Strategic Management at Apple and Samsung - Capstone Project Example

Capstone Project Introduction Strategic management is an important aspect which is undertaken by every business in the present scenario. Business strategies are formulated on the basis of various external factors which positively or negatively affects an organization. It is often observed that competitive advantage is achieved by a company through innovative strategies which are implemented by the management. These strategies differ from one organization to another as in certain cases differentiation is appropriate for a firm to gain profit margins while for some companies cost leadership strategy proves to be more beneficial. Apple and Samsung have been able to set its mark in the industry through their wide range of strategies which they modify as per external environmental conditions. Analysis 1. Business strategies of Apple and Samsung Apple has a unique position in the market place and the company’s business strategies are aligned towards developing a high end product which would create a memorable experience for all its customers. As per the management of the company the major aim of their business was not to manufacture low priced products and capture huge market share but they focused towards innovative products for certain segment of consumer market. Steve Jobs had figured out all possible ways to launch such products at lowest cost possible in order to gain high profit margins. Their main business strategy for both domestic as well as international markets is to offer high end products and focus on small range of products but incorporate differentiation and this strategy cannot be easily imitated by other players. The company even gives priority to profit margins over market share and believes in creating a halo effect amongst customers which would make them wait for products to be launched by Apple. On the other hand Samsung has different business strategy in which it does not only encompass creativity or innovation but also encompass people, change, integrity, excellence and co-prosperity. The business strategy of this company is all about analyzing the consumer market demand and offering products as per the demand. Mission and vision of Samsung is strongly aligned with its strategic directions as they inspires the world through their innovative products and builds a beautiful future (Neil, 2010). Their product line and pricing strategy states that they have the major goal of becoming the best company across the globe. On the other hand Apple’s mission and vision guides its overall operations through providing value added services and sustaining its market position for long run to gain high profit margins and be the first preference of customers. 2. SWOT analysis of the companies SWOT analysis is an effective tool which helps to identify the competencies which are possessed by an organization. The major strength of Samsung is its hardware integration and encompasses many open source software and operating system. It even holds excellence in manufacturing consumer electronics and hardware parts. The production costs of this company are low with focus towards innovation and external environment. Other strengths are its capabilities to promote the brand and occupy a large market share in mobile phone segment. Samsung is considered to be the second most powerful player in Smartphone market in terms of sales. On the other hand Apple possesses the major strength of advertising and marketing capabilities with strong distribution channel in United States. The strong brand name forms strength of the company. Another factor of strength is its vertical integration mechanism. There are certain weakness which is possessed by Samsung such as focus on wide range of products, low profit margins, patent infringement and lack in its own software and operating software. This proves that to some extent business strategy of the company is failing to generate desirable revenue. Apple also possess weakness in the form of high dependency on iPad and iPhone sales, incompatibility with other software which are easily available, lack of wider range products or price differentiation and weak distribution channels in India and China. This states that the company being focused on innovation is not able to satisfy the hidden demand of market. It gives more attention to its domestic markets in comparison to international markets. For Samsung the opportunities are majorly in emerging Smartphone market such as in India. There is a high growth in industry of mobile advertising which can be explored by the company. The other opportunities are gaining patents through various acquisitions, growing market demand for tablet and quality application processor. Apple has opportunities in the form of acquisitions of different valuable organization, launching wearable gadgets and providing a medium for mobile payments. On the other hand threats for Samsung are launch of iTV by Apple, rising price wars between different players in the industry, rapid change in technology, saturated markets for Smartphone in developed regions, reducing margins in relation to hardware production and breached patents. The major threats for Apple are lawsuits against patent infringement, rising competition and strong or powerful US dollars. All these factors state that in certain aspect both the companies are outperforming the rest in terms of competitive strategies but in some cases they even do possess loophole which would be a major issue in long term. Samsung has been able to gain its competitive position in the industry with the support of wide array of products ranging from Smartphone to insurance. The company majorly focuses on offering different price points to satisfy large base of customers and this observed in pricing strategy of its Smartphone where some are priced as high ended products and some are low priced products (Pringle, 2008). On the other hand Apple is able to create a competitive position through focused differentiation strategy where it offers limited product range at high prices for specific customers such as its iPhones, iPads, etc. However the innovative technology which is incorporated by the company in its devices cannot be imitated easily by other players proving it to be a major competency for the company. 3. Adoption of cultural differences by business leaders Business leaders can be considered to be the strong pillars which drive growth and success of a company. Apple and Samsung have different goals and objectives which are highly reflected in their competitive business strategies. On one end Apple gives more importance to acquiring high profit margins through launching innovative and technologically advanced products and on the other end Samsung aims at gaining economies of scale by controlling their production costs and offering wide range of products at competitive prices. Steve Jobs during his tenure in the company has always set goals to facilitate innovation and considered all the team members to be an integral part for reaching that desired goal. The leaders of this company do not believe in following an autocratic approach where the supreme power and decision making capabilities lies on certain individuals. In this organization innovative skills are appreciated by leaders and they give equal opportunities to team members in terms of enhancing skills and taking strategic decisions. These leaders adjust to cultural differences by involving individuals from different culture and setting forth a common platform for promoting and launching products (Hoskisson, Hitt, Duane & Harrison, 2007). This is highly observed in pricing of Apple’s products which does not vary as per culture or country. On the contrary business leaders of Samsung facilitate strategic innovation through training team members and focusing on delivering excellence. The most prominent example of this company adopting cultural differences is in terms of its wide array of products which are differentiated as per consumer market demand and affordability of target market. 4. Organizational competencies of Apple and Samsung Organizational competencies are often considered to be the most important factor which helps to achieve the desired objective. There are several factors which are associated with organizational competencies such as entrepreneurial capabilities, strategic capabilities and organizational design capabilities. Entrepreneurial capabilities are the competencies which are possessed by the organizational leader. Steve Jobs possessed high degree of innovation capability. There were certain unique entrepreneurial capabilities which were incorporated in the organization such as providing space to employees to do creative thinking, offering dreams to customer rather than products and creating unique experiences both for team members as well as customers. Opportunity recognition is the major entrepreneurial capability which is possessed by leaders of Samsung. The company has even enhanced this competency by setting up centers of excellence across the globe. Strategic capabilities in case of Apple are its strong financial arm and narrow focus on product range. This company has been able to create a strong brand image in the market and this saves a lot of time and cost in relation to promotional activities or advertising. On the other hand Samsung possess strategic capabilities in the form of wide range of market share and extended product portfolio (Mcfarlin & Sweeney, 2008). They operate over large number of industry segments so loss from one business can be easily compensated with profit from the other business. Apple has been able to come up with unique functionality and designs due to flat organizational structure which is implemented in the organization. In this organization innovative and creative skill is given importance which is not restricted in the form of strict regulations or wide array of hierarchies. However the organizational design is not the same in case of Samsung as there are too many hierarchies in the system and collaborative working has not gained importance in the organization. Organizational competencies of Apple is observed in the form of rising market demand with the launch of iPhone and on similar context Samsung has been able to explore its competencies through manufacturing different products at different prices. 5. Recommendation of new business strategy for each company Apple and Samsung operates in an industry which is highly competitive in nature and in order to sustain their operations in this industry it is essential that both the firms continuously modify their strategies as per changes in the external environment. Apple as a leader of innovation has always focused on narrow segment of products. However this strategy needs to be altered as there is large percentage of market share which needs to be captured by the company so as to sustain its operations for long term. It is recommended that this company adopts the strategic goal of launching different products or incorporate product differentiation in the system. The company has its operations spread across large geographical areas and hence it needs to offer products as per consumer market demand. On the other hand Samsung can gain high profit margins by focusing on technological advancements and developing their own hardware or operating system. This would help to reduce the level of dependency that the company possesses on outsourcing activities. It can even enhance competitiveness in the form of offering more value addition in all its products or services. 6. Corporate-level strategies Both the companies possess different kinds of corporate strategies which are aligned with their business goals and motives. However the effectiveness of these corporate strategies depends on the resources or capabilities which are possessed by an organization. Apple and Samsung are considered to be the top most players in terms of exceptional product line and large base of brand loyal customers. Both the companies have adopted different type of corporate strategy such as Samsung focuses on diversification but Apple is inclined towards vertical integration. It can be stated that the strong financial position of Apple is because of its controlled production costs since all the elements of its supply chain is owned by the company itself. This reduces the level of dependency on outsourcing mechanism and provides the scope to innovate more in wide directions. The success story of the company in the form of high revenue margins and growth per year is based on this strategy (Johnson & Scholes, 2003). On the contrary Samsung focuses on diversification and success of this strategy can be evaluated in terms of wide scale of products offered as per consumer market demand. The company’s Smartphone sales had created a record in the market place as they were able to offer advanced technology at affordable price range. As per thorough analysis the strategy which contributed towards success and profitability of Apple was its lower production costs and narrow product segment offering high value to customers. This has helped the company to create a niche position in the market as individuals in present scenario desire for an Apple product. On the other hand Samsung’s strategy of diversifying into new markets with new products has helped it to gain market share as well as manufacture products on basis of rising demand. The most significant example of this strategy is the launch of Samsung Galaxy S3 and S5. 7. Analyzing internal leadership strategies to discourage unethical behaviors Unethical behaviors are not appreciated in Apple or Samsung. The major reason behind this action is that both the firms aim at establishing strong brand image in the industry. Internal leadership plays a vital role in discouraging such unethical practices and provides a right strategic direction to an organization. The leadership structure of Apple is quite different from that of Samsung. In Apple the leaders are more visionary by nature but the same is not true in case of Samsung as their leaders possess an opportunity seeking behavior. The steps which are taken by leaders of Apple to prevent such unethical practices are setting up an agency within the organization which detects the level of ethics being maintained in work practices, constant monitoring of tasks being done by employees and rewarding those team members who are able to maintain the ethical standards in the workplace (Hitt, Duane & Hoskisson, 2012). On the other hand Samsung maintains its ethical practice by being associated with local communities, taking active participation in all forms of corporate social responsibility activities and training all the team members in context of following ethical guidelines in day to day work practice. 8. Need for organizational change in both companies Organizational change in present scenario is a mechanism which enables a firm to be aligned with the external changes taking place in the competitive environment. Apple and Samsung both possess a fixed set of functional, corporate and business level strategies. However organizational change is a must for both these firms as it would help to enhance their respective competitive advantages. There are three specific ways of organizational change through which Samsung can improve upon its competitiveness and business performance in the industry. Firstly is eliminating the wide array of hierarchies and facilitating more of collaborative approach in the workplace, secondly, is reducing its dependency on outsourcing activities and thirdly is implementing vertical integration in the system. These activities would help the organization to pose a tough competition for all the players and even would bring forth the necessary change in the organization. On the other hand Apple can incorporate certain activities such as more of product differentiation in terms of price and features which would change its business strategies, more of diversification into new emerging markets and obtaining cost advantage by outsourcing expensive elements and manufacturing certain hardware parts for the products (Simerson, 2011). These specific ways would enable the company to cater the major threat in the form of rising competition in the industry. Conclusion As per the analysis it can be stated that Apple and Samsung has adopted innovative strategies to sustain its business operations. Though some of the strategies have been the reason for success and growth of both the companies but in certain aspect these strategies have proved to be point of weakness for the companies. However both the companies possess an influencing leadership style which has guided the team members towards organizational goal. References Hitt, M., Duane, R., & Hoskisson, R. (2012). Strategic management cases: competitiveness and globalization. USA: Cengage Learning. Hoskisson, R., Hitt, M., Duane, R., & Harrison, J. (2007). Competing for advantage. USA: Cengage Learning. Johnson, G., & Scholes, K. (2003). Exploring corporate strategy. Prentice Hill: London. Mcfarlin, D. B., & Sweeney, P. D. (2008). International management. New Delhi: Dreamtech Press. Neil, B. O. (2010). Acting as a business: strategies for success. New York: Random House LLC. Pringle, H. (2008). Brand immortality: how brands can live long and prosper. Great Britain: Kogan Page Publishers. Simerson, B.K. (2011). Strategic planning: a practical guide to strategy formulation and execution. USA: ABC-CLIO. Read More