Apple vs Samsung

Valencia Bounds, Chris Sibson, Richard Penick I. Executive Summary

Mission Statement
Apple, Inc.
Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad. (Frequently Asked Questions, 2013)

Samsung Electronics
We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society (Values & Philosophy)

Overview
Apple, Inc.
Apple was founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. Apple has come a long way since its humble garage-based beginning. Before the release of Apples first computer, the Apple I at a price of $666.66, Ronald Wayne relinquished his share of the company for a mere $800. As the company continued to struggle, Wozniak also left after a 1982 car crash that left him physically impaired, leaving Jobs to fly solo in his pursuit of success with the company. The company is now headquartered in Cupertino, CA and what started with three brilliant minds and $1,300, has become a consumer electronics giant that now employs or supports in excess of 350,000 jobs in the U.S. alone, boasting a net worth of about $406 billion. (Fried, Apple Turns 30, 2006)

Samsung Electronics
Samsung Trading Company was founded by Lee Byung-chul in 1938. The companys found died in 1987. The company subsequently split into four business groups Samsung Group, Shinsegae Group, CJ Group, and Hansol Group. (Fried, 2006) (About Samsung -History) Since then, company has continued to thrive and grow despite multiple suicides among his successors. Having been in business for more than 70 years, the company has been through many changes which include the establishment and conversion of Samsung Electronics to handle Samsung Groups consumer electronics product lines. In 1988, Samsung Electric Industries and Semiconductor & Communications merged to become what is now known as Samsung Electronics, headquartered in Suwon, South Korea. In that same year

the subsidiary launched its first Samsung mobile phone. Since being created in 1969, the Samsung Electronics has expanded to include more than 370,000 employees and an estimated worth of approximately $174.4 billion. The parent company Samsung Group is worth about $121.5 trillion. As of 2013, Samsung surpassed Apple as the worlds most profitable phone seller. (Haselton, 2013)

Products
Apple, Inc.
Among the products offered by Apple are MacBook Portable Computers, Apple Retail Stores, iPad Mini, iPhone, iPod, iPad, iOS, OSx, iLife, iWork, iCloud, iTunes, Apple TV, Mac Computers. (Apple Press Info -Product Images & Info, 2013)

Samsung Electronics
Samsung offers a much wider variety of products covering everything from home appliances to handheld consumer devices. Among its product lineup are TVs, OLED display, Smartphones, Electronic accessories, Blu-Ray and DVD players, Home appliances and lighting, Home entertainment systems, PCs, monitors, memory and storage, printers, and Mobile devices (cell phones, smartphones, tablets, laptops, media players, cameras and camcorders, etc.). (Samsung Products, 2013)

II. SWOT
Strengths
One of Apples strengths has been its power over suppliers. It has made a habit of locating the best of the best in and locking the manufacturers of those items into exclusive contracts. The company has also shown strong, consistent financial performance over time. Adding to its arsenal are its highly capable marketing and advertising teams which have more than proven their worth in getting the companys message out to consumers. The organization also enjoys a long-standing reputation for innovation and for producing top quality products. Because Apple has enjoyed top seating at the technology for so long, it would take a number of flops and failures to completely unseat the company from its proverbial throne. Samsung has longevity and diversity on its side. It has been in operation for more than 70 years and has been in consumer electronics for more than 50. In addition to PCs and handheld electronic devices, the company also engineers and produces hardware parts and consumer electronics along with household appliances. In addition, it provides many of the components used to create devices like those that are sold by Apple. In addition to its reputation for innovation and design, the company boasts

excellence in engineering and producing hardware parts and consumer electronics. As of this year, the company is enjoying the lead in phone sales.

Weaknesses
The biggest weakness in the Apple matrix is probably its relationship (or lack thereof) with nonApple developers. As consumers demand more flexibility in their mobile computing devices, Apple will need to find ways to meet those needs. This may require a step away from the closed-source development it has become known for. However, consumers will also still be expecting the company to maintain the high levels of security and dependability for which its products are known. Samsungs wide-ranging product line can prove to be a problem in that resources that are spread across the many types may detract from the potential quality of a few. Some of the companys largest competitors are also its largest buyers. Should one or some of them decide to pull their business due to the conflict of interest, the company could suffer. The fact that the company does not develop its own OS and software for use on its electronic devices could also create a problem should the current providers decide to create their own devices or deal exclusively with Samsungs competitors.

Opportunities
Apple has the advantage of being known as a leader in User Interface development. Samsung is widely known for its open-source platform which offers maximum flexibility. Both offer extensive app resources. Apple could benefit by offering more free apps while Samsung still remains open to an increase in business apps. Strong growth in smartphone and tablet markets is expected to create a world of new opportunities for both. Apple is reputed to have led the way in its use of cloud-based technology. However, Samsung quickly caught on and is about even in this area. Threats As is the case with any business organization, both Apple and Samsung face competition from similarly-natured businesses. Any company dealing in electronics is their competition; the largest opposition comes from Microsoft and Google. Ups and downs in the economy tend to have some effect on business since most of the items sold by either company are non-necessary items that are typically bought with disposable income. Apples reputation for high quality has enabled it to hold firm to its higher pricing structure. However as its competition grows and produces more high-end products, it may be faced with more pressure to reduce prices at some point in the near future. Both companies have been accused of patent breaches. Technology is changing rapidly. As consumers try to keep up with the changes, Samsung products are becoming a bit more desirable since they tend to be lower-priced and more flexible in its usability. The fact that the markets are quickly becoming with smartphone products will assuredly lead to a leveling off of sales in that area, meaning decreases in overall sales of the products.

Top Competitors
Apple and Samsung have many of the same competitors. Some of the fiercest competition that is shared by them is the Hewlett Packard Company, Sony Corporation, Google, Incorporated, Motorola Corporation and Microsoft, Incorporated as well as makers and users of anything Android. Because Samsung is more diverse it also has to contend with additional competitors like Intel Corporation, Texas Instruments, Incorporated and Sanyo Electric Company, to name a few.

III. Changes in Recent Marketing

Apple has had one of the most drastic changes in terms of marketing in the technology industry recently. Though Apple had not been truly run by Steve Jobs for quite some time before his sudden death and was instead often run by Tim Cook (the current CEO), the tech giant had always depended on Jobs for their marketing strategies. Its hard to find a time when Apples new products werent being presented to the press by the mogul or giving some profound speech increasing Apples reputation and vision in between releases. Now Apple is living in a post Jobs world, and their marketing has taken several drastic shifts as it attempts to find itself. One of the first marketing strategies was to include celebrity endorsements of Siri. One such example was a commercial of famous director Martin Scorsese using Siri to navigate downtown New York. Another marketing strategy showing a complete tonal shift for the company was Apple showing commercials that flaunted its extremely popular customer service. While their customer service is indeed world renowned, and people certainly love their Martin Scorsese movies, it appears that neither of these marketing strategies were particularly successful. (Ogg, 2013) Now the company has majorly shifted its marketing strategy once again with what many critics call Apples first post-Jobs manifesto. Its new strategy is called Designed by Apple and does several things differently. (Apple, 2013) The clearest example of its marketing method is what is known as pathos or a complete appeal to the audiences emotions. The video shown on the website and the overall tone of the marketing campaign shows artistic images behind text explaining Apples concept. This is it. This is what matters. The experience of a product. How it makes someone feel, the website states. This campaign sees the tech giant embracing its status as an industry leader, rather than the Think Different slogan of the past. There is also a reminder that this product is run by a U.S. company as stated by Designed by Apple, in California. This is a subtle affront to Apples biggest smartphone competitor, Samsung (A South Korean company). The jury is still out on whether this campaign is successful or not with some reports saying its largely more influential than the campaigns of the past, and others saying it rates poorly with its demographic. (Burrows, 2013) (Ogg, 2013) The company has

also come under fire for many small mistakes as the tech giant known for its immaculate reputation has made some small changes such as referring to iPhone technology as the iPhone in its marketing campaign a naming convention that was specifically forbidden in the Apple offices under Steve Jobs. It has also come into question by critics whether the tech giant should be taking the road of bragging about itself. (Ogg, 2013) Samsung on the other hand has had a much different avenue of marketing. One of the first things that really stands out from Samsung is its massive marketing budget. (Neiger, 2013) While the marketing budget is slightly askew due to Samsung marketing for more than just its Smartphones, its clear by all accounts that Samsung spends several times more than Apple does for marketing. One theme clear throughout recent and past marketing schemes is that Samsung is not afraid to deal directly with its main competitor, Apple. The most watched tech ad of 2012 was known as The Next Big Thing and consisted of a several individuals standing outside of an Apple waiting line and showing off what their phones could do compared to Apples. The mantra of the commercial was The Next Big Thing is already here. With more than 17 million views on Youtube.com, the commercial was clearly a hit. (Samsung, 2012) Samsung has only capitalized on its massive marketing budget by following through with many further different avenues of marketing. One such example has been the marketing of Jay-Zs new recent album Magna Carta Holy Grail. (Buford, 2013) Recently Samsung purchased one million copies of the album for its smartphone users. As the Jay-Z lyric goes, Im not a businessman, Im a business, man. Other such recent examples of their various avenues of marketing are the Galaxy Tab S3 with it comes 3 months of Hulu+, $10 of Google Play purchases, and one year of Boingo hotspot service, and two years of 50GB Dropbox service. As can be seen from this, Samsung leverages its massive marketing budget to allow for popular commercials that become a popular trend as well as making sure to reward Galaxy shoppers for buying Samsung.

IV. Stakeholders
A stakeholder is defined as a person or group that has an investment, share, or interest in something, as a business or industry. This is not just limited to someone who has purchased stock in a company, which is defined as a shareholder.

Apple, Inc.
Stakeholders
Shareholders: preferred and common Manufacturers and their employees

Software developers Apple employees Music industry Customers Suppliers Lenders It is a well reported fact, that under Steve Jobs, Apple did not care about shareholder value. Jobs, while admittedly a master salesman, really did focus on making great products. He cared about the stakeholders, the customers and the employees. He cared about bettering society. Jobs flaunted his lack of concern about the stock market regularly, as was well reported, with quotes like the press and the stock price will take care of themselves, and it irked many on Wall Street but they bought the stock anyway. Apple has taken a proactive approach to maintaining an excellent relationship with all its stakeholders. It is also continuing to actively pursue actions to further improve these relationships including the fight for fair wages and human rights concerns in foreign factories that are run by its contractors.

Apples Position on Social Responsibility

Heres what Apple says on its website: Apple is committed to ensuring the highest standards of social responsibility wherever our products are made. We insist that our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes. A review of Apples Supplier Responsibility Report reveals that the company is taking action to stop unethical practices among is suppliers. These have included use of underage labor at 10 facilities, dangerous working conditions at two facilities, falsification of audit materials at four facilities, and bribery at one facility. Its obvious that these irresponsible actions need to be prevented. However, doing whats necessary in this area doesnt add up to CSR as it should be practiced at Apple.

Samsung Electronics
Stakeholders
Samsung SDI strives to distribute the value created through its business operations fairly among its stakeholders, and thereby seeks mutual growth with these stakeholders through an exchange of economic, social and environmental value. Samsung SDIs major stakeholders are:

Shareholders and investors Research Institutes Government Employees Customers Suppliers Major stakeholders are identified through an annual stakeholder status survey conducted by each department and through internal discussions. Samsung will continue its efforts to build a prosperous and sustainable society together with its stakeholders by providing increasingly better products and services, fulfilling its corporate social responsibility, and creating better value.

Samsungs Position on Social Responsibility

Apart from developing innovative technology products, Samsung places great importance on acting as a responsible corporate citizen in the communities where it operates. Its CSR programs respond to the social and environmental needs and seek to give back to communities where it operates. In 2009, Samsung launched the companys Corporate Social Responsibility initiative Samsung Hope Project with projects in the areas of education, culture, sports, social welfare and community development. Each program under the Hope Project uniquely addresses the needs of individual communities while emphasizing on innovations for development of the community including education, technology, engineering and IT technical training. Notable local programs include: Samsung Hope for Children, an initiative designed to help under-privileged children through e-learning centers. These e learning centers located in different parts of the country impart computer literacy to underprivileged youth and ensure placements as well. Samsung continues to be innovative for the development of the community. Another program is a partnership between Samsung and various educational and media agencies to support grassroots innovations. Samsung has instituted two programs: Samsung Innovation Award with IIT, Delhi and Samsung Innovation Quotient which recognizes Indias best grassroots innovators from across the country Hope for Culture represents Samsungs tribute to the rich Indian cultural heritage through Tagore Literature Awards that recognizes the best literary contributions in 24 Indian regional languages. Samsung is partnering with the Sahitya Akademi for the Tagore Literature Awards. Additionally, Samsung partners with INKO to present the Samsung Womens International Film Festival that gives voice and expression to the perspective of women and celebrates her spirit through the medium of Cinema.

Sports Sponsorship is an ongoing initiative wherein Samsung supports top ranking athletes across individual sports disciplines with their training expenses while they prepare for the Asian or the Olympic Games.

V. Describe marketing procedures currently being used including specific tools or concepts from chapters in text such as use of CRMS.
While really every chapter in the book could apply to either of these companies, there are a few that have particularly interesting stories. To begin with is Apples unique customer service management. While Apples customer service is preferred over every other company in America, it is found to even be preferable to Samsungs in Korea, home country of Samsung. (Quigley, 2013) They have many different methods that help create this success from the top down. For one, Apples speed of repairs is higher than the completion and the likeliness to even need a repair is slower to even begin with. However what really drives Apples customer service is its methodology. Recently it was found that Apples customer service handbook was leaked (to no great surprise) which outlined its methodology for providing customer service. (Morris, 2013) The service is built around several key concepts. The key concept is to empathize with the customer. It is important that the client is understood, but Apple has found that beyond understanding it is even important that on an emotional level it is important that their employees empathize with the customer. There are some key exceptions to this such as the employee must never talk down about Apple itself, but Apple appears to offer the training necessary for its employees to provide valuable service to its customers. For Apple, its all about the customer and building a strong relationship between the user and the customer. Samsung on the other hand is actually in the middle of an interesting shift in terms of customer relationship management. Currently Samsung does not have its own physical store, at least in the U.S. However, it has currently partnered with Best Buy to create what it calls the Samsung Experience. There are already some test stores in Chinese markets and first reports appear to have nothing but good things to say. (Quigley, 2013) Samsung does however have its own support and repair services, but on the same token it also often works through other businesses and suppliers in order to provide its products as opposed to Apples complete proprietary control of its product. Another interesting concept that applies to these companies is that of marketing development, or moving existing products to new markets. The first major market is India. So far it is has largely found Samsung to be the lead competitor for several reasons. The Indian people demand different price points and modeling options in order to be successful in their markets. There are many reasons for this, but chief among them is the many different levels of prosperity in India. In this regard, Samsung often obliges the demand while Apple does not, insistent on only offering the same models and pricing

options as the rest of the world. In order to stay competitive however, Apple has created trade in programs. (Rai, 2013) Another massive market has been that of China. Apple is currently working with China Mobile, Chinas largest mobile provider in order to offer additional options to the country. (Martin, 2013)This is especially important to the two tech giants as China is the worlds fastest growing market for smartphones. Unfortunately for Apple, Samsung is in the lead yet again in the developing country. The first reason mirrors Indias own an extremely varied population requires many different pricing options and models, and again Apple cannot comply while Samsung takes advantage of this edge. However Samsung also has the advantage of already having created many connections and has many more mobile stores offering its products than Apples. This gives Samsung a clear advantage in the future as well as familiarity with the product will give them a huge lead in the developing nation unless Apple can quickly penetrate the market. (Lee & Kim, 2013) However, the most interesting concept from the book that applies to real life is that of business to business sales. Currently, Apple is Samsungs largest customer. (FOOL, 2013) The tension of the situation is obvious as two of the fiercest competitors depend on each other for producing profits. Currently this situation is a benefit to both companies. Apple requires Samsungs products to produce its product lines. Samsung in return can gain contextual information as to when its major competitor is doing things such as major releases, not to mention the hardware sales revenue. It creates an interesting position for Apple as it requires its competitors parts to stay relevant, and maintain its position as a fierce competitor. It may eventually lead to Apple producing its own parts, but the tech company certainly isnt prepared for it yet. It also gives Samsung yet another large lead on its competitor. While its own phone costs more to produce in raw parts than Apples, it ends up effectively being less as it produces its own parts and thus creates no markup on it.

VI. Financial Reports

Apple vs. Samsung
Samsungs latest financial report suggests that Apple is falling behind fast. Samsung the worlds leader in computer memory chips, televisions, mobile handsets and LCD panels took a huge chunk out of Apples hide in the first three months of 2013. According to IDC, nearly 80% of the smartphones shipped last quarter ran on Android. Many financial insiders believe that Apple will regain ground when there next iPhone arrives shortly. Apple believes that many Apple users and future users are waiting on the next release and thats why the sales have begun to taper off.

According to Strategy Analytics, Samsung controlled about 33% of the global smartphone market in the first quarter to Apples roughly 18%. And while Samsungs smartphone sales surged 56% to 69.4 million units, Apple shipments grew a mere 6.6% to 37.4 million units. Samsung is not giving up profit as it gulps Apples market. According to the New York Times, about 75% of Samsungs profits came from the division that makes smartphones, tablets, personal computers and cameras. Compared to Apple, Samsungs revenues and profits are soaring. While Apple revenue rose 11%, Samsungs sales spurted 17% to $47.6 billion. And as Apples net income fell 18%, Samsung enjoyed a 42% profit explosion to $6.5 billion.

Money spent in 2012 by Samsung and Apple

$10.0- billion on R&D to Apples $3.6-billion $29.5- billion on selling and administrative costs (SG&A), which included $11.3-billion for advertising, promotion and other marketing expenses; By comparison Apples SG&A spending was $10.3-billion for calendar 2012, with approximately $1.0-billion for advertising $20.0- billion on capital expenditures versus $10.4-billion for Apple

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