Strategic management employs a range of tools and techniques to facilitate the formulation of long-term goals to guide operational processes within an organization. A SWOT analysis as explained by Pearce & Robinson (2013), is one of the techniques employed in strategic management which organizations use to assess helpful and harmful aspects of their internal as well as the external environment. SWOT is an acronym that refers To Strengths, Weaknesses, Opportunities, and Threats and it allows organizations to consider all factors relevant to decision making. This paper examines the SWOT analysis for two well renown electronic companies, Apple Inc. and Samsung highlighting the primary differences and similarities between them.
Strengths
Strengths represent the primary internal capabilities that make an organization stand out from competitors in the same industry. Companies utilize their capabilities to take advantage of opportunities in the external environment and manage threats to survival and operation (Krishnaswamy, 2017). a review of the strengths of both companies highlights certain differences and similarities. The most common strengths of Apple Inc. and Samsung company include brand reputation and recognition and innovativeness in product design.
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The high quality of products produced by apple Inc is a source of strength for the company which has enabled a loyal customer base. Most of apple products are highly innovative independent of market trends in consumer needs which has kept the company at the top in the industry. Although Samsung also designs its products through innovation, their innovative capability is yet to match that of Apple Inc. Both companies have extensive distribution channels within the united states although Samsung’s channel of distributing products is more developed compared to that of Apple giving it an advantage over competitors. Although both companies offer different electronic products, Samsung has a more diverse product portfolio comparted to Apple which reduces the risk of doing business for the company. Apple enjoys a stable financial platform compared to Samsung probably since Samsung spends more on research and design.
Weaknesses
A company’s weaknesses represent the negative aspects that limit it from reaching its full potential in operational efficiency and profitability. Given that weaknesses are internal, the company can identify measures to improve weak areas and increases their capabilities (Khan et al., 2015). Most of the weaknesses for Apple Inc. represent strengths at Samsung while weaknesses at Samsung represent strong areas at Apple Inc. There is not much similarity between the weaknesses of the two tech companies other than the factors identified limit these companies from reaching maximum efficiency.
The primary weakness at apple is the incompatibility of products with other hardware and software available in the market. Also, apple relies on more on sales from the iPhone series compared to its other product lines. Samsung on the other hand relies on sales from a single region, the united states and north America regions. Apple spends less on research and development, although this does not seem to have affected the company’s productivity so far. Samsung has experienced a much lower profit margin compared to apple in recent years that has affected the company’s profitability in the industry. Another weakness at apple is the high cost of production which makes their products expensive compared to those of competitors from the Chinese market. Samsung’s marketing capabilities are inferior compared to those of apple which is probably the reason Samsung is yet to surpass apple’s sales.
Opportunities
One of the components of the external environment is opportunities. According to Berisha Qehaja et al. (2017), factors in the external environment are beyond the control of an organization. therefore, there is need to identify capabilities that will help address factors presented by the external environment. Opportunities are chances or circumstances in the environment that companies can use to further their strategic objectives. The difference in the scope of opportunities lies in the difference in markets of operation.
Both Samsung and apple are faced with the same market opportunities given that they operate in the same industry. The extensive growth of the internet across the globe provides an opportunity for new markets for both companies. Rising concerns over healthy living has instigated the need for wearable electronic gadgets to help users keep track of their health. This is an opportunity for both companies to design products that will meet these changing needs. Globalization has reduced most of the barriers to entry into new markets which enables both Apple and Samsung to expand their global market presence. Samsung has acquired other firms in the tech industry like Viv and Harman which has expanded its capabilities to take advantage of new market opportunities.
Threats
Threats, like opportunities, are aspects of the external environment which pose challenges to the operations of a company. threats are difficult for companies to avoid and failure to understand what challenges threaten the survival of operations leads to poor management. The two companies are each other’s competitors; however, Apple remains the leading manufacturer of smartphones and computer accessories in the world (Khan et al., 2015).
Like the opportunities, Samsung and apple face almost similar threats from their external environments. First, is the growing competition from Chinese based manufacturers that offer equally reliable and quality products at cheaper prices. Another primary threat is the risk of imitation form other producers who use established brand names like Samsung and apple to get their products sold. There is increasing demand for tablets which poses a threat for Apple Inc. Whose main product is the iPhone series. Although Samsung has a wide product portfolio that reduces risk of business, it also poses a threat as the failure of a single product affects all other products under its brand name.
- Berisha Qehaja, A., Kutllovci, E., & Shiroka Pula, J. (2017). Strategic Management Tools and Techniques: A Comparative Analysis of Empirical Studies. Croatian Economic Survey, 19(1), 67-99.
- Khan, U. A., Alam, M. N., & Alam, S. (2015). A Critical Analysis of Internal and External Environment of Apple Inc. International Journal of Economics, Commerce and Management, 3(6), 955-961.
- Krishnaswamy, S. (2017). Sources of Sustainable Competitive Advantage: A Study & Industry Outlook. St. Theresa Journal of Humanities and Social Sciences, 3(1).
- Pearce, J. A., & Robinson, R. B. (2013). Strategic Management: Planning for Domestic & Global Competition. New York: McGraw-Hill/Irwin.
