This blog post is in response to Maki’s blog post where she talks about the difference in the 2 biggest competitors in our generation: Samsung and Apple, comparing their business models. She emphasizes about how Samsung is more diverse when it comes to its products, in the sense they are present in various markets (flat panels, LED lights, batteries, etc.) and is vertically integrated with its suppliers. Apple on the other hand has a very niche market and has outsources its manufacturing to other firms. There are many advantages and disadvantages for both firms and will be further evaluating their different business models.
Spreading risks
Due to Samsung’s presence is various markets, their risk is spread throughout their different products and thus if one fails, it would not harm the firm too much due to the profit generation from other products. Apple on the other hand has a very niche market and thus a decline in sales of their products would affect their sales gravely. Apple, for the first time in 5 years, just experienced a decline in the sales of iPhones and learned the hard way to spread their risks through markets. They have thus started emphasizing more on their service industry recently, along with content and many others.
Vertical Integration vs Outsourcing
One of the biggest competitive advantage that Samsung has is the fact that they are vertically integrated with their suppliers. This gives them a steady source of supply, which Apple does not experience. Apple however saves a huge amount due to the fact that they do not have to do R&D themselves for that sector, and it is instead outsourced to their suppliers. Apple can also take advantage of their competition in the supply market and fish for lower prices. The money saved on R&D can thus go to researching consumer trends and thus attending to them even better. Apple has a unique and chic design and uses this to their advantage by integrating this design to products that already exist, making them more appealing. An example of this is the iPod, which was a better version of the Walkman that was released a few years prior to the iPod. This design also makes it very hard for loyal Apple consumers to switch to another brand, this being their competitive advantage.
Comparing these 2 companies is very difficult and somewhat unfair as they have their own principles, goals, and business models which works best for them. Despite the stark differences in their business models, they have managed to be the market leaders of the one of the most cutthroat and fast paced industries out there which is commendable.
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In reference to: https://blogs.ubc.ca/makeday/2016/10/02/apple-vs-samsung-competitive-strategy/