Jobs

 Top Executive Leadership: At the pinnacle of Apple's organizational chart was
Steve Jobs himself. His position was central to the organization, with all major
functions reporting directly to him.
 Senior Vice Presidents (SVP): Directly beneath Jobs, Apple’s functional structure
was segmented into several core divisions, in charge of by the SVPs. They are

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 responsible for different aspects of the company’s operations, rather than only
focused on specific product lines:
 SVP of Industrial Design: This division was critical to Apple’s innovation. It
included industrial design and hardware engineering teams, led by Jonathan Ive
and other key figures. This division worked closely with hardware engineers to
ensure that design and functionality were seamlessly integrated.
 SVP of Software Engineering: Focused on developing the operating systems and
software applications for Apple’s devices. This included Mac OS X, iOS, and later
software innovations. The software division was integral to creating a cohesive
user experience across all Apple products.
 SVP of Hardware Engineering: Responsible for designing, developing, and
refining the physical components and overall hardware architecture of Apple's
products.
 SVP of Worldwide Marketing and Retail: this division was responsible for Apple's
brand management and customer engagement strategies. The marketing team
crafted the iconic advertising campaigns and product launches that generated
excitement and demand. The retail division, with Apple Stores as its cornerstone,
provided a direct channel to customers.
 SVP of Operations and Supply Chain: Ensuring that Apple’s products were
manufactured efficiently and delivered on time.
 Functional Teams: Under each Senior Vice Presidents were teams of specialists
focused on their particular function.
The functional structure of Apple under Steve Jobs facilitated clear lines of
hierarchy, division of labor and a strong centralization of power. Each division had a
specific focus, allowing for specialization and deep expertise in their respective areas.
Jobs’ direct involvement in key decisions ensured that the company’s strategic vision was
consistently applied across all functions.

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1.2.2. 2011- Present: Tim Cook and the transition to a fully functional structure
Under the empire built by Steve Jobs, Apple’s organizational structure, while
achieving core values, still faced limitations related to rigidity in hierarchy. To address
the limitations of Jobs’ centralized model, Tim Cook introduced several changes,
including:
 Decentralized Decision-Making: Cook relaxed the rigid hierarchy that
characterized Jobs’ era. Instead of routing every decision through the CEO,
divisional senior vice presidents and product managers were given more
autonomy. This shift allowed for quicker decision-making and enabled different
divisions to take ownership of their respective areas.
 Enhanced Collaboration: One of Cook’s major contributions was fostering a
collaborative environment. Apple’s organizational structure began to incorporate
elements of functional and product-based grouping. This meant that the
development of each Apple product involved intensive collaboration between
various groups and divisions. The integration of hardware, software, marketing,
and supply chain teams became a standard practice, promoting a more holistic
approach to product development.
 Functional Flexibility: While maintaining elements of a traditional hierarchical
structure, Cook’s approach introduced greater flexibility. The rigidity present
under Jobs was replaced by a more fluid structure that encouraged creative input
from multiple sources. This flexibility allowed teams to work together more
effectively and share insights across functions.
While Tim Cook has maintained the core functional organization established by
Steve Jobs, he has also adapted and expanded it to suit Apple's growth and changing
market focus. Cook's version is more complex and specialized, reflecting Apple's larger
size and broader range of activities: At the top of the hierarchy is the CEO, who, along
with the executive team, provides overall leadership and direction for the company. The
second level of authority is distributed among key executives such as the Chief Financial
Officer (CFO), Chief Operating Officer (COO), and heads of Legal, Retail, Software

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Engineering, each responsible for overseeing their respective domains. The executive
team, which

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includes all senior Vice Presidents (VPs), reports directly to the CEO. Below this level,
functions are further subdivided into specialized departments, with senior VPs delegating
authority to VPs at the third level to manage day-to-day operations. Despite this layered
approach, significant decisions and critical actions typically require the CEO’s
intervention, ensuring that strategic priorities and corporate vision are consistently upheld
throughout the organization.

Current functional organization structure of Apple

Along with the aforementioned improvements, the organizational structure directly
influenced by Tim Cook still retains the core values left by his predecessor, Steve Jobs.
Both maintain a functional organization focused on expertise rather than products,
reflecting a concentration of power and a hierarchical organizational structure of Apple.
1.3. Apple’s reasons to remain its functional structure
Apple, despite its growth and size, has consistently resisted the trend of adopting a
multidivisional (M-form) structure that is common among large, diversified corporations
and retains its functional structure till present. With the multidivisional structure, the
company is divided into semi-autonomous units, each responsible for its own operations

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and financial performance. Apple's resistance to the multidivisional structure can be
largely attributed to its organizational philosophy, which emphasizes centralized control,
unified product vision and maintains a consistent brand identity across all products.
Firstly, Apple’s leadership, starting from its co-founder Steve Jobs and continuing
under Tim Cook, has always favored a highly centralized approach to decision-making.
In a multidivisional structure, power is often delegated to individual divisions, each with
the autonomy to make strategic decisions. However, Apple’s philosophy centers around
maintaining a unified vision across the entire company, ensuring that key decisions
regarding product design, development, and marketing are made at the top.
In addition, by avoiding the M-form structure, Apple preserves its cohesive
ecosystem, in which products and services work seamlessly together. A multidivisional
model might risk fragmenting this integration, leading to inconsistencies across divisions.
Apple's functional structure fosters collaboration between specialized departments like
design, engineering, and software, driving innovation. This structure enables cross-
functional cooperation crucial to Apple’s product development process, helping the
company maintain its competitive edge.
Last but not least, Apple’s functional organization also supports its brand identity.
Unlike a multidivisional structure, which could create varied approaches to design and
marketing, Apple’s unified control ensures consistency in product quality, user
experience, and brand messaging across its portfolio. This consistency reinforces Apple’s
brand values and loyalty, with all products designed to work harmoniously within the
broader Apple ecosystem.
2. Apple’s International Strategy
2.1. SWOT analysis of Apple
2.1.1. Strengths
Brand Reputation: In 2023, Apple ranked the first position for the 10th
consecutive year by Interbrand, with a brand value of $502,680 million.
Leading Innovation and Technology: Apple constantly introduces
groundbreaking features and pushes the boundaries of technology with its innovative

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products, such as facial recognition through face ID (iPhone X), augmented reality apps
through ARKit (iPhone 8), etc…
Diverse Product Portfolio: Apple has a diverse product portfolio despite the
iPhone’s popularity. Apple also has Apple Music, the App Store, and Apple Arcade, in
addition to the iPad, Mac, Apple Watch, and Apple TV.
High-quality Products and Services: Apple's reputation for its products and
services is built on its focus on design, innovation, and customer satisfaction. This is
evident in its sleek, minimalist design, tight hardware-software integration, rigorous
quality control, excellent customer support, and commitment to technological leadership.
Strong Ecosystem: Apple's seamless integration of hardware, software, and
services is difficult for customers to switch to competing products and creates loyal
customers.
Strong Financial performance: Apple is a highly profitable company and has
consistently generated net income close to $100 billion in the last three years. In FY23 –
$96.99 billion, in FY22 – $99.8 billion and in FY21 – $94.68 billion. According to
Statista, Apple generated $3074 of net income per second in fiscal year 2023.

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2.1.2. Weaknesses
Expensive products and services: Because of their high costs, their products are
targeted at people in the medium and upper-income brackets, which may limit its market
reach and cost. And since hardware and software are so closely intertwined, any
necessary repairs can be expensive due to the limited availability of parts and tools.
Compatibility Issues with Other Programs: Apple's products are incompatible with
other brands since they don't support other applications or technology. To keep using
their Apple gadgets, customers must purchase only Apple software or accessories.
Lack of new Innovative products: Apple's recent releases have not been as
successful in introducing innovative products as in the past, with features found in earlier
models, making it difficult for them to stand out and attract a new customer base.
The Decrease in Market Share: Competition from Samsung, Xiaomi, and OnePlus,
which sell cheaper Android devices, has recently harmed Apple’s market share.
According
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to the latest data, in 2024 (September), Android dominated the global smartphone market
with a 71.27% share, while iOS had a 28.02% share.

2.1.3. Opportunities
Increasing demand for Cloud-based services: The growing demand for cloud
services is driving a market expansion for Apple's iCloud services and applications.
Breaking Into the Gaming Industry: The release of Apple Arcade suggests
Apple could gain a larger share of the multi-billion-dollar gaming market.
AI Development: As the world moves towards a new wave of AI, Apple can take
advantage of recent developments to make its products more user-friendly and
approachable.
Green Technology: Climate change is the greatest environmental challenge
facing the world today. By including green technology, Apple will not only benefit the
environment but also improve the positive image of the brand in the eyes of consumers
and investors.

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 Venturing into Virtual Reality (VR) and Augmented Reality (AR) Devices:
VR and AR technologies are rapidly gaining popularity in various industries, including
entertainment, education, and retail. Apple, by developing new products like Vision Pro,
can capitalize on this new revenue stream and expand its fan base.
2.1.4. Threats
Rapid Technological Change: It will be a great challenge for the company to
keep up with the latest trends as technology is evolving constantly every other day.
Battle Against Counterfeit Products: Apple faces potential damage from third-
world countries illegally selling counterfeit products, damaging its reputation and
customer loyalty.
Economic Downturn: A global economic downturn could lead to a decrease in
consumer spending on electronic devices, which would hurt Apple's sales.
Backdoor Mechanism: The potential for government agencies to access user data
stored on the iPhone through backdoor mechanisms is a significant threat facing Apple,
putting private information of Apple’s users at risk.
Increasing Competition: Apple faces tough competition from Google, Samsung,
and Spotify in different technology sectors. These competitors offer cheaper items,
diminishing Apple’s market share.
Regulatory Changes: Apple is subject to several strict laws like other tech
companies. Any major changes to privacy, data security, or antitrust law might hurt
Apple’s economic model and force it to change goods or services.
2.2. Apple’s International Strategy
2.2.1. Pressure to reduce costs
There are some reasons why Apple’s strategy is under great pressure to reduce costs:
In Apple's strategy, it is only focused on creating products that are different from
others, with advanced technology and high quality, released new models and applications
that have outstanding features, better configuration than previous generations, along with
a relatively high price.

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 It has to face major competitors such as Samsung, Huawei, which are also
constantly improving new products and selling prices much lower than Apple. In
addition, the cost of launching products with the latest and most advanced technology,
including production costs, global shipping and marketing, is increasing day by day.
2.2.2. Pressure for local adaptation
In Apple's strategy, it specializes in producing high quality, high tech products
with multiple uses for all customers, regardless of country and preferences. In addition,
because Apple also has a large and stable sales channel, distributed in many different
countries, therefore, the company's products are often not different or vary from place to
place as they prioritizes product standardization, creating a competitive advantage in cost
mainly through achieving a competitive advantage on a large scale. They have always
been famous for its policy of one product, one advertising campaign in all markets to take
full advantage of economies of scale.
Except for a few slight differences in power, price and carrier characteristics in
some markets, Apple products are identical in terms of design, configuration, models, and
colors across all markets. All pricing policies, promotions, store system regulations,
warranties, etc. must comply with the company's regulations.
However, Apple, when faced with the pressure of different markets, was forced to
make changes to be appropriate. For example:
Example 1: India
India is a key market for Apple, with a growing middle class and increasing
smartphone penetration. Apple’s strategy in India has focused on tailoring its products
and services to the specific needs and preferences of Indian consumers. As Indians have
very elastic demand in terms of prices, Apple has introduced more affordable iPhone
models in India, such as the iPhone SE, to attract price-conscious consumers.
Apple’s localization strategy for the Indian market has included the adaptation of
its products, marketing campaigns, and customer support, including the development of
Hindi-language versions for its software. Also, it heavily invested in its online presence
in India, making it easier for consumers to purchase its products online and partnered

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with

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Indian e-commerce platforms, mobile carriers, and banks to expand its distribution reach
and payment options.
Example 2: Japan
When Apple Computer Inc. ventured into the Japanese market - the world's
second- largest economy and a fortress of domestic technological titans - in the 1980s,
this company confronted many significant challenges. These include: strong domestic
preference for local brands, high barriers to entry, competition from established domestic
and international mobile phone manufacturers. To overcome all these difficulties and
become as successful as it is today, Apple have used the following strategies:
 Leadership and localization were keys. By appointing a Japanese management
team and developing localized products, Apple demonstrated its commitment to
understanding and meeting the specific needs of Japanese consumers.
 Apple's marketing strategy evolved to be more aggressive and culturally aligned. It
expanded its network of distributors, sponsored high-profile events, and adopted
competitive pricing strategies with the efforts to increase brand awareness and
market share.
 With the challenges Apple had to face, adapting the iPhone to local tastes,
supporting Japanese character sets, and integrating with local mobile networks
were critical to overcoming these challenges.
 In the late 2000s, Apple marked its partnership with SoftBank. SoftBank's
aggressive marketing and pricing strategies positioned the iPhone as desirable and
attainable, helping Apple gain significant market share. This strategic partnership
with SoftBank and the introduction of emoji support were pivotal to the success of
the iPhone in Japan, allowing Apple to navigate Japan's complex distribution
networks and expand its reach effectively.
2.2.3. Global Strategy
To maintains a competitive advantage in the global market, Apple has used some strategies
including:
a. Product Strategy

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  Product differentiation: Rooted in the concept of “differentiation”, Apple’s
strategy was able to set it apart from its competitors. This differentiation has
allowed Apple to capture a loyal customer base and establish a strong brand
identity across the globe.
 Ecosystem Integration: Apple's products are designed to work seamlessly together,
creating a powerful ecosystem that enhances users’ experience and encourages
customer loyalty.
 Premium Pricing: Apple maintains a premium pricing strategy, positioning its
products as high-quality and desirable.
 Innovation: The company is renowned for its ability to consistently introduce
groundbreaking products. This innovation strategy has positioned Apple as a
market leader in various segments, including smartphones, tablets, computers, and
wearables.
b. Marketing Strategy:
 Minimalist Branding: Apple's branding is clean and minimalist, emphasizing
simplicity and elegance.
 Targeted Marketing: The company focuses on targeted marketing campaigns that
highlight the unique features and benefits of its products.
 Retail Experience: Apple Stores are designed to provide a premium customer
experience, showcasing products in a visually appealing and interactive way.
 Adaptation: Apple's global strategy has evolved to prioritize customer experience,
ensuring products and services align with global consumer needs and preferences.
c. Global Expansion Strategy:
 Emerging Markets: Apple has been expanding its presence in emerging markets,
such as China and India, to capture new growth opportunities.
 Localized Offerings: The company adapts its products and marketing strategies to
meet the specific needs and preferences of consumers in different regions.
 Partnerships: Apple has a strong global retail presence, with a total 530 stores in
27 countries, according to Wikipedia. By forming partnerships with local carriers

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and

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 retailers, this extensive retail network has provided consumers with easy access to
Apple products and services.
d. Sustainability Strategy:
 Environmental Responsibility: Apple is committed to reducing its environmental
impact through initiatives such as using renewable energy and recycling programs.
 Product Design: The company designs its products with sustainability in mind,
focusing on recycled and renewable materials, clean electricity and low-carbon
shipping.
III. EMERGING ISSUE OF APPLE’S ORGANIZATIONAL
CHART AND INTERNATIONAL STRATEGY
1. Emerging issues of Apple’s organizational chart
1.1. Lack of listening to employee opinions, strict work culture.
Since 1976, Apple has always operated in the same way: board of directors makes
decisions about how things work, and employees can either follow or leave. Now, an
increasing number of internal groups are speaking out about working conditions at Apple.
The root of this problem stems from Apple's highly secretive corporate culture, which
discourages employees from sharing work-related anxieties with others, be it colleagues,
the press, or social media. Secrecy was always a priority for the late CEO Steve Jobs. The
New York Times described him as being obsessed with preventing leaks of new products
to create a surprise for the public. Over time, employees say this culture of secrecy has
spread and become more pervasive.
Internally, secrets are kept through a series of regulations. They are simple: don't
talk publicly about Apple unless specifically asked. Employees are required to sign
NDAs (Non-Disclosure Agreements) for each project, and product documents are
encrypted with internal keywords like "Ultra," "Black," and "White." For many
employees, a lack of transparency and privacy is seen as the price to pay for working at
Apple. But for others, the company's refusal to listen to its workforce is a major issue,
especially in an era where the power balance is shifting from management to employees.

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 Everyone agrees that Apple's secrecy policy has created an environment that
prevents employees from speaking out about workplace concerns. They are not allowed
to talk to colleagues, the press, or mention it on social media. Complaints about
management or colleagues are often ignored. Employees are very afraid of criticizing the
company's operations. "This secretive environment is very toxic. I understand that
secrecy is important for products, to create surprises and delight customers. But it spreads
to other areas, causing obstacles and harm to employees" said Christine Dehus, who
worked at Apple for 5 years and left in August 2021.
1.2. Inflexible organizational machinery
The Apple org structure has its advantages and disadvantages. In addition to its
strengths, such as fostering consistency and focus throughout the company, enabling each
department to concentrate on its specific tasks, and thereby cultivating deep expertise and
optimizing performance in various domains, Apple's organizational structure also exhibits
certain drawbacks.
Despite the hierarchical structure's effectiveness in many aspects, it can limit
flexibility. The centralized nature of Apple's hierarchy can result in slower decision-
making processes, particularly when confronted with sudden changes or emerging trends.
The top-down approach may suppress innovation and creativity at lower levels, as
employees may be reluctant to propose novel ideas or take risks. Furthermore, the
concentration of power at the upper echelons can create an excessive reliance on top
leadership, rendering the company vulnerable to leadership changes or unforeseen events.
1.3. Problems with top management
1.3.1. Searching for Tim Cook's successor
Tim Cook has been hailed as a successful successor to Steve Jobs since taking the
reins in 2011. Having served far longer than the average Fortune 500 CEO and now at the
age of 64, Cook is significantly older than his peers. This seems like a suitable time for
Cook to start planning for someone else to shape the next chapter of Apple.
In a November 2023 podcast with Dua Lipa, Cook made his most in-depth
comments yet in succession. "My job is to prepare a number of people to be successful,

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and I really want that person to come from inside Apple. So my role is to make sure there
are a few people for the board to choose from," Cook said.
Toni Sacconaghi, an analyst at Sanford C Bernstein who has followed Apple for
two decades, noted that investors are very interested in Apple's succession plans.
1.3.2. A wave of key leaders leaving the company
Apple is facing an unprecedented wave of high-level executive departures, with 11
key leaders leaving in just six months, from the late of 2022 to mid-2023. Most of these
individuals held the positions of vice president or director and reported directly to CEO
Tim Cook. They were among the most important figures at Apple, responsible for
overseeing many of the company's core daily operations.
Departures included vice presidents overseeing areas such as industrial design,
online stores, information systems, Apple's cloud computing, hardware and software
engineering, privacy issues, emerging market sales, subscription services, and
purchasing. In total, 11 key personnel left, significantly higher than the number of
departures Apple has seen in recent years.
Of course, this also comes with a series of new leadership positions. Apple has
appointed a new head of human resources to replace retail chief Deirdre O'Brien and a
new chief information officer to replace Mary Demby and David Smoley.
According to analysts, there are several reasons for the wave of executive
departures. The rapid pace of departures may be partly due to the increasing workload on
executives, as well as other factors. The company is reportedly becoming more
bureaucratic over the years, especially in product development. Additionally, Apple's
enormous size means that individual contributions may not be as valued.
The loss of experienced leaders reduces the company's stability and management
experience, which could impact its ability to make strategic decisions and disrupt
innovation projects, slowing down the development of new products. Significant changes
at the leadership level may raise concerns among investors about the company's stability
and direction, affecting its stock price and market value.

27
2. Emerging issues of Apple’s international strategy
This essay will not delve deeply into the general impacts of the COVID-19
pandemic, the US-China trade war, or the Russia-Ukraine war as challenges for Apple, as
these have affected most businesses worldwide, not just Apple.
Instead, we will focus on more specific issues currently facing Apple, such as its
reliance on Chinese manufacturing, regulatory scrutiny in the US and UK, efforts to
preserve the App Store, declining iPhone sales, the need to catch up in AI, and the
pressing need to identify the next big product after Vision Pro.
2.1. Heavy reliance on China for manufacturing
In 2011, when Tim Cook succeeded Steve Jobs as Apple's CEO, he shifted Apple's
manufacturing operations from the United States to China. This move led to remarkable
efficiency, laying the foundation for Apple's subsequent rise. However, this extraordinary
success story also created a significant vulnerability for Apple: its overreliance on a
single country - China. While Apple has always claimed that its supply chain is global
and not overly dependent on China, the reality is that Apple relies heavily on the country
for manufacturing. Currently, over 95% of Apple's iPhones, AirPods, Macs, and iPads are
produced in China.

28
 Where Apple products are made - Source: Counterpoint Research EMS Insights Service.

In early November 2022, just weeks before the peak holiday shopping season,
Apple issued an unusual warning that customers would face longer wait times for iPhone
14 Pro models. The reason was that one of its key assembly lines in Zhengzhou, China,
had to cut production due to unrest at the factory. For years, Apple has relied on a vast
network of assembly lines in China to manufacture iPhones, iPads, and a host of other
popular products. However, this reliance has left Apple vulnerable during the pandemic,
geopolitical instability, and trade wars. Even as US-China tensions have escalated, Apple
has continued to invest in China and deepen its ties with the country. Cook and Apple are
now facing significant pressure from US investors and politicians to "decouple" from
China and accelerate their manufacturing diversification strategy. In an effort to diversify
its manufacturing, Apple has turned to other Asian countries, including India - a nation
with a population comparable to China but lower labor costs. According to Business
Insider, the iPhone company is trying to turn India into a new manufacturing hub.

29
However,

30
India's manufacturing capabilities are under serious doubt, especially after Foxconn
abruptly withdrew from a $19.5 billion semiconductor joint venture with Vedanta, setting
back India's ambitions to enter the chip industry.
2.2. Sales problems in international market
While Apple enjoys a strong position in the US, the same cannot be said for the
company in China, where the iPhone 15 is struggling in the world's largest smartphone
market. Apple's new iPhone 15 is not selling as well as its predecessor in the Chinese
market amid stiff competition from Chinese rival Huawei. Additionally, the relationship
between Apple and the Chinese government has become strained after Chinese officials
began tightening restrictions on the use of iPhones. Data from Counterpoint shows that
Apple saw a 19.1% decline in iPhone sales, while Huawei witnessed a surge of 69.7% in
smartphone sales in the first quarter of 2024.
Apple CEO Tim Cook called China “the most competitive market in the world”

31
Detailed market share of smartphone brands in China in the first and second quarter of 2024.
Source: Counterpoint

Apple has been trying to boost sales in China by offering discounts on the
company's online store in January. Some online retailers even discounted the iPhone 15
by up to $180. Despite this, Apple's market share eventually fell below 16%, down from
19%.
2.3. The App Store fee dispute in the UK and EU
In March 2024, Apple was fined €1.8 billion, or about $1.95 billion, by the
European Commission after being accused of abusing its dominant market position.
European Commissioner for Competition Margrethe Vestager highlighted that for a
decade, Apple had abused its dominant position in the market for the distribution of
music streaming apps through the App Store. They restricted developers from informing
users about cheaper alternative music services available outside of Apple's ecosystem.
According to EU regulations, this is illegal. In the March 4th ruling, the commission
banned Apple from blocking apps that provide services outside of iOS. Europe also
required Apple to remove restrictions on the App Store and comply with the EU's new
tech rules known as the Digital Markets Act (DMA) as of March 7th. Apple has made
several significant changes to the App Store in the EU this year in anticipation of the
DMA. Apple now allows apps to be downloaded from websites as well as third-party app
stores on its devices.
Additionally, on April 11th, US tech giant Apple lost a class-action lawsuit worth
785 million British pounds (979 million USD), filed in London on behalf of over 1,500
app developers regarding the App Store's fee policy. Developers accused Apple of
charging an unfair 30% commission on app purchases and other content on the App
Store. They argued that Apple is exploiting its dominant position in the app distribution
market for iPhones and iPads to impose high fees, harming developers and consumers.
The UK court's ruling is a significant step forward in app developers' efforts to force
Apple to change its commission policy. This lawsuit could pave the way for similar
lawsuits in other countries, forcing Apple to adjust App Store commission fees to ensure
32
greater competition and fairness for developers.

33
2.4. The failure of Vision Pro
Once expected to revolutionize technology, Apple's ambitious Vision Pro is facing
the risk of failure. Despite its distribution in multiple countries beyond the US, Vision
Pro's sales this year are projected to be less than half a million units.
According to market research firm IDC, Vision Pro smart glasses have sold less
than 100,000 units in a quarter. Despite being available in the US since February, Apple's
groundbreaking product has yet to reach a wide audience. For comparison, other Apple’s
products like the iPhone sold a million units within the first 75 days of its launch in 2007.
Meanwhile, Apple sold over 300,000 iPads on the first day in the US in 2010.
Apple hopes to boost Vision Pro sales by expanding distribution to more countries
beyond the US. Since late June, the device has been available in China, Japan, and
Singapore, and its availability has continued to expand to Canada, France, Germany,
Australia, and the UK in July.
The expansion of Vision Pro to many countries demonstrates Apple's
determination to capture the global mixed reality market. However, with a sky-high price
of $3,499 for the base model and less-than-comfortable user experiences—with many
users complaining of discomfort in the eye and neck areas after wearing the device for a
while—Apple will face many challenges in making Vision Pro a sustainable success.
Price is believed to be the biggest obstacle, deterring consumers from purchasing Vision
Pro. Analysts suggest that device sales will not increase unless Apple releases a cheaper
version. The poor sales of Vision Pro have led Apple to reconsider its strategy. In May,
The Information reported that Apple had paused development of the second-generation
Vision Pro to focus on a lower-priced model. "Regardless of the price, the success of
Vision Pro will depend on the available content. As Apple expands into international
markets, it's important to have content for each region," said Francisco Jeronimo, Vice
President of IDC.
The failure of the Vision Pro line of virtual reality glasses or the discontinuation of
the iCar project suggests that Apple has yet to find a suitable successor to the iPhone.
In conclusion, Apple at this time faces some emerging challenges at both

34
organizational and international levels that necessitate strategic reevaluation. Internally,

35
Apple's rigid organizational structure and culture of secrecy are creating friction,
impeding flexibility, and discouraging open communication. This environment has led to
concerns about employee morale and innovation, exacerbated by a wave of high-level
executive departures and the looming question of Tim Cook's succession. Externally,
Apple's heavy reliance on Chinese manufacturing poses significant risks amidst
geopolitical tensions and supply chain disruptions, while its efforts to diversify
manufacturing are still in nascent stages. The company's struggle with declining iPhone
sales in China, regulatory pressures in Europe, and the disappointing performance of the
Vision Pro highlight the need for a more adaptive and resilient strategy. To maintain its
market leadership, Apple must address these emerging issues by fostering a more
inclusive corporate culture, strengthening its global manufacturing footprint, and adapting
its product strategies to meet evolving consumer demands and regulatory requirements.

36
 CONCLUSION
Apple's nearly 50 year journey as a giant global technology company is a story of
innovation, breakthrough strategy, and adaptation. The company's success can be
attributed to its focus on user experience, premium products, and a tightly integrated
ecosystem.
Throughout Steve Job and TimCook’s “eras”, although there are some noticeable
changes, Apple’s organizational structure still maintains a functional organization
focused on expertise rather than products, reflecting a concentration of power and a
hierarchical organizational structure of Apple. Analyzing Apple through various global
strategies, including two detailed examples of Indian and Japanese markets reveals a
strategic approach that balances global expansion with regional adaptation.
However, Apple's current organizational structure and international strategies face
some challenges. The hierarchical model, while fostering efficiency, can stifle employee
creativity and slow down decision-making. Additionally, the recent wave of high-level
departures raises concerns about leadership stability and knowledge transfer. Finding a
successor to Tim Cook who can maintain Apple's innovative spirit will be crucial. On the
international front, Apple faces significant issues. Its overreliance on Chinese
manufacturing, declining iPhone sales in China, a key market, regulatory scrutiny in the
US and UK anf the failure of Vision Pro further complicates the company's global
operations.
To ensure its future success, Apple needs to address these emerging issues
by fostering a more collaborative work environment, diversifying its manufacturing base,
and exploring new product categories beyond smartphones. This will be essential for
maintaining its global leadership position.
In conclusion, any company venturing into international markets will inevitably
encounter a myriad of challenges, pressures related to economic, cultural, and legal
factors. For large corporations like Apple, the task of effectively managing a
organizational structure and developing international strategies to suit each country's
unique circumstances is particularly daunting. By embracing change while staying true to
37
its core values, Apple can continue to be a pioneer in the ever-evolving world of
technology.

38
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