Strategic Management - Samsung and Nokia - Case Study Example

Strategic Management Introduction The telecommunication industry has witnessed significant growth in the past years and this has led to the emergence of major industry players from different parts of the world. However, the growth and dominance of one company within the telecommunication industry results into the decline of another in one way or another. This arises because of differences in strategic approaches to the dynamic telecommunication market. Today, three companies based in the united and states and other parts of the world dominate the telecommunication market. Samsung, a Seoul based company has demonstrated the benefits of great strategic management in the highly competitive market. However, Nokia and Apple, two main American companies have also remained at the forefront of the competition. In this paper, the market strategic decisions and approaches of the three major telecommunication companies will be evaluated from a number of angles including the yips drivers of internationalization, porter’s diamond and the porter’s generic strategy among others. Yips drivers of internationalization Within any industry, four main key factors play a role in the success and competitiveness of companies including the market, cost, government and the competitive drivers. Nokia, Samsung and apple have embraced the competitive yip drivers in various ways and this has contributed to their success despite the tough competition. Nokia, being a Finish based multinationals has had significant impacts in the mobile telephony industry especially in Europe with previous studies indicating its dominance in the overall mobile market. However, the introduction of smartphones by Apple and Samsung pushed the company into venturing into the market in an attempt to protect its hold on European markets. However, the response that the company received from the market did not favour the continued production of the smartphones and this led to the failure of the initiative. A number of factors contributed to the failure of Nokia in the United Kingdom, a market that was predominantly controlled by the multinational before apple introduced its smartphones. In 2007, Nokia introduced its first iPhone into the European market in a response to the emerging mobile telephony in the region and in other markets across the globe. This was viewed to be a response to the success that other smartphone manufacturers like HTC, Samsung and Apple had posted within the American and European markets. However, the development of the smartphone affected the popularity of Nokia brand in the European markets especially in the United Kingdom. Smartphones operate on software backgrounds and this has been used by a number of mobile phone makers to increase their influence in the market and beyond. Apple produces smartphones that operate on their original software while Samsung adopts the android system created by Google. At the initial phase of introducing their smartphone, Nokia introduced its own software, a reflection of the approach that apple adopted when it introduced its iPhone. The Symbian platform introduced by Nokia for its iPhone flopped and this marked the beginning of a challenging market experience for the company. The Symbian platform created by Nokia failed on a number of fronts and this affected the first users of the device, creating a public uproar and loss of reputation. Unlike the Apple iPhone platform, the Nokia Symbian platform had few applications as compared to the iPhone produced by apple. The operating system did not also provide an ecosystem that could allow other peripheral software to be installed and to operate successfully. While developing the smartphone, the Symbian developers failed to appreciate the dynamic and growing nature of the smartphone market which will demand an improve platform for the smartphones. Failure to project market expectations and behaviours especially in the United Kingdom contributed to the negative reviews that the company’s smartphone received (Maisto, 2012). Apple has developed strong strategic decisions, which have enabled its great and innovative products to reach different parts of the world despite the strong competition. Apple has remained a major market player since Steve jobs reinvented apple and introduced new ways of doing business, developing new products and marketing. His approaches have enabled the business to remain afloat despite the challenges that other market players have continued to face due to stiff competition and a large number of market players. On the background of statements like ‘apple is richer than the united states government’ lies the financial strength of the computer and phone giant apple. The company has grown to increase its financial strength significantly and is today considered as one of the richest American companies. When Steve jobs died aged 58, he left a company that was second largest in market capitalisation, second only to ExxonMobil. However, under the leadership of the able Tim cook, apple has grown and is today the richest company in the United States and holds a major role in the global business (Vissak, Larimo & European International Business, 2009). Johnson culture web Organisation culture plays a critical role in determining the performance and sanctity of an organisation due to the coherence and uniformity that it creates. Johnson’s cultural web is an approach that is diverse and embraces an inclusive framework for studying culture and behaviours of an organisation. The Johnson’s model uses six elements which include the power structures, organisational structure, control systems, stories, rituals and routines and the symbols that are used by the organisation to influence its decision making framework. Organisational culture plays a major role in the success of an organization as it determines the behaviour of the company towards the employees, the stakeholders and the competitors. However, according to insider sources at Nokia, the company’s corporate culture has contributed to immense failure in the smartphone market. While Apple and other smartphone companies continue to take massive risks and venture into software and application development for the smartphone, the approach to risk that Nokia has adopted has significantly affected its ability to make any impacts in the smartphone market. With a long history and dominance in the European markets, Nokia was preoccupied with maintaining its position as opposed to venturing into the murky waters of competitive smartphone market. With massive resources, the company has continued to tread cautiously in an effort to reduce the impacts negative market reviews may have on its products. This is the case according to analysts concerning the recently introduced Nokia smartphones. In an effort to counter the impacts of Google and iPhone dominance in the market, Nokia entered a partnership with Microsoft and this enabled it to produce windows phones (Vissak, Larimo & European International Business, 2009). This has been viewed as a positive step towards countering the control of apple and Google in the smartphone market in Europe and beyond. However, the approach of the organization has continued to affect its success as critics have described the Lumia 800 operating on a windows 8 platform as too little too late. As a result, despite the great reviews that the phone has received due to flexibility and dynamic nature, Nokia Lumia has made a minor 2% impact on the European and British market. With only a 2% market share as compared to the massive share controlled by iPhone and Google android, the introduction of Nokia Lumia smartphone has failed to raise significant market waves in Europe and Britain (Gurǎu, 2007). Understanding of cultural dimensions has been demonstrated to help international human resource managers to understand the sources of miscommunication and cultural conflicts that can arise within this context. Hofstede highlighted the need for international human resource managers to understand the different cross-cultural dimensions that exists. Within the dimensions of power distance, there exist two sets of cultures that significantly affect the success of an organization in the international market (Maisto, 2012). Cultures adopt either individualism or collectivism cultural dimension approach and this is influenced by either the existence of capitalist or socialist ideals within them. The expansion of Samsung operations to international markets such as the United States resulted into the merger of two culturally identical regions. Individualism concentrates on the use of individual skills, power and knowledge in the development of a plan or the implementation of a policy. Cultures that practice individualism cannot comfortably embrace the principles of teamwork that is covered within the dimensions of collectivism. It is thus essential for international human resource managers to understand the individualism and collectivism cultures that exist within the cross-cultural areas of operation before adopted a framework for employee cooperation and teamwork. From a country with a low score of individualism, Samsung moved into regions that had little recognition for collectivism and teamwork. To blend with the different cultural dimensions in the global market, Samsung international human resource practices seeks to embrace the internal practice while integrating it with domestic cultural dimension. This has enabled the company to eliminate the incidences of cultural conflicts related to individual and teamwork related roles as captured with the South Korean cultural dimension (Tansey, Spillane & Meng, 2014). Porter’s diamond Porter’s diamond is a model that was developed to explain the manner in which organizations gain and use competitive advantage to establish themselves in the market. In this model, a nation’s role in determining the competitiveness of domestic organization such as Samsung, apple and Nokia as will be shown in this section. The use of the porter five force analyses will provide a better evaluation of the nature of the smartphone market in Europe by extension and the United Kingdom specifically. This will be essential in demonstrating why Nokia failed to understand the home market, one that Apple aptly understood to enable it to succeed significantly. The entry into the smartphone in the United Kingdom is significantly low due to the massive resources and capital investments required for it to succeed. This has discouraged the entry of new multinationals except for heavily resources companies like Samsung, Apple and HTC. This gave Apple an advantage once it entered the market and created room for it to advance its products and market in the region (Stone & Ranchhod, 2006). The rivalry in the smartphone market, just like in the mobile phone market has remained relatively high and this has affected major markets including the United Kingdom. As a result, smartphone giants like Samsung and Apple have spent a considerable amount of money on research and development to develop products, which not only responsive the needs of the market but remain dynamic to changes. Smartphones are seen to possess a very short half-life and this should influence the developers to develop a platform that is not rigid but is considerate of the expected changes in the software and application market Cho & Mun, 2013). This has been the advantage that Apple has enjoyed as it has led in the introduction of products, which are not only responsive to the market but also dynamic to changes in the operating system platform. Generation in the smartphones changes so fast that one generation become obsolete so fast meaning it has to make significant market impacts immediately after introduction to enable the business make significant sales. Currently, the smartphone market is witnessing the introduction of sixth generation smart phones, a trend that Apple has followed both in the American and British markets (Singh, 2013). The company has been awake to the fact that each generation has to be faster, efficient, dynamic and have the ability to work on various platforms and accept different applications as compared to the previous editions. The development of international human resource management practices must consider the impacts of communication and language of use within cross-cultural setting. Samsung develop policies that are implemented by its subsidiaries in different parts of the world. As a company with its head office in South Korea, the original language of these policies is Korean but is translated to different languages before being passed to different heads of the subsidiaries within the global arena. This approach of multi-lingual communication of policies by multinationals as adopted by Samsung was borrowed from Colgate Palmolive, a household goods manufacturer. After developing a framework for employee behaviour and conduct for all its subsidiaries within the global market, Colgate Palmolive translated the documents to over 10 languages and this gave the company a positive international image and rating (Singh, 2013). Nonverbal communication cues are also affected by different cultural settings and this influences the success of the relationship and communication between the employee and the employer. International human resource management approaches must seek to bridge the gap that exists within the non-verbal cues used by employees in a foreign subsidiary. Within the Indian context, head gestures used in affirmative resembles those used within the western context for no. this has created significant confusion for human resource managers of western based multinationals with operations in India and other parts of the Asian continent. Bowman’s Strategy Clock and porter generic strategies Bowman’s strategy clock is used as a marketing tool to improve the competitive ability of international institutions and was developed as an improvement of three previous models of the generic approach. In porter’s generic strategies, organizations improve their marketing and competitive abilities based on the market of choice and the number of international players. However, the company introduced this Microsoft smartphone into the market after the failure of the Symbian operating platform, the sales of the current sales of the Symbian smartphones is way above that of the Microsoft Nokia Lumia. This has led to a decline in the company’s share by over 20% immediately after the launch, an indicator of the failure in making significant impacts. Apple has developed a strategy of market responsiveness and the ability to develop products that incorporate the views and demands of the consumers. This has been captured in the organization’s market centred approach in the United Kingdom which has enabled its sixth generation phone to meet the demands of the consumers. Nokia, billed as having a mantra for listening to the customers has failed to live to the expectation of their culture by not being able to develop market centred products. Nokia has witnessed strategic erosion and this has led to a decrease in its willingness to respond to the market needs and develop smartphones that can meet the current demands of the customers. In 2007, Apple was involved in the marketing and the introduction of its iPhone, a gadget that received positive market review while Nokia was involved in research and development to improve its Symbian platform. Strategic erosion has affected Nokia’s ability to sustain its technological innovation and maintain a positive market leadership in the United Kingdom. Apart from decision making and action speed, the consumer electronic industry operates under a high-risk environment that are encountered from different fronts. Inventory liabilities and shortages that have hit the company in the past increases the volatility of the demand for any company in this industry. This has been the identity of apple for a long time since the company has been known for its ability to develop customer specific goods and customize them to meet the demands of different markets across the world. The apple market strength has received mixed reviews from different market analysts with a significant number of analysts believing that the dominance of the company has slipped significantly and is currently controlled by Samsung. However, apple has had significant market presence in other countries especially in japan, china and the Middle East. The iPhone market in japan and china has increased significantly with the company moving towards controlling over 50% of the smartphone market. The logo of apple has become a much known and common brand in japan and china and the company continues to increase the base of loyal consumers in the region. The white headphones and earphones associated with apple iPad is growing common in the two countries with majority of the youths developing more taste for the product (Mundy, 2014). McKinney’s 7-S Framework McKinney’s 7-S Framework is a model that has remained viable in the analysis of industries like the telecommunication industry as will be demonstrated in this paper. The 7S model is used to help an organization improve its performance, demonstrate how changes can be made to change the performance of an organization in the future and the how aligning of departments can improve the competitiveness of organization. As compared to the Kurt Lewin change model, the McKinsey 7-S model adopts a holistic approach that involves the incorporation of a number of shared values within the organization (Chen, 2014). Developed in 1987 by four management gurus, the model uses seven agents of change, which include the shared values, the strategy adopted by the organization, management structures and systems, style, skills and staff of the employees. As compared to Kurt Lewin management model, the 7-S model is considered more valuable and application in different organizational situations. Apart from blanket change management, the model enables manages to facilitate the organizational change by involving all employees and the resources involved. The model also allows for the implementation of new strategies without affecting the success of previously adopted strategies by organization (Hassoun, 2014). The implementation of change must also be on an informed basis with information on the areas to effect on completion of the approach adopted. With this model, it is easier for an organization to identify the department and sections of operation that will be affected both in the short and long term. Change in some organization involves mergers and acquisition, steps that must be properly managed in order to ensure the success of the initiative. With this 7-S model, mergers of values, skills, styles and staffs of the organization are critical in the success of any merger or acquisition (Freemantle, 2013). Despite the benefits of the model that have been highlighted, its application to multi-departmental organizations and multinationals may be limited. Though Lewin model has been applied to such organizations with success, the application of this model will affect other departments due to its interrelated nature. The model also ignores the differences that may arise from the different departments in an organization or from two organizations that are in the merger process. While the Lewin Kurt model has been successfully cited in a number of situations, the level of failure with the 7-S model is relatively high. This makes it less preferred by multinationals and big organizations that cannot consider failure as an option in the management of change (Chen, 2014). Conclusion The telecommunication industry is one of the most dynamic sectors due to the impact that innovation and features have on the attitude and preference of the customers. The introduction of new gadgets by the three players in this industry influences the attitude and loyalty of the customers, a situation that changes the level of market performance. However, this analysis has demonstrated that apple and Samsung remain the major players in the industry due to the market they have controlled in the past. This control is attributed to their strong innovation and product viability, which has enabled them to establish a strong market. References Chen, Y 2014, Telecommunications Service Industry. TIER Industry Report - Telecommunication Service Industry, 1-14. Cho, T., & Mun, H 2013 from Adam Smith to Michael Porter: Evolution of Competitiveness Theory. Singapore: World Scientific Publishing Company. Freemantle, D 2013, Part 2: Applying the cultural web -- Changing the labor ward culture. British Journal of Midwifery, 21(10), 723-730. Gurǎu, C 2007, Porters generic strategies: a re-interpretation from a relationship marketing perspective. Marketing Review, 7(4), 369-383. Hassoun, D 2014, Tracing Attentions: Toward an Analysis of Simultaneous Media Use. Television & New Media, 15(4), 271. Maisto, M 2012, Apples $1.05 Billion Payday May Be Bigger Microsoft, Nokia Win. Eweek, 1. Mundy, S 2014, Samsung grapples with reversal of fortunes; Analysis: Technology hardware. Financial Times. p. 16. 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