Operational activities are critical component of businesses and organisations. Business ventures are started to provide services and products to clients. The operation is concerned with transformation of available resources into outputs which include products and services. Therefore, the management of company operations is crucial. The operation management involves planning designing, and monitoring the production process and improving systems and structures for purposes of achieving high efficiency. This requires a strategy which outlines how an operational objective is to be achieved. This essay uses Apple Inc to illustrate the concept of strategic operation management. It examines the company critical components of productions such as supply and distribution, manufacturing, technology, human resource and quality management.
Apple Inc is a multinational electronic company based in California in the United States of America. It was incorporated in the United States under the name Apple Computer Inc with Steve Wozniak and Steve Jobs as the directors. Due to shift in production from computer manufacturer to digital and communication developer, the company changed its name to Apple Inc in 2007. Today, it has grown its portfolio to include designing, producing and marketing of consumer electronics. Its products include computers, smart phones, software such as OS X and iOS and media devices like Apple TV.
Although Apple had been crippled by operational inefficiencies at initial stages, its journey towards becoming the leading technology firm in America is phenomenal. Indeed today, Apple Inc. is the most capitalized technology company in America with market value of US dollars 659 billion. This exceeds the combined value of its competitors, Microsoft Corporation and Google Inc. While some analysts attribute this success to the adoption of market led operational strategy, others associate it with the late former Chief Executive Officer, Steve Jobs exceptional managerial skills. Immediately after assuming office in 1997, began to restructure the production line. He focused on improving existing product models to suit clients ever changing preferences. As a good innovator, he steered the firm in the production of Apple’s most liked products such as iPhone, iPod and iPod.
Apple is one of the few companies that boast of many customers who are loyal to its products. This is best captured by its sale of 5 million iPhone within a week of its release. Consequently, Apple profits have remained all time impressive. The market for its products has been growing even in developing continents of Africa and Middle East. It is argued that the company has adopted a bottom up operational strategy where the customer feedbacks are used to improve the products. For instance, the newly released iPhone 5 has a longer battery life than the preceding iPhone 4S. This improvement was informed by the clients’ complaints about short internet time. Besides, the company has invested heavily on technology aimed at producing quality products that can withstand market competition. Its products such as iPod and iPhones are considered stylish and durable. Its technology has improved over time to a point where its products are identified by certain unique features that are absent in the competitors products.
Although Apple products are the most expensive in the world, its sale has soared past the expectation. According to company sources, 2 million orders had been made before the release of iPhone 5. Many more customers were eagerly waiting by Apple stores worldwide to get the latest Smartphone. While the iPhone 5 retails at $ 649, a Samsung Galaxy SIII Smartphone with similar specification cost $ 429. From this comparison, it is evident that Apple does not focus on pricing as a strategy. The company relies on product quality to generate the revenue needed to spur growth (Ruggles, 1991). This explains why its products are not common in poor nations where consumers are willing to sacrifice quality for cost. Take, for example, the Macintosh Personal Computer market performance. Its world’s market share stands at 5.2% while the MS Windows has a market share of 92%. The company ability to manufacture hardware as well as software to run it has enabled it to take full control of the production process. For instance, iPhone 5 runs on iOS 6 which is developed by Apple software engineers. Therefore, issues of compatibly are easily fixed. Furthermore, the production schedule is easily adhered to, and products delivered to the market as planned as both processes are performed by the same company. On the contrary, Samsung uses the Android operating system developed by Google to run its Galaxy series. Considering that these two companies are independent, Samsung has no control of software production. Consequently, its production plan is affected by Google’s operations. There are even instances where the Android OS applications have been found to be incompatible with certain Samsung Smartphone series.
The Corporation manufactures products that target many aspects of life like entertainment and security. Gadgets like mobile phones are increasingly becoming inseparable part of life. Today, many business transactions are done via mobile phones hence the need for extra security features. Although Blackberry, still commands the lead in this aspect, Apple products also comes with powerful security features. Targeted products also contain inbuilt games, media players, high definition display and high quality sound quality which appeals to the youths.
Areas of Operation
The company headquarters is based in California in the United States of America, where its executives and design engineers work. There are four geographical operational regions namely; Europe, Asian Pacific, Japan and America. The Europe region also encompasses Africa and Middle East while the American region consists of all countries in North and South America. The headquarters for the Europe, Middle East and Africa is based in Cork, Ireland. The division of the operation area into four distinct regions was occasioned by the levels of operational activities that are undertaken on in these regions. This strategy ensures that the company to allocate resources according to the regional requirement. In addition, it is also easy to prioritise certain activities in different regions.
Procurement and Sourcing
The corporation uses two methods to procure manufacturing components:
The company procures specific components such as microprocessors and Application Specific Integrated Circuits (ASIC) from one supplier namely Intel Corporation. Procuring these critical components from a sole reputable firm such as Intel ensures that quality of products is maintained. In addition, single sourcing offers exceptional flexibility needed for customisation of components. It also makes it possible for the involvement of the supplier in research and development (Nancy and Nancy, 2006).
Other components such as NAND flash memory and Liquid Crystal Display (LCD) screen are sourced from companies such as Samsung Electronics and LG Corporation. Multi sourcing provides the company with a choice to buy component at a favourable price and reduce the operational costs. In addition, problem of delay in supply of the component is partly solved because of availability of a variety of sources. This ensures continuity in production and insulates it from being affected by the operational challenges of suppliers. Other notable suppliers are Advanced Micro Devices Inc, Analog Devices Inc, Avago Technology Ltd and Amkor Technology Inc.
The company outsources the entire manufacturing process from Asia with Foxconn as the leading manufacturing partner. This company operates manufacturing facilities in strategic countries like China, Mexico, Hungary, Japan, Mexico and Brazil. However, the designing of Apple products is done at California based facility. The outsourcing of manufacturing activities enables the company to benefit from cheap labour cost in these countries (Saxena, 2009). This translates into low production cost.
Apple products are highly energy efficient, highly compact to minimise material waste, and small to enhance shipping. They are made components that can be recycled and free of toxins. In the process, the corporation meets its clean environment requirement.
The corporation employs advanced technology to make products. Majority of its products are known for their attractive designs, high adaptability, quick internet connectivity, long battery life. It is focused on delivering gadgets that offer entire solution to consumer requirements. Cocoa Touch framework is used as a platform for the development its operating systems. This framework allows full transfer of operating system features to any application developed on it thus saves time required to develop an application.
Distribution and Markets
The company own retail outlets in different parts of the world where customers get Apple products. It has also partnered with third party vendors to expand its distribution channels. Besides, its online store is used to distribute applications and other digital content. The company The Company continues to expand its distribution network by partnering with other technology vendors. This ensures that products reach the markets faster and increase dependability. The United States of America accounts for the largest share of product market with Europe coming second. For this reason, most of the corporation retail stores are found in US with the remaining distributed in other countries. The stores are situated in large cities where substantial purchasing power exists. This strategy ensures the products are brought within the reach of the targeted customers. The outlets in these cities are attractively designed and painted to catch the attention of consumers and therefore, market the products. These stores also sell third party accessories and software which increases the number of visitors and provide an opportunity for people to view Apple wonderful products.
The company recruits sales executives who have extensive knowledge on products and services. They educate consumers on technical aspects of the gadget to tap on value buying. There is also online support system where clients can seek help on various aspects of the products they have bought or intend to procure. The retail stores also offer technical services such as a replacement of parts and reconditioning. Besides, the company gives warranty on most of its products to boost trust and as a quality assurance measure. This package of customer relations activities boost the confidence of clients on the company's products and also increase sales.
Human resource Management
Apple employs close to 60,000 permanent employees and about 2,600 casual workers. It has two core divisions in its management structure. One is taking care of development, testing and production of devices while the other provide support services such as distribution, marketing and after sales services. The other noncore division is concerned with administrative duties. Its top employees include the Chief Executive Officer, Project Managers and Software Engineers.
The corporation value creative and innovative employees who are the drivers of growth. It recognizes that high product performance depends on the expertise and commitment of Apple staff to quality. It offers competitive remuneration to maintain highly skilled human resource. Consequently, experienced staffs from other technology firms get their way into the corporation. The company policy on employment stresses on competency. As a result, only the best technology experts are accorded the opportunity to work for the company. These technocrats are paid high salaries to retain them. There are other benefits like share allocation which boost employees' dedication. It is an equal opportunity employer which emphasises on individual competences and abilities. Within the corporation, any form of discrimination based on race, religion, social status and political affiliations are highly discouraged.
Research and Development
Apple operates in a sector where continuous improvement of technology is necessary for survival. The release of new advanced product into the market by the competitors means that the firm has to rely on research and development to counter the impacts. To this end, the company has invested heavily on research and development laboratories which are the originators of innovation. It also continues to acquire strategic technology firms in order to build production capacity. One such company is 3D Mapping of Sweden.
Apple is touted as one of the best inventory managers. Rarely do apple products stay on the shelves for a long time. The company manufactures consumer electronics which are speedily absorbed by the market which has resulted into lower inventory in hand ratio. This can be attributed to its policy on market research before a product is delivered for purchase. It has an extensive network of distributors who give vital information on market dynamics which are then factored into the production process. The cautionary manufacturing approach which often affects the distribution is not practiced.
Apple is has shown commitment to international standards on quality and environment safety. It uses the best technology and component to assemble high standard products. It goes further to display useful product information on products such as power rating, frequency and safety precautions. Its supplier code of conduct booklet contains quality requirement for each component to be supplied. These requirements range from safety to health measures. The company has developed an action plan aimed at minimising toxic wastes. It also produces products that are energy efficient and it is currently incorporating green energy in the manufacturing process. It has internal quality management department which ensures that the products have the highest quality standards and adhere to quality checks formulated by quality control organisations.
The success of Apple Inc is a pointer to the fact that its operational strategies are realistic practical and appropriate. The corporation has continued to register a positive growth in revenue despite operating in a sector characterized by stiff competition and high capital investment. Its investment in key areas such as research and development, distribution channels and technology promises good future returns and sustainability. The outsourcing of labour intensive operational activities like manufacturing is well informed cost cutting measure. However, the poor performance of company products in Africa and Middle East market raises a lot of questions. Perhaps the company is not doing enough to markets its products in these regions. This is an operational issue which should be fixed through the establishment of distribution channels targeting the regions. Finally, the company should consider producing low cost electronic products for developing nations.
Nancy, N., and Nancy, M., 2006. Implementing purchasing and supply chain management: best practices in market research. Arlington: Rand Corporation.
Ruggles, F.W., 1991. Apple: certain conditions of competition between US and Canadian industries. Washington: USITC Publication.
Saxena, J.P., 2009. Production and operation management. New Delhi: MC Graw Hill.