Mata Kuliah : Manajamen Operasi Internasional Dosen Pengampu : Baziedy A. Darmawan, SE., MM.

CASE STUDY : SAMSUNG VERSUS APPLE BATTLE

Samsung and Apple’s battlefields
Samsung Electronics, the world’s largest IT company as measured by 2011 revenues, is a
subsidiary of Samsung Group, a South Korean multinational conglomerate. Its product range is
large and includes mobile phones (the world’s largest mobile phone maker), semiconductor
chips (the second- largest manufacturer, after Intel), televisions (the largest television
manufacturer), Liquid-crystal display (LCD) panels (the largest manufac- turer), memory chips
(with the largest market share of any manufacturer), and tablet computers.
Apple, named as the most-admired company in the world from 2008 to 2012 by Fortune
magazine, is a leading American multinational corporation that designs and sells consumer
electronics, computer software and personal computers.
In recent years, these two companies have been competing in several business battlefields.
First, the smartphone space is perhaps the fiercest marketplace in which the two companies
compete. While Samsung has made millions of its Galaxy phones, powered by Google’s
Android operating system, Apple has sold millions of its iPhones. In the first quarter of 2012,
Samsung had bested Nokia, the previous number one in the global mobile phone market, and
had also bested Apple in the smartphone market. Second, the two companies compete in the
tablet computer space, albeit with less competition. The sales figures for Apple’s iPads are still
far larger than those for Samsung’s Android-based Galaxy tablets. Third, Samsung has begun
to build a standard Samsung user interface even though it uses Google’s operating system, and
these efforts are now being seen as a threat to Apple’s software. Apple, meanwhile, is exploring
the potential of entering the televi- sion market and other fields which Samsung has traditionally
dominated.
Competency battle
Samsung and Apple have built different competencies (Table 4.6). First, the price of Samsung’s
offerings is typically lower, not just for customers but for service carriers, as well. Although the
current situation is safe for Apple, since they operate in different market segments, Samsung
can compete more effectively on price in the future if it uses its revenues from the lower-end
market to subsidize the R&D of its higher- end products. Second, Samsung offers a wider
variety of phones than does Apple, which takes “simplicity” as a core philosophy in providing
fewer options to the market. Third, generally speaking, the perceived quality of Apple is
regarded as being higher. Finally, while Apple would often make its fans wait for new products
during Steve Jobs’ time as CEO, the speed with which Samsung is able to deliver products to
market is greatly improved due to their in-house manufacturing and the stronger control the
possess over their supply chain. The speed with which Apple realized the global launch of the
iPhone 5, however, astounded observers in 2012, as new CEO Tim Cook took on the
unglamorous task of global supply chain management.
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Mata Kuliah : Manajamen Operasi Internasional Dosen Pengampu : Baziedy A. Darmawan, SE., MM.
Value chain battle
Samsung versus Apple is a competition not between two companies, but between two supply
chains. Figure 4.8 shows the primary supply chains for the Samsung Galaxy phone and the
Apple iPhone, respectively. Note that the supply chains are dynamic and their supply chain
networks may be more complicated than is represented in Fig. 4.8.
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Mata Kuliah : Manajamen Operasi Internasional Dosen Pengampu : Baziedy A. Darmawan, SE., MM.
✓ Software design
Apple has maintained its status as the technology and innovation leader in the market. In terms
of software design, the Apple iPhone uses a mobile operating system, iOS, which has a 23 %
share of all smartphone operating system units sold in the first quarter of 2012; Apple does not
license iOS for installation on non-Apple hardware. Apple is strong in software and Apple’s App
Store contained more than 700,000 iOS-compatible applications as of September 12, 2012. The
Samsung Galaxy relies primarily on Google’s Android operating system, which has the largest
market share of any smartphone operating system.
✓ Hardware design
Apple is the hardware leader for all six generations of its iPhone. The GSM iPhone created the
original design which has persisted through all subsequent models. The iPhone design follows
the Apple style philosophy of uniqueness and simplicity. In order to retain the feature of having
only a single “home” button, for example, the newer iterations of the iPhone have a sleep button
at the top, volume buttons on the side and have removed the physical keyboard.
Apple added 3G cellular network capabilities with the iPhone 3G, added a faster, more powerful
processor and a higher-resolution camera with the iPhone 3GS, a higher-resolution “retina
display” with the iPhone 4, an 8- megapixel camera, dual-core processor and “Siri” natural
language voice- control system with the iPhone 4S, and the new A6 processor as well as a 4-in.
“retina display” with the iPhone5.
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Mata Kuliah : Manajamen Operasi Internasional Dosen Pengampu : Baziedy A. Darmawan, SE., MM.
The Galaxy is predominantly plastic and offers customers two colors, Marble White and
Titanium Gray. Surrounding the edges and the rounded corners is a chromed bezel. Its rivals
and IT reviewers claim Samsung is adopting a “plastic design philosophy”. During a lawsuit
heard in 2012, Apple’s attorneys introduced a Samsung internal memo since released to the
public in which the president of Samsung Mobile, JK Shin, expressed outrage that Samsung
was suffering from a “crisis of design”, and told designers “not to create a plastic feeling and
instead create a metallic feel”.
✓ Manufacturing
Hi-tech parts in the mobile phone industry often become bottlenecks in the supply chain, and
parts manufacturing can be a company’s most important strategic activity. In 2012, for example,
Apple was unable to keep up with iPhone 5 orders and customers were forced to wait months
because Apple’s suppliers had difficulties producing two components for the iPhone 5: the in-
cell display screen and the long-term evolution (LTE) chip. The screen is produced by Apple’s
long-term partner, Korea’s LG Display, as well as by Japan Display. Apple also contracted with
Sharp, Japan’s largest manufacturer of LCDs, but even Sharp failed to produce the screens at a
sufficient
pace prior to the launch of the iPhone 5. These parts require such high levels of technology that
suppliers think it unfeasible to produce enough on time. Prior to 2012, the bottleneck of parts
manufacturing was even more serious when Apple released the iPhone 4 under Steve Jobs,
who placed a greater emphasis on design and marketing than on supply chain management.
Samsung, with its in-house parts manufacturing capacity, possesses a clear strategic
advantage in this regard. The parts used in the Samsung Galaxy S III, for example, from the
screen to the quad-core processor to the RAM to the NAND flash memory, are all made
in-house. In component manufacturing, Samsung takes advantage of the fact that it is a primary
supplier of chips, displays and flash memory to Apple. This is also the reason that Samsung can
make smartphones at lower costs. With the iPhone 5, Apple has made attempts to contract with
other component suppliers to avoid operational risks.
Apple outsources iPhone assembly to Foxconn in China. After several workers committed
suicide at Foxconn’s facility, Apple has been exposed to ethics risks in recent years. The Fair
Labor Association (FLA) has identified issues with the work conditions at Foxconn, including
excess overtime and low wages. Foxconn has agreed with the FLA to reduce employees’ work
time and increase pay. Samsung has its own assembly plants in Korea and China, which allow
it to control outsourcing risks.
✓ Marketing and service
The marketing strategies of Apple and Samsung are different: while Apple focuses on
generating the most profit, Samsung ships the most phones in an effort to win the largest share
of the still-growing smartphone market. Apple’s strategy revolves around the high subsidies it
charges to carriers who wish to offer the iPhone and allow it to achieve astonishing margins of
49–58 % on iPhone sales from 2010 to 2012. Apple can maintain these high carrier subsidies
and high margins only if consumer demand for the iPhone remains strong.
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Mata Kuliah : Manajamen Operasi Internasional Dosen Pengampu : Baziedy A. Darmawan, SE., MM.
While carriers of the iPhone are limited (e.g., at first limited to only AT&T, then Sprint, then
Verizon in the US), Samsung makes a point of selling the Galaxy on all major carriers, including
US regional carriers. Samsung has generally been willing to cut the price it charges carriers,
which allows the company to maintain good working relationships with the service carriers. This
is critical to allowing Samsung to build marketing channels through which they can compete with
Apple. The strategic focus of Samsung is on the cumulative volume of sales, not the margins.
✓ Customers
Due to its long-term success and reputation, Apple has earned highly loyal fans, many of whom
are willing to wait in long queues for new products, while Samsung can only conduct
promotional activities to attract customers. Samsung has the advantage of a far broader
customer base, however, and can attract customers from all areas of consumer electronics
since it makes a huge range of products, including HDTVs, DVRs and Blu-ray disc players,
laptops, camcorders and refrigerators. Furthermore, Samsung can draw in customers from other
markets of the Samsung Group, which includes Samsung Heavy Industries (the world’s leading
shipbuilder), Samsung Engi- neering and Samsung Life Insurance.
4. Lawsuit battle Since the spring of 2011, when Apple began litigating against Samsung in
patent infringement suits, Apple and Samsung Electronics have been locked in a series of
lawsuits pertaining to their smartphone and tablet computer design and the related patents. The
mobile device patent wars highlight the fierce competition in the global consumer mobile
communications market. As of July 2012, the two companies were still embroiled in more than
50 lawsuits worldwide. While Apple won recent cases in the US, Samsung won in South Korea
and Japan. In Europe, the lawsuit battle is more complicated and fiercer, and neither company
has registered a complete victory in either the German, Dutch, French or British courts.
Berdasarkan studi kasus tersebut, jawablah pertanyaan-pertanyaan berikut ini : 1. Apakah
kualitas merupakan kompetensi yang paling utama bagi Apple? Jika ya, bagaimana cara
Apple dalam mencapai kompetensi tersebut? 2. Apakah kompetensi utama yang dimiliki oleh
Samsung? Bagaimana cara Samsung dalam
mencapainya? 3. Apa keunggulan kompetititf yang terdapat dalam proses rantai pasokan
Apple? 4. Apa keunggulan kompetitif utama yang dimiliki oleh jaringan rantai pasokan
Samsung? Apa aktivitas yang paling utama dalam rantai pasokan tersebut yang digunakan
untuk meningkatkan kemampuan strategis Samsung? 5. Apakah perangkat hukum yang
digunakan oleh kedua perusahaan digunakan sebagai ‘senjata’
strategis untuk menghadapi persaingan diantara keduanya? 6. Gambarkan dan jelaskan
jaringan rantai pasokan global yang dimiliki oleh Samsung dan Apple secara
terpisah!
-You can, if you think you can- BZD -
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