Strategic Management of Apple Inc. and Samsung Group

Running head: CAPSTONE PROJECT&nbsp 1

StrategicManagement of Apple Inc. and Samsung Group

September5, 2014.

APPLEIN

StrategicManagement of Apple Inc

AppleInc. was instituted in 1977 by Steve Job as Apple Computer Inc. withan original net worth of US$250,000.The firm has grown tremendously surpassing its net worth to overUS$250,379 million according to 2012 survey. Similarly, the companyproducts have grown tremendously from PC computers to smartphoneproduction(Apple Inc., 2014).Apple revolutionized the phone industry through its iPod, iPhone andiPad technologically integrated devices. Appleis one of the leading electronic multinational companies ininformation technology and revenue collection after Samsung.

Thecompany is headquartered in California, United States and designs,develops and sells electronic products and services such as computerhardware, software and online services. The company best products areiPads, Mac, iPod media players, iPhone smartphones, iPad Tablets andonline services such as iCloud, App Store, OSX, iTunes and others(AppleInc., 2014).Samsung business environment has stiff competition from otherelectronic and information technology giants such as Samsung, Nokia,Dell, Hewett Packed, Erickson, Sonny and LG. In 2013 Apple Inc. wasnamed by the Fortune magazine the best company in loyalty brand,market capitalization and good organizational management structure.

Itis estimated that Apple has an approximate 72,000 employees, and thecompany is growing at 45%. In 2014, the fortune magazine named Appleas the best top ten in the Fortune 500 list of best multinationalcompanies globally. The telecommunication and information technologyindustry of consumer electronics has vast emerging opportunities aswell as stiff competition. Apple has been able to cut a niche throughits innovative and quick product launch in the competitive markets.Emerging economies and increased demand for digital lifestyleproducts present the Apple with vast market opportunities forresearch and exploitation. However, the firm has recently encounteredcritical threats to its business due to products imitations by itsmain business rivals. Apple’s strength lies in its innovativequality brands a consistent commitment to research and design(Apple Inc., 2014).

ExistingBusiness Strategies at AppleInc.

Apple’selegant business strategy is influenced by its leaders and throughits innovative, simple design products. The firm current businessstrategy under the leadership of Tim cook is to increase the firmmarket share through advanced technological products and services. Inaddition, the firm has strategized increasing its partnerships,acquisitions and vertical integration approach as a way of improvingits products and market penetration in emerging powers like Brazil,China, India and Africa (Levitt, 1983). For instance, recently thefirm has invited ABC Nightline and Foxconn as part of its verticalintegration in the production of Apple accessory components (AppleInc., 2014).Another strategy currently employed by the firm is using theintegrated value approach in the product design and pricing. Applecompetitive edge is integrating innovative technology of hardware andsoftware to give users superior product experience (Hill &amp Jones,2013). In summary Apple’s current business strategy are summarizedas

  • Scaling organization operations to meet global demands

  • Rapid expansion in emerging and developing economies

  • Research and development

  • Adopting distinctive market campaigns.

  • Leveraging on the bargaining power of consumers through affordable and competitive prices (Apple Inc., 2014).

Domesticand global environments

Applefaces stiff market competition both locally and internationally frommajor industry rivals such as Samsung, Nokia, Hewlett Packard, Sonny,Erickson, LG and Dell among others. There are vast markets atdomestic and global level for Apple’s product and especiallyemerging economies. However, increased competition in the industry,changing consumer preferences, inflation and legal issues are themain challenges in the domestic and global market environments. Forinstance, recently Apple was faced with criticism for its globalbusiness strategies as well as labor practices that involved workerspoisoning and child labor. Apple Inc. has been engaged in severallegal tussles with its main competitors for patented rightsinfringement. The firm has also upgraded its products in line withenvironmental requirements (AppleInc., 2014).

AppleInc. Mission and vision

Thefirm mission is the commitment to environmental conservation,wellbeing of its staffs, customers and the general community acrossthe globe. This is achieved by integrating the firm long-term goalsof technological innovative products and services that conserve andenhance the quality of lives for future generation (Hill&amp Jones, 2013).The firm vision is to promote technological development in allsectors among its product users. This vision is aligned with the firmgoals of enhancing product penetration in all sectors and market(AppleInc., 2014).

Internalcapabilities for both Apple

Themost influential internal capability at Apple Inc. is influenced bythe leadership. The firms’ business model reflects the aspirationsof the leaders. It is under the leadership of Steve Job and now TimCook that Apple has made significant strides in the production ofinnovative and unique products. The leadership has also influencedthe organization structure and overall work performance. The businessstrategy adopted by the firm through partnerships, acquisitions andvertical integration enhances Apple Inc. have a competitive edge toits competitors (AppleInc., 2014).Applehas a committed research and development approach that enables thefirm to continuously design unique brands that do not match withthose of its competitors (William,Perrault &amp McCarthy, 2006).In addition, Apple develops most of its products components and thisenhances its competitive edge through product differentiation in themarket (Hill&amp Jones, 2013).Furthermore, Apple well-articulated marketing strategy and itsunique, innovative products enhance its brand loyalty among its maincompetitors.

SWOT(Strengths, Weaknesses, Opportunities, and Threats) analysis.

Strengths

Applestrength is pegged on its brand differentiation strategy this hasenhanced the firm have an established market share as demand fortechnological digital applications continue to grow. In addition,Apple Inc. has brand reputation owing to its technologicaldifferentiated strategy and well-managed product marketing campaignsteams (Hill&amp Jones, 2013).Although Apple does not have the largest budget for productmarketing, the firms advertising budget is the best managed among itsrivals (AppleInc., 2014).In addition, Apple Inc. is the leading innovator in informationtechnology and telecommunication devices and services. The firm has afair number of retail stores in major cities as well as online retailstores. This online customer interaction makes the firm have acompetitive niche among its competitors. Apple Inc. is faring wellfinancially compared to most of its competitors. For instance in2013, its global revenue totaled $170 billion with the firms brandimage surpassing that of Coca-Cola (AppleInc., 2014).

Weaknesses

Apple’sproducts and services are indisputably expensive compared to those ofthe competitors like Samsung. This has been critiqued by analysts whosee the firm as myopic to competition and shrinking market in theface of stiff competitors (Hill&amp Jones, 2013).Another notable weakness of the firm is the product incompatibilitywith software from different companies. For instance, the iOS and theOS are not like the Microsoft OS, which makes clients buy otherproducts that allow compatibility with other different products.

Thefirm has been involved in unhealthy tussles with other firms forallegations of patent infringement. This is detrimental the companybrand image and financial status (Hill&amp Jones, 2013).Another weakness includes declining gross margin, declining marketsand defects on the new products. For instance, the iPod and theiPhones had faults during the initial release in the market. In thesame line, most of the firm products lack the physical QWERTY keypadwhich is vital for users typing long messages or in the event ofscreen sensitivity failure.

Opportunities

Apple’sopportunities in its innovative products launch such as iTV and thehighly demanded iPhone 5 and iPad mini. These products have increasedthe firm’s market share. Emerging economies have rising demand fordigital products with innovative applications like Apple’s. Thismakes the firms product demand high it is estimated that mostChinese prefer Apple’s sleek mobile and iPad tablets than thesupply in the market. Other emerging economies like Africa are goodopportunities for Apple products (AppleInc., 2014).

Threats

Increasedcompetition, technological changes and changing consumer preferenceare major threats to Apple’s business (Hill&amp Jones, 2013).Others are increased and uncertain tax, inflation, a strong dollarand rising labor costs. Product imitation by competitors isthreatening the firms’ business and the quality of products. Forinstance Erickson, LG and Samsung are alleged to have imitatedApple’s iPhone design and functionality. In some cases, majorrivals to Apple are forming collaborations to offer more competitiveproducts than those of Apple (AppleInc., 2014).

Strategiesadopted by Apple to enhance effective operations amid diverse globalcultures

Applehas one of the most diverse workforces pooled from talented personsacross the globe. The company leadership adopts a flat organizationalstructure in which each is left to make technical leadershipcontribution to the firm innovativeness goals. Apple’s top andinternal leaders foster employee individuality and excellence. Inaddition, the firm has an excellent employee development program thatfosters diversity and collaboration among the staffs (Hill&amp Jones, 2013).In most of Apple’s projects in different regions lower candorworkers are drawn extensively from a pool of local specialists. Thisenhances project acceptance, diversity and innovativeness in thecompany (AppleInc., 2014).

Internalleadership strategies taken to discourage unethical behaviors atApple

Apple’scompany mission, vision and leadership are to develop and enhance thebest character among its employees. The firm leadership ensures thatall operations run as per set regulations in regard to productstandards, consumer and employee safety and promoting a positiveorganizational culture among its employees. In particular employeesare motivated to contribute positively to the organization goalsthrough their services (Hill&amp Jones, 2013).Apple has a strict accountability regulation employees are heldresponsible for any gross negligence under their project. Forinstance, the iOS vice president was forced to resign after he failedto sign an apology for numerous errors in Maps App. Project design(AppleInc., 2014).In addition, all Apple employees are specialists and are not assignedfunctions beyond their expertise to limit ethical behaviors. In othercases, like China factories, workers are forced to sign legaldocuments as a guarantee that they refrain from consuming killerchemicals.

Verticalintegration

AppleInc. has a vertical integration in which most of the firms productsare manufactured by the subcontracted third party firms. These firmsproduce and design Apple’s products under its design andspecifications. In this way Apple maintains the full control of themanufacturing process (Levitt,1983).In addition, Apple manufactures most of its components for thecompany’s products, and this helps it have unique brands among itsrivals (William,Perrault &amp McCarthy, 2006).For instance, A4, A5 processors for the iPad and iPhones are producedpropriety by the firm. In these ways, vertical integration approachallows the firm controls its innovation, product design and decisionmaking (Hill&amp Jones, 2013).

Apple’sorganizational competencies

Apple’sorganization competency is based on the firm’s innovativeness,business strategy, influential leadership, research and development.Apple is committed to consistent research on product design, marketand customer preferences as a strategic approach of increasing itscompetitiveness in the market (Levitt,1983).In addition, Apple has formed mergers, acquisitions and partnershipwith larger firms in its quest to improve its product uniqueness andmarket penetration (Hill&amp Jones, 2013).In the same line, the firm has developed an organization structurethat motivates and enhances the productivity of its employees (AppleInc., 2014).

Recommendationfor new business strategy Apple

Customerfeedback and consultation

Applecould have a more competitive edge if it adopts customer feedback andconsultation strategy. This is important because customers are theusers and have a quality experience on how the products or servicescould be improved (Levitt,1983).For instance, the firm could institute an innovative mechanism inwhich a client product is designed and customized as per theirspecifications. In this way, customers would make orders on whatfeatures they want their products or devices have. Furthermore,customer feedback is important in getting timely information onproduct success or failure (Hill&amp Jones, 2013).Customers should be able to consult on the problems encountered asthey use the products whether the products are in warranty or not.

Recommendationfor Apple Inc.

Waysin which Apple could change its corporate strategies andorganizational structure to improve business performance andcompetitiveness in the industry.

Increasemarket expansion of Apple stores

AppleCompany needs to expand its market penetration by increasing physicalstores across the globe. Currently, the firm has dismal physicalpresence, and this is detrimental to consumers who need constantconsultations on products problems. Furthermore, physical retailstores increase the firms market, brand image and reliability whichare important customer expectations (Hill&amp Jones, 2013).

Researchand development

Appleneeds to invest optimally in research and development. Innovativenessand uniqueness are only achieved through extensive research on futurebusiness activities, technology and consumer preferences. Research isguided by the fact that, products that are fashionable to customersmight be regarded as obsolete in the future. Likewise, it is throughresearch that the organization learns more on maximizing market shareand pricing strategies (Levitt,1983).

Increaseits corporate social responsibility

Corporatesocial responsibility is essential for any firm that wishes to exposeits brand to the public. Apple has less known domestic andinternational CSR, and this could be affecting its market share aspeople in remote regions do not know of Apple’s products (Hill&amp Jones, 2013).The firm needs a strong CSR that will rival the competitors’ image.Corporate social responsibility is a multifaceted approach thatincreases organization market, advertising as well as increasing thefirm’s sales (AppleInc., 2014).

SAMSUNGCOMPANY

StrategicAnalysis of Samsung

Briefoverview

Samsungis as South Korean multinational firm with numerous affiliatedbusinesses. The firm was founded in 1938 by Lee Byung-Chul. In thelate1960s, the firm focused on electronic products and theconstruction industry. The firm is now focused on developing mobilephones electronics. Samsung has other subsidiary industries inengineering and insurance under the brand name Samsung. The companyhas a number of growth strategies in the world through itselectronics products. In 2012, Samsung was named the best mobilephone maker globally. The firm has also engaged in extensive researchprojects aimed at boosting the firm innovativeness in the electronicmarkets (Levitt,1983).However, recently the firm has been engaged in patent wars with Appleand was fined approximate $1.05 billion for patent infringement andimitating Apples smartphone innovation.

Leadershipand management

Samsungcapitalizes on its sourcing strategy for creative and talentedmanagers to spearhead the firm’s innovativeness, organizationculture and improving the employees’ welfare. The firm is managedby an independent board of directors who spearhead the company’spolicies. In addition, the firm has an over acting Vice-chairman, whoalso doubles as the company’s CEO. Samsung Corporation has severalexecutive teams managing various functional areas (William,Perrault &amp McCarthy, 2006).

SamsungCurrent business strategies

Thecompany main strategies are increasing its advertising campaigns toenhance its brand image and market amid rising rivalry andcompetition from major competitors such as Apple. For instance in2013, the firm announced the most expensive budget for advertisingand marketing drives. In addition, the firm has spent heavily inresearch projects aimed at increasing its product diversity anduniqueness (Levitt,1983).Another business strategy is increased acquisitions and partnercollaboration in the production of mobile products. Samsung hasacquired firms like the US SmartThings Co., Neurologica, Queitsideand NVELO. All these acquisitions are in line with the firm’s needfor research, product diversity and market.

SamsungDomestic and Global environment

Samsungis the largest mobile phone electronics supplier in the world. In2009, Samsung held 13% of the global markets and the firm is assessedto have a larger market share. The firm has also grown expansivelylocally and at international level as evidenced with its largeinvestment projects abroad. Samsung business environment cannot beaccurately predicted as it keeps changing due to technologicalchanges, competition and market changes. This is where the essence ofinnovation and brand uniqueness should be adopted to influence globalmarket environments (Hill&amp Jones, 2013).

SamsungCo. mission and vision

Thecompany mission is to develop talents and technology in line withcreating elegant products and services for its consumers and thegeneral global society welfare. However, the company’s mission andvision is weak in explaining the company’s core objective to itsstakeholders and in line with its overall corporate strategy (Hill&amp Jones, 2013).

SamsungCO. Internal capabilities

Themain source of Samsung’s capability lies in its innovativemethodology in all scopes of operations. For instance, Samsung hasapproximately 9% display markets globally unlike its competitorsthis creates more market opportunities for the firm. In addition, thefirm re-trains employees as a way of enhancing skills and promotes atechnological culture rather than copied ideas (Levitt,1983).Samsung also invests heavily in changes and risk ventures.Furthermore, internal competition between the firm subsidiarycompanies is encouraged to foster innovativeness. The leadershipfocuses on individual employee decision-making and promoting a commonorganization culture to enhance a wider coherent strategy (Hill&amp Jones, 2013).

Samsung’sSWOT Analysis

Strengths

Samsungproducts are designed in an open design that enhances productcompatibility with others from different firms. This gives Samsungproducts a competitive edge against Apples closed system devices. Thefirm is also competitive in its research and innovativeness in theproduction of consumer electronics (Samsung C&ampT Corporation.2014). The firm has low production costs compared to its rivals, hasmore concern for environment. Samsung offers low margin has enhancedits competitiveness in the market thereby increasing its sales volumeunlike Apple’s overpriced devices (Hill&amp Jones, 2013).

Weaknesses

Samsunghas been criticized for patent infringement, and this is detrimentalto the firms overall brand image and sales. The firm lacks owncomponents for its products such as OS and other applications thismakes it dependent on other firms. In addition, the firm has poorpricing strategies leading to low margins. Over diversification inmany products limits the firm’s unit product brand recognition(Samsung C&ampT Corporation. 2014).

Threats

Samsungis operating in a market saturated with smartphone electronicsespecially in developed economies like United States and Europe. Thisis detrimental to the company market share and expenses used inmarketing campaigns (Levitt,1983).Another threat is rapid technological changes in the market this isa serious problem for the company as new technological changes meanmore cash is needed for redesigning and developing products thatmatch the technology in the market without delay. Patent infringementhas proved to be a detrimental problem to the company’s productsand market share (Samsung C&ampT Corporation. 2014). Lastly, pricewars have led to a reduction in profit margins, and this could affectthe firms overall productivity (Hill&amp Jones, 2013).

Verticalintegration

Samsunghas a well vertical integrated approach through in-house Firmwaredesign. The firm designs its firmware software for product testingand problem fixing in its range of electronic products. Thesemaintenance software programs help the company customize itsproduction processes. The overall effect of this integration ishigh-performance products that are reliable and cheap (Samsung C&ampTCorporation. 2014).

Samsungorganizational competencies

Samsungorganizational competence is pegged in its organizational structurethat promotes creativity among its employees. In addition, thecompany invests heavily in research and marketing for its products(Samsung C&ampT Corporation. 2014). The firm has an elaborateleadership structure that enhances the firm continued growth andproductivity. In addition, the company has partnered and acquiredother subsidiary firms for effective product development andmarketing (Levitt,1983).The firm low pricing, product innovativeness and marketing has madethe company brand image known across the globe. Unlike itscompetitors, Samsung has well-established retail outlets therebyincreasing its market physical presence (Hill&amp Jones, 2013).

Internalleadership strategies taken to discourage unethical behaviors atApple

Employeesare re-trained to as part of enhancing their knowledge on thecompany’s ideal culture in the production. In addition, Samsung hasput in place an elaborate mechanism through which employees’competitiveness is continuously developed. For instance, the companygives employees adequate work life balance as a way of enhancingtheir wellbeing (Hill&amp Jones, 2013).The firm has an organization culture that allows workers pursuecreative ideas, enhance their professionalism and become innovative.The overall objective is to enhance employees’ professional ethicsin their service provision.

Recommendationfor new business strategy for Samsung

Developunit product brand uniqueness

Samsungdiversifies on a wide range of products that limits its focus oncreating a unique brand for its products. The firm needs tostrategize on improving its specific product brands to set them apartin a competitive global market (Samsung C&ampT Corporation. 2014).Most of the firm’s mobile products resemble those of itscompetitors, and this affects its market share (William,Perrault &amp McCarthy, 2006).Unique brands that have different features from those of thecompetitors would increase the firm’s stakes in the market(Levitt, 1983).For instance, Apple has almost monopolized in its latest versions ofiPad tablets, notebooks and iTune applications this has enhanced thefirms brand and market share increase (Hill&amp Jones, 2013).

OtherRecommendations

Researchand Development

Samsungcould improve its product brand uniqueness through research andinnovativeness. It is not logical to imitate the products or servicesof the competitors. Research enhances organizations have vastinformation of improving their products development and overallorganization management (Hill&amp Jones, 2013).

Regulateits pricing strategy

Althoughpricing is a major strategy used in a competitive market, offeringtoo low prices may harm the firm profitability. As stated above,Samsung needs to research well before offering prices for itsproducts. The firm could strategize on making changes on its productsin relation to customers’ needs. However, the prices needs to becompetitive and in tandem to quality products(William, Perrault &amp McCarthy, 2006).

Morecharities and Corporate Social Responsibility (CSR)

Thefirm needs to continue with its CSR and charitable in rural and localareas where the company wide range of products have not penetrated.For instance, the firm could organize education scholarships to lessfortunate kids in rural Schools this would increase the companyadvertisement and marketing rather than focusing its marketing drivesonly urban centers and more developed countries where competition ishigh (Hill&amp Jones, 2013).

References

AppleInc. (2014).Retrieved on September 6, 2014, from https://www.apple.com/live/

Hill,C., &amp Jones, G. R. (2013). Strategic management: An integratedapproach (10th

ed.).Independence, KY: Cengage.

Levitt,Theodore. (1983). The Globalization of Markets. Harvard BusinessReview.

SamsungC&ampT Corporation. (2014). Sustainability Report: create theFuture, Lead the World. Retrieved on September 6, 2014, from

http://www.samsungcnt.com/data/cnt_pdf/2014_report_EN.pdf

SamsungCo. (2014). Management About Samsung. Retrieved on September 6,2014, fromhttp://www.samsung.com/us/aboutsamsung/management/index.html

WilliamD., Perrault E. &amp McCarthy J. (2006). Marketing Globally -AManagerial Approach. Tata McGraw-Hill Publishing Co. Ltd.