Abstract was made in reference to the direction
Apple and Samsung have achieved high levels of business success over the years. However, both companies have pursued different strategies to achieve their success. This paper compares the business strategies of both companies and reveals that their production, human resource and marketing strategies are inherently similar.
However, within these similarities, both companies have different corporate cultures, which differentiate the companies’ ideals. This paper proposes that Samsung should re-evaluate its business strategies to be in tandem with the needs of today’s technological world by focusing on the software market.
In addition, this paper proposes that Samsung should redirect its resources to focus on new and emerging markets as opposed to battling for the developed markets. Finally, this paper also proposes that Samsung should direct more company resources to the home appliance market, which is its area of key competence. Apple’s strategies are perceived to be largely successful.
“If you don’t know where you are going, you will likely end up somewhere else” (Chris, 2008, p. 1). The above statement was made in reference to the direction pursued by chief executive officers (CEOs) when pursuing different company strategies. This statement has a strong implication in businesses because the tactics and methods used by businesses in undertaking their daily business operations define the future direction of their fate.
Usually, experts explain that an efficient and effective business strategy is the most appropriate type of business strategy for a company (Chris, 2008, p. 1). The influence of a company’s business strategy spans across different sectors of a business’s competence areas such as customer retention and resource allocation.
A company’s business strategy therefore determines a company’s long-term health. Establishing a company’s business strategy has a positive effect on realizing a company’s strategic goals. Chris (2008) emphasizes that business owners have to take time to pinpoint their business strategies to guarantee their overall success.
In support of this fact, he explains that, “If that’s the case, business strategy and strategic planning are essential to achieving your goal, and no business can possibly head forward over the long term without some form of strategic planning and decision making” (Chris, 2008, p. 5).
However, the concept and importance of business strategy is ambiguous and vaguely understood (partly because of a clear misunderstanding of the concept and partly because of the extensive depth and multifaceted understandings that characterize business strategies). Nonetheless, most companies have a business strategy. Some companies have simple business strategies while others have complex and multiple business strategies.
Giant multinationals are known to have multiple business strategies because they operate different business portfolios. However, with the growing pressures of globalization and increased business competitiveness, it is important to evaluate the business strategies of different companies to evaluate how they compete against one another in today’s turbulent and competitive corporate environment. More so, it is interesting to evaluate the business strategy of different companies engaged in the same type of business.
Apple and Samsung are some of the giant technological companies engaged in the same type of business. Apple Inc. is a successful American company, which has been in existence since 1976 (Mallin, 2011, p. 1). Over a span of three decades, Apple Inc. has been able to establish itself as a force to reckon with in the electronics market.
The company has received a lot of admiration (both locally and globally) after it was ranked by Fortune magazine as the most admirable company in America (in 2008), and the most admirable company globally (since 2009) (Mallin, 2011, p. 1).
Apple is engaged in the manufacture of hardware products such as Macintosh, portable music players, personal computers (PCs) and software, networking solutions, third party digital content and related software. The company’s most notable products include Macintosh computers, ipods, ipads and the Apple TV. Apple’s online presence is also firm, especially with the existence of a virtual marketplace where the company sells digital content through App store, itunes, iBookstore among other online platforms (Mallin, 2011, p. 1).
Apple Inc. has a global presence in 10 countries around the world and it runs 357 retail stores in these locations. Apple started business in 1976 and has since been in competition with other giant multinationals such as Microsoft and IBM (especially in the computing market). Since the company started business in the 70s, it has created a lot of buzz.
For instance, Apple Inc. was among the first multinationals to have created a lot of capital in its initial public offer (IPO) after Ford Company (Mallin, 2011, p. 1). The company consequently made many millionaires – a development that elevates it above many of its rivals who have also conducted IPOs in the past. Infighting between Steve jobs (the company’s founder) and Jef Raskins initially deterred Apple’s success.
The infighting saw Jobs focus on the Macintosh computers, which became one of Apple’s earliest successes. However, Apple’s growth path has been hit by several setbacks such as its attempted launch of auxiliary technological gadgets such as digital cameras and other home appliances.
The venture into these market segments was informed by a dwindling market share and reduced fortunes of the company (during the late eighties and early nineties) (Mallin, 2011, p. 1). The company’s products failed to capture a strong market share among the consumers. Consequently, Apple’s shares and stocks depreciated. Later, the company’s reputation was soiled by a poor response to its products and its failure to meet deadlines.
Furthermore, the company focused on a high-market strategy aimed at developing highly engineered gadgets at a premium but consumers never responded to this strategy positively. At the same time, Apple’s rivals created cheaper products such as Microsoft windows, which slowly gained a good reputation in the market (Mallin, 2011, p. 1).
During the 90s period, Apple tried to reinvent its products by launching new product lines such as Apple’s Newton which proved to be unsuccessful in the market. This product was revolutionary because it marked Apple’s entry to the PDA market and consequently, its interest to develop the Apple ipad and iphone.
The 90s period also marked an ear of alliances between Apple and other technological companies such as IBM and Motorola (Mallin, 2011). These alliances were aimed at developing a superior computer technology, which was going to incorporate Apple’s software and IBM’s (and Motorola’s) hardware competencies. These mergers were aimed at countering Microsoft’s influence in the software market. The strategies however did not yield much fruit.
Apple’s comeback to profitability occurred in the 1998-2005 period when Apple developed new product lines such as imovie, and new operating systems for its Macintosh computers. The company’s growth into profitability was also characterized by the Intel transition that occurred in the 2005-2007 period when Apple merged its computer production with Intel (Mallin, 2011). Apple’s success during this period was evident in its sudden rise of stock prices. It is estimated that Apple’s stock price rose more than ten times (Mallin, 2011).
During the 2007-2011 period, Apple’s success was cemented with the growing popularity of its iphone, ipad and ipod products. It is at this point that Apple changed its name to Apple Inc. after the company shifted its business focus from making personal computers to other technological gadgets such as mobile phones and music players. It is also during this period that Apple introduced the itunes platform, which allowed consumers to purchase music and play them on other music players.
The appstore was also introduced during this period and consumers were given an opportunity to purchase different applications for their technological gadgets (iphone and ipad). It was estimated that the appstore raked a million dollars every day for Apple and in the future, the platform was projected to be a multimillion-dollar industry (Mallin, 2011).
In the recession of 2008/2009, Apple continued to post an impressive sales growth. During the same period, April posted a net profit of more than $1billion after reporting revenues of more than $8 billion (Mallin, 2011). With the launch of the ipad in 2010, Apple’s popularity soared and the company’s stock price hit an all-time high of about $300 (Mallin, 2011).
In the 2011 period, there was increased speculation about the health of Apple’s CEO, Steve jobs and the effect of Job’s health on the company’s future. Steve Jobs often took sick leaves but was present to officiate Apple’s launch of the icloud. About the same time as the launch of the icloud, Apple had already gained reputation as a very efficient company with a strong foothold on its supply chain.
The operations of Apple’s supply chain was strong enough to warrant speculations by observers that the company’s grasp on the supply chain was enough to dictate the terms of other players in the chain (Mallin, 2011). This attribute exposes the uniqueness of Apple’s operations compared to other companies in the same business.
Nonetheless, Apple’s corporate culture revisits the age-old debate regarding which corporate structure is the most effective. This debate touches on different aspects of corporate cultures such as flat, tall, casual or formal organizational structures and corporate cultures. However, Apple’s corporate culture has been associated with southwest airlines, and Microsoft (Mallin, 2011).
The media has often portrayed Apple’s culture and business practices as uniquely unconventional and odd. For instance, the media picked Job’s tendency to walk barefoot in the office as a weird attitude held by a CEO of a fortune 500 company (Mallin, 2011, p. 2).
However, Apple’s initial business practices have been lost with the successive changes of management and CEOs. Different people have altered the company’s operations based on their ideas of what they thought the company should look like. However, Steve Job’s influence on the technological giant has been the most profound and widely talked about. Steve Jobs has seen Apple transcend to a very profitable company.
Currently, the world does not have a doubt regarding Apple’s ability to succeed. Observers associate Apple’s success to its ability to foster individuality and uphold employee success (Mallin, 2011). The focus on high employee talent was especially fostered by Jobs after he made a debut back to the company after being fired by the company’s board in previous years. To support high employee talent, Apple came up with an effective fellow program, which rewarded employees for their outstanding performance.
The fellow program was however implemented in the personal computing field. This was one pet project for Jobs. Job’s input in the company’s operations has been invaluable because employees have often cited his input as facilitative (Mallin, 2011). Projects that are undertaken without his input therefore tend to take a longer time before completion.
Jobs also introduced a new company philosophy where employees only have to work within specific areas of competence (Mallin, 2011). The company perceived this strategy as a tool to breed the best human power possible within every company department.
For instance, the company’s senior vice-president in the retail department had no authority to direct other activities within the company’s retail chain, other than those described within his roles. Other companies have however perceived Apple’s strategy as flawed because it creates a lot of human capital redundancy. Therefore, firms such as General Electric have pursued an all-rounded strategy where different employees are trained to undertake different tasks (Mallin, 2011, p. 6).
Different aspects of Apple’s operations have been perceived to be responsible for Apple’s success. One such aspect is the company’s supply chain strategy. This aspect has already been highlighted in this paper as one area of Apple’s key competence areas. However, it is important to point out that this area of competence has been ranked among the best globally (Mallin, 2011).
Therefore, Apple’s supply chain strategy involves a well-researched and efficient manufacturing; logistics and procurement strategy that has liberated the company from incurring excess costs associated with maintaining large inventories and distributing high product volumes. The efficiency of its business strategy has given Apple an edge in reduced supply chain costs of up to a half of the normal costs incurred by other hardware companies (Mallin, 2011).
Most of Apple’s products were initially produced in America but due to increased globalization and the proliferation of production opportunities elsewhere, Apple’s products are currently produced in other parts of the world. The traditional business strategy of producing their main products in America is no longer a viable strategy because there is a high flexibility and diligence that is available in external markets.
So far, the Apple brand has made many headlines in different markets around the world for their unrivaled product categories. Similarly, the company has created an unrivaled brand loyalty among its most valued customers around the world. It is therefore a usual occurrence to find hundreds or thousands of people waiting outside different Apple retail stores to buy a new Apple product.
Scenes like these have been witnessed in most Apple product launches such as the iphone 4s, which was launched in October 2011. Most of these customers are local (Americans) but occasions have been witnessed where some customers fly from overseas and wait in line for days to purchase Apple’s products. The strong brand loyalty among Apple’s consumers was however built naturally due to impressive product quality.
Apple’s ambassadors have also sprouted in the recent years but their input has been second to the near fanatically following that Apple enjoys. Apple has not shied always from taking advantage of the improved customer loyalty. The company has formed impressive consumer networks among its most trusted consumers such as the network of imac computers (Mallin, 2011). The strong customer pool would occasionally meet in different company expos around the world.
Notably, Apple has organized different expos in the European and American markets where these loyal customers have met. The strong brand loyalty among Apple’s consumers has prompted different researchers to probe the profile of Apple’s consumers. It is established that Apple’s consumers are twice as educated as other consumers in the PC market are (Mallin, 2011).
Different explanations have been given to explain this observation but the most common notion is that most of Apple’s products are priced at a premium and therefore, they attract a sophisticated clientele. The strong brand following for Apple’s products has been highlighted in different media across the world.
Samsung electronics is also engaged in the same type of business as Apple because some of its main products have been compared to Apple’s. For instance, Samsung’s galaxy tablet has been compared with Apple’s ipad, and Samsung’s Galaxy S mobile phone has been compared with Apple’s iphone (Mallin, 2011). Unlike Apple, Samsung is based in South Korea and has a sales network spanning over 60 countries across the globe (Henny, 2003).
Samsung has come from a period of financial doom to become one of the coolest brands in the technological market. Less than a decade ago, Samsung’s brands were perceived to be cheap and low quality, with some critics perceiving its products as “me too” products.
Now, regardless of which continent one hails from, it is virtually impossible to miss a Samsung brand in the stores. In the US alone, it is difficult to miss Samsung gadgets such as high definition plasma televisions, mobile phones, digital cameras and other technological gadgets in any electronic shop across the country.
The company has also managed to establish a dominant online presence because it is almost impossible to miss a Samsung advert in most heavily trafficked sites such as USA today or CNN. Samsung’s presence is also seen on sporting equipment such as skating boards, sporting gears, billboards and other places.
The unrivaled success that Samsung has witnessed in the digital world has even scared most of its competitors but in the same breadth, the company has been able to “wow” its consumers by creating superior products. So far, Samsung has been able to win several design awards and over the years, the company has been able to sneak its way to the top of brand awareness awards around the world (because more people are now aware of the company’s existence around the world) (Henny, 2003).
Currently, other technological giants in the digital market (such as Sony) are becoming more worried about Samsung’s growing success because recent reports show that existing technological companies are always seeking to know what Samsung is doing. However, Samsung’s management believes that it is well on its way to becoming the most valuable electronic company in the world.
To show the extent of Samsung’s success in the digital gadget market, Jason (2011) explains that,
“Samsung has become the biggest maker of digital mobile phones using code division multiple access (CDMA) technology — and while it still lags No. 2 Motorola (MOT) Inc. in handsets sold, it has just passed it in overall global revenues” (Jason, 2011, p. 13)
A couple of years ago, the global market was mainly dominated by Sony and Mitsubishi Corp. but over the years, Samsung has quickly come up to be a formidable force in the market. Samsung’s reign as a digital manufacturer has not only been witnessed in the manufacture of televisions and other digital equipments, it has also been witnessed in the microchip market. Jason (2011) explains that,
“In the new market for digital music players, Samsung’s three-year-old Yepp is behind only the Rio of Japan’s D&M Holdings Inc. and Apple Computer (AAPL) Inc.’s iPod. Samsung has blown past Micron Technology (MU), Infineon Technologies (IFX), and Hynix Semiconductor in dynamic random-access memory (DRAM) chips — used in all PCs — and is gaining on Intel (INTC) in the market for flash memory, used in digital cameras, music players, and handsets” (Jason, 2011, p. 13).
Nonetheless, for a long time, Samsung has been battling with Hewlett-Packard (HP) for the position of the best information technology (IT) manufacturing company in the world, and in 2009, Samsung won this coveted price (Jason, 2011, p. 13).
Samsung is also known to have a remarkable sales record in LCD displays and LED screens which puts it at the first spot in the world (compared to other companies, which sell LED and LCD screens). Though Apple Inc. is considered the number one company in the sales of tablets, Samsung is considered the leader in the sale of televisions. For close to a decade, Samsung has maintained this position.
1.1 Statement of the Problem
Though Samsung and Apple specialize in different aspects of hardware and software manufacturing, there has been a strong competition between the two technological companies. Both companies have realized high levels of success in different product portfolios but no company has exercised restraint on producing products that infringe on the other company’s core product.
Apple Inc. has produced apple TVs (which infringes on Samsung’s strong foothold on the sale of television equipment) while Samsung has been resilient in producing tablets (which infringe on Apple’s core business – the sale of the Apple ipad).
Recently, Apple sued Samsung for copyright and patent infringement after it accused the South Korean technological giant of copying Apple’s ipad and iphone features (Deagon, 2011, p. 1). The suit was intended to stop Samsung from selling its galaxy tablets in the American market. However, Samsung claimed that Apple’s arguments were unfounded.
Samsung and Apple’s rivalry has transcended the above Californian case because the two manufacturers have filed suits (and counter lawsuits) in about a dozen countries around the globe (Deagon, 2011, p. 1). Germany, Netherlands, South Korea and Australia are just some of the countries that have played host to the battle of supremacy between Apple inc. and Samsung electronics (Deagon, 2011, p. 1).
The US is one country that has ruled against Apple in its case for copyright infringement against Samsung but certain countries such as Germany have ruled in favor of Apple (in the same case). Experts note that the tablet market is quickly expanding, and as at 2011, the potential of the market is estimated to be about 50 million units (Deagon, 2011, p. 1).
The tablet market is expected to be dominated by Apple Inc. but so far, the American company has only reported sales figures of about 30 million. This means that there is still more room for other companies to sell their tablets. Moreover, the market is still growing. Though other technological companies have entered the tablet market, Samsung is perceived to be the closest rival to Apple Inc. (in terms of design and capability) (Deagon, 2011, p. 1).
In the Smartphone market, Samsung and Apple have gone head-to-head to dominate this market segment. Towards the end of 2011, most observers perceived Samsung’s sales numbers to be remarkable (Deagon, 2011, p. 1). In the fourth quarter (of 2011), Samsung reported profits of $4.5 billion after the company sold more than 300 million units of mobile phones (Deagon, 2011, p. 1).
This sales record was complimented by the reign of the technological company as the king of android phones. Since Samsung and Apple have mainly competed on the Smartphone market segment, it is important to evaluate the sales of both companies on this front.
Samsung does not share specific sales figures regarding its business portfolios. However, observers estimate that the South Korean company sold about 35 million Smart phones in 2011 (between October and December) (Deagon, 2011, p. 1).
This sales record is attributed to the growing popularity of the galaxy smart phones around the world. Evaluating the performance of Samsung and Apple in different quarters of 2011, we see that Apple sold 18.65 million Smart phones in the first quarter of 2011 (alone) while Samsung sold slightly more than 12 million units (Deagon, 2011, p. 1).
In the second quarter of 2011, the competition between the two companies became stiffer as Apple registered a sales record of 20.34 million smart phones while Samsung posted a sales record of 19 million smart phones (within the same period) (Deagon, 2011, p. 1).
In the third quarter, Samsung’s sales records improved drastically to overtake Apple’s. During this period, Samsung sold about 24 to 28 million Smart phones while Apple sold about 17 million smart phones. In the last quarter of 2011, Samsung is estimated to have sold between 32 and 35 million smart phones but Apple has not released its official figures yet (Deagon, 2011, p. 1).
This trend shows that Samsung’s prominence in the Smartphone market has been on the rise. However, experts observe that the launch of the ipad 4s jostled Apple’s sales in this market segment and though both companies have not been releasing the exact figures of their sales records, observers perceive the competition between the two countries to be very stiff (Deagon, 2011, p. 1).
The competition between Samsung and Apple has transcended the design and functionality aspects of their products; it has also entered the advertising filed as well. Samsung and Apple have become more aggressive in pursuing different tactics to gain an upper hand in the tablet and Smartphone markets. A recent observation on one of Samsung’s advertisements shows that the South Korean company used the same advertising gimmick to market the Samsung galaxy tablet (Jason, 2011, p. 1).
Observers note that this gimmick introduced a new twist to the growing market wars between the two technological giants, especially after some market observers hold the belief that the android operating system is nothing more than a cheap replica of Apple’s ipad and iphone (Jason, 2011, p. 1). Google’s android operating system has been closely associated with Samsung’s products because the two companies share a close working relationship that has seen most of Samsung’s products use the android operating system.
Recently, Google was prompted to withdraw a voice software called “Siri” from its android system after it was claimed that the software resembled the ‘Siri” feature (which was available on iphone 4s) (Jason, 2011, p. 1). Considering Samsung won the first round of the lawsuit (filed by Apple), experts observe that the company’s market strategy has been increasingly confrontational and aggressive. In an article citing the use of the same child for Apple and Samsung’s advertisements, (Jason, 2011, p. 1) explains that,
“The South Korean consumer electronics giant – now the number one Smartphone maker in Australia, according to IDC – released two ads for its Galaxy S II Smartphone that launched thinly veiled attacks on Apple products and ridiculed the hordes who line up for days to buy them” (Jason, 2011, p. 3).
It is not clear if the marketing strategy adopted by Samsung was deliberate but the ongoing war between the two technological giants has seen Apple’s followers baying for blood (Jason, 2011, p. 1). Samsung’s marketing department has also not established if the aggressive marketing strategy adopted by the company was a sheer coincidence or there was malice involved.
Samsung and Apple share a love-hate relationship because some observers note that both companies also share a working relationship (though they have sued one another for patents and copyright infringement). Samsung supplies Apple with important parts for the manufacture of its products (because Samsung is considered the largest manufacturer of memory chips and liquid crystal displays) (Deagon, 2011, p. 1).
Samsung’s management also believes that it holds most of the patents covering wireless communication and Apple should respect these patents. This is the basis for Samsung’s copyright infringement lawsuits against Apple.
Samsung is of the opinion that it can overtake Apple in the sales of tablets because it believes that its competencies in hardware manufacturing, functions and operating systems surpass those of Apple.
The company’s pricing strategy and its huge global presence is also perceived by some observers as the main competencies that the company expects to take advantage of, as it battles for the top spot with Apple (Jason, 2011). Nonetheless, it is established that Samsung and Apple command a huge market in the tablet and Smartphone markets.
In fact, collectively, the two companies are said to stake claim to about 95% of the profits in the Smartphone market (Deagon, 2011, p. 1). Considering this scenario, it is interesting to know what components of Apple and Samsung’s business strategies have contributed to this command in the tablet and Smartphone markets. From this understanding, it will also be interesting to determine if any other company can slice a share of the market from the two technological giants.
Despite the above intrigues and questions, Deagon (2011) observes that, Samsung and Apple’s business strategies have been able to convey different ideas we hold of certain technological gadgets today. For instance, it is observed that even though many people (and small companies) do not understand the exact workings of the Smartphone, Apple has been able to market the Smartphone (through the iphone) as an important component of modern lifestyle.
Through this understanding, many people now believe that a Smartphone is an important accessory that can improve a person’s productivity in today’s fast-paced world. In addition, the ability of Samsung and Apple to develop downloadable applications has provided a platform where different consumers can download applications that specifically appeal to their lives. Such applications touch on different human interests such as sports, business, entertainment and the likes.
Furthermore, the introduction of mobile VoIP on the Smartphone is considered another area of key competence, which was advanced by Samsung and Apple, thereby, allowing their customers to use features such as Skype and Vonage on their mobile phones (Deagon, 2011, p. 1). This feature allowed many people to shift from the conventional GSM payment mechanisms to paid VoIP services. Interestingly, some observers identify the death of Apple’s founder, Steve Jobs, as another factor contributing to Apple’s growth.
1.2 Purpose of the Study
The importance of learning a company’s business strategy is part of strategic management. Business strategies are known to be the path taken by different companies as they try to outdo their competition. Competition is a very important aspect of understanding the importance of business strategies because it defines the primary motivation why big companies have to formulate effective business strategies.
If a new competitor comes into the market with a new business idea or strategy such as consolidating the industry (or introducing a new competitive element such as a major cost advantage), it is important for the existing businesses to know how they will counter such threats.
Some of the threats, which are evident in the business environment, may not be motivated by the competition but by the consumers. For instance, consumer tastes, preferences and needs may change to reflect a new set of wants that companies have to conform to. For example, a few years back, an Asian car manufacturer experienced a great spike in car sales that had a cup holder (Jason, 2011).
This spike in sales was attributed to changes in consumer preferences. Therefore, adding or omitting a small attribute to a company’s production strategy may determine the future sales of the business or its sustainability in the long-term.
Some companies are also required to improve their overall business operations by coming up with a good plan of action as a requirement for business financing. More so, this situation is often experienced when businesses are performing poorly and they have to revamp their operations to project a positive performance outlook. External financiers such as banks and other lending institutions often require such businesses to review their business strategies and develop new plans of action that will improve the company’s performance.
By extension, a company’s business strategy defines the best approach a company’s management can take in securing the future of a business. Chris (2008) explains that a business strategy should show different aspects of a company’s operations such as the scope of the company’s operations, the current consumer trends in the market, the unique capabilities that are bound to give a company competitive advantage and what needs to be done to secure the future of the business.
Learning a company’s business strategy is an important predictor of the company’s performance in the business environment. More importantly, it is easy to know how a company will perform, viz-a-viz its external business environment.
The external business environment is quickly changing (especially in today’s fast-paced world) and therefore, it is important for businesses to go back to the drawing board and ask themselves important questions regarding how they intend to manage external pressures of operation. The political, technological or economic forces, which are prevalent in the operating environment, are just a few examples of some of the most prevalent forces businesses have to manage.
In fact, Chris (2008) estimates that many changes in the business environment amount to many business opportunities and increased threats. Despite the nature of the business environment (stable or not), it is always important for businesses to prepare themselves for unforeseen eventualities because competitors always have new strategies of outmaneuvering their rivals.
Businesses therefore have to devise new ways of creating value to their consumers so that they stay relevant in the wake of such unpredictable operating environments. To stay successfully relevant in today’s business environment, it is important to employ successful business strategies.
The study of business strategies therefore provides a big picture regarding how different aspects of a business’s operations work towards achieving the ultimate business goals. The overall direction of a business can only be charted through the proper understanding of its business strategy. Different factors are usually in play. For instance, environmental pressures, internal weaknesses and opportunities always work towards boosting or derailing the success of a company.
Different organizations have different motivations for formulating their business strategies but as academicians; it is important to clear some of the misunderstanding held regarding business strategies. For instance, it should be understood that whatever action taken by a business is done within the confines of a strategy.
Business actions are always strategized because they are designed to achieve a specific goal (Chris, 2008). Even if a business operates merely for taking care of the owner’s basic needs, there is always an existing strategy. The constant attribute here is that people will always undertake business actions that they believe will draw them closer to achieving their business objectives.
The main challenge of pursuing different strategies may be that some of the strategies may not be very good for the business. For instance, a small business owner may not account for competitor actions or the threats that may occur in the business environment. Similarly, a small business owner may fail to see an existing business opportunity for growth.
The importance of analyzing a company’s business strategy can therefore not be underestimated because it touches on different aspects of a company’s operations (which determine the long-term health of the company). For instance, a company’s business strategy is the best indicator for determining a company’s financial health.
Therefore, a company’s business strategy can be assumed to be the source for long-term profits because a company’s fight in the business world determines its market share and consequently its profitability. Chris (2008) explains that,
“It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle” (Chris, 2008, p. 2).
Therefore, understanding a company’s business strategy is like knowing the terrain of the battlefield and predicting (or knowing the actions) of the enemies.
From the above background, it is important to acknowledge the importance of business strategies. Since business strategies span different sectors of a company’s operations, this paper seeks to understand the business strategies of Samsung and Apple by identifying how the strategies of the two companies compare to one another.
One area of the analysis seeks to understand how both companies use their resources to support their business strategies while another section seeks to understand the differences and similarities between their business strategies. Resources may amount to different competencies available to a company such as plant and machinery, finances, human resource, trademarks, patents and other tangible or intangible assets.
Some of these resources may be wholly owned by the companies but others may also be acquired through partnerships, joint ventures and similar arrangements. For instance, the business association between Samsung and Apple (in the supply of hardware parts for Apple’s products) shows the acquisition of new resources for Apple in sustaining its business strategies.
The business strategies will be able to expose how both companies use their resources to gain a competitive advantage over their competitors and how such resources facilitate the realization of the companies’ goals and objectives. Chris (2008) explains that the utilization of a company’s resources is important in the fulfillment of a company’s stakeholder expectations and market needs.
This paper also seeks to establish how Samsung and Apple use their value chain competences as part of their business strategies. The value chain analyses will be considered an integral part of the companies’ business strategies because it will also be considered an important aspect that defines the strengths of both businesses.
Porter explains that a company’s activities can be easily grouped into two segments: primary activities that involve the utilization of a company’s resources to produce the company’s main products and services, and secondary activities that improve the effectiveness of a company’s primary activities (Chris, 2008).
The latter may include the use of new technology, employment of competent and highly trained personnel (among others). Chris (2008) explains that it is ordinarily difficult for companies to undertake both primary and secondary activities at the same time.
The value chain analysis however exposes the distinction between primary and secondary activities and identifies which activities are complemented through the support of other companies. From this basis, this paper seeks to understand Samsung and Apple’s value chain processes with the aim of understanding how they complement the companies’ business strategies.
In addition, this paper also investigates the core competence for both companies. These competencies are perceived as those components of the companies’ business strategies that are vital to the realization of competitive advantages. This analysis will be important in the understanding of the competition and extreme rivalry between Samsung and Apple.
The importance of including this analysis in this study is reinforced by Chris’s assertion that “The starting point for analyzing core competencies is recognizing that competition between businesses is as much a race for competence mastery as it is for market position and market power” (Chris, 2008, p. 10).
Furthermore, Chris (2008) explains that it is often difficult for managements to oversee all aspects of a business and still ensure that their competencies are working effectively. It is however easy for a company’s’ management to ensure their companies’ competencies are effective to guarantee their competitive positions.
Though evaluating a business’s resources, value chain and core competencies are important aspects of understanding a company’s business strategy, it is equally important to evaluate the performance of a business viz-a-viz its business strategy.
From this understanding, this paper also seeks to evaluate the performance of Samsung and Apple viz-a-viz their business strategies to understand how their changes in resources (historical analysis) have affected their performance and how these resources compare with other companies in the technological world.
This analysis also exposes how these resources compare with first-class resources, which are expected of existing technological companies in today’s market. This analysis will be an important tool in benchmarking the performance of Samsung and Apple viz-a-viz their business strategies. Finally, this aspect of business comparison highlights how the performances of both companies have changed over the years and how they fair with the performance of other technological giants in the same industry.
Finally, this paper seeks to undertake a portfolio analysis of Samsung and Apple because both companies operate in more than one business portfolio. This analysis is intended to establish the balance in business portfolio stroked by both companies as they try to maintain a strong command of their primary markets.
This analysis acts as an important pointer to the strengths and weaknesses of the different portfolios operated by both companies. Here, it will be easier to see which business portfolios fuel the success of both companies and which ones increase the chances of failure for both companies.
1.3 Significance of the Study
Different comparative studies have been developed for different purposes. However, for purposes of this study, we seek to highlight the differences and connections between the different market approaches pursued by Apple and Samsung. For a long time, Apple and Samsung’s actions have drawn a lot of attention among most industry observers.
Some of their corporate actions have been unconventional while others have been outright aggressive. In an era of growing competition, these companies have adopted unique corporate strategies to realize their corporate vision and objectives. Moreover, the nature of the business environment has been changing continuously and both companies have had to adopt unique corporate strategies to stay relevant in today’s fast-paced digital age.
Some of the strategies adopted by both companies are similar in composition but others have inherent differences. There is a direct correlation between the nature of business strategies adopted by the two companies and the corporate actions undertaken by the same companies.
Through the findings of this study, we will be able to show clearly the connection, differences and similarities between the actions pursued by both companies and their business strategies. Through this analysis, we will also be able to establish that a company’s business strategy has a big role in determining a company’s business actions.
In addition, this study aims to set a globalization connection between the business strategies adopted by Apple and Samsung. This analysis will be focused on evaluating Apple and Samsung’s business strategies based on their global pursuits. Emphasis will be given to the business actions undertaken by the two companies outside their primary operating environments. Samsung’s primary operating environment is South Korea while Apple’s main operating environment is America.
The strategies pursued by both companies are aimed at increasing their market share in the global environment. Moreover, both companies are streamlining their operations according to the global operating environment. This scenario depicts a situation where there will be a strong connect between globalization and the comparative attributes for this research topic.
The findings of this paper will also provide a good platform to formulate a usable and adoptable view to the analysis of Apple and Samsung’s business strategies. This view is aimed to developing a connection between the performance of Samsung and Apple in the technological market.
Therefore, it will be easier for people to find a direct correlation between Apple and Samsung’s business strategies and their overall corporate performance. This analysis can also be generalized across other business platforms and organizations because it will be simpler to draw the connection between company performance and business strategies. This paper will therefore show what to expect of different businesses, based on their business strategies.
Through the above analysis, it will also be easier to develop a deeper understanding of business strategies and more so, it will be easier to develop a deeper understanding of how Apple and Samsung work. This knowledge is useful in understanding the intricacies between the two companies.
The findings of this paper will not only be useful in understanding Samsung and Apple’s business strategies because from business strategies, smaller businesses can also learn new strategies and adopt new recommendations regarding how such businesses have been able to succeed in today’s competitive world.
This paper therefore sheds light on the business practices adopted by the two companies to act as a pointer for small businesses wishing to achieve the same level of success in different market segments.
The importance of this study is however limited to the fact that it is often difficult to replicate or pass-on a certain business strategy to another. Therefore, emphasis will be given to explaining the motivations behind the business strategies for Samsung and Apple so that smaller businesses can be able to understand how to develop a successful business strategy.
1.4 Research Questions and Hypotheses
To investigate the differences and similarities between Apple and Samsung’s business strategies
To establish the difference or similarities of different business portfolios between Samsung and Apple
To ascertain the key areas of competence between Samsung and Apple
To establish how Apple and Samsung use their corporate resources to implement their business strategies
To investigate Samsung and Apple’s value-chain processes
To evaluate Apple and Samsung’s business performance viz-a-viz their business strategies
To evaluate how Apple and Samsung’s changes in business resources affect their performance
To investigate how Apple and Samsung’s business resources compare with the expected first class resources for technological companies in the digital world
Apple and Samsung’s business resources are inherently similar
Samsung has a more diversified business portfolio than Apple
Samsung’s key area of competence is in the television market while Apple’s key area of competence is the mobile phone and tablet markets
Samsung and Apple use their corporate resources to develop better and high quality products for their consumers
Samsung and Apple’s value chain processes are very different
Samsung and Apple have achieved high levels of success because of their effective business plans
The changes of business resources between Samsung and Apple have not affected their performance
Samsung and Apple’s business resources are at par with the business resources expected of first-class technological companies
2. Literature Review
A company’s business strategy represents the vision of the management, but more so, the vision of the leader. Under the leadership of Steve Jobs, Apple was able to make a name for itself in the technological map.
The company managed to develop a strong brand through simple product designs. However, unlike his former boss, Tim Cook, the new company CEO, has never failed to discuss the future of Apple’s business strategy in recent times.
In a recent press conference made at the Goldman’s Sach’s business platform, Cook revealed that only one out of four people do not buy Apple’s smart phones (Mallin, 2011). This observation was made in reference to Apple’s strong business strategy. However, the company’s CEO also revealed that the Smartphone market only accounted for about 9% of the total handset market (Mallin, 2011).
Apple’s business strategy has especially come into sharp scrutiny after recent reports revealed Apple monopolized its partnership deals and agreements with third party supply companies. This revelation came after Apple opened itself to other organizations such as ABC nightline to be part of the company’s supply chain after the new company CEO adopted an open policy to the company’s associations (Mallin, 2011).
However, Cook’s business strategies are in sharp contrast to Steve Job’s business ideals, which mainly centered on instincts. It is still not clear where Cook’s strategy will land the company but there is no doubt that Apple’s labs are quickly playing by Cook’s strategies. However, experts observe that Apple will not suffer from a change of management because it will always continue to be paid for the value-added services it offers its customers (Mallin, 2011).
These observers attribute Apple’s value addition services to its ability to integrate different attributes of their hardware and software for a seamless user-experience. Apple’s ability to integrate useful components of its hardware and software components has been identified as a platform that the company uses to decrease its aggregate cost (Mallin, 2011). Experts hold this belief despite the fact that Apple’s products are priced slightly higher than most of its competitors.
Since the death of Apple’s founder, Steve Jobs, the company has embarked on an ambitious plan to change the company’s strategies to meet the new business challenges and opportunities of 2012. The company is therefore up scaling its business plans in line with the vision of the new management.
Some of the most notable changes on Apple’s business strategy has been the focus on new and emerging markets, the development of new products (such as Apple televisions), development of Apple’s icash and boosting the company’s operations to meet the increased global demand for Apple’s products. These business processes will be explained in later sections of this study.
Samsung’s corporate philosophy is encrypted on the company’s goal of using its resources to produce quality products, which will benefit the wider global society. According to the company’s management, every day, every employee is supposed to abide by the above philosophy.
New employees are recruited and given the adequate resources to undertake their activities (according to the company’s philosophy). To support the above assertion, Samsung explains that, “The result is that all of our products—from memory chips that help businesses store vital knowledge to mobile phones that connect people across continents— have the power to enrich lives” (Henny, 2003, p. 5). From this assertion, Samsung believes that it contributes to the betterment of the society.
Samsung also believes that through a set of values, it can be the best company in the technological world. These values are based on a few common principles such as people, excellence, change, integrity and co-prosperity. The company emphasizes the importance of people input because it believes that its success is mainly based on the success of its people (Henny, 2003, p. 5).
Therefore, Samsung strives to provide all its employees with the right opportunities and resources to achieve their full potential. However, in doing so, the company expects utmost excellence from its employees. Samsung employees are required to produce excellent products and deliver quality services as part of the company’s goal of achieving excellence in the technological market.
However, even in setting its eyes on the goal, the company acknowledges that it operates in a dynamic and fast-paced world. Therefore, Samsung always strives to be in tune with the constant changes in its internal and external environment. The company does so by anticipating new changes in the business environment by establishing the needs and demands of the market so that the company’s success is sustainable in the long-term.
Samsung also puts a lot of emphasis on ethics and integrity as the core drivers for its operations. Through this conviction, Samsung strives to ensure that all its operations are done fairly and respectfully to protect the interests of the company’s stakeholders.
Therefore, Samsung undertakes its operations in the most transparent manner and through the right moral compass; the company hopes to entrench its operations on the right ethical foundation (Henny, 2003). Finally, as part of Samsung’s values, the company believes in the concept of prosperity because it believes it cannot succeed unless it also creates opportunities for other people to succeed. Through this conviction, Samsung works towards adopting socially and environmentally right practices to characterize its operations.
From the above characteristics of Apple and Samsung’s business strategies, it is important to highlight the works of previous researchers who have expressed divergent views regarding Samsung and Apple’s business strategies. From this understanding, some researchers note that Samsung and Apple share similar business strategies while others note that the two companies have different business strategies. These views provide the right framework for the analysis of the research problem.
Proponents of Similar Corporate Strategy
Human Resource Strategy
“A quarter of all Samsung employees have PHDs”. Seongjae (1999) made this statement to summarize the philosophy of Samsung’s human resource strategy. He notes that Samsung’s human resource is closely similar to Apple’s because both companies operate by seeking the most qualified personnel to run their operations.
At Samsung, qualifications are usually analyzed through educational excellence and work experience. Samsung also has a unique work ethic, which guides the behaviors of its employees. Seongjae (1999) notes that most of Samsung’s employees do not leave work for vacations or holidays unless they have attained their retirement age. This provision is considered unpopular in most western economies but Samsung has been able to implement it because of its diverse work locations.
Most of Samsung’s plants are located in third world economies, which do not have strong labor laws that protect their employees from unfair work practices. This analysis only shows the distinction between Samsung’s work ethics and western work ethics but it does not propose that Samsung’s work ethics are wrong. Nonetheless, Samsung enjoys less disruption of employee performance because of vacations and holidays. This leads to improved productivity.
Apple’s human resource strategy is based on employee excellence as one of its core elements of business success. However, the methodology applied by Apple’s management has been unpopular and uncommon (VAR, 2005). Few companies are known to adopt a counter-intuitive strategy to improve their business success.
Apple is one such company because it is known to seek the best employees by paying the weak ones (or the ones who lack commitment) to leave the organization. The counter-intuitive strategy therefore acts as a sieve for non-performing employees. Employees who may end up performing below par are therefore identified (earlier) in the recruitment process and relieved of their duties. Some observers have termed this strategy as “Crazy” and “illogical” (VAR, 2005, p. 3).
VAR (2005) notes that there is probably no other company that has been able to implement this “crazy” and “illogical” strategy with much success. This business strategy has been seen to cause a lot of stir among Apple’s competitors because it is a source of frustration. Observers perceive this business strategy as a confusing and risky one, especially if Apple were to apply the same strategy to some of its close business associates such as suppliers, distributors, and social media (VAR, 2005, p. 3).
This strategy is perceived as a close-ended approach to Apple’s operations because VAR (2005) warns that it may be toxic to the company’s ecosystem. Though most of Apple’s success has been attributed to the contribution of the company’s founder, the company has also adopted several human resource business strategies as part of its overall business strategy.
VAR (2005) explains that Apple and Samsung share a common business strategy, which is based on producing innovative products. Samsung’s innovative strategy has been witnessed in the company’s operations since 1997 when the company’s CEO, Yun, saw the company transition from the analogue market segment to the digital market segment.
The move to the digital market sparked most innovative projects by Samsung, although the company perceived this venture as a risky move at the time (Henny, 2003). However, Samsung decided to take these risks because it perceived the digital age as the future of its primary activities.
However, this decision was made with the acknowledgement that the company could lose its fortunes in a blink. Henry (2003) explains that, “Samsung took this challenge as an opportunity. They switched their core competitive power from mass manufacture to its own brand which based on digital technology” (Henny, 2003, p. 4). This movement transitioned Samsung’s position as the leading company in the digital age to the leading company on the innovative front.
The company’s quest is the development of useful products that can benefit consumers (through innovative technology). This strategy improved the company’s competitive position with other competitors (Sony being the main competitor). This strategy was also complemented by further modifications to its product design so that the company was no longer perceived as an imitator to other companies’ designs.
New product designs were complemented by the introduction of new product designers to increase the scope of Samsung’s product design to meet the standards of the highest level of product designs (Henny, 2003). Through this initiative, Samsung won an American award in product design (the most prestigious award in product design) (Henny, 2003).
Consumers and different specialists therefore acknowledge Samsung’s unique input in the design aspect of its products. This recognition increased the company’s prominence in this regard. Moreover, the new product designs improved Samsung’s status as a young and fashionable brand with strong functions.
Through this shift, Samsung made many technological gadgets available to its customers and easily, the company shot to the top of the leadership pyramid in the digital market. This quick transition from analogue to digital production was considered a necessary move for Samsung because the company’s management believes that a late venture in the digital market was going to be fatal for the company (Henny, 2003).
Samsung’s innovativeness is also centered on taking advantage of new opportunities in its primary and secondary markets. For instance, the company has properly understood its Korean market and is taking advantage of the existing market opportunities in its primary market.
For instance, Samsung plays a huge role in meeting the demand of about 20% of the Korean population who buy new handsets every six months (Henny, 2003). Samsung also uses this market as a testing ground for its new products. In fact, the Korean market is deemed Samsung’s launch pad for new products. In the Korean market, Samsung is deemed the leader in innovation technology.
Recently, the company launched a new cell phone that allows its users up to 30 minutes of video time on the phones (Henny, 2003). This phone was equipped with another feature where users could watch live television on their phones. Though this feature has been prominent in other phones (in the recent past), Samsung was a pioneer in accommodating this feature on their gadgets. The Korean market was among the first market to enjoy Samsung’s innovation.
In 2003, Samsung launched approximately 95 new products in the US alone as part of its business strategy to refresh its product lines every nine months (Henny, 2003). Refreshing its product lines every nine months is a step above its peers because most of Samsung’s competitors refresh their product lines in about 14 months.
Samsung’s innovation is not only present in the mobile market; the same commitment has also been witnessed in the television market. Samsung was among the first companies to produce the projection televisions (using digital light processing). The television line was among many new television designs using about 1.3 micro mirrors to increase the picture quality (Henny, 2003).
This technology was first given to Sony, but the Japanese company failed to take advantage of it because they did not understand how to produce economical gadgets. Samsung managed to do so and it consequently made a lot of money as a result. Concerning the quick response by Samsung, Henny (2003) explains that Samsung is good at producing easily marketable gadgets that can sell quickly.
As part of Samsung’s strategy to dominate the digital market, the South Korean company hopes to eliminate the bottleneck challenges and the lack of uniformity in its production strategy (as some of the main barriers preventing it from ascending to the top of the digital market).
Samsung’s focus is to close-in on its competitors such as Sony, and Philips, which have consistently dominated the home appliance market. Looking forward, Samsung expects to take advantage of increased internet penetration in most of its primary and prospective markets to introduce newer technology.
For instance, Samsung expects to introduce a new touchpad that is able to operate multiple home appliances from one gadget (Henny, 2003). Though the home appliance market is still dominated by the traditional Japanese and American companies, Samsung is increasingly gaining the reputation as an innovator in this market segment. This reputation is financed by a $7 billion allocation in the company’s financial statements for research and development.
Like Samsung, Apple bets its future success to innovative products. The Apple television is one such product, which has caused a lot of stir in the technological world. The product is perceived to be next generation equipment, which sets it on the warpath with other established brands in this market such as Samsung and Sony.
The Apple television was a pet project for former Apple founder, Steve jobs. The company believes the Apple television is going to be a big project for the company because of several reasons. One such reason is the market size for the television market and the potential for premium pricing as a result (VAR, 2005).
In 2010 alone, the market for television equipments rose by close to 15% and similarly, experts project the potential market for the same to be close to 78 million units (Jason, 2011). Jason (2011) observes that Apple should take advantage of the potential for this market segment despite the fact that its primary market is the high-end market.
The second reason Apple wants to venture into the television market is the existing platform expansion through form factor. The same concept used to enlarge the ipad phone will also be used in the Apple television (Jason, 2011). This will be an expansion of the form factor. New technologies on the Apple platform such as the “Siri” application will also be used to leverage the Apple television to improve its user interface.
Apple television also intends to use motion sensor technology where the product will be able to follow the action in a room (through a video conferencing platform) and relay the same on the screen. Through the improvement of connection speeds, the icloud feature on the Apple television is expected to be functional in the near future. Jason (2011) also explains that Apple intends to incorporate an ecosystem lock-in in the Apple television through an assertion that,
“Just as Frito-Lay thinks about the share of stomach it captures with drinks and snack foods, Apple seeks share of screens be it on Mac, iPod, iPhone or iPad. Just as salty snacks drive you to drink more soda, Apple TV will leverage device interoperability via iCloud” (Jason, 2011, p. 4).
Some observers note that Apple’s strategy of defeating its competition is by widening the competitive moat but at the same time, the company is good at preparing the grounds for future product launches. Several observers such as Donald Rumsfeld have identified that Apple does not fail to surprise its competitors by producing future-oriented applications (Jason, 2011). The venture into the television market is only set to expand Apple’s playing filed because this market is a wider platform compared to the mobile or ipad markets.
Finally, the last motivator for Apple to join the television market is that it gives it an opportunity to venture into the hardware market. So far, the company has received positive reviews for its software ventures such as itunes but the company believes that in the future, it needs to increase its revenues stream by also venturing to the hardware market.
Apple is not expected to have it smooth in the television market. Unlike most of its other ventures, such as ipad and iphones, the Apple television is expected to face stiff competition from incumbents in the television market.
As noted in previous sections of this paper, other technological giants like Samsung and Sony have had a strong foothold in this market and they are expected to counter Apple’s venture into the television market through their pocket-friendly pricing strategy. Like Apple’s “Siri” platform, existing television pioneers such as Samsung are expected to scale Google’s android platform to create friendlier interface features that are expected to be revealed through the “siri” platform.
There is also the possibility of using Microsoft’s features in the same manner. With regards to this technological point of control, Jason (2011) admits that “Assuming Apple pushes face time as a family video conferencing play, you can bet that competitors will counter with a similar feature based on Google Voice or Microsoft’s Skype and Kinect technology” (p. 4).
The second battlefront for Apple will be the stiff opposition forged by existing content distributors. The disruption of Apple itunes in the distribution of movies served a big lesson to existing companies, which were affected by apple’s itune launch. With the expected venture of Apple television product, existing movies and television studios are expected to counter apple’s move by creating a parallel product that almost offers Apple’s exact features. The strength of these companies cannot be underestimated if history is anything to go by.
Netflix (a movie distribution company) was also faced with the problems of an increasingly competitive and fast growing (movie distribution) business. Traditionally, the company relied on revenues from movie rentals but after the digital age set in, the company found it increasingly difficult to compete with online distribution channels.
Consequently, the company decided to develop online versions of its movies and retail them online. This was a workable business strategy because the company’s customer base grew by close to 1,800% (Jason, 2011). However, with increased business opportunities comes more competition. Other well-established brands in the market such as Google and Apple also joined the frenzy and significantly dented Netflix’s prospects of increasing its customer base.
For instance, Google established an online platform where it distributed materials freely and hoped to leverage its business through increased business revenue. Netflix’s growth was therefore hampered as its competitors continued to gain a larger market share because of the environmental boundary changes that did not work in its favor (Jason, 2011). There are many lessons that can be learned from the Neflix case.
Here, we can see that even though Apple may launch an innovative product for the future (Apple television), there is going to be stiff opposition from other competitors. It will be very difficult to predict the timing and severity of the competition. How to outmaneuver this competition is the most difficult challenge for the American company and it has to go back to the drawing board to identify how it will manage this challenge.
It will be interesting to see how Apple will be able to overcome the challenges of competing in a more competitive television market and if it will be able to outmaneuver its competitors the way it did with the launch of the itune. Indeed, Apple will make good money from the launch of the Apple television but the big question will be if the company’s product will be sustainable in the end. Apple’s venture into the television market and Samsung’s smooth transition into the digital age highlight the similarity in product innovations.
Jason (2011) observes that Apple and Samsung’s marketing strategies are similar because of their focus on the high-end market. Apple’s marketing strategy has historically been focused on appealing to high-end customers. The company has been unapologetic for pursuing this strategy and despite the fears of the global recession; the company has consistently maintained a high-end marketing approach.
Though many observers term apple’s market focus as arrogant, the company has earned a reputation for producing minimal gadgets, which do not compromise on quality (Jason, 2011). As opposed to producing average goods (or crappy products), Apple has focused on producing the best quality goods. This strategy was made by Jobs when comparing his company’s strategy with Nike. Here, he said that,
“Nike makes some of the best products in the world – products that you lust after, absolutely beautiful stunning products. However, they also make a lot of crap. Just get rid of the crappy stuff, and focus on the good stuff” (Jason, 2011, p. 4).
The above statement has been apple’s motto for its production strategy.
The focus on high-end markets is also supported by as another basis for highlighting the similarities between Samsung and Apple’s corporate strategies (VAR, 2005, p. 3). Samsung’s market strategy has traditionally been holistic in the sense that the company meets the needs of all market segments.
However, after 1997, when a new management was set up, the company’s market shifted to the high-end market. The company discontinued the production of low-margin goods. This move was unpopular among most company representatives but Samsung’s management stuck to it. In fact, the company withdrew its products from specific low-end retail stores much as Wal-Mart and target to higher-end retail stores like best buy and Circuit city (Henny, 2003, p. 4).
However, the biggest challenge to adopting this strategy is seen from the fact that the high-end market is not expanding as fast as other market segments do. Nonetheless, Samsung’s main goal is to reap more profits in the wake of dwindling sales by focusing on a customer group that buys goods at a premium. Therefore, most of Samsung’s marketing strategies have been designed to appeal to the high-end market.
This new marketing strategy was not part of Samsung’s 1990s marketing strategy, which introduced the notion that Samsung’s products were mainly obtained at a bargain. Samsung’s previous brand strategy was changed because the company realized that setting low prices for its products was just one way of competing in the lower-end market segment, but it did not provide the opportunity to compete in the high-end market segment.
Samsung then acknowledged that the high-end market segment was more competitive than the low-end market and it shifted its marketing strategy in this regard (Henny, 2003, p. 4). This shift was also informed by the fact that Samsung’s products were increasingly being perceived as a as cheap brands.
Therefore, to improve its brand image, Samsung decided to focus on the high-end market. This decision was followed the repositioning of the company’s major brands such as flash memories, handsets and consumer electronics into the high-end market by increasing their prices to reflect the high price category of high-end goods.
The company’s pricing strategy in the mobile phone market has seen Samsung sell its mobile phones at a slightly higher price than its rivals, Nokia, and Motorola. Peggy (2002) reports that Samsung sold its mobile phones at $191 while Sony sold its mobile phones at $154 and Motorola sold its mobile phones for a mere $147.
It is not confirmed if Samsung’s pricing strategy contributed to the company’s decreased debt levels because the company’s debt shrunk from an unsustainable $10.8 billion to a mere $1.4 billion. Similarly, the company’s net margins significantly improved from a mere 0.5% to about 13% (Peggy, 2002).
Samsung’s successful pricing strategy is mainly attributed to its proficiency and dominance in the chip and display market. It is estimated that the cost of chips and displays accounts for about 90% of the cost of making new technological gadgets (Peggy, 2002).
Fortunately, Samsung has an edge above its competitors in this market segment because it supplies some of these accessories to its competitors, thereby having an upper hand above them. In addition, Jason (2011) explains that, “Besides dominating DRAM chips, Samsung leads in static random access memory and controls 55% of the $2 billion market for NAND flash memory, a technology mainly used in removable cards that store large music and color-image files” (p. 4).
The market for NAND flash memory has grown over the past years, thereby increasing Samsung’s profitability over the years. The overall sale in the NAND flash memory market is estimated at $7 billion and Samsung reaps heavily from this market (Jason, 2011).
To Samsung, venturing into the high-end market improves the company’s product quality and profit margins. A positive brand image (characterized by improved quality and better pricing) works for the company and consumers alike because the company enjoys improved profitability while the consumers enjoy improved product quality.
Proponents for Different Business Strategies
Morrison (2004) observes that Apple and Samsung have had very different business strategies (based on their financial resources). In this regard, Morrison (2004) notes that, Samsung has operated to save more money while Apple’s financial strategy has been based on expending its surplus resources for more competitive power.
Due to the unpredictable nature of the hardware market, Samsung has had to trade at a discount to keep its shareholders happy. Recent years have seen dwindling sales in the company’s hardware segment but Samsung has had to reduce the prices of its commodities to sustain its demand.
Partly, the company’s struggle to post commendable sales was worsened by the poor performance of the global economy in the past few years coupled with a worsening local economy for South Korea. Samsung’s willingness to trade at a discount however shows the inclination of the company’s corporate governance strategy to consumer-friendly policies.
Morrison (2004) notes that, Samsung is operating under a risky corporate governance strategy because most of its investors stand to lose if the company does not boost its sales in the coming years. This risk is further complicated by the fact that Korea has experienced several corporate governance scandals that are bound to cast doubt on the real accounting figures of the company.
This suspicion exists despite the fact that Samsung is considered among the most transparent companies in the emerging market economies. Observers note that Samsung’s stocks are among the most widely held stocks in the international stock market because foreign investors hold about $41 billion in market capitalization (Morrison, 2004). This amounts to about half of all the stocks held by the company.
Apple’s financial strategy is characterized by many speculations regarding its yearly cash flows and the existing uncertainties that characterize its mobile phone lawsuits between the company and Samsung (among other technological companies).
The company’s new CEO is on record as sitting on a load of cash amounting to more than $100 billion (Jason, 2011). This money has been termed as more than what the company needs to use for an unforeseen eventuality and some observers note that it is increasingly difficult to ignore the potential that this money has for Apple.
Obviously, issuing dividends to the company’s stakeholders is a sure way of sharing the company’s success with the people that matter (Jason, 2011). However, such a move is not considered a strategic action for the company because it does not add to its revenue growth.
Acquiring new technological companies will be a strategic move to grow the company’s revenues. For instance, the 2009 acquisition of PA semi improved the company’s operations because it incorporated some components of the company’s ipad production into the company’s scope of activities. However, observers note that this acquisition did not affect Apple’s financial books (Jason, 2011).
However, due to the ongoing court battles between Apple and its rivals, the company is expected to spend a few million dollars settling these cases but in equal regard, observers do not see this move as having a significant impact on Apple’s financial books (Jason, 2011). Google was also involved in a similar brawl with its competitors (such as Motorola) and it also settled some of its cases using its financial reserves.
Apple expects to undergo the same court battles for some of its licensing and patent agreements regarding the use of the iphone in China. This spat is between Apple and a Chinese company named Proview (Jason, 2011). There are however more speculations regarding an ambitious expansion strategy for Apple if it is to adopt a stronger acquisition strategy.
However, there are impending problems associated with this strategy, but top among such strategies is regulatory problems. Obviously, there are some concerns over monopolistic tendencies because Apple is considered among the most valuable companies globally. For instance, any move by apple to acquire another technological company (as part of its expansive and ambitious plan to strengthen its market base) would be viewed with extreme suspicion (Jason, 2011).
There are also more concerns regarding the intrusion into different cultures around the world because most cultures tend to be exclusionary rather than inclusionary. Apple’s history of secrecy does not complement the flexibility required in the global map.
The ability for Apple to assimilate its activities in the global map is also another hindrance to the company’s expansion plans because the company does not have a good record of assimilating its activities into others. Other companies have had a good record of assimilating their activities in new markets and thereafter gained a lot of experience regarding the same ventures. Cisco is one such entity.
However, Jason (2011) observes that Apple has the option of enlarging its infrastructural capability by seeking non-traditional technology that does not fall in its conventional Apple ecosystem. For instance, instead of adopting a vertical expansion strategy, the multinational could adopt a horizontal expansion strategy where it seeks partnership with other businesses, which do not engage in its core business.
For instance, if Apple were to acquire a large financial firm, it would boost its business competence. In addition, the company could adopt an advertising strategy through its itune software where it could market different aspects of its software and hardware manufacturing features.
Other proposals have been made by Mallin (2011) after he suggested that, “Apple could buy a no-name bank and quietly use their existing financial infrastructure to leverage its 200 million iTunes customers and software expertise into an Apple iWallet. In the midrange, they could look at Intuit ($17B market capitalization) though that might raise regulatory flags. Alternatively, they could go big and buy Mastercard ($50B market capitalization)” (Mallin, 2011, p. 4).
The above strategies could be a useful strategy to leverage Apple’s technological prowess because it would help reduce the regulatory inhibitions of expanding in its traditional market segment. Though taking a big leap in the company’s expansion strategy may not solve some of the company’ inherent expansionary problems, there is no doubt that such a strategy would simplify Apple’s expansion strategy. Apple’s expansion strategy therefore differs from Samsung’s revenue saving strategy.
International Business Strategy
Apple’s plan to increase its production capacity to suit the growing global demand for its products highlights the existing production capacities in China. Like other multinational companies around the world, Apple has forged a close working relationship with China. This relationship has seen the company sell its Apple iphone through its Chinese subsidiary (China Unicom) after Apple’s CEO visited the Asian country in 2011 (Mallin, 2011).
Through the same platform, China has been able to reach a wider customer base of 196 million subscribers. There are still more opportunities for growth because the Chinese population is estimated at billions of people and focusing on the mobile market alone, more than 500 million subscribers are still to be sought by Apple (Mallin, 2011).
It is reported that Apple’s innovative strategy has played a big role in revolutionizing the technological market for the developed world. However, Apple seeks to engage an incremental product strategy for the developing world. Mallin (2011) points out that this strategy “may be combined with creative cost and/or pricing strategies that subsidize purchasing much like Verizon and AT&T has for U.S. iPhone customers” (p. 6).
Apple therefore seeks to exploit the potential existing in the growing middle class. Major developing markets such as China, India, Mexico, and South Africa have this potential. From the growing potential in these emerging markets, Apple perceives the establishment of a market access strategy to be more important than introducing innovative products.
The company’s entry to the developing market is however not a new phenomenon. The company has in the recent past ventured into the Asian Pacific market, which accounts for nearly 20% of Apple’s revenues (Mallin, 2011). In 2010 alone, this market grew by close to 200%. In 2012, Apple is expected to achieve far greater growth figures because its retail presence is growing and the global economic situation is slowly improving.
To show the difference between Apple and Samsung’s business strategies, Mallin (2011) notes that Samsung’s international strategy has mainly been focused on the US market. Jason (2011) notes that Samsung’s strategy is informed by its tight grasp on the emerging markets.
The focus on the US market is considered important because a brand’s success in the US is considered the first step towards attaining a global brand status. This observation is true because of the leading status of the US market on the international front. Samsung’s international marketing strategy has therefore been focused on the US market.
This strategy is supported by Samsung’s participation in the Salt Lake 2002 Olympic Games where the company offered millions of dollars in sponsorship through the provision of wireless equipment to facilitate the smooth running of the games (Jason, 2011). In the same event, Samsung conducted several public relations sessions with other stakeholders to elevate the company’s position as a top-notch brand. Samsung wanted to portray a high-class attribute for its products among the US consumers.
It is observed that the company’s success in the American market dictates its success in the international market as well. However, a company’s success through such marketing strategies not only depends on the success in the branding strategy but also on the supporting strategies.
For instance, Samsung decided to integrate different segments of its marketing strategy through the inclusion of the product, strategy, technology strategy, and the branding strategy. It is observed that without the inclusion of these strategies, Samsung’s success in brand awareness could not have a rich meaning (Jason, 2011). However, this marketing strategy has a big risk attached to it because most companies fear the consumer perception that their brand is ordinary.
To expose further the difference between Samsung and Apple’s business strategies, Jason (2011) emphasizes the fact that Samsung continues to focus its marketing strategy on the developed markets as opposed to the developing market.
To emphasize this point, Mallin (2011) explains that Samsung decided to adopt business-to-business opportunities and existing enterprise space in the European market as part of an ambitious marketing plan to launch a series of exciting new products in the European market. Furthermore, to overcome the challenges of a poorly performing global economy, Samsung intends to forge better and close relationships with its consumers.
The printer and notebook PC are only some of the products that have been launched in the European market using this strategy. Furthermore, the company’ strategy of venturing into new markets is complemented by the push to merge new technology with new markets. For example, the launch of the LED screens in the European market reduce energy consumption by about 40% because they do not depend on cathode ray tube as its primary source of light (Mallin, 2011).
The reduction of energy consumption has also been seen to comply with the European Union (EU) energy regulations. In support of this compliance, Samsung states that, “Our 2009 product lines represent a new generation of converged products that blend technology with the active lifestyles of European consumers” (Mallin, 2011, p. 13).
This statement shows a keen conviction among Samsung’s management that its markets have unique needs and therefore, the products to be sold to these markets have to resonate with the unique needs and preferences of the market. The difference between Samsung and Apple’s international marketing strategies therefore lie in their focus on developing and developed markets.
Mallin (2011) observes that Samsung’s marketing strategies are far more distinct than Apple’s. Recent company events have seen Samsung adopt a more comprehensive market strategy that seeks to impose its presence on the global market.
This approach is seen to be successful in the sponsorship of sporting events such as the world Olympics. Here, Samsung branded most of the sporting equipments used in the games and facilitated the use of all communication equipments in the 2002 Olympic games (Henny, 2003). The same effort has been replicated in the world cyber games.
Samsung’s participation in the Olympic Games is perceived to be among the main reasons for the ascension of the Samsung brand to the top of the electronics market. The company’s sponsorship of the Olympic Games is part of the company’s philosophy of producing better products and services for the betterment of humanity. The decision to sponsor the Olympic Games was also part of Samsung’s acknowledgement that sports play a vital role in the betterment of the society.
Through this conviction, Samsung’s management established that the sports-based strategy fit well with the company’s values and philosophy. The company’s vice-president affirmed that, “sports sponsorship is a strategy that fits well within our operations at Samsung. It’s an integral part of our company’s philosophy” (Henny, 2003, p. 5).
Observers note that Samsung’s sponsorship of the Olympic Games elevated the company’s profile to an international level. Only companies such as Coca Cola, IBM, and Visa have achieved this sort of brand recognition at a global level.
Samsung’s involvement in the Olympic Games was however not a one-off event; the company expressed its interest in sponsoring the games during the 1988 Seoul Olympic games, the “Nagano 1998 Olympic Winter Games, Sydney 2000 Olympic Games, Salt Lake 2002 Olympic Winter Games and Athens 2004 Olympic Games” (Henny, 2003, p. 6).
These sponsorships started Samsung’s journey as a global sponsor in Olympic Games – a trend that continued through the sponsorship of the Torino 2006 Olympic Games and the Beijing 2008 games. Samsung’s sponsorship strategy has seen the multinational company pay huge sums of money in such ventures because the company’s management believes that sports plays a huge role in stabilizing the company’s bottom-line.
This strategy paid off. The company’s brand awareness (globally) increased in significant proportions and its markets share significantly soared as well. Consequently, the company’s market position also improved significantly. The level of brand awareness realized from becoming one of the leading sponsors in the Olympic Games (alone) tripled after the games. This level of brand awareness only came second to Coca Cola (Henny, 2003).
The high level of brand awareness received by Samsung was part of a two-fold strategy designed by Samsung (as a motivator to sponsor the Olympic Games). The first goal was to increase the level of brand awareness in the international market (which it successfully managed to do) and the second goal was to improve the level of positive brand perception in the international market.
The first goal of improving the company’s brand awareness in the international platform was however intended to beat its rival, Sony, which also enjoyed positive global brand awareness. As noted in earlier sections of this study, Samsung’s marketing strategy paid off. Jason (2011) explains that, “The effectiveness of Samsung’s sponsorship was shown at the ATHENS 2004 Olympic Games which had a positive impact on brand awareness, with an increase from 57% to 62%” (p. 6).
Samsung’s success in building a positive brand image through a series of sponsorships in the Olympic Games was realized through several steps. The first strategy adopted by the company was using available resources in brand building. Observers often note that brand building usually has a significant pay off to employees and customers alike (Henny, 2003).
For instance, in the 2004 Olympic Games, Samsung was engaged in the Olympics torch journey, which saw close to 2000 people selected to take part in a journey around the world. Among the selected individuals were Samsung employees. Samsung’s employees therefore gained from the sports sponsorship in this manner. In addition, there was an attached emotional benefit to the games because Samsung’s employees felt proud for being associated with the international sports event.
Through the establishment of the Olympics rendezvous, Samsung’s customers also benefited from the company’s sponsorship of the Olympic Games.
The Olympic rendezvous acted as an entertainment spot located on a 1024 square feet piece of land on Athens Olympic sports complex where fans and participants sat and enjoyed the games (Henny, 2003). The spot also acted as a recreational facility for all people, but more importantly, the visitors were given a chance to try out Samsung’s products at the venue.
Moreover, different people were offered a platform where they could interact with international stars in a laser-light event. The caliber of celebrities that fans could interact with included musicians, sportsmen, and sportswomen. During the same event, Samsung also hosted an event dubbed “national days” that highlighted the national cultures of different countries that participated in the sports.
Thousands of athletes who took part in the Olympics sports graced Samsung’s stands and made contact with people at home because the company established an online communication center for participants. Web services were available at these centers and participants were allowed to make online contact with people from their home countries. Telephone services were also available at these centers.
Samsung did not hesitate to use this social platform to display its products and new technology. Samsung believed that it had to display its products in this platform because of the belief that the best way it could adequately increase its brand awareness was through publicity. Publicity is considered an effective way of marketing because it is known to be highly effective. Moreover, Henny (2003) perceives this market strategy as a credible way of marketing. In the Olympic Games of the year, 2000, Samsung displayed its products in this manner.
In this event, the company launched a series of futuristic products such as “mobile phone watches, the PDA-phone, the digital camera cum mobile phone, the MP3 mobile phone and the its latest model of 3G mobile phone” (Henny, 2003, p. 6). In the same event, visitors were allowed to experiment these new products and the company received a lot of feedback regarding these products as well. As noted in earlier sections of this study, Samsung’s sponsorship of the Olympic Games increased the company’s brand awareness significantly.
It is therefore important to note that, the 2000 Sydney Olympic Games increased the company’s brand awareness from 5% to 16.2% (Henny, 2003). The increased brand awareness also led to a significant boost in the company’s sales. A year after the Sydney 2000 Olympic games, the company’s sales increased by nearly 44% (Henny, 2003).
As part of Samsung’s sponsorship strategy, the Korean company also adopted an associated marketing strategy where the company sought different brand associations with other companies. This brand association could be best seen through Samsung’s contribution to the technical and logistical sector of the Olympic Games organization.
Henny (2003) explains that, “Samsung, an official sponsor in wireless communication equipment presented the Wireless Olympic Works (WOW), a communications system to support and guarantee the smooth and efficient running of the event” (p. 7).
Samsung also equipped the participants, staff and volunteers with wireless communication devices to facilitate the smooth running of the event. After the company sponsored the games, Samsung was listed as constituting among the 21st most valuable brands in the world (after the company’s brand value increased by 16%) (Henny, 2003).
Samsung’s brand value is now perceived to be in excess of $12.5 billion (Henny, 2003). These statistics show that Samsung’s branding strategy has been highly effective and efficient. From the above examples of Samsung’s sponsorship of the Olympic Games, it is impossible to deny the fact that Samsung’s sponsorship of the Olympic Games played a vital role in its brand building strategy.
The company adopted the sports-centered market strategy after its management realized that it did not put enough effort to add value to its products. Through the same market strategy, Samsung also hoped to achieve a stronger customer brand loyalty. In reference to this strategy, Samsung’s managing director reported that, “Largely we try to put smart products in the market. And we paid a lot of attention to our distribution channels. We made sure we used the high-end channels”(Henny, 2003, p. 8).
Samsung’s marketing strategy has also been distinguished from Apple’s marketing strategy based on its resort to pursue a web-based marketing strategy. This move has been informed by the unique characteristics of the web-based marketing strategy when compared to other conventional marketing strategies. Samsung perceives the online communication channel as a unique way of communicating to its consumers because it is more interactive and involving.
With increased internet penetration in most countries, many multinational companies are slowly starting to appreciate the importance of online marketing (Jason, 2011). This development was a departure from the norm because traditionally, more established brands such as Coca Cola and Visa had a strong impact on people’s lives. This change highlights the way the internet builds brands over time.
There are many advantages associated with online marketing strategies. Among the most notable advantages, include the availability of current and rich information. Several companies around the globe acknowledge the importance of adopting the online marketing communication.
For example, VISA sought partnership with MSN because it had the strongest online presence as it tried to reach out to a young audience (Jason, 2011). VISA sought the services of MSN to create more brand awareness about a new promotional campaign aimed at reaching out to young people aged 18-29 through a website, which was custom designed to accommodate the campaign titled Happen (Jason, 2011).
The site ran for about three months and about five million people visited it (Jason, 2011). The online marketing strategy has therefore been perceived to be very efficient and Samsung has adopted this strategy as part of its core marketing strategies. Apple does not have the same level of online presence as Samsung and neither does it have the type of sponsorships Samsung enjoys. Its marketing strategies are mainly based on television and print advertisements.
Synchrony of Findings
Despite the belief, that Samsung’s business strategies are weaker than Apple’s, there is a common agreement by most researchers that the strengths of the company are equally immense and Samsung may wade through its sustainability challenges.
Samsung’s strengths mainly come from a few business competencies such as the success in the memory chip market, which accounts for nearly half of the company’s profits (Jason, 2011). Though the memory chip business is prone to the challenges of its cyclical market, Samsung’s presence in this market segment is unrivaled.
Other companies engaged in the same business like, Microsoft, Cisco, and IBM does not realize the same profits as the Korean company does. Samsung’s strength in the same market has also seen other companies lose a lot of money as Samsung’s stamps its authority in this market. Sony is estimated to have lost about $940 million to Samsung while Micron, Infineon, and Hynix are estimated to have lost collectively about $2 billion of its profits in the memory chip market to Samsung (Jason, 2011).
The belief that Samsung will stand to remain competitive in the future is also expressed by Mallin (2011) who explains that, prior to Samsung’s entry into the technological market, US, Europe and Japan had dominated this market. However, even with the previous domination of the technological market (with international technological brands), Samsung has been able to establish itself as a strong brand.
The dominance of Samsung in today’s technological world is therefore an unprecedented eventuality because the Korean company has been able to wade its way through the dominance of technological giants to be a force to reckon with. Mallin (2011) observes that the success of Samsung can be attributed to its unique competitive strategies.
Samsung has not risen to the top by copying its competitors or levering its resources; it has been a dominant player in the technological industry by adopting unique competitive strategies. Mallin (2011) explains that Samsung’s strategic intent is to “to become a major global competitor with a premium brand position in the global market” (p. 5).
The company has strived to attain this goal by developing layers of advantages over its competitors. These advantages have spanned different layers of the company’s operations but some of the most notable areas of improved performance have been improvements in production processes and increased investments in research and development to increase its competitive position.
Mallin (2011) also explains that Samsung has been able to stay competitive in the world market by “searching for loose bricks, changing the terms of engagement, and competing through collaboration” (p. 8).
Most of these strategic competencies are designed to boost the company’s strategic planning. The company’s strategic planning process is however developed by keeping a close eye on the competition and looking for unexpected ways to overshadow its competition.
Samsung’s desire to change the terms of engagement as part of its competitive strategy is also intended to come up with new and unexpected strategies for overcoming its competition. Simply, Samsung does not adapt to conventional ways of implementing its competitive strategies. The company tends to look for innovative ways of formulating its competitive strategies.
Some of these ways have been perceived to be unpopular but so far, Samsung does not show any apology for adopting some of these unpopular ways. For instance, the company’s move to use the same girl in an advertising campaign intended to hit out at its closest rival in the tablet market – Apple has been highlighted in earlier sections of this paper as an aggressive strategy adopted by the Korean company on its competitors.
As another competitive strategy for its business, Samsung has also pursued collaboration. So far, Samsung has collaborated with other companies such as Toshiba, and Philips to better their business practices and fortunately, some of these collaborations have increased the company’s market share (Mallin, 2011).
In addition, to keep up with the changing times and remain on top of its peers, Samsung embarked on a ferocious strategy of streamlining its operations to create more efficiency. In early 2000s, the company’s management decided to downsize its workforce by about 24,000 employees (Mallin, 2011). This move was unpopular among the workers but it was initiated by a change of management.
Later, Samsung also decided to sell about $2 billion worth of non-core business so that it could concentrate on its main businesses that account for the company’s main revenue stream. This move inspired Samsung’s competitors to do the same. Sony was notably among the first companies to restructure its operations according to Samsung’s new operations. Sony’s CEO was quoted as saying, “To survive as a global player, we too have to change” (Mallin, 2011, p. 5).
Samsung’s restructuring efforts have won massive approvals from within the company because some of Samsung’s managers acknowledge that the company’s operations are more efficient now. They also acknowledge that, “we go through far fewer layers of bureaucracy to win approval for new products, budgets, and marketing plans, speeding up our ability to seize opportunities” (Mallin, 2011, p. 5). From the above sentiments, many researchers peg a lot of hope on Samsung but Apple strategies are perceived to be far more effective.
2.2 Definition of Terms
Strategy – The direction taken by a business
The research methodology for this study will be centered on identifying the differences and similarities between the business strategies for Apple and Samsung. As noted in previous sections of this study, this research goal is informed by the ongoing market, legal and corporate wars between the two technological giants. Furthermore, the growing competitiveness and the changing landscape of the technological and digital markets highlight the importance of analyzing how the two technological companies intend to overcome this hurdle.
3.1 Research Design
The methodology for this study is mainly based on the qualitative research design. The qualitative research design will be used as a precursor to quantitative research, which may form the basis for future studies on Apple and Samsung’s business strategies. The usefulness of the qualitative research design will therefore be limited to getting a comprehensive conceptualization of the differences and similarities between Samsun and Apple’s business strategies (based on the backdrop of organizational decisions made by the companies).
The use of the qualitative research design is also supported by the fact that this research methodology is flexible and supports the inclusion of case study research information. As evidenced in this paper, information from case studies (such as court cases) are highly relied on to develop a framework for the understanding of the research problem. The inclusion of such data is supported by the qualitative research design.
The nature of the research topic is also too complex to be answered by a “yes” or “no” response and therefore the use of the qualitative research design will be able to expose the underlying dynamics of the research topic. The simplicity of undertaking the qualitative research design is also a huge attraction for this research because the heavy financial muscle that would allow for the inclusion of a complex research design is not required in this research.
Furthermore, considering this paper focuses on the use of secondary research information as the main form of data collection, the dependence on population sample will not be as important as it is for quantitative research. Therefore, meaningful research can still be obtained with a small case study or a collection of relevant cases.
3.2 Data Collection
As mentioned in earlier sections of this paper, this study will use secondary research sources as the main data collection tool. In addition, a comparative study of the business strategies pursued by Apple and Samsung (with regard to the recent developments of the technological industry) has not been properly researched. The secondary research methodology will therefore be useful in gaining a proper understanding of the research problem.
Furthermore, since the recent developments of the tussle between Apple and Samsung have not been addressed, the use of secondary research data will provide a broader understanding of the research problem. Though secondary research is mainly classified into internal and external sources, this study will mainly rely on internal sources of data because this paper focuses on specific organizations (Apple and Samsung).
The main types of secondary research data to be used in this paper will be business journals and publications regarding the business strategies of Apple and Samsung. These research sources will be relied on because of their relevance to the research topic and their high credibility and validity (Tim, 1991, p. 56).
Furthermore, the reliance on business journals and related studies will strive to ensure the findings of the study remain within the confines of the business field (because the research problem is equally corporate). Books will also be relied on as credible sources of research information because they contain published texts.
Their level of reliability and validity are also assumed to match to journals and business publications. Finally, this paper will source information from online sources of research as the last type of secondary research data. The main advantages associated with this data collection tool are its easy availability and ability to remain current. However, emphasis will also be made to seek sources of data from reliable online sources such as company websites.
The above research sources will provide the groundwork for a meta-analysis, which will combine the findings from the three sources of secondary data to form the framework for the research findings. Therefore, the true “effect size” of the data collected from the secondary research sources will be estimated by the meta-analysis. Comprehensively, we will be able to come up with a systematic review of the research problem by eliminating the less-precise effects size of the research information collected from the secondary research sources.
There are several advantages to be realized from the above meta-analysis. For instance, it would be easy to establish the diversity of the researches obtained from the different types of information sources highlighted in the secondary research information. This diversity is likely to be realized from the inclusion of diverse information sources in the secondary research studies.
Through the meta-analysis, it is equally easy to derive the statistical testing for all the factors involved in the progress of the secondary researches (highlighted in the secondary research sources). Though the concept of generalizing findings is highlighted as a limitation for this study, the meta-analysis helps to generalize the findings of this research to different (but related) contexts.
3.3 Data Analysis Plan
The data analysis section will use four tools. These tools will mainly be used because of the reliance on secondary data as the main form of data collection tool. The interpretive technique is the first type of data analysis tool used in this study.
The interpretive technique will be adopted within the framework of observer impression because the secondary data collected will be analyzed from an analytical and professional view to come up with a structured impression of the study’s findings.
By extension, this data analysis tool will include the input of experts and professionals in analyzing the data collected. An analytical eye will also be included to sort pertinent issues regarding the research problem and eliminate any information that may not be of use when answering the research problem or meeting the objectives of the study.
The second data analysis tool to be used will be the coding technique. The coding technique shares many similarities with the other data analysis tools used in this study because it is mainly interpretive (Tim, 1991). Mainly, the coding technique will be used to organize the huge volumes of research data collected.
The data will be analyzed and segmented into different groups, which are identified by unique codes. These codes are usually words that show the link between the information obtained and the research objectives. The different research contents represented by the unique codes will thereafter be compared to one another to expose their similarities and differences.
Advanced coding techniques use integrated computer software such as the Computer Assisted Qualitative Data Analysis Software which does little to supplement the interpretative nature of the exercise (but improves the efficiency of the process altogether). The increased efficiency of the integrated computer software also allows for work sharing, peer-review, and easy examination of the information obtained (Tim, 1991).
To establish the validity of the research information obtained, the member check technique will be adopted. This technique will not only be used to check the validity of the research information obtained because it will also evaluate the accuracy, credibility and transferability of the research information obtained.
The member check technique works by submitting the research findings to the sources or sample sources. In this study, the research information will be compared to the existing pool of research sources and any distinctions checked to report on the accuracy or validity of the findings. Highly accurate and valid research information should reflect the views, feelings and experiences of the authors who developed the previous research (which is relied on in the study).
However, this is not to mean that the findings of this paper will reproduce information from other studies because it will go beyond that to conceptualize the research problem form a holistic perspective, and provide a framework for future studies by carrying out a meta-analysis of existing research. Though member checking was done during the course of the research process, this paper undertakes the same procedure at the end of the research.
3.4 Time Frame
The period for undertaking this study is spread to accommodate different activities within a four-week period. The first week of study will be dedicated to gathering research information for purposes of the study. The second and third week will be left to analyze the research information and derive meaning and understanding from it. Here, the computation of the findings and the data analysis process will be done. The final week of study will be dedicated to data presentation.
The main assumption underlying this study rests in the historical spread of business strategies adopted by Samsung and Apple. This study will assume that there are no time variations between the business strategies adopted by the two companies.
The highlighted business strategies adopted by the two companies will therefore be assumed to be the current and prevailing business strategies used by the two companies over the years. This analysis will also apply to the highlighted differences and similarities between the business strategies of the two companies.
3.6 Scope and Limitations
The scope of this study includes the business strategies adopted by Samsung and Apple since their inception. There will be no time limitations to the strategies adopted by the two companies when we analyze the differences and similarities between the two company strategies.
The scope of study will also not be limited to the type of business strategies adopted by the two companies. The types of business strategies adopted by the two companies may therefore include different aspects of the business strategies including (but not limited to) marketing strategy, financial strategy, competitive strategy, financial strategy, production strategy and human resource strategy.
The biggest limitation to this study rests on the nature of the research methodology. The research methodology mainly uses secondary research, which is limited to the objectives and aims of the initial researchers.
In addition, secondary information may contain bias (on the part of the researcher), thereby reducing the credibility of subsequent research information which may be obtained from the same. Primary research would however not contain this bias.
The generalizability of the research information may also be limited to a specific component of the businesses in study. For instance, Samsung electronics is part of a wider group of companies forming the Samsung group. The Samsung group is an umbrella body that includes other business segments such as insurance business.
The findings of this study will therefore only be limited to the activities/strategies of Samsung electronics and not the entire Samsung group. The same scenario also applies to Apple Inc. because focus will only be given to its electronics segment and not other un-affiliated businesses.
After weighing the findings of this paper, it is important to point out that Apple and Samsung have many commonalities among their business strategies. These commonalities are evident in their marketing, human resource strategy and production strategies. Apple and Samsung’s marketing strategies are both fixed on the high-end market where their products are designed to sell at a premium, due to superior product quality.
Apple has pursued this strategy for a long time but Samsung has come on board recently. Samsung only realized this strategy after it noticed that the low-end market was not bringing many revenues to the company, even after the company realized increased sales (in physical quantities). The new company strategy informed the company’s decision to discontinue the production of television sets, which were below the 26-inch specification (Mallin, 2011, p. 5).
Currently Samsung’s strategy focuses on producing high-end goods, which are designed to appeal to the high-end market segment. Apple has pursued this strategy for a long time and evidence shows that it is unapologetic for pursuing this market strategy. From Apple’s high-end market strategy, the company has earned a reputation for producing quality goods at high prices. Samsung also strives to achieve this reputation, though their main motive is pursuing a pricing strategy that aims to sustain profit growth.
There is also a strong similarity between Apple human resource strategy and Samsung’s human resource strategy. Both strategies aim to develop the best human resource by sourcing for the best talent available in the market. Though both companies pursue different strategies in developing the best human resource, both companies aim to achieve the same goal of attracting the best human talent.
Apple believes that it can attract and retain the best human resource strategy by providing a strong incentive to leave the company so that weak or demoralized employees can be motivated to leave the company. Through this strategy, Apple expects to retain highly motivated staff by eliminating weak staff. Apple’s human resource strategy traces its roots to Steve job’s business principles. In fact, most of the company business strategies are part of Steve Job’s ideals.
The focus on employee excellence is also another example of Steve Job’s ideals. Jobs stressed on cultivating employee excellence by starting a fellow program where outstanding employees were rewarded for their performance. Several employees have benefitted from this program and generally, the program is seen to have a positive impact on the motivational levels of the employees (Mallin, 2011, p. 5).
Samsung on the other hand hopes to attract and retain the best human resource by providing the best working terms possible. The company also expects to instill a strong sense of discipline among its employees as a viable strategy to developing the strongest human resource strategy. For example, the company limits the number of vacations its employees can take within their working life. Most Samsung employees are therefore seen to take vacations and leaves soon after retirement.
Through the findings of this paper, we also see that a quarter of all Samsung employees have a PHD. This observation highlights the strong emphasis on educational qualifications as one of the key requirements for Samsung’s employees.
This educational qualification is a form of benchmark for Samsung’s managers and it acts as a sieve to attract the best human resource talent available in the marketplace (and eliminating all irrelevant human resource talents). This strategy is further complimented by the focus on work experience as an important ingredient to Samsung’s working plan.
Employees with the most valuable work experience therefore form a majority of Samsung’s human resource pool across all its production plants. Nonetheless, Apple and Samsung both acknowledge that the key to sustaining their operations is developing a highly competent human resource pool.
Focusing on Apple and Samsung’s production strategies, we can see that Apple bears a lot of importance on controlling the unpredictable elements of its operations (business environment). If there is one constant attribute in Apple’s business strategy is that they have successfully managed to control all the unpredictable elements concerning different components of their business strategy.
For instance, they have been able to control their human resource strategy through the counter-intuitive strategy, which weans weak employees. This is an uncontrollable aspect of the company’s operations.
The same approach has been applied in its distribution, marketing and product development strategies. Another constant attribute of Apple’s strategy is that they have been able to maintain a closed-ended business strategy where the public does not know different aspects of the company’s operations. For instance, the company has a locked-down software platform, which is only known to close associates of the company (Mallin, 2011, p. 5).
The company also dictates the manner it wants its brand to be mentioned in the public arena because it bears a lot of importance to the usefulness of positive branding. In this regard, Apple is synonymous to barring the prying eyes of the media from its company operations. Therefore, any information that is shared in the public forum is done under the permission of the management.
This is also the main reason why there has been scanty information regarding the company’s real sales figures (especially when the company’s figures are compared with its competitors). This closed-ended strategy has seen the company manage small attributes of the business environment that are often perceived to be “uncontrollable” by Apple’s competitors. The closed-ended approach to Apple’s operations has seen the company significantly reduce the negative consequences of publicity.
Unlike other companies, which have embraced partnership as a viable business model, Apple’s strategy has been to do business alone. Partnership is therefore perceived as a last resort because Apple has attempted to silence their partners by sieving what they can disclose (about Apple’s operations) to the public.
Apple’s first conviction when faced with an operational problem is how the company will be able to solve the problem through internal mechanisms. Unlike other companies, Apple does not see partnership as an opportunity to grow but as a barrier to growth.
In addition, through the company’s culture (introduced by Steve Jobs), Apple seems to be very keen on small aspects about its products. Few experts would recommend obsessing over small aspects of management and similarly, few employees would want to work with a manger who looks at every little detail of production.
However, Steve Jobs went against this norm and took his time to focus on the little attributes of the product development strategy. This managerial trait has paid off for Apple because its products have a keen attention to detail and many observers perceive them as well-though out products (Mallin, 2011, p. 5).
Form the above analysis, we can see that Apple and Samsung differ in the manner they implement their production strategies. Samsung does not have a high secrecy regarding its production strategies. In addition, unlike Apple, Samsung has forged many business partnerships with other companies within the same industry.
Evidence is given of Samsung going into business partnerships with other technological companies such as Google, IBM and Toshiba. These partnerships have been part of Samsung’s key areas of operations since its inception. Therefore, the South Korean company does not perceive partnerships as a last resort but rather as a core area of its operations.
In addition, unlike Apple, Samsung does not dictate the terms for its distribution channels. It has very little influence over its distribution partners. This area of operation has boosted Apple because most companies do not have the grasp that Apple has over its distribution channels. Samsung adopts a more liberal strategy over its engagement with its partners and unlike Apple, it does not limit the kind of information that its partners may release to the public.
Samsung and Apple however share the belief that the production of futuristic and innovative products is the key to future company survival. Both companies therefore strive to make innovative products the key driver to their production strategies.
This conviction is supported by their human resource strategies, which aim to attract a competent human resource pool that is able to come up with new ideas for new product lines. Apple came up with the Apple TV product as one of its new innovative products and Samsung came up with the Samsung galaxy product as one of its latest innovative brands.
Another key difference between Apple and Samsungs production strategies is the focus on the hardware and Software markets. Apple has always shown a key interest on the software market but Samsung has stuck to its hardware market.
Samsung believes that it is easy to get different software from any manufacturer but it is not easy to obtain quality products from any manufacturer. Considering the belief that software is the future for technological companies, many observers say that Samsung is taking a huge gamble by sticking to its hardware market (Mallin, 2011, p. 5).
Samsung’s focus on the hardware market is however not random. It represents one of the company’s key areas of competence because the company has achieved a high level of success on the memory chip market. This area of key competence is the basis for its relationship with Apple because it supplies the American company with enough hardware supplies for its product lines.
Jason (2011) also questions the sustainability of the company’s strategy in the coming years. This sentiment is expressed because it is seen that Samsung’s business strategy is challenging new economic dogma (this is an unpopular precedent, which is shunned by most companies).
The common business ideology in today’s technological world is that the development of new software and content is guaranteed to elevate a company’s position ahead of its competition. However, Samsung has not shown any interest in joining the growing number of companies entering the software market.
The company has instead stuck to the hardware market and though this market is quickly shrinking, the company still shows increased persistence in this market segment. In addition, instead of the technological company joining the growing number of multinationals that are outsourcing their activities, Samsung continues to invest a lot of money opening new factories in different locations across the globe (Mallin, 2011, p. 5).
In addition, contrary to popular ideology and business practice, Samsung remains vertically integrated and increasingly diversified as opposed to focusing on some of its main competencies. For example, Samsung has consistently stuck to the manufacturing industry, especially after the success of the microchip market segment. In fact, the company uses its chips to develop its products. Recently, the company’s CEO stated that if the company exits the manufacturing industry, it is going to lose (Mallin, 2011, p. 5).
However, history shows that persistence in this business model (hardware) is not sustainable in the end. Many companies have tried to defy changing business models and have collapsed as a result.
Many Japanese, European and US companies learned the hard way that such business strategies do not work in the long-term but they also exposed the wisdom that companies, which insist on their traditional business models, need to invest a lot on research and development to come up with new product lines that are sustainable in the end (Jason, 2011).
Samsung’s production strategy is rather conventional because Jason (2011) recently quoted a massive investment of about $19billion by Samsung in the improvement and development of its microchip facilities.
However, it is seen that similar companies can obtain the same hardware for a cheap price because they do not have to tie up their capital in the same venture. Furthermore, Samsung’s move is unpopular because hardware tends to have a shorter lifecycle and they are equally easily commoditized. For instance, recent years have seen a rapid decrease in the price of television sets and DVD players. Television sets are estimated to fetch about 30% lower than their markup prices five years ago (Jason, 2011).
DVD players also exhibit the same trend because Jason (2011) says that, currently DVD players sell for less than a quarter of their value (five years ago). With increased competition, the prices of hardware products have even decreased further, especially with the growing dominance of Chinese products in the global market. This downward push has been precipitated by lower wages and cheaper engineering technology from the Chinese market.
This trend has quickly caught up with other technological companies around the world. Recently, Japan was quoted as developing its own Chinese plants to take advantage of the reduced production costs in this location (Jason, 2011). This development was seen as the main reason why Samsung exited the lower-margin segment of the television market by stopping the manufacture of television sets, which were lower than 27 inches.
Experts note that Samsung’s business strategy is therefore unsustainable and it is going to suffer the consequences of sticking to the hardware market. Evidence is given of Sony, which was forced to almost depend on its play station market to sustain its hardware production because it stuck to the hardware market (Jason, 2011).
Similar companies have also suffered the same fate because Motorola, Ericsson and Apple Inc. are also feeling the heat of sticking to the hardware market. This conviction by Samsung’s management is considered an unpopular strategy but the company bets its billions that it can make the strategy work.
5. Conclusion and Recommendations
By sampling the case studies of Apple and Samsung’s business strategies, we see that both companies perceive the international market to be the new frontier for sustaining their business operations.
More so, many researchers identify that both companies aim to establish a strong foothold on the American market as a launch pad for future product launches. This emphasis is explained by the importance of the American market as a test platform for the launch of new products in the international market.
Another strong point observed from the researches sampled is the fact that Apple maintains a high-market strategy that bears little or no importance to the low-end market.
Though Samsung has also focused on the high-end market in recent times, its pricing strategy cannot be compared to Apple’s. Apple’s pricing strategy is relatively expensive and charges a higher premium for their products. The company’s success and main business competence has been its success in the ipod, iphone and ipad markets.
These areas of key competence have been a hard gamble for its competitors because Apple’s competitors (notably )have tried to produce new products that tend to substitute Apple’s products. The Samsung galaxy tablet is one such example but still, the Korean giant has not been able to surpass Apple’s sales in this regard. From the success of Apple’s ipad, it is clear that the company’s production strategy thrives on innovation, which leaves other industry manufacturers following its lead.
However, on a larger platform, Samsung’s resources are designed to strengthen its areas of key competence – television market and other hardware market segments. Apple’s resources are however diverted to improve the company’s software competence. The launch of the appstore and the icloud applications are just some of the few evidences showing Apple’s commitment to producing new software. Samsung’s strategy is however focused on the hardware market.
Different researchers have attributed the success of both companies to their human resource strategies. Apple’s success has however been associated with Steve job’s input and managerial practices. However, many researchers attribute his input to Apple’s human resource pool as mainly being focused on developing and retaining the best human capital (Jason, 2011).
Samsung’s success has also been attributed to the same factor although there is no single individual attributed to the overall company success. Samsung’s success is therefore an all-rounded success that is shared by many people. However, based on the numerous volumes of research analyzed in this study, the reorganization of Samsung’s organizational structure, which has seen a reduction in the levels of management, has also contributed to the company’s increased performance.
Apple’s business strategy has proved successful over the recent past. Samsung has also achieved tremendous success based on its business strategies. However, based on the current business environment, there seems to be a change in consumer taste and preferences. No longer do customers have a keen eye on price at the expense of quality. Quality seems to have surpassed the emphasis on price among today’s consumers.
This seems to be the underlying premise behind Apple’s success because the company has always adopted a high-end market strategy and its products have consistently been received with high enthusiasm. It almost seems like Apple has created a very strong brand following by remaining unique to its competitors. Samsung does not witness the long queues that Apple witnesses during its product launches.
Moreover, the media pays a lot of attention to Apple than it does Samsung. These events paint a strong emphasis on Apple’s business strategies because they have been able to succeed in markets that have been previously dominated by other giant players such as Samsung (in the hardware market) and Microsoft (in the software market).
It is almost impossible to point out that Apple has differentiated itself from its competitors by remaining unique. This is one strategy that Samsung ought to learn from Apple because it has been left to pick up the pieces behind Apple’s success (at least in the tablet market). Apple has remained a leader in its market segment and through its innovation; it has been able to produce superior and futuristic products.
Other companies such as Samsung need to learn the same business strategy by coming up with new and innovative products of their own rather than developing replicas of superior products in the market. This paper focuses on the court battle between Samsung and Apple as one area of competition for the tablet market share. Apple has mainly filed the lawsuits after it believed that Samsung infringed on its copyright and patent laws by developing a replica of the ipad.
Though these court battles are ongoing, it is important to point out that the ipad was a revolutionary product (made by Apple) and Samsung was playing “catch-up” by producing the Samsung tablet. This is one example of how Apple is able to be a pacesetter in the technological market. Samsung should therefore divert more resources to research and development so that it can come up with new and innovative products that can stake a claim to its dwindling market share.
Samsung also needs to reevaluate its business strategies according to the current intrigues of the technological market. Its consistent focus on the hardware market may prove to be disastrous in the long-term because it is a very risky gamble. Other companies, which have achieved tremendous success in the past, have not done so by sticking to the hardware market.
The software market is very lucrative and Samsung should acknowledge this fact and divert its resources in the same regard. Apple has already warmed up to this new business phenomenon and it has made billions as a result. For instance, the launch of the itunes and icloud are just some of the few software innovations that Apple has ventured.
Other applications such as the appstore have been highlighted in this study as having raked millions of dollars for the American giant. It is therefore no surprise that Apple is making a lot of money (more than it can spend) while Samsung’s defiance to venture into the software market only stands to limit its revenue stream (because it seems to mainly rely on its competence on the hardware market).
Other hardware manufacturers have tried to adopt the same strategy to no avail. For instance, IBM was known to be a very strong hardware manufacturer but after the business landscape changed to the software market, the hardware manufacturing giant was able to save itself from being obsolete to become one of the most competitive companies today.
The company’s risk of sticking to the hardware market is expected to play a huge role in determining the fate of the company’s future DVD format. The future of the DVD format is at stake because Samsung has developed a high-definition sequel of the format war between Samsung, Sony and Toshiba.
For example, Samsung has been engaged in a long battle with Sony after the latter introduced the Blu-ray technology in its gaming gadgets. High definition DVDs have suffered as a result. High definition DVDs differ from conventional DVDs because the latter has a lesser storage capacity.
The difference between the high definition DVDs and the blue ray technology is that high definition DVDs can be played on old DVDs while blue ray technology does not allow for this provision. Certain movie multinationals such as Warner Bros have insisted on using the high definition DVDs but it still remains to be established where other companies will fall.
Samsung’s business strategy has however been compounded by the growing convergence of different technologies in the market. For instance, in the past, different companies used to stick to their traditional brands and certain technological gadgets served only one function.
However, this trend has changed and many companies are now operating in multiple business segments. For instance, Apple has started making home appliances and HP has started to make televisions. Both developments infringe on Samsung’s core market segment.
However, as explained in earlier sections of this study, some of these companies have a working relationship with Samsung. For instance, HP and Apple source the chips from Samsung and as Samsung formulates its marketing strategy, it needs to respect this working relationship. However, Samsung’s management is of the opinion that, when it comes to competing against one another, it will not shy away from the battle.
Apple and Samsung have shown that they are very sleek in their operations. However, Apple’s strategy has proved to be more successful than Samsung (going by the strength of brand loyalty between the two companies). Based on the contents of the “discussion” section of this report, it is important to point out that Samsung should direct more company resources to develop new and innovative products as opposed to playing second fiddle to its competitors.
However, it is also important for the company to focus on its key areas of competence –home appliance market. Already, the company has a strong foothold on the home appliance market and it has a strong advantage over its competitors such as Apple in the same business segment.
Therefore, Samsung has more experience in the home appliance market, which it can use to counter competitive pressures in the same market segment. Therefore, the launch of new products such as Apple television can be countered through the development of efficient marketing and production strategies that will diffuse the influence of the competition in this market.
Samsung should also intensify its international marketing campaign by shifting its focus from the American market if in intends to battle with other technological giants such as Apple in the tablet and phone markets. Samsung’s use of the android platform has already proved to be successful in other markets (apart from the US).
The US consumer base seems to be an inflexible customer pool, which would be harder to penetrate. It will therefore be more fruitful for Samsung to focus on other international markets such as Europe and Asia if it intends to counter Apple’s influence in the tablet and phone markets.
The ability of Apple to meet the global demand for its products has been a common topic among the industry’s observers because there have been fears that the company’s ability to meet increased global demand may be limited. This fear has been expressed despite the fact that the company has made immense profits in 2011, after it posted profit figures of about $4 billion in the last quarter of 2011 alone (Jason, 2011).
The company’s growth chart is estimated to have surpassed the company’s expectations with more than 122 million Macs sold since the company started producing its mainstream products in 1984 (Jason, 2011). The sales figure for 2010 show that the company’s sale of ipad, iphones and ipads transcends the company’s mac sales (122 million). The company’s 2012 business strategy should therefore be focused on managing the challenges of scaling up.
It is observed that most of Apple’s iconic products such as the iphone and the ipad still have immense opportunities for growth but as the opportunities for growth open in the world market, the consequences of making the smallest hiccups in production become severe. It is observed that executing a production strategy that meets the soaring demand in the global market for Apple’s products requires an efficient marketing and supply chain strategy.
This scenario also requires that apple forge a workable working framework to integrate its activities and those of its suppliers in the most effective way. Jason (2011) observes that the world market is obsessed with hi-tech technological gadgets such that it has been easy to overlook what a shortfall of these gadgets may mean for the consumers.
For instance, the recent Thailand flooding disrupted the company’s operations because it distorted the supply chain of disk drive for close to half a year (Jason, 2011). Apple should therefore focus on meeting its surging demand and Samsung should reevaluate its entire business strategies.
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