Analysis of Existing Business Strategies - Samsung, Apple - Case Study Example

Strategic Management [Name of the Student] [Name of the University] Strategic Management Part One – Analysis of Existing Business Strategies Samsung Samsung is a major Korean conglomerate that accounts for 17% of the gross domestic product of South Korea. This organization employs around 370,000 people in 80 nations. however, it mainstay is South Korea, where it has the dominance of a second government[Gro131]. The primary marketplace strategy of Samsung is to flood the market with a variety of products within a short interval. In fact, Samsung provides a wide range of cell phones, smartphones, tablets and other gadgets to the high-end and low-end markets. The idea is to ensure that these gadgets appeal to some person or the other. With regard to the low-end market, Samsung has achieved considerable success. [Wil121]. Thereafter, it has made its presence felt in the smartphone market, with commendable success As of the year 2011, Samsung had garnered a substantial share of the smartphone market. In fact, its market share had doubled to 36% in the second quarter of 2011 from 18% in the second quarter of 2010. This phenomenal development has been attributed to, first, the veritable plethora of devices deployed by Samsung, in comparison to Apple and the other competitors. Second, Samsung’s enormous lead over Apple in the second quarter of 2012. During that period, Samsung had sold twice the number of smartphones as Apple. As such, this success had several reasons behind it, such as the unprecedented success of its Galaxy S III whose sales had exceeded 10 million units in two months[Wil121]. The Galaxy S III was introduced by Samsung as a befitting rejoinder to Apple’s iPhone, and the favorable reaction of the consumers towards the former ensured drastic growth in the market share of Samsung. With respect to the Android software developed by Google, Samsung constitutes it largest adopter. All the same, Samsung produces smartphones that run on Windows Phone OS also. On the other hand, Apple is strictly limited to its own operating system, namely the iOS[Wil121]. As such, Samsung has achieved tremendous success with its flood the market strategy, due to its capacity to diversify hardware, as well as the software that is used by its smartphones. Apple Apple Incorporated employs the Apple brand to foray into the highly competitive markets. An evolution has transpired with regard to this brand, which has accompanied its expansion to a vast array of services and products. This organization commenced operations with the sale of desktop computers in the 1970s. subsequently, during the 1990s, it manufactured and sold laptops. Thereafter, it took more than two decades for the company to provide a new product, namely the iPod in 2004, the iPhone in 2007, iPad in 2010[Mar152]. Initially, Apple proved to be a challenger that introduced easy to use computers to consumers and small businesses, in a manner that concentrated upon the style, individuality and requirement of the ordinary individuals, instead of focusing upon the conformity and technical mandates of big business. Despite the tremendous growth achieved by this company, it has continued to live up to its initial promises[Mar152]. The strength of Apple lies in its extraordinary capacity to deliver outstanding customer experience via its superlative interfaces. As such, the product strategy of this company revolves around this concept, and the main products that demonstrate this are the iPhone, Mac, iCloud, iTunes, and the Apps Store. For instance, the distinguishing feature of Apple Pay and Apple Watch are customer experiences of elegant user interfaces and the simplicity of their use[Mar152]. The Apple brand was rejuvenated with the launch of the iPod in 2001. Thereafter, this company strived hard to harmonize and migrate its brand and product strategy in a closely intertwined manner. This great initiative resulted in the distinguished position occupied by Apple today. As such, Steve Jobs, the co-founder of Apple had described it as a mobile devices company that was the largest in the world. Subsequently, this company was renamed as Apple Incorporated instead of Apple Computer[Mar152]. This indicated the objective of this company to become something more than a computer company. Apple Inc has now transcended being a mere devices company. Thus, it has been observed that this company has combined digital content services, such as Apple Music, iTunes, iBooks, and App Store, as a means for providing excellent value to Apple device owners. As such, this company facilitates access to several services and functionalities to consumers, regardless of the Apple device being utilized by them[Mar152]. Part Two – Analysis of the Central Manner of Strategies SWOT Analysis Samsung Strengths Several advantages are possessed by Samsung. These include, leadership in the visual display market segment, a strong patent portfolio, global leadership in all the smartphone and mobile phone markets and high brand value. Weaknesses The chief weaknesses of Samsung are; low profit margin, dearth of own operating system and software, extensive product portfolio and difficulty in retaining competitive advantage. Opportunities Samsung has the following opportunities. First, possibility of further enhancing investment in research and development. Second, emphasizing upon mobile advertisements. Third, foraying into the cloud business segment. Fourth, improving presence in the emerging markets. Threats Some of the major threats faced by Samsung are; first, increase in the interest rates of the US. Second, increasing competition resulting from reducing growth in the industry. Third, patent infringement lawsuits[Dud15]. Apple Innovation is crucially dependent upon diversity and this proves to be vitally important for the future of Apple. In addition to making the company as diverse as the talent that is available for employment, Apple has to deal with the challenges facing it, provide novel opportunities and generate future employees who have the same level of diversity as the environment. As of the year 2014, Apple had hired 11,000 females across the world, representing a 65% increase over the previous year. With regard to the US, 2,200 blacks had been hired, thereby increasing such hiring by 50%. Finally, a 66% increase was achieved with respect to the employment of Hispanic individuals over the previous year[Coo16]. SWOT Analysis Apple Strengths Apple strengths are its high profit margins and the effective innovation process that it adopts. Weaknesses The notable organizational drawbacks of Apple are its limited distribution network, high selling prices and the fact that its sales are mainly restricted to the high-end market. Opportunities With regard to its business environment, Apple has the following major opportunities, namely, expansion of its distribution network, increasing demand for smartphones and tablets and the creation of new product lines. Threats The threats envisaged by Apple are; presence of aggressive competition, imitation and increasing labor expenditure in the nations where its plants are situated. The remedy for these threats is for Apple to have in place a stronger patent portfolio, and continuous innovation to preserve the competitive advantage possessed by Apple products[Smi151]. Part Four – Superiority of Company’s Organizational Competencies Samsung Samsung reposed considerable trust upon dynamic random access memory (DRAM) chips, liquid-crystal display screens and mobile phones. This ensured that it achieved substantial success. In the near future, Samsung intends to invest $20 billion in solar panels, light emitting diode (LED) lighting, medical devices, biotech drugs and batteries for electric automobiles. Despite the apparent differences between these industries, Samsung has rightly concluded that they share vital features. These industries are going to experience rapid growth on account of new environmental regulations in solar power, LED lights and electric cars; and the exploding demand in the emerging markets of medical devices and drugs. It has been predicted by this company that by the year 2020 it would enjoy sales of $50 billion in these sectors, and that its overall global sales would be $400 billion[The115]. Apple Apple employs extremely competent and intelligent individuals in design, software and retail. Moreover, this company has massive funds to invent components, manufacturing process and other such critical features. This explains the enormous difficulty faced by Apple’s competitors. One could be tempted to contend that Android has emerged as the most popular smart-phone operating system. Despite the fact that the Android operating system is used the most, it has to be realized that Apple makes 70% of the profits in smart phones and 85% of the profits in tablets. As such, the true measure of market dominance is the share of profits, and thus Apple continues to retain its pristine position[Baj12]. The success of Apple is due to its adherence to the following principles. First, any product created by Apple should be wanted by the individuals who create it. Second, the product has to be easy to use. Third, the products and their variations have to be simple. For instance, there is just one iPhone model, and not a plethora of models as is the case with Apple’s competitors. Fourth, customers are provided with outstanding service and experiences in the store. Fifth, Apple manufactures products that are an improvement upon the existing products. Sixth, Apple maintains a minimum lead of two years with respect to its competitors[Baj12]. These principles, in conjunction with its excellent software, industrial design, content, applications and services have made Apple a tremendous success. However, the main cause of Apple’s success can be deemed to be these principles, and this company will remain competitive, grow and dominate the market, as long as it adheres to these principles[Baj12]. Part Five – Recommended Business Strategy Samsung Samsung commenced operations with just 36 employees in January 1969. This company became larger than Matsushita of Japan within nine years, by producing two million black and white television sets. During that period, the Korean government had prohibited the sales of color television sets and broadcast of programs in color, till the latter half of the 1980s[Byo12]. Consequently, the Korean electronics industry suffered a setback in development. However, by the year 2012, Samsung Electronics emerged as a major global information technology firm. Its product line includes digital television sets, smartphones, semiconductors, laptops and desktop personal computers. In addition, it provides employment to more than 90,000 individuals at the global level[Byo12]. Expanding the company to a versatile market product will secure its market share in the competitive world. Apple After the successful launch of the iPod, Apple continued with the iTunes Music Store in the year 2003 in the US and in 2004 in Europe. This product was an agreement with the leading record companies of the world to permit the legal downloading of music tracks over the Internet for 99 cents per track. This constituted a major achievement for Apple, as it had convinced the record companies to changer their approach to music piracy. The credit for this monumental development has been rightly accorded to Steve Jobs, the then Apple chief executive. As such, the iPod emerged as the largest single sales contributor to the products in Apple’s portfolio[Lyn14]. The year 2007, was very important for this company, as it launched the iPhone, a mobile telephone that possessed the same user friendly design as the iPod. In order to make the iPhone available internationally, Apple formed an exclusive contract with just a single national mobile telephone carrier in each major nation. For instance, in the US it entered into an agreement with AT&T, whereas in the UK it did the same with O2[Lyn14]. Nevertheless, it is indispensable for Samsung and Apple to presage and mold the future via dynamic and innovative strategies. As such, the management of Apple and Samsung have to shoulder the responsibility for effecting positive organizational change. Part Six - Successful Corporate Strategies Samsung Samsung Electronics has achieved the distinction of being the primary international supplier of digital code division multiple access (CDMA) phone hand-sets with a 26% market share. In addition, it constitutes the leading manufacturer of DRAM chips, static random access memory (SRAM) chips, computer monitors and liquid crystal display (LCD) television sets. As of the year 2005, Samsung Electronics had sales of $79.6 billion and operating profits of $7.48 billion[Kim07]. This has been rightly recognized as a remarkable achievement, as the initial conditions for this company had been highly unfavorable, due to adverse features of the technology, market potential, industry infrastructure and labor skill. In addition, this company had to withstand the keen competition produced by the well-established and aggressive competitors from the companies of US, Europe and Japan [Kim07]. Samsung Electronics is one of the handful of companies that have transitioned beyond the mere imitation of global competitors to emerge a leader in the international market. Apple Apple was sufficiently proactive to recognize a novel strategic management opportunity to benefit from the burgeoning international market in compact disk (CD) players, MP3 music players, digital cameras and other personal electronic devices. This transpired in the year 2000, and subsequently, Apple marketed its versions of these products, which had high value and which employed user friendly software. Some of the resulting products of this initiative were; iDVD for DVD players and iMovie for digital cameras. However, the product that produced an awesome effect upon the consumer was the iPod, or the personal music player that stored the content of hundreds of CDs. At that juncture, Apple sought the cooperation of the industry, instead of keeping the product exclusively[Lyn14]. Part Seven - Internal Leadership to Discourage Unethical Behavior Apple Apple conducts its business activities, across the world, in an ethical and honest manner, and in full compliance with the relevant laws and regulations. This company ensures that this commitment is not compromised at any cost and at any location[App15]. The principles of business conduct of this company ensure the success of Apple and are based upon creating innovative and high-quality products and services, and functioning with integrity in every transaction. These principles are; first, demonstration of honesty and high ethical standards in all business dealings. Second, according due respect and courtesy to customers, suppliers, employees and others. Third, safeguarding the privacy of information of the company, customers, suppliers and employees. Fourth, ensuring compliance with the applicable laws and regulations, whilst taking business decisions[App15]. Samsung Samsung Electronics persistently opposes corruption, bribery and non-participation under the code of conduct that is founded upon the five management principles. These principles are; first, compliance with laws and ethical standards. Second, maintenance of a clean organizational culture. Third, respect for customers, shareholders and employees. Fourth, care for the environment, health and safety. Fifth, preserving the status of a socially responsible corporate citizen. This obliges its employees to promote and preserve a health organizational culture, whilst obeying the law of conscientiousness. This code of conduct incorporates 59 items that have been segregated into 17 clauses[Sam08]. In addition, it stipulates the practical performance measurements regarding conduct and judgment of value, including prohibition of discrimination on the basis of gender and nationality, transparency in business information, and preservation of the privacy of the customer. Part Eight - Organizational Change Apple represents a redoubtable customer franchise and brand equity. In fact, the partiality towards Apple products amongst the members of the Mac community had preserved the fortunes of the company during the 1990s. In addition, this had made it possible for Apple to sustain pricing at a premium to its competitors. It has been contended that in the absence of the price-premium sustained by the Apple brand, this company would have been compelled to abandon the personal computer business several years ago[Mar152]. During the present era, brand preference has promoted Apple’s profits, and it has drastically reduced its manufacturing costs without diluting its very strong brand equity. The branding strategy that is native to Apple concentrates upon the emotions. The entire exercise commences with determining the emotion aroused in a consumer of an Apple product. In fact, the brand personality of Apple relates to aspirations, dreams, hopes, imagination, innovation, lifestyle, liberty regained, passion, and empowering people via technology [Mar153]. In addition, Apple’s brand personality strives to achieve simplicity and excise intricacy from people’s lives, promote people driven product design, and achieve an intimate association with its customers. Nevertheless, it would be naïve to regard Samsung as a mere smartphone manufacturer. It is a conglomerate, manufacturer, and the largest chip maker in the world. A large number of the components used in its smartphones are made by it. This provides Samsung with a major cost advantage, and permits it considerable flexibility is deciding upon what to manufacture and when to manufacture it[Nis13]. In direct contrast to this, Apple, despite its diverse, well managed, and modern supply chain, relies upon external partners. This can result in delays and difficulties. In order to usher in meaningful change, Apple and Samsung have to review and modify their processes and procedures[Bea14]. This constitutes an extremely effective and comprehensive method that has to be adopted by these companies, in order to realize beneficial change. It is necessary for these companies to review the choices available whilst moving forward. List of References Gro131: , (Grobart, 2013), Wil121: , (Williams, Westray, Mackley, Owlett, & Rampulla, 2012), Mar152: , (Marketing Minds, 2015), Dud15: , (Dudovskiy, 2015), Coo16: , (Cook, 2016), Smi151: , (Smithson, 2015), The115: , (The Economist, 2011, p. 14), Baj12: , (Bajarin, 2012), Byo12: , (Byoung-ki, 2012), Lyn14: , (Lynch, 2014), Kim07: , (Kim, 2007, p. 131), App15: , (Apple Inc, 2015), Sam08: , (Samsung, 2008), Mar153: , (Marketing Minds, 2015), Nis13: , (Nisen, 2013), Bea14: , (Bean, 2014), Read More