Apple and Samsung
Technology changes rapidly and with every new product consumers in the market make a dash to have it so as to be ahead of everyone else. As a result, companies in this sector are pushed to fill in this gap in demand. Apple Inc and Samsung Corporation have set themselves apart from the rest as the most valuable brands not only among the technology related firms but also as multi-national corporations. The focus of this paper is put on comparing and contrasting the strategies as well as the factors that have led to the huge success of these two corporations. It then concludes by making recommendations on areas that the two technology giants need to improve.
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Business Strategies Used by Samsung and Apple
Apples business strategy can be looked at from the perspective of two owners, Steve Jobs and Tim Cook. Under the management of Steve Jobs, Apples main strategy was producing high end technologies in long developmental cycles. These long development cycles create anxiety and anticipation for Apples products. These products were released in an annual selling period and during this period the company marketed and sold their older products for cheaper price. In the Tim Cook epoch, Apples focus is on strengthening and making further additions to what is already available. This has resulted in the development cycle moving to a two-three year cycle for new improved products. Samsungs business strategy on the other hand is quite aggressive. Samsung first checks out what its competitors are doing and bringing to the market. It then observes how the market reacts to these developments. If the response is positive they come up with their own version of the same variety of products rapidly manufactured.
Apples and Samsungs global and local environments entail political, economic, socio-legal and technology factors. Political events in the country especially international relations with other countries affect the operations of Apple Inc. Economic factors are related to such issues as inflation, general food prices and oil prices. If these conditions are generally good around the globe, Apple business is also likely to be good. Sociological and legal factors entail the cultures and regulations of doing business in particular areas. Where laws are favorable and the cultures are not so backward, the business environment can also be said to be good. Technology is the main factor that influences Apples decision making. This is because; invention of new technologies is the key business issue for this corporation. It is worth noting that these factors affect Samsung as well, because both companies have international presence.
Apple Companys mission, which is not stated explicitly, is as follows: "Apple strives to bring the best personal computing experience to educators, students, creative professionals, and consumers all over the world through its innovative software, hardware, and Internet offerings." This statement is in line with the corporate strategy which is to produce high-end products and capture a particular niche for itself within the market.
Samsung Electronics' vision statement is to "Inspire the World, Create the Future" and its mission statement which is embodied in its philosophy is the following: At Samsung, we follow a simple business philosophy: to devote our talent and technology to creating superior products and services that contribute to a better global society. This vision and mission reflects its overall corporate strategy of wait-and-see.
SWOT analysis is a strategic forecasting tool that is used to evaluate a companys objective related to the internal and external factors that are either favorable or adverse to the achievement of that objective.
Samsung Company has the following internal strengths. First is its ability to produce devices that can be incorporated using most of the available software and operating systems. Second is the companys ability to produce a variety of designs compared to its rivals. Another strength possessed by the company is its focus on the production of environmental friendly products which makes it preferred by many consumers. Others include low production costs, a large market share especially in the mobile market and its ability to market the Samsung brand. The company also has some strategic weaknesses that may hamper the achievement of its long term strategy. First is patent infringement of its rivals patents which destroy its reputation. The firm also has a very low profit margin. Samsungs main competitors are its customers that put the company in a very precarious position when it comes to negotiation. Another challenge that Samsung faces in its internal environment is the production of too many products in addition to the lack of its own software and operating system.
Some of the opportunities that Samsung can take advantage of in the forthcoming financial year include the expansion of Indias and Chinas Smartphone market and the mobile advertising industry. The tablet market is also growing and if Samsung produces improved and better quality models, it can increase its market share. Lastly, Samsung can merge or acquire some of its competitors so as to enjoy a large portfolio of patents. The threats faced by Samsung in the technology market include saturation of the Smartphone market especially in first world countries. Rapid change in technology which enhances intense competition is another threat faced by Samsung Company. Other threats include the possibility of declining margins from its semiconductor business as well as breach of its patents.
Being one of the leading corporations, Apple Inc has the following internal advantages. Its competitive advantage is enhanced by an expanding closed ecosystem coupled with consumer loyalty. The companys ability to remain innovative is another key to the companys success. With a gross margin of 43.9%, Apple is among the most profitable ventures in the technology industry. Other strengths attributable to Apple include its strong brand reputation as well as a highly effective advertising and marketing team. Some of the corporations inherent weaknesses include its high price. Another drawback includes the ever decreasing market share which means it has less influence than its competitors. The incompatibility with other operating systems is another disadvantage for the company since customers who may want to switch to it are not able to do so. It has lost some of its key managers including Steve Jobs, John Browett and Scott Forstall in a very short period of time, which implies a loss of expertise. Other weaknesses include infringement of its patents and defects in some of its new products.
There also external factors which may affect the attainment of its objectives. Some opportunities created by these factors include the high demand for its products and the launch of iTV which is likely to have a positive reception in the market. The emergence of a new provider of application processors is likely to diminish its reliance on Samsung. The ever increasing demand for Smartphones and tablets further presents an opportunity for Apple to thrive. The huge profits of the company also present an opportunity to acquire competitors and get additional patents. External factors also pose the following threats to Apples business. The rate of change of technology pressurizes the company to release new products faster. Tax increases and the workers wages are likely to push up the operational costs. This is an additional factor to the rise of the dollar compared to foreign currencies from which Apple makes its sales. Its online music market is threatened by competitors such as Spotify, Amazon and Wal-Mart.
Strategies Adopted to Curb Cultural Differences
Samsungs headquarters is located in South Korea, its country of origin, and most of its operations take place there. The company however operates all over the globe and thus there are a lot of cross-cultural interactions between its workers and nationals in the various states. The company therefore has come up with a business strategy that will reduce this apparent cultural conflict to allow the company to achieve its objectives around the globe. In seeking to sort this out Samsung has come up with a strategy of improving cross-cultural communication which enables it to transfer ideas and knowledge from one entity to another. According to J. Ku-Hyun, the company hires a large percentage of non-Koreans for its branches located outside of Korea and this has increased the companys acceptance outside Korea since the locals find it easy to socialize with each other as opposed to foreigners.
Apple on the other hand has adopted a cross-cultural team and marketing strategy to control the multi-cultural challenge. The team has a professional manager who has an international view on the various challenges posed to the business. These global minded managers accept the differences and seek to balance this conflict using an international team of workers rather than a team consisting of individuals from the same region. Problems are also solved by including everyone in this cross-cultural team so that the process appears to be fair and everyone is satisfied with the outcome.
Entrepreneurial capability entails the effectiveness of the leadership of the company. Generally, Samsungs leadership turns out to be more vibrant as compared to Apples leadership. The leadership team comprising of three CEOs executes its plans hastily, rapidly expanding its market share and widening the range of products manufactured to meet their customers satisfaction. For instance, Oh-Hyun Kwon before becoming the CEO helped the company acquire Apples business with the help of components it uses to make its mobile phones. Under his watch, Samsung has become the 2nd largest manufacturer of chip globally. Tim Cook on the other hand seems to be still basking under Steve Jobs shadow who was more daring and does not fear venturing into the unknown.
Design capabilities refer to the ability of the company to come up with superior and unique designs. In its policy on product development, design is the primary consideration. As introduced in 2007, the iPhone design was very simple. Over the years, it has been able to improve the design and reach the admirable levels but the basic initial idea has remained the same. Today its products such as the MacBooks and iMac are considered to be very sleek, posh and pretty. We cannot however overlook Samsungs attempt to come up with its own superior designs. This can be seen in the current development of the Galaxy S4.
Lastly, strategic capabilities entail an organizations ability to meet its objectives using the laid sown strategies. Samsung is highly rated by analysts for its ability to achieve customer satisfaction since it is able to offer a wider variety of products compared to Apple. For instance, Apple only offers one high-end iPhone and either a big or small iPad whereas Samsung offers hundreds of different kinds of phones and tablets. This therefore shows that Samsung can be said to have better strategic capabilities compared to Apple.
Recommendations for both Companies that May Maximize Profitability and Improve Competitiveness
Apple should try to diversify its products. This calls for the company to venture into other areas such as production of iPods, supply of iTunes and iChat. Such a strategy is important for Apple because in order to be highly competitive, a company has to dedicate most of its resources to the production of new goods that are unique of their kind. A variety of goods also implies a wide range of choices for customers. In addition, the marketing strategy employed can also direct its focus towards the diverse age groups. For instance, it can use popular artists and actors in advertising products to young people or important business men to advertise other products to older people. Another area through which they could gain popularity is the education industry where they could promote sales by selling laptops at discounts as a form of support encouraging educational schemes. Through this strategy, therefore, the company would be able to attract a number of customers and hence expand the market which will result in large amounts of profits.
Since Samsungs products are extremely diverse as well as quite expensive, one of the most appropriate strategies it could embrace is cost effectiveness. Samsung manufactures a wide range of products. The Smartphones it supplies come with different types of screens and prices and this has helped it become one of the top most retailers globally. However, it can be said that to a certain extent this has gone out of hand since the advantage of offering customers a wide variety is overtaken by the disadvantage of customers experiencing difficulty differentiating them. Doing away with that variety would help to concentrate more on the quality offered. However, narrowing down the variety should not go to extreme levels. Instead, the company should focus on working on distinguished designs and software and employing similar aspects in its products in order to lower the costs of production and consequently the prices of its goods. It is obvious that the lowering of prices in conjunction with provision of a moderately wide variety of products will improve its competitiveness, expand the companys market and thus lead to an increase in the amount of profits made by the company.
Success of the Companys Corporate-Level Strategies
Vertical or horizontal integration, outsourcing and diversification are central to many business organizations. In the case of Apple Company, the use of vertical integration has proved to be the most successful unlike the use of horizontal integration, outsourcing and diversification. For 35 years, it has embraced this model which includes hardware and software techniques. This is because the vertical model draws major positive operation effects which include the capability of dictating the constituent part of the solutions and value-addition developments, receiving of higher returns based on the products success and increased efficiency and flexibility among others. More particularly, its success in employing the vertical integration model is seen in its dealing with iPhones. Apple controls a large percentage of its value chain to consumers.
The use of vertical integration in Samsungs production of chips and display screens has on the other hand posed numerous challenges to Samsung due to the costs incurred and the competition involved. It has however been most successful in applying horizontal integration which majorly aims at diversification of its products. In fact, it has been noted that no other company has been able to reach the level of diversification that Samsung has managed to achieve except Apple which is just a few steps away from reaching its league. This is because it has promoted profitability within the organization due to the expansion of its market and a healthy development in future.
Strategies to Discourage Unethical Behavior
In an attempt to increase the standard of supply chain, Samsung has committed itself to promoting labor practices that are in line with ethical requirements. All of its suppliers have also been directed by the company to implement new principles particularly with respect to child labor. This initiative, for example, was triggered by allegations from the public which accused Samsung of using children in their manufacturing process. Consequently, investigations were carried out with the aim of establishing what happened in reality. It was, however, established that the allegations were unfounded and untrue although other issues were revealed. Secondly, Samsung has implemented the above policy by changing its employment strategies. As one of their new guidelines, individuals seeking employment within the company go through a vigorous interviewing process. Lastly, it was found out that its suppliers and manufacturers used crude practices within the manufacturing and supply chain such as making workers work overtime without compensation and being charged fines for arriving late for work. Samsung has therefore taken the initiative to investigate more thoroughly those located in China, and aims at releasing an audit report in the end of this year.
Apple on the other hand strives to make sure that its workers exhibit acceptable conduct in every circumstance. It measures its success on the basis of creative innovation, production of high-quality products, and ensuring that it demonstrates high levels of integrity in all its dealings. To ensure it implements this policy, Apple has worked extremely hard to come up with a standard code of business conduct that regulates all its dealings including the organizations established abroad. Taking another step to ensure compliance with its principles of honesty, respect, confidentiality and compliance, Apple has availed policies on its web page concerning corporate governance, conflict of interest among directors and rules on reporting conduct among workers that are suspicious. Finally, as a way of discouraging misconduct of among employees, its workers have been provided with a Business Conduct Helpline that can be utilized to bring any unethical behavior of any employee to the attention of the Audit team within Apple and the Finance Committee.
Recommendations on Change of Existing Strategies
Apple Inc uses a constrained diversification approach and should therefore seek to maximize the limited expansion opportunities created by this approach. First, instead of charging their clients $99 dollars annually for MobileMe service, they should make it free to all their users and thus minimize the likelihood of defection to competitors. The iBook store should strive to become a print media platform for textbooks, magazines and newspapers instead of just being a book store. In their competitive strategy, Apple Inc should not strive to have a huge market share or be a monopoly like Microsoft. The company should instead be focused on defining what their devices are so that competitors can react to it. Using continuous innovation, Apple will remain a market leader.
Despite being the largest retailer of mobile phones in the world, Samsung is involved in reviewing some of its strategies in order to increase the corporations margin. Despite their quest to offer a wide variety of phones to its customers, Samsung has gone overboard by producing so many differentiated models that its customers face difficulty in distinguishing them. Samsung should therefore make a reduction in the number of models it is producing which would enable it focus on more effective strategic models. In terms of the corporate strategy, Samsung should seek partnerships with local corporations in major markets such as India and China and also find partners among some major online retailers in dominant markets. Its management also needs to focus on the path they have chosen to take. If they chose to focus on attaining a huge market share, they should then reduce its prices and focus on the lower end of the market. If on the other hand they aim at achieving higher profitability they should improve the quality of their designs and sacrifice the market share for the sake of gaining profits.
In conclusion, the paper has shown some of the factors that have led to the apparent success of the two technology firms. The research paper has been able to demonstrate Apples key strategy as focusing on the development of a superior design. It has achieved this starting from the Steve Jobs era and ending with the Tim Cooks era due to the fact that none of the global suppliers of technology devices are able to rival its technical innovative capability. Samsung, on the other hand, follows its chief strategy that is diversification. It offers an array of products to its customers and this has been its key strength especially to consumers who prefer uniqueness. Despite this, the two corporations have shortcomings in those strategies which they have to improve if they are to maintain a stranglehold of the top. Apple, for instance, has to create products that are compatible with other hardware devices as well as increase the diversity available to their customers. Samsung, on the other hand, has to remain focused and decide whether they aim for a bigger market share or profitability.
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