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Apple Inc. and Samsung Electronic: A Comparative Strategic Analysis

By:   •  July 22, 2019  •  Case Study  •  1,493 Words (6 Pages)  •  619 Views

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Apple Inc. and Samsung Electronics: A Comparative Strategic Analysis

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Apple Inc. and Samsung Electronic: A Comparative Strategic Analysis

The success or failure of an enterprise is partially dependent on understanding the business’s legal, economic and social environment as well as its management, operation and financial issues. Companies can best understand and address these issues by conducting a strategic analysis using various approaches such as PESTLE or SWOT analysis (Chen, 2015). Drawing from the strategic plan and PESTLE analysis of two technology giants, this paper compares and contrasts the business environment of Apple Inc. and Samsung and further explores their management, financial and operational issues.

Analysis of Legal, Social and Economic Environment

Legal

On April 2011, Samsung was sued by Apple Inc. for imitating some of its products including iPhone and iPad. In 2012, Apple won the case and Samsung was forced to pay heavy penalties to its counterpart technology giant. This case affected the perception of the public about the company as a whole and many consumers started to question the company’s strategies (Bosker & Grandoni, 2012). Some technology enthusiasts commented that this lawsuit was the primary reason why the company expanded its base of operations to emerging and developing markets.  

Social

Although Samsung is a global company, it has made an adjustment to act as a local business when operating in the emerging markets. Furthermore, the company has also made major changes to match the ever-changing needs and preferences of consumers in these new markets. Primarily, this company operates in a market niche that is greatly influenced by the lifestyle choices and preferences of their consumers (Chen, 2015). However, one should not that socio-cultural factors differ in each country. Therefore, Samsung had to reorient its strategies according to the country it was carrying its operation.

On the other hand, Apple has been making several changes so that it may meet the expectations of its customers. For example, Apple has made various acquisitions and alliances over the years such as Prime Sense, Tipsy, Motorola, AT&T among others. Consequently, the company has had a considerably large increase in sales which influenced its decision to make major investments in Asia particularly India. This move was a demonstration of the company’s justification for its growth strategy.

Economic

Samsung had to reconsider its economic factor since the opening up of some developing markets in different regions of the world. The recent global economic crisis also affected Samsung’s goal of expanding its global market. Since the Great Recession’s climax in 2008, the purchasing power dropped significantly thus the technology giant was forced to find a profitable solution. In the recent years, Samsung’s macroenvironment of operation was characterized as volatile and uncertain thus the company had to change the direction of its strategies. In response to the volatility of the market, the company’s leader sought to expand its operations to new markets (Chen, 2015).

Similarly, Apple Inc. was also greatly affected by the outcomes of the great recession in the recent years particularly among the world’s major economies such as the UK. These countries were the major market for Apple products and when unemployment rates increased, purchases significantly dropped. The effects of this recession are still felt among major economies and are likely to continue for a few more couples of years. Consequently, Apple is led to tougher economic situations (IMF, 2013). Additionally, the price of Apple products, shipping fees, and profit margins was also negatively affected by stringing dollars.

Analysis of Managerial, Operational and Financial Issues

Organizational culture and Performance

Apple’s organizational culture is critical to its success. The company has a culture that focuses on employee development and guiding them towards rapid innovation. Products such as the new iPhone X, Apple watch, and upgrades on Siri (Apple’s AI) are some of the observable effects of the company’s culture of rapid innovation. Conversely, Samsung has an organizational culture similar to an owner-management system. This culture realizes both positive and negative effects on the performance of employees.  Its seniority-oriented culture prevents junior employees within the organization to effectively communicate new ideas. However, the company still prides itself on a culture that promotes employee loyalty and faster decision making (Chen, 2015).

Promotion Policies

The two companies have an almost similar promotion policy with minor differences. Apple’s promotion policy is dependent on the company’s ability to anticipate the requirements and need of customers. Samsung’s policy is dependent on value creation activities and business processes to meet user needs (Gupta, Kim & Levine, 2013).

Strategic Decision Making

Major Decisions at Samsung are based on the business principles and management philosophy of the company. This method of decision making is meant to ensure that there is the mutual prosperity of the company’s stakeholders. The Board of Directors consisting of 13 Directors, six of whom are executive and 7 independents, oversees all critical decisions made by Samsung.  

Decision-Making Style

Samsung’s has a fast decision-making process because of its authoritative leadership style. Therefore, the company utilizes the directive style of decision making. Conversely, Apple has a slow process of decision making due to its diversity in executive leadership. It uses the analytic style to make decisions.

Management Style

Samsung has made major management style changes since it began in the 1960s. The company currently focuses on excellence in product design with the aim of differentiating it from that of the competitors. The improvements in design capabilities are not only based on the systems but also the people and processes.

Leadership Style

The current leader of Apple Inc. Tim Cook has been described by several research articles as a transformational leader one capable of building trust with the employees, encouraging employees and having emotional intelligence (Giachetti & Marchi, 2017). This leadership style has thus contributed to improved performance by Apple’s staff in all its branches around the globe. Samsung has a more authoritative leadership style. Most of the executives are Korean nationals (Carani, 2012).

Communication Style

Apple’s communication style, particularly between employees and the staff, is formal yet accessible within all management levels of the organization. Primarily, the company invites the employees to share ideas, opinions, and concerns while still maintaining boundaries between management and staff. This style is founded on Steve Jobs principle of respect for the management. Samsung has quite a different approach. Communication is slightly varying through the different management levels. An employee at a lower rank is welcome to share their ideas and concerns with the management directly above them. This management style suggests that the topmost management level of Samsung cannot be easily accessed by a staff in the lowest level (Chen, 2015).

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