Apple Inc. was incorporated in the year 1976. Likened to one of the giants in Silicon industry, it designs, builds and does advertising of mobile communication, media devices, computers and handy music players. It also merchandises a range of linked software, accessories, facilities, third-party digital content, apps as well as networking solutions. It is spread all over Europe, America, China, Japan etc. Some of the most famous Apple products are iPhone, iPad, Mac, Apple Watch, Apple TV etc., several specialized software and apps plus a range of accessories, service and support services. It stands #9 in Global Forbes List and is worth US$752 billion as of today.
Apple enjoys its status because of its thirst to always innovate. This provided it with the needed competitive advantage. Let us discuss the competitive strategy of Apple using Porter's five forces to understand better. This analysis shows that industry competition and bargaining power of buyers are two of the strongest forces influencing Apple's profitability. Whereas, bargaining power of suppliers, availability of substitute products and the threat of new entrants are comparatively weaker rudiments amongst industrial forces. To elaborate, let us evaluate the competition in the industry for Apple. The competition is immense with competitors like Google, Samsung, Amazon etc. this is because the cost to switch brands for the customer is not much, example a customer opting to but Amazon Kindle instead of iPad. Apple has however built a unique product and made it synonymous with ‘posh image' with a lot of celebrity endorsements and offering niche product (Rao, 2017). The bargaining power of buyers is high because of low switching costs among its competitors
Headquartered in Seoul, Samsung is a giant group of companies from Korea. It began as a trading company in the late 1930s and entered the electronics business only in late 60s. it is world's second largest IT company, Samsung's revenue itself comprises of the major chunk of total South Korea's GDP. Samsung has made a grand entry in mobile phones industry and gives a strong competition to its competitors especially Apple, Microsoft and Google.
Samsung has adopted the red ocean strategy to gain a competitive edge as part of its strategy (Lee, 2014). The red ocean strategy means a brand entering the market and flooding it with own products at a comparatively cheap price. This helps undercut its competitors. Samsung is also known as an innovative tech company and unlike Apple does not take tiactually helped Samsung gain a position and capture market in a short duration of time. Using this strategy, Samsung has actually made its markets by compensating for deficits in Apple products and offering their own products at cheaper price. Building on the weakness of competition has always been Samsung’s strategy but this is why it is also dragged to court over patent conflicts (Kim, Park and Kim, 2015). Also, this makes Samsung stand out as a brand that is not as ‘innovative' Even for launches, it always waits till the competitor releases their version. Only then, it launches its own product which is usually an improvisation on the competitor product. Samsung has however changed its strategy to stand out as an innovative company itself. It has invested quite a sum of money into R&D. Secondly, it has also invested heavily in advertising as part of brand recognition. The more one sees a name again and again more strong the memory is on the subconscious mind. Third Samsung has brought out products of all price ranges (Nagle, Hogan and Zale, 2016). This is to cater to small, medium and premium product buyers. When compared this to Samsung's competitors, it is seen that most of its competitors are heavily into premium segmented products only. This is where Samsung's strategy works. The strategy has assisted Samsung to overtake Apple in smart phones market (Cardoso, 2017). A point to be considered here is that some customers, especially in the US perceive low-cost products as inferior products which stop Samsung from getting more customers because of its strategy to cater to all kinds of customers. It needs to build specific strategies to attract premium customers. Also, its plans to invade Apple's market by coming up with the innovative product instead of ‘copycat' products is also a good move to strengthen the company’s position in the market built and monopolized by Apple for a long time (Karhu, Tang and Hamalainen, 2014). Still, they should emphasize more on innovation and quality to make its hold on the market stable. Also, it recent fiasco with Note 7 did not go down well with its followers and Samsung lost a lot of hard work, revenue and most importantly, brand image. It should probably have a stronger quality check team too.
Rao, C.B., 2017. Competitive strategy. Notion Press.
Nagle, T.T., Hogan, J. and Zale, J., 2016. The Strategy and Tactics of Pricing: New International Edition. Routledge.
Lee, F.Y., 2014. Competitive Advantages of Smartphone Industry in 4G Era-A case study of SAMSUNG and SONY.
Karhu, K., Tang, T. and H?m?l?inen, M., 2014. Analyzing competitive and collaborative differences among mobile ecosystems using abstracted strategy networks. Telematics and Informatics, 31(2), pp.319-333.
Kim, S.Y., Park, S.T. and Kim, Y.K., 2015. Samsung-Apple patent war case analysis: focus on the strategy to deal with patent litigation. Journal of digital convergence, 13(3), pp.117-125.
Lee, J., Lee, K. and Heo, J., 2015. Supplier Partnership Strategy and Global Competitiveness: A Case of Samsung Electronics. Eurasian Journal of Business and Management, 3(4), pp.1-12.
Cardoso, E.A.R.P., 2017. Examining the differences of the internationalization strategies of two of the major brands in the smartphone industry-Apple inc. versus Samsung electronics (Doctoral dissertation).
Straker, K. and Wrigley, C., 2016. 11. The role of emotion, experience and meaning: the comparative case of Apple and Samsung. International Perspectives on Business Innovation and Disruption in Design, p.231.