Apple and Samsung are two of the largest tech companies in the world. Both are also dominant in the more specific consumer electronics industry. Their respective product portfolios are almost the same and they target the same consumers. However, upon closer inspection, these two companies have different specific tactical and greater strategic approaches. This article explores and discusses the notable differences between Apple and Samsung based on the key elements of their business strategies.
Understanding the Difference Between Apple and Samsung From a Strategic Perspective: A Comparison of Their Business Strategies
Organizational Structure
Both Apple and Samsung are publicly traded companies. This means that their respective ownership is organized via shares of stock which are traded on a stock exchange or in over-the-counter markets. Apple is listed in the Nasdaq Global Select Market while Samsung is traded in the Korea Exchange, London Stock Exchange, and Luxemburg Stock Exchange.
The two tech companies have different organizational structures. Apple follows a hierarchical and functional structure with a clear chain of command flowing from the chief executive down to various functional departments with its own leadership and responsibilities. This allows centralized control and a top-down approach to decision-making. The different facets of operations and processes are under strict oversight from the chief executive.
Samsung has a product-oriented divisional structure. This means that the entire company is organized into various divisions based on product categories. Each division has a high degree of autonomy when it comes to leadership to enable quicker decision-making while focusing on specific product lines and the needed strategies and tactics for each.
The structure of Apple promotes cohesive branding and strong alignment across its various strategies and tactics. The downside is that it might result in slower decision-making and make the organization less flexible in adapting to market changes. This is in contrast with the structure of Samsung which allows greater market responsiveness but it can create problems as regards branding cohesion and even the marketability of novel products.
Product Strategy
One of the notable similarities between Apple and Samsung is that both are tech companies that are known for their consumer electronic products and digital products such as software and services. However, despite having competing products in the same markets and more specific market segments, the two differ in terms of their focus.
Apple has a limited and more curated product portfolio compared to Samsung. It focuses more on computers such as personal computers, mobile devices, and other smart devices, along with related digital products and services. Samsung has a more diverse product range and has a broader target market. Its product portfolio includes end-use personal computers, mobile devices, and home appliances, and business-to-business electronic components.
It is important to highlight the fact that Samsung targets not only end-use consumers but also business clients. The company manufactures and supplies various electronic components such as lithium-ion batteries, semiconductors, image sensors, camera modules, and displays. It even supplies components to Apple and other companies such as Qualcomm and Google.
There are still several similarities between Apple and Samsung in terms of product strategy. The two have created their respective end-use product ecosystems to keep customers loyal through repeat sales. However, between the two, the former has a more closed ecosystem that has been made possible through its strong hardware-software and cross-platform integrations. This means that Apple has a lower threat of substitutes compared to Samsung.
Technology and Innovation
Another difference between Apple and Samsung is their respective approaches to technology and innovation that have guided their research and development directions that fuel their product strategies and overall business strategies. Remember that both are two of the leading tech companies in the world and have been recognized for their innovative prowess.
Part of the business strategy of Apple is its proactive and reactive approach to research and development. It focuses on refining existing technologies and creating new markets from existing ones instead of introducing novel products or creating new markets from scratch. The company also strives to redefine entire categories. This is evident from the introduction of disruptive products such as the iPod and iTunes or the iPhone and iPad.
Samsung is more focused on bringing new features to market as fast as possible or integrating new technologies to improve existing product categories. It is the first manufacturer to use OLED displays in smartphones and televisions. It is also one of the first companies to introduce foldable smartphones and curved televisions using flexible plastic OLED.
It is also important to highlight the fact that Apple develops new technologies and introduces innovations to prioritize user experience and maintain the cohesiveness of its product ecosystem. The silicon strategy of the company has helped in enhancing its hardware-software integration which leads to performance gains. Samsung is more focused on manufacturing and integrating components that could be used across its diverse product lines.
Integration Approaches
The two companies also have different approaches when it comes to integrating their respective value chains. There are several integration options. Horizontal integration is involved with increasing product development capabilities through expansion or mergers and acquisitions. Vertical integration involves taking ownership of key stages in the supply chain.
Apple follows a selective vertical integration approach. It focuses on controlling aspects of its supply chain and product development while also depending on suppliers or outsourcing. This is exemplified in its semiconductor strategy. The company ditched Intel for its in-house designed system-on-chips. The production of these chips is outsourced through fabless semiconductor companies such as Taiwan Semiconductor Manufacturing Company or TSMC.
On the other hand, compared with the aforementioned, Samsung has a more extensive vertical integration. It has in-house manufacturing capabilities on top of its design capabilities. The company has capabilities to design and manufacture chips and other components used in its various products such as personal computers, mobile devices, and home appliances.
It is worth mentioning that Apple tends to have a more extensive vertical integration approach when it comes to software. The company develops various software and even services as part of its closed product ecosystem. Examples include its proprietary macOS and iOS operating systems. Samsung has a limited approach. It has its fair share of software but its products are still dependent on software from third parties such as Microsoft and Google.
Marketing and Sales
Another interesting point of comparison for understanding the difference between Apple and Samsung is their respective marketing strategies and sales strategies. These two tech companies have established brands as evident from their strong brand equity. Both also have impressive sales figures and substantial market shares across different markets and segments.
The two companies have different marketing strategies. Apple does few paid advertisements on traditional mediums and focuses on other promotional strategies. It is known for aligning buzz marketing and event marketing to create excitement, maximize media mileage, maintain discourse, and promote product interest. The company has also capitalized on its premium branding and closed ecosystem to build and expand its pool of loyal customers.
Samsung is somewhat traditional when it comes to its promotional activities but has also integrated novel tactics similar to Apple. It spends on conventional paid promotions such as advertising, celebrity endorsements, and outdoor displays while also using event marketing and digital marketing strategies to promote product interest and maximize market reach.
Another difference between Apple and Samsung is their pricing and distribution strategies. Apple products are expensive and are sold through experiential showroom-like online and physical stores. It maintains a premium pricing strategy to maintain its premium brand while also maximizing profit margins. Samsung caters to diverse market segments. This is exemplified through its entry-level, mid-range, and flagship product categories.
Takeaways From the Difference Between Apple and Samsung From a Strategic Perspective: Conclusion and Important Pointers
It cannot be denied that there is a stark difference between Apple and Samsung when it comes to the facets of their strategies and operations. The former seems to have a more focused approach when it comes to developing and marketing products while the latter has a more expansive take on maximizing profits. Furthermore, despite offering competing products in the same markets, the two have different attitudes in terms of branding. Apple is more of an aspirational computing-centric brand while Samsung is a versatile consumer electronics brand.
