Contextual Introduction
Contemporary corporate leaders acknowledge the effects of specific strategies on their organizational performance. Nonetheless, these managers fail to articulate the critical parts of their strategy. For instance, executives might adopt new innovative processes and operating strategies aimed at attaining breakthroughs in their performance but continue using the same short-lived financial indicators that have been in place for decades. These measures may include operating incomes, sales growth, and returns on investment among others (Cooper et al., 2017). The caliber of business executives fails in their attempts to introduce novel measures for monitoring new processes and goals and to question whether the existing old strategies are critical for the execution of new tactics.
Notably, effective measurements should be an integral component of a business’s management process. The Balanced Score Card (BSC) offers corporate leaders a holistic framework for translating their firms’ strategic goals into coherent performance metrics. The BSC is not a mere assessment exercise; rather, it refers to a management methodology, which could spur breakthrough improvements in different fundamental organizational areas, including market development, customer, processes, and product development. This report analyzes Apple Inc.’s strategic management using the BSC model. Notably, the document analyzes and describes the primary facts and issues the company manages using its BSC methodology, the strategic objectives pursued using the tactic and assesses the suitability of the adopted strategy.
Description and Examination of Key Facts and Important Issues
Senior management at Apple Inc., one of the leading global brands in the electronics industry, decided to concentrate on a strategy, which would aid in improving the company’s return on capital and gross margin. The company developed a BSC intended to address four categories of its operations, each with different key performance indicators developed to improve the respective categories (Akhtar & Sushil, 2018). As the cited study indicates, the company (Apple Inc.) did not initially focus on its consumers because most attention was directed toward its products and technologies. Nonetheless, the organization realized the need to re-strategize, considering the growing importance of customer satisfaction, which has since become the corporation’s leading tenet. According to Terziev et al. (2017), the business realized the need to have an independent market survey and break away from the tendency to outsource such metrics, which is common across its industry. The move is considered one of the most strategic ever achieved by the corporation in its extensive history since it helped revolutionize its relationships with customers, a core component in driving sustainable financial operations.
Apple Inc. also focused on revolutionizing its core competencies. Shen et al. suggest the business executives at Apple envisioned an employee team that was highly focused on a few, specific competencies (2016). Precisely, the company concentrated its core competencies on the development of user-friendly interfaces to distinguish its products from the rest in the industry, formidable software architectures to give its products the desired performance outcomes, and the development of an effective distribution channel. The company depended on developing these competencies among employees for a considerable spell of time until its senior management realized the need to re-strategize. Akhtar and Sushil (2018) report the challenges of using these competency dimensions in assessing performance. Consequently, the business began experimenting with a new strategy for assessing its core competencies.
The company also needed to address the issue of employee commitment. The previously cited literature reports that the company undertakes comprehensive employee surveys across the business at a two-year interval. Notably, the management uses randomly selected employees to study their levels of commitment to attaining specific goals—the research is concerned with understanding how effectively each employee comprehends Apple’s strategic objectives and whether their actions are consistent with the adopted goals. The findings of the study are critical in strategy formulation, considering that they provide critical information about individual attitudes towards Apple’s operational approach.
Alongside the identified key aspects of the company’s operation, it is understood that Apple’s strategy has always envisioned a strong market performance. The corporation’s focus has always been on growing Apple’s market share through producing products and services meeting the highest levels of quality, essential for building a strong brand reputation, which Apple has enjoyed for a long. The business has also been concerned with improving its shareholder value in its long-term strategy (Llach et al., 2017). While shareholder value is not a performance driver, it has always been the core of Apple’s planning process since it is applied in offsetting the previous emphasis on some performance drivers and concentrating on consumer satisfaction. These areas of strategy have been central to Apple’s performance for some time, forming the basis for analyzing the corporation’s BSC.
Discussion of the Strategic Objectives Pursued
The BSC Goals Model
The BSC offers organizations four varying perspectives from which they can select measures. According to Akkermans and van Oorschot (2017), the model complements conventional financial indicators with internal processes, customers, improvement, and innovative performance measuring activities. Notably, the reported measures are different from the ones traditionally applied by firms in many ways. Fundamentally, organizations already have several physical and operational measures for their local activities. Nonetheless, the local measures are always bottom-up and developed from ad hoc procedures. The scorecard provides a different set of measures, which are grounded in a company’s strategic goals and the market’s competitive demands (Shen et al., 2016). The BSC helps managers to concentrate on executing its strategic vision by requiring its management to choose a limited only a few critical indicators for each of the four perspectives.
Furthermore, whereas the conventional financial metrics mostly focus on what occurred last period with no consideration for how corporate leaders could better the performance in the next, the BSC operates as a foundation for the business’s present and future success since it sets specific forecasts for financial performance. Companies applying the BSC model realize that it inclines them to understand the right balance between internal measures, including new product development, and external ones, such as operating incomes. The BSC’s capabilities in assessing strategy inform why Apple Inc. has adopted it for planning.
The BSC and Apple’s Planning Process
As described, Apple Inc. adopted a BSC model to concentrate senior management on a plan, which could foster discussions beyond the contemporary metrics, such as market share, return on capital, and gross margin. Accordingly, the corporation created a committee, which is intimately aware of the decisions and strategic thought of the firm’s executive management team to oversee different measurement categories proposed by the BSC model. The company approached each of the four measurement measures differently, as described subsequently.
Customer Satisfaction
The discussion so far reveals that Apple Inc. has traditionally been product-focused, competing with others in the industry in design matters. Nonetheless, the recent rethinking of the methodology has transformed the business into a customer-focused venture. Notably, the business has recently shifted its attention to customer-centered performance metrics occasioned by its shift to a self-developed market survey instead of relying on outsourced data (Quesado et al., 2018; Malagueño et al., 2017). These customer objectives are critical for the organization’s rejuvenated strategy, striving to deliver results in different ways. First, Apple Inc. is now focused on developing and sustaining customer loyalty. According to the extant literature, including (Malagueño et al., 2017), loyalty is the most critical driver of long-lasting customer value. The same study indicates that loyal clients have emotional connections with their brands, making them proud clients. As much as perfectly clients could be ready to switch suppliers when presented with the right offer, loyal ones will always be reluctant. Apple Inc. understands the economic implications of the smallest shift in customer loyalty, explaining why its strategy seeks to bolster customer interactions, especially when one or several aspects underpinning the relationship is not working as expected. Consequently, Apple Inc. has a vibrant customer support department working closely with other departments to generate loyalty and satisfaction among consumers.
Satisfaction with support experiences is the second perspective of the customer objective in the BSC model adopted at Apple Inc. Accordingly, Apple desires to attract and keep a pool of satisfied clients, which it strives to attain by fixing issues with customer relations as soon as they are reported, giving customers the information they seek to obtain, aiding them to avoid running into problems and empowering them to be informed and better consumers of products from across the range of the electronics portfolio (Shen et al., 2016). In this case, Apple does not focus solely on the mean client satisfaction score, but on their dissatisfaction and delight metrics—unhappy customers are likely to cause issues in the market while extremely happy ones will generate brand loyalty. In many ways, the strategy seeks to recreate customers’ perception of the quality of service (it shifts from the product model) they receive.
Core Competencies
Conventionally, corporate executives stress the need for workers to develop a few core competencies, such as effective distribution channels, resilient designs, and user-friendly products. Nonetheless, according to Gama (2017), it is challenging to assess performance along with such competencies, explaining why Apple has recently adopted an experimental model for measuring such metrics. The company delivers on this model using three separate strategies. First, Apple Inc. has consistently sought to build a strong knowledge base for its employees. Understandably, knowledgeable workers have a better ability to handle clients’ issues, drive revolutionary design models, and achieve other benefits for their organizations. Second, Apple focuses on more effective knowledge transfers among employees and executives. The firm understands the need of transferring the core competencies and knowledge of how such capabilities may help the company across its generations of workers. Usually, the strategy works best when a business lays the ground for effective interactions within the workplace, which is a priority for Apple Inc. Lastly, the corporation focuses on having a motivated and trained staff, understanding its significance in achieving the set goals.
Employee Commitment and Engagement
According to the previously reviewed studies, Appl Inc. engages in a comprehensive employee survey across its organization at a regular interval. The company’s concern is always on understanding how its workers comprehend the business strategy and whether they are committed to delivering according to the set objectives (Terziev & Georgiev, 2017). The findings of such surveys have critical implications for performance since they help the organization establish human resources capacity-building needs, including training, hiring, and other functions.
Financial Objective
The BSC offers different companies a chance to analyze their financial strategy alongside executing other goals. Apple Inc., as is the case with other firms, is concerned with growing its profitability. A customer-centric strategy described previously is effectively executed with an understanding the business should make profits. Accordingly, Apple strives to drive profits by stimulating repeated purchases by elevating its image to the target market and helping clients to get value for their money. Notably, increased sales also stimulate increased revenues, which should be depicted in more bottom-line profits enjoyed by the business. Lastly, Apple’s financial objective under the BSC model is to attain low-cost operations.
Critical Evaluation of the Course of Action
The reported performance indicators may only have been adopted recently, but they have instrumentally helped Apple’s senior management team to focus their plan on different aspects. First, it is realized that the BSC is a planning tool, not a regulatory mechanism for the company. In many ways, the company uses the model to restructure its corporate performance in the long run instead of driving operating changes. Furthermore, the performance metrics can be driven both vertically and horizontally across the organization. In the vertical sense, it is realized that each metric can be split into constituents to assess the way each contributes to the whole system’s functioning. On the other hand, when perceived horizontally, each metric can be used to assess how the processes contribute to the attainment of specific objects. Notably, the analysis reveals that Apple Inc. has managed to establish a language of measurable outputs that can be used to spearhead further improvements in performance.
The BSC model critically serves as the focus of the company’s efforts by helping define and communicate priorities to managers, clients, workers, and investors. The strategy is currently being used as Apple’s benchmark, the language for articulating new projects developed by the company. Notably, the method is useful in determining Apple’s strategy transparency because it effectively articulates all plans in simple, understandable objectives and deliverables—the performance drives also stimulate the development of performance measures.
Assessment of the BSC Suitability for Business and Suitability
Apple’s BSC suitability is assessable by considering its relationship with and significance for the vision and mission statements. According to its corporate website, Apple Inc.’s mission is to bring the best user experience to customers by providing innovative hardware, software, and services (Terziev & Georgiev, 2017). Furthermore, the latter literature indicates that the business’s vision is ‘we believe we are on the face of the earth to make great products and that is not changing.” The BSC strategy focuses Apple on the customer-centric delivery model, where all the critical procedures are executed such that they strive to attain the highest levels of customer satisfaction possible. The design elements, a statement committing apple to achieve product superiority, are now considered the company’s way of driving customer satisfaction and loyalty. Notably, the BSC content inclines the organization to focus on the current situation while considering future situations, bringing an aspect of sustainability. The approach also coincides with what Apple envisions in its mission statement, especially because it is understood that product quality is a leading measure of client satisfaction. Notably, Apple Inc. strives to make the best products that would continue generating increasing revenue streams through high customer satisfaction.
Conclusion
The BSC is a revolutionary business planning strategy adopted widely by companies seeking to transform their operational approaches. The tool presents an agile methodology, in which global companies can focus on their present and future positions simultaneously. Precisely, the plan invites corporate leaders to think about their financial, core competencies, business processes, and customer-orientation objectives. As discussed, Apple’s adoption of the BSC framework transformed it from focusing on its products to customer satisfaction, spurring changes to its operational methodologies. The decision inclines the company towards meeting the clients’ needs, transforming the nature of operations to ensure that it attracts and retains clients because of the implications of these metrics for Apple’s profit motive.
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