A COMPARISON OF THE OPERATION STRATEGIES OF APPLE AND SAMSUNG

A COMPARISON OF THE OPERATION STRATEGIES OF APPLE AND SAMSUNG

Executive Summary

            This report aims to give a comparison of the operation strategy of Apple and Samsung, providing an analysis of their hidden problem. The report also includes a statement of a hidden problem, suggestion solution to the issues, risks as well as mitigation plan. According to the report, both companies are facing a hidden problem, which is the struggle to produce products with fast-changing technology. Apple strives to maintain its high-quality electronics as Samsung struggles to keep up with the pace of technological advancement.

            In the past few years, the consumer electronics market has become heavily commoditized, which has resulted in high competition form firms competing for a market share. Apple has utilized its talented research and development team to position itself its products in terms of performance and reliability compared to other similar products in the market like those from Samsung.  From a broader perspective, the company has set high standards for quality that even the company itself has to perform at level best to maintain the standard.

This report recommendations that the two companies spend on research and development as an investment where they can expect to gain or lose. In some cases, massive investment in research and development does not always guarantee returns. So of the product developed during research might be commercially unsuccessful, even after investing so much in them. Additionally, the report recommends that the company consider producing products that target a broader market.

According to this report, each of the two companies has what makes have a significant market share in a competitive electronic market. Using the 4Vs, Apple products target high-end markets and do not depend on volume to make a profit, but instead on the profit margin. On the other hand, Samsung price its product to reach a broader market, and therefore depend on sales in large volumes to make profits.  However, both companies produce a variety of products like smartphones, computers, and tablets for their customers to choose from. In terms of variance, both companies produce products that vary in color size and shape.

This operation strategy report indicates that the two strategies require a sizable amount of funds to undertake and, therefore. As stated in the report, Apple has already spent 7.6 percent of its revenues on research and development in the first quarter of the financial year 2019. Therefore, the company is required to have an amount of more than 4.2 billion US dollars for research and development. Also, the company needs more funds to acquire software. However, if implemented with a good plan, the company can be able to retain its current position and even gain a broader market. The companies should continuously review their strategic policies to ensure that they maintain the market share.

Introduction

            Over the past decade, there has been a rapid development of science and technology, with electronics becoming an essential part of people’s life. As a result, there are many electronic companies such as Apple, Sony, and Samsung that have come up. Apple and Samsung are two of the most know big electronics companies in the world and are considered the biggest rivals. The two companies are considered pioneers in the technology industry. Both Apple and Samsung produce a variety of electronic products ranging from smartphones, tablets, and computers.  The mobile industry is a very dynamic market with high innovation. Apple Inc., commonly known as Apple, is a global technology company bases in America with its headquarters in Cupertino, California. Apple has grown tremendously to become one of the most iconic companies in the current decade. On the other hand, Samsung Electronics is a multinational company with its headquarters in Suwon, South Korea. Samsung has been able to position itself among the top players in the electronics market.

The Hidden Problem

            Apple’s hidden problem is the rapid change in technology. The recent decade has experienced a dramatic accelerating speed in the development and adoption of technology in different areas. Emerging technologies and the development of computer applications have made the competitive business environment. There are similar products and new technology entering the market, which is a challenge for the company to keep itself in line with the latest technology.  Apple Company faces the problem of adapting to the pace of technological change. The company has been a leader in the computer industry previously, but it has struggled to keep pace in the fast-growing electronics industry recently. In the technology industry, a product can out-of-date in less than a year if there is no improvement done (Gross, 2012).  To survive in the industry requires skills to predict changes and effectively act on the market demand. Judging from the feature of the iPhone 11pro, the company’s radical innovation seems to be running out of steam. The new phone appears to be more marginal than a progressive improvement over its predecessor in terms of physical attributes and technological capability. The high rate of change in technology might hinder the company’s goal to expand the sales of its products as well as create hassle-free products for the enjoyment of its customers.  Demand for better results requires new strategies and technologies that will propel the company to effectiveness.

Similarly, Samsung faces the problem of rapidly changing technology. Rapid technological change involves, among others. A company like Samsung, it has to follow the trend in technology advancement, to maintain its presence in the market. Samsung Electronics has been facing a waning demand in its critical mobile and computer section to increase its efforts to measure up with the world’s fast-growing smartphone technology or risk shrinking its business further. Over the past few years, Samsung has been slow in adjusting its strategy to match the rapidly growing technology (Harjani, 2019). The increasing competitive pressure in the industry implies more challenges ahead. The company has been under pressure to introduce new products or services frequently due to the existence of numerous competitors so that it can maintain its position in the market.

The Decision Matrix

            There are various ways in which Apple Inc. can overcome the problem of striving to create an excellent customer experience. First, the company can develop products and services is that they are superior in design to those available in the market. The developed product is technical progress within the company. This development which would ensure that the company produces good, fast, and low priced electronic products every year, which would create a new market. Top managers are also involved in the development process to ensure that the process runs smoothly. This move will ensure that the company maintains its status in the market as the next-generation technology leader.

The other alternative for both Apple and Samsung is investing more in research and development to overcome the troubling gap between the new technology and how the company inherits it. It is the responsibility of the leaders of the company to spearhead technical innovation into routine use. The companies can spend more funds on researching new developments to make on their products and rise to the challenge. Failure to innovate can put the companies at risk of being overtaken by their competitors.

Competitive Strategy

            4Vs (Volume, Variety, Variation, Variability)

            All operation processes take their input, such as raw material, capital, and time and convert them into output. There are four different ways in which they do this, referred to as the Four V’s, Volume, Variety, Variation, and Visibility.  Most of Apple Inc. product such as the iPhone are high end and target high income. Most of its customers are sensitive to change in price, and growth in volume is limited. Therefore the company does not rely on volume to make a profit but depends on profit margin.

On the other hand, Samsung attempts to make products and services priced to target a different class of customers. It implies that for the company to make profits, it must sell a large volume. Both Apple and Samsung offers a variety of hardware, software, and associated digital services products from which their customers can choose from. The variation refers to the different dimensions of a particular product. The two companies try to maintain their uniqueness as they do not offer in their product. Lastly, Apple and Samsung have variability by having many stores

            Four Perspective on Operation Strategy

            Operation strategy is a top-down reflection of what the business wants. This report examines the four perspectives on operation strategy. The top-down perspective predicts an operations strategy that is associated with corporate strategy through the business strategy of every business unit. Also, it is concerned about how the competitive market environment is changing and action the operation has to take so that it can meet present and future challenges.

For Apple, the Top-down perspective is to regularly and consistently create hardware and software applications. This perspective has helped the company to maintain a vast foundation of customers. For Samsung, the top-down perspective is to offer after-sale services. One of the strengths Samsung has is that it is customer-centric.

Apple applies the Top-down perspective to complete in technological advancement. In recent years, the company has been able to innovate some of its products and compete for will with other similar products. The company repeatedly come up with new products and create a brand new market that never existed. The Top-down approach makes the process fast and more effective. The bottom-up perspective is to research on the user experience and needs for the company to understand what they desire to have. In 2010, when Steve Jobs introduced the iPad, he emphasized on the fact that it was a consumption device first (Bajarin, 2014).

On the other hand, the To-down perspective of Samsung is to compete in the market and become one of the top preferred brands. This perspective has made them try and reach a wind range of the market, with a variety of products.  While the company hoped a looser environment would enable it to stir new ideas, progress has been slow as a result of the entrenched culture of rigid culture (Hyun-ju, 2016). There are numerous cases where company leaders make an executive decision and fail to fall for their consequences.

The finance

            For the companies to achieve the proposed alternatives, financial expense is involved. For Apple, the constant production of hardware and software requires a lot of investment. Although there is no information in the public domain on the amount Apple spends on software, there are complex to develop. Therefore high financing is required.

The second alternating that Apple should consider is spending on more research and development. This alternative is critical to ensure that the company develops products that meet the market’s current market needs and maintain its market need. Apple is a known spender on research in the technology to come up with new exciting electronic products. In the first quarter of the financial year 2019, Apple spent 4.2 billion US dollars on research and development, which was 7.9 percent of its revenue, the highest the company has ever paid since 2003 (Leswing, 2019).  Samsung was ranked among the top ten huge spenders in research and development (Ians, 2018). There is an increased demand for high-quality electronic products, and therefore both companies must heavily invest in research and development programs.

The Implementation Plan

            Goal Setting

            For the companies to accomplish more and implement its plan, it needs to have set goals. The implementation plan will give the strategic contingency plan along with the implementation process. Goal setting is done after strategic planning aligned with the company’s mission and vision statements.  For the case of apple, the company has to make the customer believe they are creating products that are the latest in the market with up-to-date software. The company has a customer base that believes in the company’s ability to produce high-quality ad, reliable products. The plan will also aim to assure the customer that the company will continue to offer them with electronics of high quality and with the latest product. Goal setting will be the first step to undertake in the first month of the implementation process.

            Needs Assessment

            Need assessment will assist in organizing and determining what to priorities in the implementation process for better allocation f resources. In this particular case, Apple should evaluate the need for the company to maintain its position in the technology industry. At the same time, the company should consider the strength of its innovation team and investing more resources to ensure that they can keep up with the latest technology. At the same time, the company needs to ensure that it has adequate skilled professionals in the development section to meet the market requirements. Need assessment will help the company compensate for any weakness that has been existing within its innovation structure. Finally, the employees will need to be undergoing constant briefed or trained so that they can adapt to the changes in creating new technology.

            Communication Material

            This section the various components of the communication plan. This stage involves how information about the changes will be passed to the different parts within the organization and the desired outcome. In the above case, will be from the chief executive officer to individual roles. The head of research and development will communicate to staff on their distinct roles. The department head will create emails and send them to staff periodically to ensure they are in line with the plan. New hiring will be updated on orientation materials for smooth integrating into the company. The department heads will also identify and set up a briefing for any new developments.

            Differentiated Plan

            This section covers the determination of the resources required for the implementation of the plan. A good idea needs to be accompanied by a resource need to implement all activities. When an organization is already prepared with resources, it can save valuable time and effort by avoiding solving problems that are systemic.  In this case, the adoption of new technology and adjustment to new technology involves various costs relating to wages for and hiring of skilled workers. Also, substantial investment is required for more research and development of new technologies.

            Action

            An action plan describes how the organization will use its strategies to attain its objectives. It consists of a couple of steps the company will undertake in the implementation of the strategic plan. The application of new technology is complicated and time-consuming. This particular plan will be implemented in several years, phasing in different stages. During the first year of the program. The early-stage will involve correctly diagnosing the existing technology and identifying the operational inefficiencies. The next step will include assembling the technology innovation and implementation team, which include individual employees who are involved.

Risk and Mitigation

            A strategic plan gives a business with a roadmap it requires to pursue a strategic direction and set of performance goals to become successful. Although the company may invest in acquiring software, the plan may not always guarantee the desired results. The customer might choose to settle for similar products from other provides. Furthermore, other competitors might acquire similar software, which means that the outcome would be faced with high competition. Another risk that the company should be prepared for is that the cost of a new or modified product may prove more expensive than earlier anticipated. Furthermore, investing in the development of a new product may be commercially unsuccessful.

To mitigate the risk of market change, the company should diversify its target customer rather than only targeting the high-income earners. It might be helpful for the company to look at it as invest, which might not always give returns to minimize research and development risks. This mitigation strategy would ensure that it faces lesser effects and distortion of business.

Conclusion and Recommendation

This report has identified hidden problems for both companies when keeping up with rapidly growing technology. The companies have to ensure they pose the latest technology in the industry or risk being overtaken by competitors. The report outlined alternatives that the companies should implement to tackle the impending problem. The company should create excellent customer service by creating products that are unique in design to acquire more market share. The companies need to respond promptly to the changes happening in the industry to survive in the foreseeable future. Recommendation for differentiation strategy, integration strategy. My recommendation is that the companies create products with a unique design to attract more customers in the market.

References

Bajarin, T. (2019). How Microsoft and Apple’s Ads Define Their Strategy, Tech.pinions. [Online]. available at: https://techpinions.com/how-microsoft-and-apples-ads-define-their-strategy/34117 (Accessed: 30 November 2019).

Gross, D. (2019). Five user complaints about iPhone 5 – CNN, CNN. [Online]. available at: http://www.cnn.com/2012/09/26/tech/mobile/iphone-5-complaints/index.html (Accessed: 29 November 2019).

Harjani, A. (2019). An ’emerging’ threat to Samsung, and it’s not Apple, CNBC. [Online]. available at: https://www.cnbc.com/id/100915961 (Accessed: 29 November 2019).

Hyun-ju, O. (2016). [FEATURE] Top-down corporate culture continues to take its toll, Koreaherald.com. [Online]. available at: http://www.koreaherald.com/view.php?ud=20160719001053 (Accessed: 30 November 2019).

Leswing, K. (2019). Apple is spending more than ever on R&D to fulfill the ‘Tim Cook doctrine,’ CNBC. [Online]. available at: https://www.cnbc.com/2019/08/03/apple-rd-spend-increases-fulfilling-tim-cook-doctrine.html (Accessed: 30 November 2019).