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Apple vs Samsung: Competitive Dynamics

CASE FLYER, STRATEGIC MANAGEMENT
ET Cases, 6 pages

Case Preview

Apple vs Samsung: Competitive Dynamics

 

Expected Learning Outcomes

• Nature and business dynamics of smartphone industry and its critical success factors
• Competitive strategy, value and volume dynamics between Apple and Samsung in being the market leader
• The strategic insights from smartphone industry’s competitive dynamics

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I. Smartphones: Personal Preferences and Patronage

1. What is the first thing on your mind (or you use) as soon as you wake up in the morning – is it the washroom, wardrobe, TV remote control, smartphone, coffee or anything else?
2. How many of you use smartphones? If yes, which brand and model?
3. Why did you choose to buy the particular brand/model?
4. What were the most important deciding factors to buy the particular brand/model?
5. ..............................................

Teaching Note Preview

Apple vs Samsung: Competitive Dynamics

 

Synopsis

When Apple Inc., unveiled its latest smartphones iPhone 6 and iPhone 6 Plus in September 2014, industry experts, opined that Apple might finally have the right  ingredients to sap the advantages of Samsung’s Galaxy line of smartphones and reverse Samsung’s fortunes. Devices that combined telephony and computing – the mobile phones/smartphones – were first predicted/conceptualized by the legendary inventor and electrical engineer, Nikola Tesla in 1909. In 1996, Nokia launched its ground-breaking product, the Nokia 9000, which was the first smartphone. Since then, the smartphone market has been growing rapidly. The Nokia 9000 Communicator was a combination of an HP-made PDA (Personal Digital Assistant) and a Nokia-made traditional phone.

Apple redefined the modern smartphone, when it launched its iPhone in 2007. It also created a new ecosystem of ‘inclusive’ suppliers. However, since 2010, Samsung’s share of the smartphone market zoomed to 31% past Apple’s 15%. The fight between these two giants had rewritten the rules of the smartphone industry and made the other companies’ (like Nokia, Motorola and BlackBerry) products irrelevant. While Value-driven Apple’s market share (in terms of handsets sold) is lesser, the margins are industry-highest. The Volume-driven Samsung’s market share is highest (at 21% in Q2, 2015) while its margins are way below Apple’s. However, with Apple’s iPhone 6, Apple is expected to regain the lost ground. Can iPhone 6 reverse the market share trend in favor of Apple?

This case flyer helps the students/participants to understand the competitive strategies of two of the biggest players (Apple and Samsung) in the smartphone industry and their influence on the industry’s competitive dynamics.

Prerequisite Conceptual Understandings/Before the Classroom Discussion

The participants/students should be conversant with the following concepts/business ideas that can help understand the underlying learning outcomes of this case flyer.

• Andrew S. Grove’s Segment Zero
• Technology Life Cycles and ‘S’ Curve
• The ingredients of a smartphone

Case Positioning and Setting

This case flyer can be used in an MBA Program for Business/Corporate Strategy for either of the following concepts/theoretical constructs/discussion modules:

  • • Industry Analysis – How smartphone industry’s competitive dynamics are shaped up largely by two dominant players and with low entry barriers and easily accessible operating systems, etc., how the innovations, etc., have altered the smartphone industry’s landscape
  • • Firm’s Strategy – How a focused and clearly positioned strategy can create an unique position
  • • Strategy vs Structure – To debate on whether structure shapes the strategy or whether strategy can shape the structure

 

Suggested Orchestration

Smartphones have become an integral part of our lives because of its ubiquitous nature – it, practically, is a device that enables a multitude of functions. In addition, the technological developments in the smartphone industry and the demand for better smartphones had triggered a stiff competition among the players. There are many players, but Apple and Samsung, which have developed different manufacturing ecosystems for themselves that gives them a competitive advantage, dominate the industry. The case flyer questions try to analyze the competitive strategies of these two players and their strategies that have shaped the industry dynamics. The classroom discussion was carried out as presented in Exhibit (TN)-I..............

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Abstract


This case flyer, based on the article1 from The Economic Times, can be used to understand how a competitive strategy is played out between two of the biggest players in an industry - the smartphone industry - and how the industry's competitive dynamics are shaped with several disruptions from other players. Is it a proverbial tale of two elephants fighting and the resultant crushed grass, between Apple and Samsung, with Motorola, Nokia, Blackberry, HTC, etc., being near irrelevant in the mobile phone industry? When Apple launched its iPhone in 2007, it set in motion a new category, the smartphones with futuristic, customer-friendly technology and a new ecosystem of 'inclusive' suppliers. However, since 2010, Samsung's share of the smartphone market zoomed to 31% past Apple's 15%. Often referred to as 'two-horse race' about the competition between Apple and Samsung, the ';duopoly' has rewritten the rules of competition in smartphone industry. While value-driven Apple's market share (in terms of handsets shipped to the distributors) is lesser, the margins are industry-highest. The Volume-driven Samsung's market share is highest (at 21% in Q2, 2015) while its margins are way below Apple's. However, with Apple's iPhone 6, Apple is expected to regain the lost ground. Can iPhone 6 reverse the market share trend in favor of Apple? With four important and key trends in smartphone industry - rise of 4G, growing appetite for larger screens, increasing demand from emerging markets and rise in demand for 'cheaper' handsets - how would the competition in smartphone industry pan out in the future?



Pedagogical Objectives

  • To understand the nature and business dynamics of smartphone industry and debate on the critical success factors
  • To examine the competitive strategy between Apple and Samsung in being the market leader and debate on the relevance of value and volume dynamics in the smartphone industry
  • To discuss and debate on the strategic insights from smartphone industry’s competitive dynamics, i.e., how structure gets shaped up by (a firm’s or firms’) strategy, and relevance of technology S-Curves

Case Positioning and Setting
This case flyer can be used in an MBA Program for Business/Corporate Strategy for either of the following concepts/theoretical constructs/discussion modules:

  • Industry Analysis – How smartphone industry’s competitive dynamics are shaped up largely by two dominant players and with low entry barriers and easily accessible operating systems, innovations, etc., have altered the smartphone industry’s landscape
  • Firm’s Strategy – How a focused and clearly positioned strategy can create an unique position
  • Strategy vs Structure – To debate on whether structure shapes the strategy or whether strategy can shape the structure

“6 Reasons Why Samsung Should Fear The iPhone 6”, The Economic Times, September 6th 2014, page 6

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 - Abstract
- Case Flyer
- Teaching Plan (**ONLY for Academicians)
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