APPLE, A KNOWLEDGE INTENSTIVE COMPANY WITH KNOWLEDGE WORKERS 11
Thispaper defines knowledge management, discusses the core stages of KMdevelopment and compares the definition and features at each stage tothe knowledge management practices of Apple Inc. Specifically, thegeneral position of the paper is the acknowledgment that Applecompany is a company that applies all the facets of knowledgemanagement, but not without the challenges that every knowledgeintensive firms faces. For every challenge that is justifiablyapplicable to the operations of Apple in regard to knowledgemanagement, plausible suggestions of solutions that seek to mitigatethe costs and inefficiencies that arise when innovations do not keepup with the industry’s pace. The solutions suggested are therecommendations for Apple Company and also other companies that havethe features of knowledge companies. The KM definition hereinencompasses a multicity of industries that apply knowledge managementin all business processes including understanding the trends thatshape tastes and preferences of the end user. Apple’s employees arevital for its innovation process due to research culture in thecompany and their technical professional backgrounds.Apple Inc.still faces competition from other PC companies that also have aknowledge intensive working environment. Thus, recommendationssuggests the future strategies that Apple cam use to dig intoexisting and future information to enhance its competitiveness in thehi-tech market.
AppleInc. has its headquarters in Cupertino, California, The UnitedStates. The company has many retail outlets in different countries inEurope, Asia, Australia, and Africa. Apple’s market capitalizationis worth $765 billion registering the largest company in that scope.Recently, Apple’s size grew to double the size of Exxon by marketcapitalization. Apple began its operations in the PC market in 1977as a manufacturer and designer of mobile devices, provider of mediaservices, digital video players, networking solutions, third partydigital content and the associated applications. Apple’s productsare:iPhone, Apple television, OS X, iCloud, Mac, iPod, consumersoftware,iPad, applications other accessories and service supportofferings.The company understands the hi-tech market as verycompetitive.
Externaland Internal Analysis of AppleInc
Theexternal environment of Apple, Inc. entails the market definition andrate of growth of market share, the PEST analysis, the competitoranalysis, and industry competition analysis.
Marketdefinition- Apple company is the only producer of both hardware andsoftware products. On the international scale, Apple is the secondproducer of smartphones after Samsung according the total numbersmartphones shipments on the international market. Samsung’shigher sales by number of smartphones were caused by the variationsof market segments that both companies target. Apple targets thehigh-end market, while Samsung cuts across all income groups.
PESTanalysis (The political, economic, social, and technological factorsaffecting the company)
Politicalfactors: geopolitical uncertainties on the international market, thefight against terror across the world, and political instability incountries that have the company’s operational offices and retailstores affect s Apple’s sales.
Economicfactors: The purchasing power of potential consumers of Appleproducts is contingent upon prevailing economic conditions. Inflationary pressures arising from high cost of fuel also drives upthe retail price of Apple products.
Socialfactors: The unique design and quality of Apple’s products hasgrown its reputation as a high-end company. Other social factorsthat have influenced Apple’s growth are growth of music and thefilm industry. For instance, the iTunes is apple’s music storethat has revolutionized the entertainment industry.
Technologicalfactors: It knowledge driven production culture spurs innovationleading the production of competitive products. The company has arobust R&D tradition that guides the design and productionprocess and aligns it with customer needs.
IndustryCompetition (Using Michael Porter’s five forces model)
Intensityof rivalry in the hi-tech and PC industry: There are three factorsthat make Apple an unrivalled company: customer loyalty, technicalsupport, and high quality products. A combination of the threefactors gives the company an edge over other PC and softwareproducers.
Supplierbargaining power: Apple’s suppliers have a high bargaining powerbecause it still has a high growth potential. Currently, there areon-going registrations of new suppliers to try and reduce theaggregate bargaining power that has had negative effects on the finalconsumer.
Buyer’sbargaining power: Buyers have a high bargaining power due to thecompetitive nature of the PC market. Apple has to be up-to-date withcustomer needs in order to maintain its market share. Customers arealso very sensitive to price hence, a slight change leads to aswitch to a similar product from the competitor.
Threatof new entrants:Although there are companies that could enter themarket, they do not pose a huge threat because Apple has a strongbrand image and robust innovation culture that is hard to compete.
Threatof substitute products:The threat of substitutes is high on Appleproducts. As long as Apple can maintain a competitive position on twoissues: price and performance of products, it can continue having thelargest market share.
Inthe United States – 34%
InEurope – 22%
AsiaPacific – 33%
Therest of the world- 22%
(iTunes,software applications, and ipods)- 9%
Apple’sBrief SWOT Analysis
Inview of Apple’s analysis, the company is undoubtedly among the bestcompanies in terms of knowledge management (KM). Understanding howthe definition of the knowledge management and how it affects in thecontemporary business environment provides the basis to explain howApple Company has applied its principles to create an extraordinarilyinnovative culture. There are several definitions of KM, but thefowling definition is comprehensive and relevant to a 21stCentury knowledge organization:
Knowledgemanagement is the process of gathering the collective expertise of anorganization (company in this case) from whatever source it is storedsuch as databases, people’s heads, and paper, and distributing itto where it can the biggest payoff (Awad&Ghaziri,2007).
KMinvolves knowledge workers. Al knowledge workers are in anenvironment where they are free to exchange and produce assets byusing various technologies. The exchange of knowledge to createintangible assets has a positive influence on the company. There areseveral sources of the knowledge from which businesses gatherinformation to influence innovative ideas in the organization: Theyinclude(Courtney,2001):
Customerknowledge: Empirical data and raw information about customer needs,contact, and purchasing power are some of the details about thecustomers that company’s gather to influence decision making.
Productknowledge: Companies gather data and information about their marketplace for different products they sell. Knowledge about productsranges from the target market, the price, the price of competingproducts, and the resources spent in producing and distributing theproduct.
Financialknowledge: Companies gather information about capital resources, thesource of capital, and the cost of capital and then integrate theinformation into its financial practices.
Personnelpractices knowledge: The Company understands the available level ofexpertise, the quality of service they provide, the potential levelof innovation they can achieve, and the quality of customer service.
AppleCompany: The Knowledge Company
Appleis among the modern companies that use KM and KM systems toholistically combine use their organizational and technical solutionsto achieve the goals of knowledge retention and reuse in order toimprove organizational decision making on innovation and product andservice competitiveness.Apple’s knowledge management takesadvantage of a technically and professionally-motivated staff whosehiring involves a strong emphasis on strong background in technologyuse and application(McElroy,2003).Apple has a creative balance between managing high demand forits products and the management of its skilled workers. Apple’semployees are crucial through the experience, formal skills, andeducation. The company also has a strong organizational base in termsof its relations with clients, the execution of corporate rules, andadherence to production and supply chain manuals. The companyconsiders employees as the real assets in production because they arethe source of concepts that drive the innovation process.
Allthe knowledge that employees accumulate is brought together throughresearch and development initiatives with the aim of creatingintellectual capital. To execute the strategies derived from the hugeknowledge base, Apple’s uses scientific analytics to arrive atimportant decisions on design, supply chain management andimplementation of strategic decisions. Apple did not use open systemsarchitecture strategy hence, losing the possibility of settingstandards for the industry.Open systems architecture vitally setsstandards for product attributes or the protocols that defines theinteraction of a product with its other product elements. Like otherPC companies, Apple does not have a single standard operating systemdue to factors such as (Dalkir, 2013): i) the oligopolistic nature ofthe market 2) the computer orientation that reduced them to terminalstatus 3) the unwillingness of companies to abandon the their use ofcustomized software and 5) language barrier that impedes the exportof some products need translation software for all known languages.
Appleuses both radical and incremental innovation. After producing aproduct the research team designs improvements of the product or onethat replaces it altogether through time. For instance, the iPodunderwent massive changes to increase the storage capacity, cuttingthe cost of production and increasing its portability. The iPodchange is an example of incremental innovation that Apple uses tocontinue meeting customer needs. An example of a product that wasmanufactured out of radical innovation is the iPad that combined boththe features of the iPod and the smartphone. The innovation of theiPad was an affirmed the company’s dominance in the MP 3 playermarket and also created a fresh market for tablet computers. Tabletcomputers were a completely new phenomenon in the PC market, whichwas a product of intensive research from the technical staff in AppleCompany.Individual employees at Apple are innovative due to theenabling innovative environment inculcated at Apple. There are threemain aspects that create the enabling environment for Apple’semployees to continue creating and testing innovative ideas beforethey are finally adopted by the top management: high creativethinking skills in design and problem-solving, expertise, andmotivation. Apple enhances the expertise of its technical employeesby providing learning and development opportunities. The specificstrategies that Apple uses are: mentoring, cross-functional projects,and shadowing. Mentoring at Apple mostly targets new employees tointegrate them into the company’s innovative culture(Wiig,2012). Mentoring programs aim to increase learning and professionaldevelopment at Apple and retain quality professionals that areactively involved the design and production processes.
AppleInc. has a strong innovative environment through its design andsoftware development teams. The teams work in groups where theybring together their expertise and skills in developing softwaresolutions to customers. However, the skill and contribution of eachworker is essential because the simple software designs that areuser-friendly are products of concerted work from a team of highlyskilled, experienced, knowledgeable, and creative softwaredevelopers.Thus, Apple technically relies on individual skilledemployees that work with others to create the needed design products.
Customerdriven innovation rather than the traditional view of concrete assetsas the main factor: Apple meets the expectations embedded in itsmotto, “Think different” through a customer-driven innovationprocess that captures the imaginations of consumers and enhancecustomer loyalty. Steve jobs, the former CEO began the long strategyof fulfilling customer needs rather than n just making sales. Thecompany considers the satisfaction of customer needs the primary andethical responsibility of its existence. Thus, the customer is thefocal point of all the processes that seek to generate knowledge andcreate value out of it. The differentiation strategy that Apple usespositions it as a giant in the market and its brands, especiallytraditional ones such as the IPad are recognizable by the loyalcustomers. Marketing strategies are also based on information aboutcustomer needs and the dynamics in the market. The informationguides the value proposition that Apple often promises to deliver toits customers. For example, before the iWatch was launched by the TimCook, information was already in public about the key features thatwould define it. Customers had prior knowledge of the value they arelikely to derive from the iWatch. It is through such valuepropositions based on market information that Apple differentiatesits products from one brand to the next. Indeed, Apple has verystrong value propositions that are customer and innovation-driventhat gives them a clout over their loyal customers.
Apple’sKM strategies on customer information are the secret for its hugecustomer base: The loyalty is successive from one product to thenext. Before products are launched, Apple stores experience an influxof eager customers who want to be the first to buy the product. Thebrand loyalty is a result of Apple’s culture to produce the bestquality computing solutions for its customers. They do so bycreating specific stores that sell Apple’s products. While insidethe stores, customers have permission to test products and explorethe technological solutions they offer.
Challengesfaced by Apple in knowledge management
AlthoughApple is among the world’s industry leaders in terms of KM, theyalso face conventional challenges in implanting innovative ideas thatemanate from the application of knowledge in production, marketingand other business processes. The challenges include:
Identifying the specific internal organ to lead KM efforts: At Apple, the Chief Information Officer (CIO) is the officer in charge of KM practices(Gamble & Blackwell, 2001). The challenge behind this organizational aspect is that CIO may no mitigate technology aspects and the business aspects of KM unless they have seep knowledge of how the two facets merger to create business value for the company.
Solution:Thesolution to this challenge is that Apple should create the positionof a chief knowledge officer whose responsibility is to identifyessential knowledge from a pool of knowledge, which is relevant tothe functional area where KM is implemented.
The technologies that can support KM are dynamic and not static:Apple’s KM strategies gradually improved from standard and off-the-shelf mail packages to intricate collaboration tools that support community building inside the company and identity. Apple employs both the synchronous interaction tools and the search and data mining tools
Solution:Appleneeds to employ a multiplicity of technologies in knowledgemanagement. Fortunately, they are currently implementing aninnovative e-learning platform to complement other technologies forKM.
Getting the correct information from a pool of huge data to turn into usable knowledge: The competition in tech industry definitely leads information overload(Jennex, 2006). The phenomenon not only affects Apple nut many other companies that use KM to innovate and further understand market dynamics.
Solution:Experiencedcompany executives need to adopt the mechanism to sieve invaluableinformation from the pool of facts and figures they get from KMefforts.
The difficulty of having a specific business goal in regard to KM: Apple has succeeded in merging its long-term corporate goals with its KM program. All invaluable information considered for analysis form the basis of creating a solid business case that justifies the implementation of the specific KM programs.
Solution:Proper interpretations of data analysis results should entail carefulconsideration of the information and data therein.
The tendency of technology dictating KM: Involving all employees in the KM process: Apple has incentives to encourage employees to provide their knowledge and experience in regard to innovation. The Company agrees that it is difficult to differentiate between an employees’ intention earn incentives and the intention to provide quality information that can enhance the company’s productivity.
Solution:Thesolution to this challenge is that participation in knowledgeprovision and application to increase innovation should be its ownreward rather than a means to an end for employees. Employees mustfind it interesting and motivation to engage in knowledge hiringsessions rather than an obligation whose benefits elicit extrinsicmotivation.
Organizations need to establish internal organs that specialize in collecting information through research and development. Focus should possibly be on the most important aspects of the company such as the target customer, new technological solutions, and employee capabilities(Rajeswari& Prasad, 2012).
KM for any organization must move along with technological changes so that innovative solutions solve emerging organizational challenges. Implementers should beware of the possibility of over-dependence on technology because KM is beyond the gross use of technology.
Strategic employees that produce valuable ideas should be part of the implementing process. However, when the employee move out of the organization, companies need to find ways of guarding information spills to competitors before they are patented.
KMis a rapidly growing management facet whose potential also remainslargely untapped. The hi-tech has made tremendous progress in KM andthe exploitation of information to create avenues for innovation. Nonetheless, it remains a daunting task for most organizations indiverse industries to track daily activities and developing aneffective R &D strategy that manipulates the information intoindicators for value creation. Like Apple, companies should exploitnew technologies to modernize and gain from effective KM.
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