Evaluating and Analyzing Organization Change Using Nadler and Tushman’s Model

free essayNadler and Tushman’s Model helps determine the drivers of high performance in an organization. The model provides a framework that helps in identifying areas that require improvement or reorganization of corporate structure to achieve desired performance. For an organization to achieve an effective performance, the key performance elements should include people, task, culture and structure. Nadler and Tushman’s Model requires analyzing how each key performance element interrelates in the organization. When analyzing the interrelation between culture and structure, the aspect of the analysis requires identifying whether the informal and formal structures compete or work cooperatively. When analyzing task and culture, the analysis involves identification of the ability of the organization culture to support the nature of work. The analysis of structure and people aims at identifying whether the formal organization structure ensures effective work of the employees. When analyzing task and people, the key performance element under evaluation includes the identification of whether the task is done by the right people with adequate expertise. For this project, Apple Inc. is chosen as the organization for the study. In 1976, Apple Inc. was established by Steve Jobs and Steve Wozniak. The company faced a series of competition from IBM that resulted in poor market shares perforce under the leadership of John Sculley in 1983 and Michael Spindler in the year 1991 when IBM assimilated more than 97 percent of the computer international market shares (Gamble & Varlaro, 2015, p.269). However, with Steve Jobs as a CEO since 1997, the company experienced a significant increase in its competitive advantage through developing an effective organizational culture and structure and using the right people to ensure innovation and products vision are achieved. However, despite Apple leading in innovations and product vision, the competitors such as HP and Android smartphones manufacturers dominate the market because Apple performs poorly in marketing. However, with Tom Cook as the new CEO since 2011, the company has regained its competitive advantage by launching Apple watch in 2015, but the company still has a poor marketing strategy.

People at Apple

The leadership at Apple since its formation has experienced both success and failure. However, all the leaders at Apple since 1976 have ensured continuous innovation and products vision. Jon Sculley as an Apple CEO in 1984 had a good reputation at PepsiCo and Coca-Cola where he developed a brand. During John Sculley leadership, Apple made the first generation computer known as PowerBook in 1991 (Gamble & Varlaro, 2015, p.269). Gamble and Varlaro (2015) state that due to the leadership of Michael Spindler in 1991, Apple managed to launch PowerMac family computers in 1994 that had PowerPC chip which increased the speed of Apple (p.269). With Steve Jobs as the CEO in 1997, Apple experienced a series of innovations that included iMac in 1998, iBook in 1999, iPod in 2000, iTunes in 2003, iPhone in 2007and iPad in 2010 (Gamble & Varlaro, 2015, p.269). Currently, Apple is under the leadership of Tom Cook who has ensured Apple’s products vision by launching Apple watch in 2015. Despite all the leaders at Apple stimulating innovations and product visions, all of its leaders have faced challenges in maintaining the level of competition against competitors. Under the leadership of John Sculley in 1990, Microsoft captured over 97 percent of the global computer market shares (Gamble & Varlaro, 2015, p.269). Under the leadership of Steve Jobs, Apple products such as iPad and smartphones have seen continuous reductions in the global market shares. According to Ortiz, Glebova, Huber and Yigit (2016), the sales of iPods went down by 45.5 percent while the sales of iPad dropped by 19.3 percent (p.5). Moreover, under the leadership of both Steve Jobs and Tom Cook between 2010 and 2014, Apple faced a continuous decrease in the global Apple tablet shipment that accounted for a decrease from 79 percent to 29 percent respectively (Ortiz et al., 2015, p.8). Despite Apple being the inventor of the smartphones in 2007, Android currently controls the market that comprises of 81 percent of the international market shares whereas Apple has 15 percent of market shares worldwide (Ortiz et al., 2015, p.8). Apple has leadership issues in relation to its global supply chain. Therefore, despite Apple’s leadership meeting innovation and product vision, the leadership has never maintained the market shares for the innovated products. Apple has managed to uphold positive revenue regardless of the global economic downturn in 2008. The output in leadership at Apple has been achieved over the years because the company has maintained a competitive edge during its entire history since its very establishment.

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Task at Apple

The task at Apple involves a series of innovations that require a high level of innovation and expertise. Johnson, Li, Phan, Singer and Trinh (2012) state that the first Apple product was invented by Sieve Wozniak in 1976 that underwent a series of innovations due to successive competition from IBM (p.1). The technological industry is competitive and requires innovative tasks to ensure a competitive advantage. Therefore, in the 1980s, after the invention of the new version of Macintosh, Apple experienced increased sales (Johnson et al., 2012, p.1). In the 1990s, Apple reinvented Power Macintosh that had PowerPC chip that helped in the competition against Microsoft office 95 but due to the similarity in its capabilities with IBM, Apple did not experience a significant increase in sales (Gamble & Varlaro, 2015, p.265). However, the tasks at Apple between 1997 and 2011 were marked by a series of innovations. Jonson et al (2012) claim that Apple introduced iMac in 1998 followed by iPod in 2001 and iPhone in 2007 (p.1). The nature of Apple products prevents them from being synchronized with other devices that do not belong to the Apple trademark. Innovations that involve the task of preventing multi-trademark synchronization have enabled Apple to ensure complementary nature of its products and create a competitive advantage. However, with progression in expertise in technology, PC corporations have manufactured devices that make tally with Apple products, thereby abolishing the complementary nature of Apple brands (Ortiz et al., 2015, p.13). Currently, the task at Apple involves the development of the Apple watch that is a key to ensuring Apple products that faced a decrease in the global market shares attain a competitive advantage. Apple also deals with the development of premium software and services. The services include iTunes music, while software requires annual updates. Apple iPhone products use iOS while Mac uses OSK. The Apple operating systems have advantages based on reliability, security, ease of use, multitasking and the compatibility with other Mac products. Conferring to the tasks at Apple, the company has met the desired outcome in most of its tasks except for iPod that has experienced continual reductions in sales due to the substitution with alternative products.

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Organization Culture at Apple

Mission, Core Values and Visions. The success of Apple becomes evident upon examining its effective organization culture. Apple has clearly set missions, values and visions that all employees abide by. According to Johnson et al (2012), Apple’s vision suggests that the company is devoted to improving computer experience through continuous innovation of software, Internet offerings and hardware that aid in the education sector and performance of personal duties (p.3). The vision aligns to the duties of the employees and ensures they maintain focus in meeting the product visions at Apple. The mission and the core values at Apple aim at motivating employees to work had in order to maintain the innovative competitive advantage of Apple. Johnson et al (2012) state that according to the website of Apple company, they are the leading communication company in making great brands on earth, which is among the core values of Apple (p.3). Apple has been the innovator of major technologies that confer to the communication sector. The company believes in manufacturing simple products that have the user-friendly nature rather than going complex (Johnson et al., 2012, p.3). Apple holds a priority for collaboration among the employees through the use of dual matrix organization structure that aims at reaching innovation that other companies cannot meet (Johnson et al., 2012, p.3). Apple operates only in the target markets where the company can obtain significant contributions or revenue and achieve maximum control over the products the company manufactures by preventing Apple’s products from synchronizing with other products (Johnson, 2015, p.3).  Additional core values of the company include avoiding some projects with the aim of completing only the projects that add value to the company. Therefore, the core values enable Apple to have maximum time in developing products that meet customer needs. The company admits it when they are wrong without settling for anything less than excellence.

Strategy. Apple’s business strategy involves leveraging unique designs and undergoing a vertical transition by which the company controls its entire supply chain. According to Johnson et al (2012), the company ensures product visions through investing in research and development intensively (p.3). Apple has taken measures that guarantee the expansion of its delivery and discovery in regard to the third part digital contents through the use of iTunes (Johnson et al., 2012, p.3). Apple uses corporate social responsibility in increasing the marketing efforts and providing quality products that enhance product dependability.

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Organization Structure at Apple

Apple uses a matrix organization structure with Tom Cook as the CEO and the leader of the company. Beneath the CEO, there exist Apple product manager, Apple America manager, Apple Europe manager and Apple pacific manager. The Apple America manager is responsible for sales and marketing in Canada and Latin America regions while Apple Europe manager is responsible for the company’s activities in France. The Apple pacific manager is responsible for Apple’s activities in Japan, Australia and countries in the pacific region. The leadership under every manager comprises of a dual authority structure in the overall matrix organization structure in which each Apple’s product manager interacts with the vice presidents of marketing, design, controller, manufacturer and procurement. After each product manager of the company has interacted with the vice presidents, the vice presidents report to the company’s president who is the CEO. The matrix organization structure has both benefits and disadvantages for the company. The benefits include having an organizational structure that enables the company to achieve efficiency in coordination required for meeting consumers’ demands. There exists flexibility in sharing both human resources and capital across products that enable the company to exploit its human resource effectively. Matrix organization structure helps in making complex decisions due to its dual nature that enables each product manager to interact with all the vice presidents under different sectors of the company, especially in regard to the unstable environment or frequent market changes. The organization structure works effectively for such organizations as Apple which have many product brands because it enhances both product and skills development. Despite the advantages of Apple’s matrix organization structure, its disadvantages include employees experiencing dual authority that results in the frustration or confusion which consequently leads to the reduction of employee’s motivation. Dual matrix organization structure requires frequent meetings and conflict resolution that result in time wastage. Due to the complex nature of the matrix structure, Apple’s organization structure requires leaders to maintain a great power balance. Apple’s organization structure has met its output of ensuring effective management and collaboration that enable the company control all its branches globally.

Apple Company Environment

Demographic Segment. The world has experienced a significant increase in the use of the Internet due to the global acceptance of computer and Internet devices such as tablets, smartphones, iPad and electronic books. The estimated Internet usage globally accounted for 314,440,891 users according to 2012 census (Johnson et al., 2012, p.4). The young population has adopted the Internet use with the United States alone accounting for 42 million youths under the age of 18 in 2012 (Johnson, 2012, p.4). Johnson et al (2012) state that the 2012 census recorded a gender ratio of 51 percent men and 49 percent women showing that the use of smartphones is not affected by gender. Also, people between 18 and 34 years accounted for the highest use of smartphones equaling to 94 percent while people above 55 years accounted for only 6 percent (Johnson et al., 2012, p.4). Therefore, the use of Apple products is affected by age. Considering education sector, university students provide the highest market for Apple products that account for 63 percent, while college students account for 26 percent and high school students account for 11 percent (Johnson et al., 2012, p.5).

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Socio-Cultural Segment. Apple products have experienced global acceptance across cultures that have embraced globalization of Apple products. However, according to Johnson et al (2012), Apple experienced difficulties in selling Apple products with 3G and 4G technologies due to the lack of popularity of such technology in the Asian Market (p.5).

Government Segment. Political factors provide both disadvantages and benefits to Apple Inc. The global and American patent laws protect the technology used in Apple products’ production from being copied by the competing companies. Sawayda (2011) states that Apple filed a lawsuit against Samsung and HTC for copying the iPhone model and on the other hand, Kodak filed a lawsuit against Samsung that led to a fine of $1 billion (P.6). Different government policies from overseas and the United States affect Apple in terms of the technology development. The Patriot Act in the United States and Privacy policy in China prevent Apple from guaranteeing ethics in providing services and products due to the breach of privacy.

Technology Segments. Advancement in technology poses both advantages and threats to Apple. Due to advancement in technology, new products have been created and this has led to Apple losing total control of their products due to the ability of other products to synchronize with Apple ones (Ortiz et al., 2016, p.13). Moreover, the development of cheap alternative products that can substitute Apple products such as iPod has resulted in the reduction of sales of the affected Apple products. The iPhone products have lost its market shares to Android smartphones and Microsoft because iPhones have premium service, fixed models and fixed price software. However, with the increase in the use of optic fiber, Apple will experience an increased use of the Internet that will provide opportunities to the company, especially in the online platforms such as Apple Music.

Nadler and Tushman’s Congruence Model Analysis of the Apple

Culture and Structure

The informal and formal structures at Apple work cooperatively because the organization culture has clearly set missions that provide direction of focus to every individual at Apple. The Matrix organization structure interrelates with the Apple’s organization culture to ensure that the employees meet the vision of the products. Apple’s structure and culture have played a key role in the development of iMac, iTunes, iPod, Apple watch, iPhone, iBook and Apple App store. Since the informal and formal structures do not compete, the interrelation between culture and structure at Apple is outstanding.

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Task and Culture

The culture at Apple interrelates with the task to produce effective results related to products vision and innovation. Apple’s organization culture supports the innovative nature of work in the company. Currently, Apple is the leading communication company in the world due to the innovation of its new unique products that facilitate diverse but improved computer experience that is similar to their core values. The culture of Apple suggesting that they must have total control over Apple products has resulted to Apple meeting its task of developing products that have limited compatibility with products from other brands. However, the culture has affected the task that involves marketing of Apple products. The manufacturing of Apple products that do not synchronize with the products from other brands has resulted in the reduction in the target market of Apple products. Also, Apple targets only those markets that they believe to make significant contribution that would reduce Apple’s target market since the company only targets to the middle and high-class individuals. In response, the interrelation between task and culture at Apple focuses on developing premium service, fixed models and fixed priced software. The interrelation between culture and task is the key reason for the continuous reductions in the global market shares of Apple products.

Structure and People

The matrix organization structure enables Apple’s employees to meet consumers’ demands and ensure effective coordination. Due to the interrelation of highly skilled employees and effective coordination based on the effective matrix organization structure, Apple is able to meet its new projects and products visions that other companies have failed to meet. The organization structure ensures effective decision making due to its dual authority nature that enables employees to perform to the best of their abilities. Moreover, with dual authority and coordination, Apple is able to use diverse expertise from employees performing different tasks in the development of different products, thereby, enhancing functionality. However, matrix organization structure has weaknesses because it is complex and requires a great balance of power. Also, there exist time wastage and frequent meeting required for solving problems that reduce employees’ motivation.

Task and People

In the innovation segment, the company has the right people to perform tasks at Apple. All the leaders at Apple have stimulated innovation and invested in research and development that have enabled the company to create an innovative competitive advantage. According to Johnson et al (2012), Apple sold a total of 35,000 computers in 1978 and 78,000 in 1979 and then it decided to go public with 1000 employees in 1980 (Johnson et al., 2012, p.1). Leaders such as Steve Jobs had a good reputation in the computer industry regardless of if them working for Apple. For instance, Steve Jobs after leaving Apple established NeXT that provided the competitive advantage at Apple after his arrival back at the company in 1997 as the CEO. Moreover, the current CEO, Tom Cook, had a good reputation at Compaq before he started working at Apple. All the leaders and employees have met the products vision task at Apple which has led to new unique designs and new computer experiences. Currently, Apple meets its Apple watch task that has resulted in the increased revenue of the company. However, despite the employees at Apple meeting tasks that relate to innovation and products visions, the marketing at Apple is poor and the company has faced a continual inability to maintain its global market shares. Moreover, the employees have not found a technology that can be used in preventing Apple products from synchronizing with other products that will help improve the complementary nature of Apple products. Also, despite Apple employees developing new products, the new products act as substitutes of the previous ones that result in the reduction in the sales of the previous products. For instance, the large screen of iPhone has led to people using it as a substitute of iPad.

Issues That the Apple Should Address

Apple’s culture has issues that affect the marketing of Apple products. The culture according to which Apple should have total control of its technology by which the company prevents Apple products from synchronizing with other devices has affected Apple products market negatively. Apple’s competitors have been able to gain market shares due to the increased compatibility of their devices. Moreover, Apple has lost education sector target market due to the inability of OSK to become compatible with different kinds of software that is used in the education sector. According to Ortiz et al (2016), Apple can solve the issue by making Apple products more compatible with software and devices to help in eliminating the competitive advantage of Compaq, HP and Dell.

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Apple’s strategy of marketing only those places that have a significant contribution has resulted in the company losing its global market shares after every innovation it has made. Apple leads in innovation and the competitors dominate the global market. Apple targets the elite and the middle class. Apple’s strategy of making fixed models with fixed prices has reduced the competitive advantage of the company in both domestic and global markets because such products do not meet the needs of a wide range of consumers. Moreover, premium updates and fixed priced software make Apple customers switch to alternative products such as Android devices. Therefore, the company should change its culture and consider targeting all users who desire diverse products through manufacturing a wide range of models and software with a wide range of prices.

Apple should adopt a horizontal structure in its organization structure that ensures increased flexibility, especially when there are changes in the customer needs. Apple has been launching new products and dominating the global market for a short time. Hence, horizontal organization structure will help Apple in fixing such issues in future and gaining a competitive advantage. Horizontal organization structure will enable every employee at Apple to gain experience in the broader perspective of the Apple’s goals. Also, horizontal organization structure encourages teamwork through facilitating shared commitment among the team members as well as ensuring effective collaboration. Therefore, horizontal organization structure would solve the problem of reduced motivation among the employees caused by matrix organization structure. Similar to matrix organization structure, horizontal organization structure will improve decision making and increase innovation because it encourages sharing responsibilities among the employees. Additionally, horizontal organization culture will improve the quality of life among the employees.

Resources That Can Help In the Analysis of Aspects That Are Difficult To Understand

Since Apple has numerous products, it is difficult to understand how each product contributes to the revenue of the company. With the use of BCG matrix, it will be possible to identify the star, cash cow, dog and problem child products. The star products in Apple Company comprise of iPhone, iTunes, iPad, and Mac PCs. This is because among Apple’s products, the above products ensure a competitive and dominant position of the company in the respective market. The revenue collected in 2014 from iPhone sales was $101, 991 million, the revenue from iPad sales was $30,283 million, while Mac sales revenue was $24,079 million and iTunes revenue amounted to $18,063 million (Gamble & Varlaro, 2015, p.271). The cash cow products include Apple’s products that have high sales but little market dominance. Examples are accessories that account for the revenue of $6,093 million. The cash cow products at Apple have high sales because their demand is derived from the demand for other products. The reason they have high sales is because they cannot be easily substituted. Moreover, Apple designs products that ensure reduced compatibility aimed at enhancing control over Apple devices. The dog products at Apple include high-tech products that have low sales or result in losses. An example is the iPod. According to Ortiz, the sales of iPod dropped by 45.5 percent in 2014 (p.5). According to Gamble and Varlaro (2015), the sales of iPod in 2014 amounted to $2,286 million that accounted for a decrease of 48 percent when compared to the revenue collected in 2013 (p.271). The problem child products include iCloud and iBook that have significant market sales but their market growth is insignificant.

Conclusion

Nadler and Tushman’s Model has successfully analyzed the organization change at Apple. From the analysis, it was identified that the interrelations between task, people, culture and structure all intersect to provide an effective organization vision on the innovation and products vision. However, several issues arise from the Apple’s organization culture affecting the marketing task.  The culture of total control of products and targeting only the market where the company can obtain significant contributions have resulted in the company losing its global market shares. Moreover, the matrix organization structure poses challenges that result in the reduction of the employees’ motivation. The solutions to the challenges faced by the organization involve the adoption of horizontal organization structure and increasing compatibility of Apple devices to lower the competitive advantage experienced by Samsung, Dell, Microsoft and HP. BCG matrix has helped in analyzing Apple’s products with the aim of identifying the performance of each product in the global market. From the analysis, it was evident that the development of iPod was not entirely successful due to the continuous reductions in its sales and substitution by alternative products.