Setbacks of Apple in Comparison by Samsung and Google - Case Study Example

?Innovation Management Table of Contents Table of Contents 2 Introduction 3 Setbacks of Apple in Comparison to the Innovative Strategies Adopted by Samsung and Google 3 Strategic Options for Apple to Ensure Competitive Sustainability 5 5 Years Strategy Plan 7 Conclusions and Recommendations 9 References 11 Bibliography 14 Introduction The recent performances of Apple Incorporation, a giant in the respective industry, have recently recorded a consistent decline in its investment returns owing to competitive challenges. Subsequently, it has been forced to reschedule its product management framework so that the company can align its products in a more competent manner (Jim & Carsten, 2013). It is in this context that continuous comparison of the strategies applied by the competitive brands to Apple, such as Samsung Electronics and Google Incorporation, becomes highly important in order to develop innovative approaches in securing the sustainability interests of the company. Emphasising this particular concern, the aim of this paper is to explore the strategies adopted by Apple, to counter the competitive influences caused by the innovative strategies taken by Samsung and Google as the major competitors in the industry. Accordingly, due significance will be delivered to the various types of innovative strategies, such as offensive, defensive, imitative, dependent and traditional & opportunist tactics as used or can be used by Apple to overcome the competition challenges. Conclusively, the discussion of the paper will be intended towards developing a 5 years strategic planning, reflecting upon the presently applied strategies, future possible strategies and imbibing new technologies in its currently ongoing practices. Setbacks of Apple in Comparison to the Innovative Strategies Adopted by Samsung and Google Samsung and Goggle are two of the leading brands in the information technology market currently. These organisations can be observed to have taken considerable plunge towards the application of innovative strategies in order to gain a leadership positioning in the industry context and beat Apple as a competitor in the same. They have not only flooded the market with new innovative and attractive products, but have also been highly focused on understanding customer demand and responding to their changing buying behaviour with efficiency (AFP, 2013). As a consequence, Google was able to obtain a considerable influence on the competitive forces in the oligopolistic market structure of the industry. Similarly, Samsung also believes in rapid innovation concerning the pace of technology advancement in the current phenomenon where the lifecycle of the products are much shortened owing to the imitative strategies practiced by the competitive brands. Samsung appeals to a larger market by providing the customers with a variety of Information Technology (IT) gadgets such as smartphones, tablets, and breathalysers. Assessing the past performance of the company, it can be affirmed that Samsung has been doing well in the low-end market and has recently began to expand its presence in the high-end market, giving a tough competition to the already existing brands including Google and Apple. Illustrative, its market share increased to 36% in Q2 of 2011 from about 18% in the same quarter of 2010. While Google has been able to obtain market success based on its product versatility, even though its serves with a limited number of products as compared to Apple and Samsung, Samsung’s success has been mostly driven by its innovative strategies to keep expanding its product line, improving on the basis of differentiation prospects. Replicating the oligopolistic structure of the industry, Samsung also attempts to work in collaboration with other IT companies, including Google to practice innovative strategies and gain competitiveness in the market. For instance, Samsung is renowned as the largest adopter of Google Android software and also a leading supply chain partner of Microsoft Incorporation whereby its major proportion of smartphones are launched with the updated Windows OS (Team, 2012). Competitively, Samsung has been able to understand the changing needs of the target market customer and customize its products according to the customers’ needs. For instance, focusing on its target market segmentation of Asian language speakers, the company was able to identify that these customers demanded devices that could perform the tasks of both tablets and smartphones, thus developing “Phablet” as its innovative product (Nisen, 2013). Samsung also delivers due significance to customer convenience in using its offered products. For instance, assessment of its innovative strategies recent revealed that unlike Google or Apple, the company prefers introducing smaller, conveniently hand-able products with focus on customer convenience, where the other competitors of the market have been criticised to face setbacks in gaining similar advantages (Oyvann, 2013). Apparently, these innovative strategies applied by Samsung in its recent competitive functioning have rewarded the company with a leading position in the industry. Strategic Options for Apple to Ensure Competitive Sustainability The impact of Samsung and Google has been quite severe on Apple’s market positioning, especially after the unfortunate demise of its co-founder, Mr. Steve Jobs, i.e. with the recent two years. To be noted, its share price fell consistently along with a degrading customer loyalty, wherein a potential number of customers were observed to switch to Samsung and Google due to their greater competitiveness and innovation capabilities in correspondence with customer convenience demanded (AFP, 2013). Nevertheless, Apple has also been applying innovative strategies in its functions based on certain principles, which can mostly be related with an offensive form of innovative strategic approach. Apple mainly targeted the high-end niche customers for its market. As a result, while other companies have been focussed on customizing their products according to the customer needs, Apple was trying to gain competitive advantages by offering them a product beyond their expectation level and therefore acting as a leader or pioneer in the market for innovating new technologies (Grobart, 2013). In addition, applying a defensive strategic approach, it was observed that Apple targeted the elite group of people who could afford a quality digital product at a high price. This can be categorised as an offensive innovative strategy as was being practiced by Apple, with the intention to differentiate its brand from its competitors. However, provided that Apple’s innovative strategy was being imitated by its competitors, the lifecycle of the innovative products reduced substantially forcing the company to launch a new product in a more competent manner. This not only raised the cost of research and development in the company, but also increased its production as well as marketing costs, thus lowering its return on investment (Grobart, 2013). Again, taking the advantages of Apple’s innovative strategies, the competitors were able to sustain the challenges faced by the company by developing products in a more affordable manner, which would deliver almost similar facilities as Apple, but at a lower price. This further hindered the loyalty of customers of Apple and made them shift their focus on other competitive brands, including Samsung and Google. As a consequence, the market share price fell for Apple, making it to face severe disadvantages in the competitive scenario (Gupta & et. al. 2013). Correspondingly, Apple was also engaged in performing monopolistic power on its customers bargaining power creating barriers in the free use of software and updates in mobile to lure its customers to use its brand for availing the unique facilities, which represents the traditional and opportunist strategic approach applied by the company. This further raised various ethical issues in terms of data forging, privacy violations and intellectual property rights violations. Previously, Apple used to charge for upgrades but detecting the declining behaviour of customers towards free software facilities delivered by its competitors, Apple was also forced to withdraw its barriers on operating system updates and free apps (Keizer, 2013). To be illustrated in this regard, Apple had filed a suit against Samsung alleging that Samsung infringed three of its utility and three of its design patents (Vascellaro, 2012). This particular event apparently replicates the ill-effects of competitive influences faced by Apple in operating during the recent era. In order to counter the competitive influences, Apple has also been aimed at applying a diverse, well-managed and futuristic supply chain that depends on external partners and thus, replicates its dependent strategic notion. Although effective at the initial stage, this kind of supply chain and distribution can often result in delays and difficulties which may result in customer dissatisfaction, as was apparent in the case of Apple, which ultimately declined its competitive strengths in the market (Nisen, 2013). To sum up, it can be noted that the company had not yet used imitative strategies as similar to its major competitors, i.e. Samsung and Google. Considering its future options for strategic measures to preserve its competitive positioning, Apple can take the option for applying imitative strategies that can reward the company with rivalry advantages. In the following section, the present and the future options of strategic progress has been suggested in a tabular format. 5 Years Strategy Plan 5 years objectives Strategic Options Strategic Activities How Apple will compete today In the current market scenario, Apple can focus on applying imitative strategies In applying imitative strategies the company will have to: Perform accurate market segmentation following a rigorous market research Decoding customer needs and preferences Developing products with facilities similar to that of the competitors, but with due attention towards Intellectual Property Rights Develop new products tomorrow In the near future, after gaining a substantial percentage in the market share, the company can shift its focus on developing and re-launching its products with better alignment with the customers’ convenience demands. Hence, it can then apply a defensive strategy to preserve its regained competitive positioning. In applying the suggested defensive strategy the company will have to: Focusing on research and development to reinvent its successful products Emphasise developing the uniqueness of the products on offer to attract a larger volume of loyal customers Remain focused on intellectual property rights so as to mitigate any legal or ethical issues related with product development Utilise new technologies currently under development When utilising new technologies, the company must focus on ensure proper measures to protect its intellectual property rights and differentiate its products from that of the competitors implementing an offensive strategic approach. When applying the offensive strategy, Apple should be focused on: Obtaining customer feedbacks and assessing those with significance in order to develop a better alignment with the market trends and also to mitigate any error persisting in its product management Promoting its products in an aggressive manner to attract a large volume of customers Conclusions and Recommendations Conclusively, it can be argued that the market structure and the buyers’ behaviour towards the offered product play a major contributory role in shaping the competitive forces of an industry and thereby influencing the strategic measures taken by the companies. As witnessed in the case of Apple, it had been applying greater emphasis to offensive strategy approach, with an intention to promote its products and obtain a monopolistic power in the industry. It is worth mentioning in this context that innovative strategies play a fundamental role in developing and further changing the competitive rivalry forces in the market (Chesbrough, 2010). For example, the basic reason for the competitive change forces in the IT industry, resulting in almost up-turn of the leadership position of Apple and Samsung and Google was the imitative strategies applied by the latter two competitors in correspondence with the offensive strategies of Apple. As a consequent measure, Apple has an opportunity to apply imitative strategies to attract the customers of Samsung and Google, further focusing on its collaboration with other IT giants. Additionally, the company needs to focus more on customer convenience rather than remaining stuck to its offensive strategies. This would allow the company to have a competitive advantage of increasing customer loyalty and sustainable stance in the increasingly volatile and competitive market scenario. References AFP, 2013. 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