Industry and Internal Capabilities for Both Apple and Samsung - Assignment Example

APPLE VERSUS SAMSUNG What are the existing business strategies, domestic and global environments, industry, and internal capabilities for both Apple and Samsung? Apple Market scheming Apple has a different market strategy when it comes to the way it approaches the market. The firm uses price scheming to introduce its innovative products to the market. What apple does is to deliver a very high-profile product to the market, sell at the highest possible price in order to take advantage of the high end market, and once this high end mark is exploited to the limit, the firm then shifts that product to the lower end market and replace it with another. This is then replicated over and over again. By doing this, the firm is able to achieve two critical things. First, the firm is able to create its market image as a higher-end firm and this makes it possible for the firm to continue taking advantage the high-end market for smart phones. Secondly, it makes sure that the firm is able to recover its technology costs as soon as possible. Developing high-end technological products such as smart phones requires expensive research to be carried out. For this cost to be recovered easily, the firm can use the price skimming method to make sure that the high end market helps to recover these costs. Apple has shown its ability to take advantage of this method called price skimming. As Müller, Kijl and Martens (2011) say, Apple also does this by using differentiation by making sure that its other products such as mobile phone apps are not usable in other smart phones. Specialized diversification As Baroto Abdullah and Wan (2012) say, Apple as a technology firms uses specialized diversification. Specialized diversification refers to a situation where the firm diversifies its products but in a specialized way. Instead of having a broad range of products, the firm decided to focus on just a few products that are closely related and that complement each other. In this regard, apple only produces a few products that are related such as smart phones, laptop computers, tablet commuters and digital music players. This is different from what Samsung does because Samsung chooses to diversify thus delivering to market a very broad range of products. In fact, with regard to the Apple mobile phone market strategy, the firm only manufactures only smart phones unlike Samsung that manufactures smart phones as we as the feature phones. Samsung Target all markets Unlike apple, Samsung targets all markets and this can be seen in its cell phone product range. Unlike Apple that only manufactures smart phones, Samsung targets all markets and in this case produces all types of phones for all markets niches. It targets the high-end market with its high-end smart phones such as Samsung Galaxy S and also manufactures medium class smart phones such as Samsung Duo. It also targets the lowest end of the market by manufacturing feature phones that are targeted for the lowest end markets such. Diversification As Lee (2007) says, diversification is one way that Samsung uses to develop strategic competence. Unlike Apple that focuses specialized diversification, Samsung uses full diversification and this means that it produces a range of electronics ranging from fridges, to TVs to mobile phones. Samsung tries to use its technological knowhow to make sure that it is able to take all the opportunities in the market. 2. What is the business-level strategy of each company as determined by a conducting a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis? Apple Strengths Leader in industry Apple has been able to place itself as the leader in its industry. This is very important in helping the firm to keep in going on in a very competitive industry such as the technology industry. Because of its status as a technology leader, it has become the industry bench mark both as a firm and also in regard to its products. It sets the bar in this industry and this means that the other firms, including Samsung itself have to follow on its foot. Although Apple is much younger than Samsung, it has been able to set itself as the industry leader and therefore even the consumers of the products that these two firms produce are measured against the standards that Apple has set. Loyalty from customers Apple has been able to create an almost fanatic level of customer loyalty and most of its customers would never want to use any produce from any other manufacturers, prices notwithstanding (Aggarwal & Arora, 2013). This level of loyalty is enjoyed by just a very few firms across the economy, let alone in the IT industry. It uses this to maintain its price skimming strategy and this makes the firm to be able to invest a lot in technology research to support its innovation and thus remain as the leader in the industry. Weakness Geographical position Being located in the USA, it has the disadvantage of labor cost. In this regard, it has been forced to export (outsource) most of its labor in the foreign market where the labor is less expensive. While this helps the firm to be able to save some costs in labor, it still does not solve all of Apple’s labor-related costs. This is because of various issues that are critical to labor management. First, even as it outsources its labor, it can only outsource some of its labor and not all. This means that the firm has to still meet some high cost of labor. The firm only outsources it technical labor such as manufacturing. However, administrative labor costs have to remain in the USA and this means that the firm has to deal with these costs. Secondly, the outsourcing has been criticized in a number of ways. First, Apple, like so many firs in the United States, has been accused in America for not being a patriotic firm because exports the labor while so many America are going jobless. Secondly, in the foreign market where the firm has exported its labor, it has been accused of overexploiting the foreign employees by not only overworking them and underpaying them but also by providing its employees with very poor working conditions. All these issues have had a very negative public image for the firm and this can be very dangerous for the future survival of the firm. Opportunities Apple has a number of opportunities that it can exploit. The Smartphone market can be considered very young and it is expected to continue growing especially in the emerging markets (BRICS) and the fact that Apple has already placed its position as the leader and a trail blazer in this industry will offer a very good opportunity in these new markets. Threats The main threat for Apple is the new entrants in the market. Samsung especially has provided a lot of challenge to Apple. In order for the firm to persevere in the competition in the future, it needs to understand how to deal with these threats. Samsung is not the only competitor that gives Apple a hard time in the market (Malcolm, 2014). Since Apple delivered the first Smartphone in the market, very many smart phones from other upcoming firms have been able to come up and they continue to cut on the market share of Smartphone’s. Given the fact that the firm depends mostly on its smart phone as opposed to the other products it sells, this will mean a lot to the firm. 3. What are the central manners in which the strategies of each company’s business leaders have adapted to cultural differences in order to both facilitate effective operations within global markets? Apple With regard to organization structure, apple uses a more open structure where function is given precedence over hierarchy. This organizational structure which is very prevalent in Silicon Valley and is used by other firms in this region such as Google and Intel is the core of Apple’s innovation strategy. By having an open organizational structure, the firm is able to exploit its talent to be the leader in the technology industry, especially in Smartphone sub sector in the larger IT industry. Samsung Samsung uses a different organizational structure and in this organization, the firm uses hierarchical structure where every function is managed in a hierarchical manner. While this may not be a very good way to help the Samsung to exploit the innovative talent in the organization, it does help Samsung to be able to manage its broad range of business thus helping it to be able to maintain its strategy of full diversification. 4. What is the superiority of each company’s organizational competencies in terms of entrepreneurial capabilities, organizational design capabilities, and strategic capabilities geared toward increased performance and profitability? Apple Apple dominates market leadership in a number of ways. To begin with, it has done a very good work in making sure it has gained the market goodwill by placing itself as a leader in the market. Apple also has the benefit of being the leader in the frontier market for Smartphone, that is, the western market. Samsung on the other hand, despite being the most formidable competition for Apple, does not have the advantage of being the leader in the frontier market for smart phones. This is because Samsung is a firm from the eastern hemisphere of the globe and this does not place it on the top of the favorite list for most westerners. Samsung As a firm, Samsung has a number of advantages in the market. To being with, the firm has been described as a fast learner that learns from its competitor. As a result, the firm is never surprised by competitors because it is able to come back the scene even after the competitors such as Apple. This kind of resilience is very important for any business, let alone a business in the most competitive industry, the Information Technology industry. While Samsung may not have the bigger muscle in the western market, it has been able to tap the emerging markets as well as the developing markets such as Africa in a way that Apple has not been able to do. This has advantages both in the short term as well as the long term. In the short term, this will help the business to increase its revenues and profitability (Kim, 2007). In the long schedule of things, this will be a good way to ensure that it is able to have the biggest market share for not only smart phones but also other electronic products. The firm has gained much preference in these secondary markets that will be hard for Apple to be able to take precedence in these markets. Samsung produces its products in a way they are customized for each market. A good example is its Samsung’s fridge which is designed for Africa. The inspiration to design this fridge was the recognition that in Africa, power supply is faced by a number of problems and many cities suffer frequent power outages. With these power outages, the firm realized that the fridge is rendered useless in that it will not be able to preserve food when it is not in power. So they designed a fridge which would store backup power that would last for a few hours so that even in the event of power outage, the fridge will still be able to work. At the same time, the power outages in the African cities also risked the product because the power returns with a surge which can short-circuit the electronic. Samsung then designed the fridge to be able to deal with any power surge without getting dammed. This approach of dealing with each market according to its needs is something that Apple has not been able to do and therefore is an advantage to Samsung. 5. What are the ways which each firm can maximize its profits? Apple Apple can seek to minimize its costs by making sure that the geographical organization of its business is optimized and thus saving on costs. As of now, the firm spends a lot of money to ship raw materials, unfinished goods as well as finished products. By optimizing this process the firm can save a lot of money. Samsung Samsung has a number of challenges with regard to its innovation strategy. This has led the firm to be sued a number of times for patent infringement. The law suits cost the firm not only money but also public image. Samsung must therefore must increase its innovative processes in order to avoid these costs by delivering predicts that do not seem to mirror the products of the competitors. 6. What are the successes of both companies’ corporate-level strategies in terms of horizontal integration, vertical integration, strategic outsourcing, or diversification and what are the recommendations for each? Apple Apple should try to expand to the emerging markets. The emerging and even the underdeveloped economies are going to be the future of business and the firms which will have been able to understand these markets will be in a position to have strategic advantage in these markets. Samsung has already recognized this and they have already positioned themselves as the pioneers in this market. In this regard, Apple should stop focusing too much in the western market and consider these markets because although they may not look so good today, they may be the business hot spots in the future. Samsung Samsung should try to reassert itself as an industry leader instead of being a good follower. Instead of letting its competitors to lead while it follows closely, it should start being creative and innovative so that it will drive creativity and innovation in the market. 7. What are the strategies that the internal leadership of both Apple and Samsung has taken to discourage unethical behaviors? Apple With regard to corporate level strategy, Apple has been very successful in creating an environment of creativity. For example, the firm was the first to invent a personal computer. Secondly, the firm invented the Smartphone, especially the touch screen Smartphone. It has also been very successful in making sure that it drives the market, always being the first to deliver a new paradigm in the market and with regard to its products. Samsung Samsung has been very successful in making sure that the firm has installed itself in the world. To compete with Apple, Samsung fronted its American health quarters to make sure that it is able to develop with a way to ensure that Apple is able to compete with its number one competitor. 8. What are the organizational changes that both companies must alter in their existing strategies? Apple While apple is a leader in the industry, there are various things that would benefit it to change. These are as follows; Change its market strategy With regard to market strategy, especially the concept of market scheming, the firm has been doing very well but must change tactic now. The arrival of other competitors who are able to deliver products as good as its own such as Samsung has shown the market that the firm’s products are overpriced. In this regard, it should try to push its prices down in order to come well with Samsung and other competitors. Change its geographical organizational structure Apple’s geographical organizational structure has been criticized for lack of efficiency. The firm uses a number of manufacturing plants around the word, with each plant manufacturing a certain piece of the phone; these parts are then sent to the central area of assembly and then sent to the USA as a full product for distribution. Apple should try to centralize its business and thus increase efficiency. Diversify Apple should use its technological knowhow to take advantage of the larger electronics market. Samsung There are a number of things that Samsung can change in order to change its almost perfect business strategy. To begin with, the firm should make its business organization to be more open in order to ensure that Samsung is able to take advantage of its innovative capabilities. Secondly, it should try to make sure that it has conquered the Western market. While it has the advantage of being the leader in developing markets which will be good in the future, it must recognize that the present is also just as important. The present will depend largely on the Western market where it can sell products not only in larger volumes but also at higher profit margins. Being able to take advantage of this western market will give it the energy and gumption to propel to the future where it can fully take advantage of the emerging and developing markets. Additionally, Samsung must be able to know how to use its diversification without losing focus. While diversion is a good thing for Samsung to be able to exploit the lucrative IT market, it has hindered its ability to have a more open organizational structured at the function face of business. This may affect it in a negative way in the future and therefore must be changed. References: Aggarwal, V.K. & Arora, S. 2013. (2013). Global Brands’ Impact of Relationship Marketing on Customer Loyalty: An Analytical Study. Global Journal of Management and Business Studies, 3, 8 , pp. 843-848 doi No. 2248-9878. Baroto, B., Abdullah, M. and Wan, H. (2012). Hybrid Strategy: A New Strategy for Competitive Advantage. International Journal of Business and Management, 7, 20 , PP. 120-134, doi no.10.5539/ijbm.v7n20p120. Kim, R. (2007). Samsung’s Competitive Innovation and Strategic Intent for Global Expansion. Problems and Perspectives in Management, 5, 3 , PP. 131-138 doi No. M16, M21, N80, O32. Lee, W. & Lee, S. (2007). Understanding Samsung’s Diversification Strategy: The Case of Samsung Motors Inc. Long Range Planning, 40, , pp. 488-504, doi No. doi:10.1016/j.lrp.2007.06.011. Müller, R.M. & Kijl, B. and Martens, K.J. (2011). A Comparison of Inter-Organizational Business Models of Mobile App Stores: There is more than Open vs. Closed. Journal of Theoretical and Applied Electronic Commerce Research, 6, 2 , 63-76, doi No. 10.4067/S0718-18762011000200007. Zahavi, T & Lavie, D. (2013). Intra-industry diversification and firm performance. Strategic Management Journal, 34, 8 , PP. 978–998. Doi No. 10.1002/smj.2057 Read More