Strategic Management of Apple Inc. and Samsung Group
Strategic Management of Apple Inc. and Samsung Group
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Strategic Management of Apple Inc. and Samsung Group
Introduction
Apple Inc is a Multinational Corporation situated in America. It focuses on designing and production of consumer electronics appliances and the related software. It is headquartered in Cupertino, California; Apple manufactures retails and supports a series of portable gadgets and personal computers. Samsung is a multinational conglomerate entity with headquarter in Samsung Town, Seoul, South Korea. It comprises of numerous affiliated and subsidiary businesses mostly united under Samsung brand. Samsung is the largest South Korean chaebol (business conglomerate), which is among the world fastest growing ventures in the mobile phone industry. Major changes have occurred in cell phones since their introduction in 1994 as they are constantly evolving to suit customers’ expectations. Double digit growth of smart phone sales in most mature markets is expressing the enormous rate of business growth. The sales of cell phones will grow by 11%-12% in coming years according to a recent analysis and predictions by IDC.
Buyer and supplier power in this business field is moderate/low; substitutes are low, and rivalry high, this is concerning Porter’s Five Forces analysis. Overall market share and price based on product type is a definition of global mobile industry. Furthermore, low-end, middle, and high-end users can also define this industry. Scale and market share are decisive constituents in global mobile industry. New and potential customers show up with the emergence of market that makes the ability of business to expand globally crucial. Creation of a respective niche can allow earn profit in the market even without expanding rapidly against company’s fierce competitors. Samsung has an upholding on its mission statement that addresses a response in both of its own change and the new developments worldwide. Moreover, the management of Samsung philosophy shows a solid determination towards contributions for the success of people all over the globe; on the other hand, technological advances and innovations have marred the history of Apple, Samsung’s close rival. The inability to supply phones to market as fast as that by the competitors have been hindering Samsung’s competitive strategy in favor of plodding march of Apple.
Vision and Mission Statements
Samsung’s Mission and Vision
Samsung electronics does not have an official mission. However it expresses its mission through its company’s philosophy:
“At Samsung, we follow a simple business philosophy: to devote our talent and technology to creating superior products and services that contribute to a better global society”.
The philosophy expresses strong interest in technology, customers, markets and i public image of the business. Samsung is customer oriented (Strategic management insight, 2013a). It gives no indication of interest in employees and mentions no tangible values. The statement is summarized and thus does not provide adequate information about the company, its activities or purpose for its existence. Samsung always mentions integrity, excellence and co-prosperity as its philosophical values; however, the statement does not reflect these attributes. Therefore, the company’s mission statement does not capture the company’s main goals and corporate direction.
Samsung’s vision is to realize, “cutting-edge technologies and top-notch components that create the future’, with the meaning of advanced technologies and products that will realize the dream of our future society through the ‘1nside Edge.” In realizing of this vision, Samsung hopes to focus on five strategies (Samsung electro-mechanics, 2014). These strategies include optimization of efficiency of business resources, intensification of challenging and enthusiastic culture, establishment of sustainable growth in business portfolio, as well as maximizing of competitiveness, and strengthening of its capabilities in market leadership. The vision is in line with its desire of Samsung to produce cutting edge technologies.
Apple Vision and Mission
Apples mission statement:
“Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store and has recently introduced iPad 2 which is defining the future of mobile media and computing devices.” (Strategic Management Insight, 2013b)
This mission statement does not follow the traditional sense of mission statements. However, the statement captures ideas about products and services, markets, and technology. This makes it different from Samsung’s mission statement which is customer oriented. Apples statement is product oriented. This statement is a mere list of the products the company manufactures, but does not mention the company’s intention towards customers, the companies self-concept or philosophy, employees or public image. Similar to Samsung statement, Apple’ statement does not explain which of the company’s values and systems guide processes such as decision making. Being product-oriented limits the company’s flexibility (Strategic management insight, 2013b). However, it captures the company’s ambition of creating perfect electronic gadgets.
Apples vision sounds like a mission statement. In fact, some critics argue that the vision could be better used as one. Apples vision is as follows:
“Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.” (Strategic Management Insight, 2013b)
The vision statement, as opposed to the mission statement, captures products, customers’ segments, markets and captures apples self-concept. The vision, however, however, customer oriented and further espouses Apples central purpose. The vision captures the company’s strategic approach to business.
SWOT Analysis
Samsung’s SWOT Analysis
Strengths
The company manufactures hardware for electronic devices hardware, which integrates easily with many software and open-source operating systems.
The company has excelled in terms of engineering, designing and manufacturing of hardware parts and consumer electronics.
Excellent design and innovation.
Strong focus on the environment concerns.
Low costs of production.
Acquired the largest share of mobile phone market and holds the second largest market share in smartphone market by 2012, as well as perfectly maintains them.
Strong ability to brand and market.
Weakness
Infringement of patents.
Reduced profit margins.
Its major competitors are large buyers.
Does not have its own OS and software.
Focuses on producing a wide products’ range.
Opportunities
The Indian smart phone market is growing.
Mobile advertisement industry is growing.
The demand for quality processors is growing.
The chance to obtain new patents through their acquisition.
Threats
Smart phone market in developed countries is saturated.
Rapid changes in technology.
Declining margins in production of hardware.
Breaches of patents.
Launch of Apple’s iTV range.
Price wars.
Apples SWOT Analysis
Strengths
The company leads in innovation in mobile gadgets technology.
It enjoys strong customer loyalty.
Strong reputable brand.
Functional retail approaches and stores.
Productive advertisement and marketing teams.
Strong performance financially with a gross profit of 43.9% in 2013.
Weaknesses
Lack of compatibility with various OS.
Exorbitant prices.
Decline in market share.
Continuous changes in management.
Infringement of patents.
Defects and problems with new gadgets.
Decline in long-term gross margin.
Opportunities
Launch of iTV
High iPad mini and iPhone 5 demand.
Emergence of new application processors providers.
Growth in smartphone and tablet markets.
Gaining of new patent via acquisitions.
Patent infringement damages.
Robust expansion of mobile advertising market.
Growth in demand of cloud based services.
Threats
Rapid changes in technology.
Increases in taxes.
Increase in salary levels of Foxconn workers.
IP rights breach.
Price pressure from competitors, especially Samsung over critical components.
Strength of the dollar.
Growth of Android OS.
Competitors’ entry into online music market.
Fundamental Ways in which the Companies Drive Competition
Apple is a formidable competitor in the electronics market. The corporation is a principal innovator in the manufacture of mobile gadgets.
Samsung activities in the electronic industry strongly influence competition in the industry. The company manufactures trendy phones for both smart phones and non-feature phones. The company is innovative and always seeking to create innovative hi-tech products.
Sensitivity to Culture
Samsung exhibits sensitivity to culture, which is probably one of the issues that have made it a successful in global markets. In 2008, the company got the True Company award after it excelled and employing disabled individuals. In addition, the company recorded 48% ratio in locally hired foreign employees of its entire workforce (Ivaniukovich, 2009). The company has expanded its recruitments of overseas talented workers. The company provides equal employment opportunities to people of all walks in areas it operates. Its employment code discourages all forms of discrimination such as education level, gender, regional backgrounds, race, and religion among others (Ivaniukovich, 2009). It prohibits child and forced labor. The company makes most of its sales (above 85%) overseas and thus respects the cultures of its customers.
Apple is also responsive to culture around the world especially consumerism culture. The company creates gadgets that meet the cultural demands, it attends to media culture that has resulted in pioneered online music platform and the iPod. The creative strategy used by the company adapts or recreates freedom to address cultural gaps by the move beyond translation to creation of something, which exudes the quintessence and essence of the message. This approach ultimately transforms the company into one which has a meaning and relevance locally, as well as recreates its message and content for specified target audiences. The company also shows cultural sensitivity in it recruitment of talent (Bitti, 2013) just like Samsung.
Core Competencies
Samsung has commendable competencies, and it is now a formidable competitor of Apple. First, Samsung exhibits strong entrepreneurial capacities. Samsung is always interested in finding and investing in new markets and products. In fact, the company has a strategy dedicated to identifying new markets and determining ways, how to get into these markets. Samsung spends a lot of finical resources on research, including nitty-gritty details on component infrastructure and position of its products (Shaughnessy, 2013). For instance, it invested in research toward 4G infrastructure. It pioneered the creation of physical storage device; hence, now the company controls 40% market share of main storage devices, such as NAND Flash and DRAM. In Active Matrix OLED, it has 97% of the market share and in LCD marked 26%. The company has also ventured into ad platforms. The company’s organizational design capabilities are also commendable. The company has enormous ability to organize corporate, manufacturing, as well as marketing and distribution activities in multiple ventures. This capacity has seen it expand and increase its capacity without compromising quality. In addition to the above capacities, Samsung has strategic capacities that have seen it rise and exert dominance in the manufacture of electronics. The company has strategic relations with other manufacturers of electronic devices, supplier of components, and regional distributors. The outsourced contractors are also an added strategic advantage to the company. All these capacities give Samsung the ability to compete sustainably, as well as generate steady level of profits.
In its turn, Apple also has strong entrepreneurial capacities. It has pioneered in the manufacture of smartphone and ventured into new markets ahead of many of its competitors including Samsung. Its innovative approach enables the company to create new products for new markets. For instance, it manufactured the iPod and revolutionized the way people listened to music, came up with iTunes and App store among others. The company also has a functional organizational design – just like Samsung. Strategically, Apple has reached out to all geographical regions on the globe; this includes 121 nations of the world, as well as versatile customers all over the world. Apple successfully achieved this position by the use of the strategy of transcreation. International Apple retail locations stand now at 62. A big plan is there to expand further and enter countries where its services are not accessed. Adding to that, embargoes and tariffs are the biggest barriers of trade for Apple. A complete ban on international trading of certain items is termed as embargos. For example, Apple’ products cannot be sold in Iran hence consumers in such countries cannot enjoy the advantages of the Apple product range. The unavoidable tariffs that Apple faces in every nation for each product they offer forces Apple to use manufacturing plants in China, in pursuit of reducing the cost.
Appropriate Business Strategy
Samsung appreciates the importance of business strategy in realizing success. The company’s strategy is diversified into several sub-strategies. These are new market strategy, partnership strategy, communication strategy, growth strategy, product launch strategy, content and service strategy, and platform strategy. These strategies aim at making the main strategy comprehensive so that it captures all areas of operation of the organization. Samsung’s corporate strategy embraces vertical and horizontal integration. Samsung uses vertical integration model T, which is also embraced by Apple. Model T vertical integration became common after the First World War (Taylor, 2012). This model banks on leverage the efficiency principles of mass production. Vertical integration gives the company more control over its inputs or parts; leverage leads to high quality products, increases collaboration and efficiency. Unfortunately, this method sacrifices flexibility, requires high capital and encourages a scarcity mentality attitude towards the partners. Outsourcing is also a critical part of the corporate strategy (Taylor, 2012). Although the company has its own plants in China, Vietnam, India and Korea, it also outsources services and production.
High end product as assembled at its plants while the assembling of low end products is left to subcontractors (Unwired view, 2013). One the companies most successful outsource product is Galaxy Trend Duos. The production of this model exceeded 10 million pieces. Zhonghuan Telecommunication was the responsible contractor for manufacturing Galaxy Trend Duos (Unwired view, 2013). Diversification has also been employed to a better level than Apple. The company has a powerful diversification strategy (Samsung tomorrow, 2012). The company invests in the manufacture of various electronics ranging from communication and computing gadgets (such as mobile phones, smart phones, tablet computers and laptops). The company also manufactures electronics such as television, plasma TVs, Smart TVs, LCD TVs, home theatres, fridges and washing machines. The company also has considerable investments in motor vehicle manufacturers industry. All these strategies have been influential in realizing the success that the company enjoys. However, diversification with some help from outsourcing has seen the company gain its success. By using diversification, Samsung has been able to explore and generate profits from all electronics markets across the world. Outsourcing has simply helped the company to produce products in large numbers to meet global demand.
Apple also values product corporate strategy. Like Samsung Apple also outsources production of its gadgets. The company’s gadgets are designed in California but assembled in China. Apple has outsourced all its manufacturing and assembling process in China. At one time, even the president wondered why Apple’s magic gadgets cannot be assembled in the United States (Rawson, 2012). Outsourcing is a corporate strategy that helps Apple meet its production needs. According to Rawson (2012), the labor and infrastructure necessary to manufacture Apple gadgets are simply not available in the US. What is available cannot support Apple’s activities and operations. Therefore, Apple outsources the production process in China. According to Rawson (2012), the outsourced Chinese firm has 230, 000 workers. This is a large work force since, in America, only some 83 cities have the sufficient level of population. Furthermore, it is impossible to turn the population of this magnitude into and workforce in America. The labor costs in China are also lower than they are in America. The employees at Foxconn-Apple have outsourced partner- work for 6 days a week and 12 hours a day. They earn US$17 per day. This amount is far beyond the American payment standards. Furthermore, jobs are on high demand in China, and it is not difficult to hire employees. According to Rawson (2012), Foxconn can hire over 3000 employees overnight. The speed, cost and efficiency make outsourcing service in China more reliable than manufacturing the gadgets in America. Unlike Samsung, Apple had done little to diversify its products. Apple mainly concentrated on the production of communication and computing gadgets. In this regard, it focuses on a narrow market and needs to find a way to diversify its products. In regard to diversification, Apple embraces vertical integration just like Samsung. For years, Apple has employed a vertical integration model, based on which the integration of hardware and software for Apple products are featured. In the end, product and parts are controlled by one company – that is what vertical integration dictates. For instance, Apple designs its own processors for devices that also design software and hardware of the Iphone and Ipad. The pace for mobile computing was set by this integration.
Internal Leadership
They also manage the training of staff and feedback mechanism. Every project has a project leader who directly manages specific projects. General staffs are assigned to different projects or department and work under the project leaders. The company also has strategists, stand along teams and taskforces that perform different tasks. At the helm, however, is the CEO. Samsung provides motivation to its employees to encourage them to increase their productivity. The business has adopted a way of increasing employee volunteerism (Choon, 2006). The company facilitates communication and networking among employees. It also provides education and training opportunities to the employees. Best performing employees are also identified and rewarded annually. Apple has strong internal policies that forester proper communication and interaction among staff. These are essential for internal leadership and ensure proper communication of authority. The organization embraces a collaborative approach to leadership in which every member of staff can easily access the CEO, who is the topmost internal leader.
Change of Strategies to Improve Business
Both companies would benefit from a change of their strategies to enhance business and productivity. Apple would benefit from enhanced diversification that would help it exploit new markets thus increase profitability. Both companies would positively benefit from incorporation of horizontal integration which would help reduce competition and prices thus reduce production cost and increase profit margins.
References
Bitti, M. T. (2013, May 3). Recruiting with cultural sensitivity will broaden the talent pool. Retrieved from http://business.financialpost.com/2013/05/03/building-cultural-sensitivity-into-the-recruiting-process/
Choon, K. (2006). Samsung ways of motivation in employee volunteer management. Retrieved from http://www.volunteerlink.net/datafiles/D037.pdf
Ivaniukovich, A. (2009). Integrity management: Respecting global diversity. Retrieved from http://www.samsung.com/us/aboutsamsung/sustainability/integritymanagement/download/RespectingGlobalDiversity.pdf
Rawson, C. (2012, January 22). Why Apple’s products are ‘Designed in California’ but ‘Assembled in China’ ? Retrieved from http://www.tuaw.com/2012/01/22/why-apples-products-are-designed-in-california-but-assembled/
Samsung electro-mechanics. (2014). Vision company information. Retrieved from http://www.samsungsem.com/introduce/biz_vision.jsp?lang=en
Samsung tomorrow. (2012, April 25). The history of Samsung Electronics (2): Diversification and expansion (1971~1974). Retrieved from http://global.samsungtomorrow.com/?p=13722
Samsung.com. (2010). Our work: GSG offers you the ability to develop and apply a diverse set of skills through unique interaction as you become a global manager. Retrieved from http://sgsg.samsung.com/Our_Work/02Our_Work_Our_projects01.asp
Shaughnessy, H. (2013, Feb 28). Is Samsung the new Apple? Forbes. Retrieved from http://www.forbes.com/sites/haydnshaughnessy/2013/02/28/is-samsung-the-new-apple/
Strategic vanagementiInsight. (2013, September 02. a). Mission statement of Samsung. Retrieved from http://www.strategicmanagementinsight.com/mission-statements/samsung-mission-statement.html
Strategic management insight. (2013, September 02.b). Mission statement of Samsung. Retrieved from http://www.strategicmanagementinsight.com/mission-statements/apple-mission-statement.html
Taylor, T. (2012, Nov 09). Vertical vs. horizontal integration: Which is a better operations strategy? Retrieved from http://www.opsrules.com/supply-chain-optimization-blog/bid/241648/Vertical-vs-Horizontal-Integration-Which-is-a-Better-Operations-Strategy
Unwired view. (2013, Nov 13). Samsung sees advantages in outsourcing smartphone production. 10 million Galaxy Trend Duos units already made. Retrieved from http://www.unwiredview.com/2013/11/13/samsung-sees-advantages-in-outsourcing-smartphone-production-10-million-galaxy-trend-duos-units-already-made/
