The success of any telecommunication firm largely depends on the strategic analysis it adopts with a number of other related factors. There are several analytical processes that the two major telecommunication companies, namely Samsung and Apple have embraced that have enabled the two companies experience a dramatic growth. This research paper will explore three major analytical processes; Yip’s Drivers of Internationalization, Johnson’s Culture Web and Porter’s Generic Strategies with respect to the Samsung and Apple, two leading phone manufacturers. The paper will review the application of the three processes in the companies’ performance and management styles as well as the challenges that may have been encountered during the implementing process.
Yip’s Drivers of Internationalization
Yip classes four sets of industry globalization drivers that create a potential for each industry to become more global as a result of the prospective practicability of a comprehensive approach to strategy. The four sets include market drivers, cost globalization drivers, competitive and government drivers (Lee, 2014, p.117).
Market drivers describe how consumer behavior and distribution patterns evolve, including the degree to which consumers’ demands converge around the world, consumers’ purchasing power and the channels of distribution globally (Qiu and Wan, 2014, p.59). With a lower level of hardware differentiation, Apple and Samsung, the two leading companies have discovered the importance of marketing their products worldwide. Consequently, the two are putting much of their investments in improving their brands and advertising their products globally. This was initiated by Apple when they made the iPhone and it has been intensified by Samsung, thus presenting a real obstacle to flourishing of the other phone manufacturers in the world (Niu and Cui, 2014, pp.68).
Consumers are increasingly becoming knowledgeable about technology in both the software and hardware components of the smartphones and computer devices manufactured by these leading companies. Developing nations are rapidly growing and the demands for high quality technological phones are rapidly mounting in these countries (Shen, 2010, pp.182). To respond to these changes in consumer demand, Apple and Samsung have been reducing prices of their products as the technology becomes more affordable. For instance, Samsung has significantly reduced the price of one of its famous product, Galaxy S5, by more than a tenth of its original price in order to make it more affordable. This made Galaxy S5 to be among the most popular devices across the globe. This has resulted in higher sales and more revenues (Steinwart and Ziegler, 2014, pp.69).
There has been a change in taste and preferences as far as smartphones are concerned. Most people globally prefer some specific features in phones rather than the phone manufacturer. Recent studies have shown that most customers are opting to buy phones with better camera clarity. This could be explained by the increased preference to have a more portable and convenient camera rather than having to carry a digital camera in their daily lives (Omair, Amin and Farooq, 2014, pp.160).
The two companies seem to be using a mix of segregation strategies in establishing their retail shops in different parts of the world. Apple targets all age groups in all the countries where they establish their retail stores. Considering the fact that Apple products are relatively costly in comparison to those offered by its competitors, the company is mostly targeting the high income earning segment of the population. This can be proven by the fact that most of Apples retail shops with full customer care support are located in major cities around the world and in modern quality shopping centers such as shopping malls (Smyth, 2012, pp.112). This has contributed a lot in building a strong brand for Apple, thus leading to more customers’ loyalty and increased sales volume.
Samsung and Apple have portrayed a desire to reach a larger market by expanding their business to most nations (Finkle and Mallin, 2010, pp.49). For instance, Samsung has recently opened new branches in more than 58 countries. Additionally, Samsung has greatly invested in infrastructure in these countries. for example, Samsung bought a large parcel of land in South Africa where the company is planning to build a large plant. The company is planning to use the proposed plant as the assembling or manufacturing center for devices so as to reach a wider market in African countries (Logman, 2013, pp.663).
Competition drivers are well-defined by the strategies adopted by the rival firms, such as the extent to which competitors globalize their operations to reach a large geographical market (Lee, 2013, pp.450). Samsung and Apple have a great desire of dominating the entire telecommunication industry by adopting various strategies aimed at improving their services and product quality. They have a solid worldwide existence with numerous retail shops across the globe, thus making it hard for new entrants to invest in the telecommunication industry.
The corporations are investing in research and innovation due to the current competitive business environment (Chen and Ann, 2014, pp.20). Apple, for instance, its approach to competition is mostly based on investing in producing high quality products and maintaining their product loyalty more than their competitors. On the other hand, its competitors such as Samsung are focusing more on diversifying their product’s features with an objective of reaching out to a larger market (Cusumano, 2013, pp.30). For instance, Samsung is currently introducing a wide range of smartphones globally with different features such as size and color, an aspect that has made it one of the leading companies in design features. Samsung was among the first companies to produce dual screen phones and it has recently produced the thinnest and lightest note pad ever (Parast, Vanaki and Abdar, 2014, pp.57)..
The two companies’ approach to competition has both advantages and disadvantages to both of them. For instance, Apple excessive focus on producing high quality products has made it lag behind in diversifying its product’s features than Samsung. However, it seems that their approach to competition drivers was well considered because this has not affected their sales as one would expect. For instance, iPhone, one of the most luxurious products manufactured by Apple, comes with only a few diversities in color (Parast, Vanaki and Abdar, 2014, pp.68). The irony in this case is that lack of a wide range of colors makes the few color blending a distinctive feature to the smartphone, serving as a supplementary benefit for increased product loyalty and preference.
Samsung on the other hand has concentrated on diversification of its product and it has been able to reach a larger market by satisfying a wide range of consumer needs (Chi and Tsai, 2014, pp.1000). Their designs are attractive and more stylish, a major reason why the company is growing rapidly despite the ever increasing competition from other companies like Apple. The company has established numerous retail shops and their products are all over the world. This has made the company one of the best sellers; Samsung reported a profit of more than $ 7 billion after selling 56.3 million phones by the third quarter of the 2012, beating its rivals like Apple in sales volume (Daily Tech, 2012, p.89).
Governments’ rules in various parts of the world such as China, Europe and America are directly affecting the telecommunication industry. The environmental policies, countries employment policies, as well as taxes are affecting the phone manufacturing companies (Ebling and Baker, 2012, pp.45). However, these multinationals ends up shifting the burdens laid on them by the policies set in various countries to their consumers by increasing product prices. Political and legal drivers in different parts of the world have greatly affected the operations of these companies (Kraemer, Linden and Dedrick, 2011, pp.16).
The strong competition between Apple and Samsung has attracted political interest where it involved administrations from different nations. For instance, the US government influenced the European nations to block Samsung market in Europe with the primary reason being to protect Apple, whose headquarters are based in the USA (Daily Tech, 2012, p.99). Consequently, Samsung was compelled to withdraw its Galaxy tablet in countries such as Germany. This resulted to a dramatic reduction in Samsung sales in the European countries.
Globalization of production methods enables firms to choose engaging or value adding activities all over the globe with respect to regions where the benefits are to be experienced. In most nations, domestic markets cannot be huge enough to realize large economies of scale and their scope. The two international companies have expanded and coordinated their internal operations to increase their sales through a combination of manufacturing, reduced distribution costs and economies of scale. The objective of Samsung in joining many markets and selling their products in different countries has resulted to an increase in profit, thereby reducing their cost per unit in production and better response to changing market prices (Parast, Vanaki and Abdar, 2014, pp.69).
Johnson’s Culture Web Analytical Process
Company’s culture has a huge impact on the firm’s productivity and the working environment. Much research has been done to identify what makes an operating company culture and how to go about it if the culture is not effective. The culture Web, which was developed by Gerry Johnson and Scholes provides a realistic approach at changing and improving the organization culture (Hane, 2012, pp.29). It states six interconnected aspects that comprise what Johnson and Scholes described as the pattern of work environment. These foundations include; rituals and routines, symbols such as company’ logo, power structures which may refer to the main leaders of the company, organization structure, and the control systems in the company (Masi, 2009, p.71).
Samsung and Apple CEOs advocate for continual changes that are aimed at improving the quality of their products which has seen the two hold regard for their innovations and quick response to the ever diverging needs of consumers. This has made the two business organizations to be in the glare of publicity in the telecommunication industry. For instance, Samsung had a desire to prove itself as a global company; the CEO Kun Lee provided the company with an outline to drive the group into new management in the 21st century. The plan was a declaration form which clearly integrated the intellectual capital, technological innovations and the employee empowerments plan. Apple on the other hand has a stable and effective performance goal. The firm introduced the famous ‘think different’ campaign in 1997 with an objective of changing the globe in the 21st century (Masi, 2009, p.74).
The CEO main ideologies were effective administration and productive transformation. As for change, all employees were encouraged to adopt positive change before conveying the new knowledge into the organization (Smyth, 2012, pp.117). Consequently, the employees in Samsung shifted their focus to quality production, upgrading of their existing products, providing better services to their clients and improving the company’s working culture which to a large extent has benefited the whole world.
Some key resources of Apple Company include a team of designs, innovative software and hardware engineer and exemplary leadership. The company for a long time had been under the management of Steve Jobs who led the company to its current competitive position in the market. He esteemed creativity and sets the company standard higher for everyone His exemplary leadership left the firm with defined unique products such as ipads, iPods and iPhone 3GS hence leaving it at a good path to advance in its footpath of innovation (Masi, 2009, p.76).
Apple leadership has adapted to different cultures by making itself visible with advertising and lowering significantly the price of their products (Smyth, 2012, pp.119). An example of Apple reducing their prices is the introduction of the iPhone 5c which previously had a version memory chip and plastic phone casing instead of the metal protective phone covering. Unfortunately, the company had problems in raising huge returns due to their exceptional pricing in that year.
Samsung has continually thrived in their culture of lowering the cost of their production to increase sales. Having competitive prices globally has made the company to be one of the leading phone manufacturers in the international market. The company has a lead worldwide; they have many products and equipment such as televisions and computer hardware. The firm leads the world smartphone market and beat its rival, Apple by a large scope in 2013 (International Business Times, 2013, pp.104).
Organization and structure
Both companies have two major groups; one concentrates on management and other team specializes in innovation. Apple has an innovative, software and design team, which is empowered to produce high quality products or improving the existing products and services. According to Hane (2012, pp.34), Apple has brought those departments together leading to manufacturing of high quality products such as I pads and iPhones widely used in the contemporary world.
Samsung has different businesses within one large corporation. Each firm specializes in its own line of business and acts as an autonomous company. For example Samsung has Samsung Electronics, which includes Samsung Information Systems that is responsible for hard disk drive, digital TV technologies and printer software (Challis, 2010, p.59). Samsung Information Systems are just one of seven companies under Samsung Electronics.
Rituals and Routines
Both companies have strong ritual and routine practices in the modern day competitive environment where they follow a selective recruitment process aimed at attracting the most talented and skilled candidates. The candidates must be experts and outstanding in their fields in order to realize the company’s objectives (Challis, 2010, p.68). In the Apple Inc, employees complement their efforts and apply their expertise in business settings. They have a high level of commitment which is followed up by scientific advancements undertakings like research.
Both companies have similar routines in provision of services (Ananthanarayanan, 2013, pp.187). All the products sold by Samsung and Apple have a warranty which may cover the product for one, two or more years depending on the type. The two companies acknowledge and respect the consumer safeguarding laws in the country of purchase. Additionally, they have set customer care centers in all their retail shops, ensuring that their customers’ concerns are addressed efficiently.
Apple and Samsung have a culture that discourages unethical behavior among the staffs. The companies have taken these steps because most productive employees prefer working in a noble business environment and in a company that does not have a bad reputation of breaking laws or being involved in unethical practices (Ananthanarayanan, 2013, pp.187). Ethical behavior in a firm is quite important because the employees will practice professional business ethics in their relationships and also when dealing with customers. For instance, Apple management embraced a code of professional ethics for their staffs. Apple provided resources to increase the awareness of staff rights in various parts of the world. The company has also developed a code of conduct for reporting any unethical behaviors in the workplace (Apple.com, 2014, para1-6).
Likewise, Samsung Company has a code of conduct within the organization, though the company’s image has been tarnished by alleged unethical practices (Byrne, 2004, pp.18). Lately, the company lost a court case with Apple Incorporation for alleged patent violation. In this case, the company’s employees appeared to be acting in an unethical manner to satisfy the company’s management goals of having new products and increasing their revenues.
Akim and Tielung (2014, 152), suggest that product loyalty and good reputation from customers is a vital resource for the success of any business. Apple’s strong corporate culture motivates its workers to be innovative and be creative in developing concepts for its future goods. Apple product has a good reputation to an extent that when people buy their products, they feel exceptional, complete and endowed (Challis, 2010, p.78).
Apple Inc., has introduced online social networks where customers are sharing their experiences with each other about the products they have purchased. This has acted as link to building good relations with its customers and increasing knowledge about Apple devices globally. The company also gets a chance to get direct comment from their clients (Chang, Kim and Joo, 2013, pp.32). This has enabled the company to continue in enhancing the quality of its devices (Chang, Kim and Joo, 2013, pp.91). The corporation has managed to retain a better reputation among its customers than its business rivals such as Samsung and LG.
Porter’s Generic Strategies
The Porter’s Generic strategies define how a firm pursues its competitive advantage across its line of specialization (Ezeh and Al-Azzawi, 2012, p.115). There are three generic approaches which include lowering costs, differentiating a product and market focused strategies. In this strategy, business managers aim at producing goods at a lower cost and selling them at competitive prices. Product differentiators purpose to be exceptional from their rivals by embracing endeavors such as having high expenditures on research and innovation in order to have a competitive advantage.
At the beginning, Samsung started in a different industry in China before embarking in telecommunication where they invested in low cost memory chips and LCD displays for colored screens (Akana eta al., 2014, p.86). The Samsung group adopted the cost leadership business model because it was aimed at producing high quality affordable products. According to Chi and Tsai (2014, pp.998), the model aims at exploring all the avenues to lowering the prices of the outputs to survive in competition. This has resulted in lower costs of production and lower prices in their products, brand reputation and adoption of modern technology in manufacturing their products resulting in increased sales.
Few of Apples business activities would be used to describe its operation as that of a cost leader. For instance, the company has lowered its supply chain to standardize the production of ipad1 at a slightly lower price (Chi and Tsai, 2014, pp.999. However, most of the activities in the company can be described as those of a product differentiator because its main focus is on producing differentiated high quality products such as iPhones and personal computers such as Mac book. Apple’s competitors, particularly Samsung and Nokia find it difficult to copy the unique products manufactured by Apple. Consequently, the company has retained brand loyalty due to a lot of differentiation activities with less emphasis on prices resulting in incredible revenues (Latif, Jaskani, Ilyas, Babar and Gulzar, 2014, pp.46).
Nevertheless, Apple’s product differential notion may become a challenge because remaining distinctive in the future may be an overwhelming process. The company is facing stiff competition from its main rival, Samsung, despite its products being unique and difficult to imitate (Aggarwal and Arora, 2013, pp.846). Samsung has overtaken the company in terms of sales of smartphones in the recent past. For instance, according to International Business Times, Samsung galaxy S3 is the bestselling smartphone all over the world. Though Samsung has adopted a unique Android operating system, this could be attributed a lot to the cost leadership strategy where the company has managed to offer the Galaxy S3 at an affordable rate for most people in the world.
Apple Inc. has focused more on attracting high income earners through their quality products. Their phones are usually expensive and unique in comparison to its competitors and their retail shops are located mostly in major cities across the world (Hane, 2012, pp.34). On the other hand, Samsung targets all the social classes in any economy. Samsung has a wide range of phones ensuring that each group in the society can afford at least one of its products.
Success of a business organization largely depends on the strategies it applies among other factors. Apple Incorporation and Samsung have accomplished a tremendous growth in the phone manufacturing industry, partially as a result of applying strategies such as Yip’s Drivers of Internationalization, Johnson’s Culture Web and Porter’s Generic Strategies.However, these two conglomerates still have a room for improving their performance across the globe. Samsung can start focusing on improving the quality of its products rather than clinging to its culture of introducing new devices consistently.Apple Inc on the other hand can improve its performance globally by reassessing its marketing strategies and lowering the cost of its devices in order to make them more affordable.
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