Quantitative Techniques in Business as Expressed from the Analysis of Samsung and Apple Companies - Essay Example

? Quantitative Techniques in Business as Expressed from the Analysis of Samsung and Apple Companies Quantitative Techniques in Business as Expressed from the Analysis of Samsung and Apple Companies Table of Contents I. Introduction…………………………………………………………………………3 II. Two Companies in the Smartphone Business: Apple and Samsung…………………4 III. Objectives of the assignment…………………………………………………………4 a. Samsung Company………………………………………………………….……5 b. Apple Company…………………………………………………………...………5 IV. Responses to the Requirements set……………………………………………………6 a. Comparative analysis of Apple and Samsung Companies……………………..…6 b. Statistics, Facts and Figures that Represent a Comparative Analysis Samsung and Apple Companies…………………………………………………………………6 V. Conceptual model……………………………………………………………………..7 VI. Brand Loyalty…………………………………………………………………………8 VII. Data……………………………………………………………………………………9 VIII. Analysis………………………………………………………………………………10 a. Method………………………………………………………………………….10 b. Regression analysis………………………………………………………………11 i. Results of the survey analysis……………………………………………11 IX. Conclusion and recommendations…………………………………………………...12 X. References……………………………………………………………………………14 XI. Appendices…………………………………………………………………...………15 Quantitative Analysis of Samsung and apple Companies I. Introduction Various factors influence the way a company is likely to perform and attain profitability. Most of these are related to the extent with which a company can retain their customers as well as attract new customers. To achieve this, they have to ensure that there is customer satisfaction which ultimately leads to brand loyalty by the customers. The companies have to ensure that the products are of high quality and meet the needs of their customers. Other factors that determine the loyalty of customers to different brands include involvement of the customer in the product and the switching pof costs between brands. It is thus the duty of the top management in any organization to ensure that they apply their skills and expertise in identifying these factors. Owing to this, it has been found that some businesses are able to perform better than others. Most of the successes attributed to some of the companies are currently related to their application of new technologies and not just the efficiency of their operations. Academics and business people have applied the concept business model in determining and providing a comparison of how business both within the same sector and different sectors operate. These models help to establish what a business does and the activities they engage in to do such things. Consequently, they act as vital tools in the analysis of the financial performance of different companies. A healthy competitive environment between two companies within the same sector is most of the time influenced by the level of aggression and aggressiveness. There is an interesting competition majorly between Smartphone giants like Samsung and Apple. They produce Smartphones in an industry that is characterized by rapid development in technology and short product life (Xun Lin, et al., 2010). The manufacture of mobile phones and operations in developing companies are creating pressure on Smartphone technology. In this relation, Smartphones with higher speeds and additional features are being produced on a yearly basis. II. Two Companies in the Smartphone Business: Apple and Samsung Smartphones are technical phones that contain an extensive power brought about by the ability to store large capacities of data as well as processing. Leyland et al., (2010) contend that because of this feature, the Smartphone has become a magical and revolutionary product that is so many steps ahead of other mobile phones by five literal years. It is in the way that the ability to process data by the Smartphone has been transferred to the hands of the users, who is able to make use of the device regardless of the space or time. The Smartphones contains additional functions such as instant messaging, the use of information services that include WiFi, entertainment and the global positioning system (GPS) as well as the different downloading applications. As a result of the advanced features in Smartphones it contains a high market demand all over the world. It is indicated by Euromonitor (2010) that there has been tremendous growth in the shipment percentage for the last three years. In 2011 vendors shipped 488 million Smartphones in comparison to other phones that had 415 shipment signifying a 62.7$ increase in shipment (Canalys.com, 2012) III. Objectives of the Assignment This paper will thus provide an analysis of two companies that conduct their operations within the same sector. It makes efforts to analyze the deeper structure of what the organizations do and obtains a greater insight for the investors, researchers, and managers. This paper aims at examining the factors that lead to an increased brand loyalty for Smartphones as a variable of the two companies. It will determine and analyze the dependent and independent variables at the apple and Samsung companies that influence their performance. To provide recommendations on what the companies need to do to ensure that their market share and profits are improved in not maintained. To identify the causal antecedents that primarily influence brand loyalty of the two company products. a. Samsung Company The Samsung Company is an electronic company that produces a number of electronic devices that include mobile phones. It has always had strong image of its brand and top skills in technology. It is with these that it is considered to have a better position in targeting customers within the electronics industry. It also has better marketing strategies where most of its Smartphones are offered within a wide range of low prices. b. Apple Company The Apple Company was established by Steve Jobs, Steve Wozniak and Ronald Wayne on April 1, 1976. It is a company that has always aimed at producing innovative products to maintain its competition. Unlike the Samsung Company that is involved in all the stages of production, which includes the assembly of the parts to make the product, Apple is only involved in the production of the parts. These are then assembled by other associate companies. This step provides the Samsung Company with an upper hand to ensure that all the processes are conducted in compliance with their quality requirements (Apple, 2013). IV. Responses to the requirements Set a. Comparative analysis of Apple and Samsung companies Samsung spent approximately three times more financial resources to conduct its research and advertisement in the year 2012. On the other hand, the precautions taken by Apple made use of about $3.4 billion. Subsequent to this, Samsung made an aggressive move into the market only to end up spending an equivalent of $ 10.5 billion. A revolution in the Smartphone industry was experienced in 2012. In this respect, each company in this industry made efforts to make the best out of this opportunity. This was by ensuring that as many of their products as possible reached the global market. However, at this time it is only Samsung and apple companies that realized a reasonable improvement in their profits and market shares. Therefore, in 2012 Samsung managed to secure the lead place in the Smartphone industry market through its shipping of 406 million Smartphones. Apple was able to get the third position after its sale of 135 million Smartphones. Surprisingly, the tremendous growth by Samsung was influenced by Android since it was powered by almost the 94% shipment of Smartphones in 2012. On the contrary, Apple started to witness significant growth in developing countries such as Indonesia and India. It is because they are known for a market that is price conscious that was adopted after the country adopted a particular sales strategy. Subsequently, there was a sale of iPhones with a 400 surge in India in the last three months. b. Statistics, Facts and Figures that Represent a Comparative Analysis Samsung and Apple Companies Apple and Samsung were the only two companies that made a significant profit from the sale of Smartphones in 2012. However, Samsung shipped a larger number of Smartphones in the same year. Nonetheless, it was Apple that was able to grab a higher profit of 43% than Samsung. During the 4th Quarter of 2012, Apple managed to secure 43 cents on each spent dollar on Smartphones against the 36 cents spent by Samsung. Additionally, Samsung also spent almost three times more to conduct its research and advertising in 2012. While the precautions taken by Apple consumed about $3.4 billion, Samsung was more aggressive on the market and ended up spending more that comprised $10.5 billion. Samsung nearly possesses a double number of employees than Apple. In spite of this, Samsung only managed to cover approximately 29% of the Smartphone market share in the 4th quarter of 2012. In comparison, Apple managed to cover a market share of 21.8%. Apple was able to rank at the top of the Smartphone brand loyalty in 2012. This position was taken over by Samsung in 2013. V. Conceptual Model (CM) Both Samsung and Apple Company fall within the same ICT sector. It is on the basis that they produce and manufacture Smartphones that are later distributed into the market. Owing to the nature of their production, most of the dependent and independent variables for the two companies are similar. No major variations exist between the two variables hence making the comparison in the performance of the two companies easy. The conceptual mode of this analysis will include the quantitative approach method to quantify the relationship that exists between the dependent and independent variables. This is based on the theoretical method which is proposed to delineate the relationship existing between the dependent variable of brand loyalty measured in net income and the independent variable that comprise of VI. Brand Loyalty It refers to the behavioral and attitudinal perspective that makes a customer deeply held toward his commitment to re-buy a particular product or service in the future. This causes a repetitive sequence with which the same brand or the same brand set is purchased. It takes place despite the marketing efforts and situational influences that have the potential to cause a switch in purchasing behavior. Therefore, it encompasses the proportion of purchase, sequences as well as the probability of purchase (Dick & Basu, 1994). Loyalty is mainly determined by the strength that exists between the relationship between repetitive patronage and relative attitude. Brand loyalty is an important part of study since it significantly contributes to brand extensions and equity. Jensen and Hansen emphasize on this point by stating that brand loyalty increases the market share of the brand. In this sense, it enhances the ability of customers to resist alternative competitor brands and encourages the positive word of mouth. Thus, it plays a crucial role in the profitability and prospect of future growth in an organization. VII. Data The data used was a primary financial data collected from the management teams the two companies from the year 2008 to 2012. VIII. Analysis a. Method The data below shows the net income, Sales, cost of sales, total expenses, total assets and equity of Samsung company, as well as, Sales of Apple company. The Samsung’s brand loyalty is measured using the company’s net income. This income is affected by other factors within the company like Sales, cost of sales, total expenses, total assets and equity. The external factor in this model is the Sales of Apple Company. Method The purpose of this analysis will be fulfilled through the conduction of a quantitative approach method. It will be done to conduct an estimation of the quantitative effect that the causable variables have on the major variable they influence. In this case, the dependent variable that is influenced by other independent variables is brand loyalty measured in terms of net income. On the other hand, the independent variables include the Sales, cost of sales, total expenses, total assets and equity of Samsung company and total sales of Apple company. In this case, it is assumed that there is a linear relationship between the independent and dependent variables. This refers to the proportional increase or decrease in the variability of the independent variables with the proportional increase or decrease of the dependent variables. This relationship is represented in the figure below; The method used in the analysis of the causal relationship between the independent variables and the independent variables is the mathematical model of multiple regressions. It is the most appropriate method since it is used when there are more than one variable to influence the dependent variable. For the analysis of data, Microsoft and SPSS are used. The compilation of raw data is done using the Microsoft excels while the conversion later takes place on the SPSS for completion. The variable coefficients which are p=value, R and R2 (square) of the output in regression are applied in the investigation. They bring about the statistical significance of the relationships to be estimated. It relates to the degree of confidence that the real relationship possesses values close to the estimated relationship. The data used in this regression analysis is shown below. Year Net Income Sales Cost of Sales Total Expenses Total Assets Equity Apple sales 2008 5,047,313 103,936,863 76,917,185 21,850,986 90,231,919 53,919,412 35,256,000 2009 8,765,999 119,103,403 4,785,803 4,396,734 101,355,174 2,600,079 42,600,000 2010 14,000,282 134,076,414 89,020,051 31,997,430 116,438,692 77,472,549 65,070,000 2011 11,908,495 43,069,254 7,238,463 31,089,757 134,944,294 80,307,746 108,600,000 2012 22,262,426 187,754,283 18,244,730 42,388,520 181,071,570 121,480,206 155,970,000 Average 12,396,903 117,588,043 39,241,246 26,344,685 124,808,330 67,155,998 81,499,200 The above data is regressed to show how the net income of Samsung is related to the company’s sales, cost of sales, total expenses, total assets, equity and total sales of Apple company. The results of the data regression are shown in the tables below. Variables Entered/Removed Model Variables Entered Variables Removed Method 1 Apple sales, Sales, Cost of Sales, Equity . Enter a. Tolerance = .000 limits reached. b. Dependent Variable: Net Income Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 1.000a 1.000 0.834 0.345 a. Predictors: (Constant), Apple sales, Sales, Cost of Sales, Equity In the regression statistic, the adjusted R square tests the goodness of fit of the model, in this case, it is meaning that 83.4% of the variations in Net income Samsung can be captured in variations in the company’s sales, cost of sales, total expenses, total assets, equity and total sales of Apple company. This is a high percentage thus, this model is very useful in the prediction of the company’s net income. The standard error (SE) measures the magnitude of errors of prediction. It measures the variation around the line of best fit. SE=0.345 is the estimation error of the value of samsung’s net income using regression analysis. This is interpreted to mean that the error in estimation of the company’s net income as an indicator of performance using regression method is 34.5%, which is a fairly low figure ANOVAb Model Sum of Squares df Mean Square P Sig. 1 Regression 1.673E14 4 4.183E13 0.041. .a Residual .000 0 . Total 1.673E14 4 a. Predictors: (Constant), Apple sales, Sales, Cost of Sales, Equity b. Dependent Variable: Net Income The linearity of the model or the overall usefulness the model is determined using ANOVA. By Letting the null and alternative hypotheses be such that: Ho: There is no linear relationship (the model is not useful Ha: There is some linear relationship (the model is useful Since the p value (0.041) is less than the significance level (0.05), we reject the null hypothesis in favour of the alternative hypothesis, i.e. 0.0423 < 0.05 Decision: Reject Ho This means that there is sufficient evidence to show that the model is useful overall. Coefficients Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) -1.266E7 .000 . . Sales -.001 .000 -.009 . . CostofSales .279 .000 1.743 . . Equity -.393 .000 -2.644 . . Applesales .499 .000 3.895 . . a. Dependent Variable: Net Income Excluded Variables Model Beta In t Sig. Partial Correlation Collinearity Statistics Tolerance 1 Total Expenses .a . . . .000 Total Assets .a . . . .000 a. Predictors in the Model: (Constant), Apple sales, Sales, Cost of Sales, Equity b. Dependent Variable: Net Income Correlations   NetIncome Sales Cost of Sales Total Expenses TotalAssets Equity Applesales NetIncome 1 0.628 -0.25 0.753 .950* 0.78 .900*   0.256 0.683 0.142 0.013 0.12 0.037 5 5 5 5 5 5 5 Sales 0.628 1 0.138 0.299 0.468 0.339 0.332 0.256   0.825 0.624 0.426 0.577 0.585 5 5 5 5 5 5 5 CostofSales -0.252 0.138 1 0.164 -0.419 0.096 -0.447 0.683 0.825   0.792 0.483 0.878 0.451 5 5 5 5 5 5 5 TotalExpenses 0.753 0.299 0.164 1 0.774 .994** 0.795 0.142 0.624 0.792   0.125 0.001 0.108 5 5 5 5 5 5 5 TotalAssets .950* 0.468 -0.42 0.774 1 0.818 .988** 0.013 0.426 0.483 0.125   0.091 0.002 5 5 5 5 5 5 5 Equity 0.78 0.339 0.096 .994** 0.818 1 0.837 0.12 0.577 0.878 0.001 0.091   0.077 5 5 5 5 5 5 5 Applesales .900* 0.332 -0.45 0.795 .988** 0.837 1 0.037 0.585 0.451 0.108 0.002 0.077   5 5 5 5 5 5 5 *. Correlation is significant at the 0.05 level (2-tailed).           **. Correlation is significant at the 0.01 level (2-tailed).           The correlation analysis showed that there is a very weak positive association between net income of Samsung and Apples’ total sales. This is because the correlation coefficient is 0.037. IX. Conclusion and recommendation From this analysis, it is clear that the brand loyalty for the products measured in terms of net income or profit of Samsung is mainly determined by Sales, cost of sales, total expenses, total assets and equity of Samsung company, as well as, Sales of Apple company . The main assumption is that the brand loyalty is influenced by only the above factors. The regression analysis shows that the company’s brand loyalty is positively related to the company’s sales, total equity, total expenses, total equity and Apple’s sales. However, there is a negative relationship between the company’s total costs of sales. The model used in the determination of the company’s brand loyalty is significant as shown by the adjusted R square. It is thus important Samsung Company performs extensive research on their financial statements to determine the required adjustment that can lead to improved brand loyalty. Other developmental activities should also be introduced to ensure that the brands and image suit the users perfectly. Despite this, Samsung should ensure that they cut costs to ascertain that their market shares and profits are equivalent to the level of their input in producing and advertising their products. The company should ensure that they study customer satisfaction to identify areas that lack satisfaction and make the necessary improvements. X. References Apple Inc. 2012. Encyclop?dia Britannica Online. Retrieved 12 August, 2012, from http://www.britannica.com/EBchecked/topic/30632/Apple-Inc Dick, S. & Basu, C.,1994. Customer loyalty: Toward an integrated conceptual framework. Journal of the academic of marketing Science, Volume 22, (2): pp.99-113 Jensen, M., & Hansen, T., 2006. An empirical examination of brand loyalty. Journal of Product & Brand Management , Vol. 15 (7): pp.442–449. Leyland, et al., 2010. Integrating the Smartphone into a sound environmental information systems strategy: Principles, practices and a research agenda. Journal of Strategic Information Systems, Volume 20: pp.27–37. Xun Li, et al., 2010. Smartphone Evolution and Reuse: Establishing a more Sustainable Model. 39th International Conference on Parallel Processing Workshops. XI. Appendices Questionnaires Questionnaire for Company Executives Please Tick Were Appropriate Key 1=Excellent 2=Great 3=Average 4=Below Average 5=Poor 1. How would you rate the growth of market shares or profits in the last 5 years? 1 2 3 4 5 2. What would you consider the main factor influencing performance in your company? 1 2 3 4 5 3. What do you believe has made you dominant in the Smartphone industry? Short Product life Technological development Constant introduction of new product Struggle for competitiveness 4. Which dependable variable determines brand loyalty? 5. Which independent variable determines brand loyalty? 6. How would you rate the significance of the role of brand royalty in the profitability and chances of future growth of the organization? 1 2 3 4 5 Questionnaire for the Brand Managers Key 1=Excellent 2=Great 3=Average 4=Below Average 5=Poor Please tick where appropriate 1. What is your age range 15-18 18-21 22-30 30-40 Above 40 2. Are you Male Female 3. What is your level of education? High school graduate College graduate Postgraduate 4. How would you consider the Smartphone? Means of leisure simplicity in life social connective information access 5. Would you consider changing the brand of your phone Yes No 6. If yes, what would be your reason? Cost Quality Features Involvement 7. What is your attitude towards this brand? 1 2 3 4 5 8. What major factor makes you loyal to your brand? Experience Image Quality satisfaction cost 9. What quality parameters made you attracted to the product? Ease of use serviceability durability excellent feature performance Read More