Table of Contents
Innovation has been described to entail more than new products and services of an organization. That way, there are various practices included in the innovation basket in most successful organizations. Innovation can be described as the process of improving products and its selling tactics. In other words, innovation entails the entire organizational structure, and culture among other practices. The various practices that have been noted to be key drivers of innovation include using technology in collaboration with sharing knowledge. It has also been associated with promotion of organizational value and development of leadership competency. Compensation of innovation has also been included in the development of idea-finding practices among others. Recruiting for competitive talents, rewarding innovation and training for creativity are some of the practices that are inclusive in innovative organizations. Apple and Samsung have been named alongside Google as the most innovative companies in the technological world. However, Apple has been crowned as the most effective among the three, especially after increasing its standings within the Fortune 500. Samsung has emerged as a behemoth in the technological market and its smartphones have been noted to dominate the landscape. Moreover, profits of the company have been relatively pleasing. In that case, the paper provides similarities and differences in innovativeness of Samsung and Apple, considering the fact that the two are big competitors in the tech marketplace.
Background Information of Innovativeness
Apple has recently been named as the most innovative firm. It is at the 9th year in the listing that the company has emerged top in a survey by Boston Consulting Group. Samsung has been listed position two, followed by Google Inc. However, it was mentioned that measuring innovation can be complex, since it involves a wide area of consideration. In that case, the bar continuously increases for all that entails a world-class innovative company. It is vital to consider the criticisms that have been surrounding Samsung’s innovativeness with some of them stating that the company has been copying some innovations. However, Samsung has remained a leader in various technologies, such as screens, televisions, batteries, as well as chip models (Bajarin 2011). It has also been described that when a project attains its critical stages in Apple Inc, then the company is at a position to allocate three groups to the development, in order to enhance competition. The big question remains what Samsung is involved in that is similar to Apple and the way it is able to line up with the masters in the United States. The current success of Samsung has been associated with the systematic approach towards innovation.
With an introduction of the initial iPhone by Apple in 2007, much has been altered within the Smartphone market. In that case, a new standard was developed for phones along with competitors who were encountering challenges in attaining the new standards. It was not until the year 2009 that Samsung was able to introduce a competing model going by the name of Samsung Galaxy (Jacobides, Knudsen & Augier 2006). It was with the introduction of the series that Apple began to lose customers to Samsung. That way, Samsung was able to lead in the market position, hence placing Apple as second in the game. In that case, the two innovative giants have continued to clash since that moment. It was highlighted that Samsung Galaxy’s success was intertwined with its similarity with the iPhone that was initially developed by Apple. In various trials, during the year 2012, the Apple Company was paid $930 million by its competitor, Samsung, citing patent infringement (Baldwin & Clark 2006). Nevertheless, it can be deduced that with such a huge value of $330 billion, then Samsung can be regarded as a real winner in the market. It is evident that both companies spent huge amounts of money in the processes of patenting their innovativeness. It is important to note that their innovativeness has not been along the lines of products and services, but also in other aspects of their practices that will be evident in this paper.
Methods of Gathering and Developing New Ideas
In terms of technology, Apple has been cited as a leader in design whilst Samsung has been regarded as a giant in component technology. Most importantly, Samsung concentrates on consumer electronics. In fact, Apple reported to have spent $876 million in its research and development during the 3rd quarter of the year 2012. That quarter, the company earned a profit of $35 billion. However, all that seems to vary between the two companies is the engineering stamp emerging from the brand. That way, research and development is notable across the two companies. As a way of comparison, both companies have regarded development features as a way of obtaining innovative value. In that case, Samsung embarked on smartphones that have sensors to both hand and eye gestures (Baldwin & Clark 2006). This began with Galaxy S4. However, that only attracted 800,000 units of sales in two months, unlike Apple’s iPhone 5s that was greatly received in the market. The iPhone 5s was regarded as the first to reach the market with the 64-bit processor. Product design has been the main aim of Samsung. Furthermore, it can be deduced that both companies offer similar, although not perfect, substitute products. They do that to maximize their profits and attain market power (Bajarin 2011).
Although the mobile phones manufactured by both companies can seem similar, they are significantly different. It is clear that since the launch of initial iPhone by Apple Company, it has continued to introduce one or two types each passing year. Samsung Company has launched above twenty phones every year in the previous three years. That way, it can be deduced that the difference is significant, considering the fact that the two are key players in the same market. On another note, innovativeness can be looked at in the angle of horizontal, as well as vertical product differentiation. Most importantly, mentioning horizontal product variety introduces the idea of when a company provides many versions of a similar product, while horizontal variety is when a company attracts clients with its different preferences under similar prices. On the other hand, vertical product differentiation is applied in distinguishing between willingness to compensate for quality by the clients. Apple Company seems to adopt the horizontal product variation (Baldwin & Clark 2006). That can be seen in its latest product of iPhone 5s that was introduced in three distinguishable colours, including gold, silver, as well as space gray. In that case, the phones are similar and it is only the colour that differentiates them. Similarly, Samsung has adopted the same strategy in that it is currently providing 21 models of Galaxy phones under different colours, prices, as well as product features.
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There is a huge difference between the organizational structures of the two companies in the sense that Samsung has adopted the vertically integrated supplying program, whilst Apple has adopted the vertically integrated buying specialization. Samsung operates under the vertical integration model that is able to leverage all elements of its manufacturing procedures from raw inputs to components all the way to fully-assembled items (Ramstad 2009). The company has also emerged as one of the largest suppliers within the electronics components field. Apple Inc uses the vertically integrated model, since it has four firms inside it, meaning that it is able to control its critical operations in making and selling its products (Kurtenbach 2006). In other words, it operates as a hardware, software, services and retail company, as opposed to Samsung. Unlike Samsung, Apple does not manufacture or assemble other parts, in order to provide its outputs. In other words, it can be described as a design firm, rather than a manufacturing firm. It is for that reason that Apple, despite using the vertical model, outsources its production processes to other companies (Linden, Kraemer & Dedrick 2007). It has become evident that one of the biggest suppliers of Apple is Samsung in terms of the flash memory and application processors.
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Another difference has also emerged in terms of profit attaining initiatives that also touches on their competitive practices. Samsung has been regarded as a company that is able to attain economies of scale and that allows it to remain top of electronics supply. That is achieved by leveraging the ability of the company to offer component parts as well as assemble them under a large scale along with a cost-effective procedure. That way, the company is able to move to markets and provide deep competition in greatly growing sectors. It has been reported that the segment increased by 42.5% over the initial quarter of 2012 and that was greatly dominated by Samsung as the vendor (Teece 2006). On the contrary, Apple’s integrated organizational structure only helps it to free up the resources, in order to look deeply into its competency. That is also aimed at designing elegant, along with user-friendly products. That also enables the company to outsource its vertical chains (Bajarin 2011). At the same period, Apple Inc is able to maintain its control on design and development practices. That way, Apple Company has remained on top of other companies in terms of profits and revenue generation.
Innovation is inclusive of organizational culture. In that case, both Apple and Samsung have joined the smartphones market with an aim of dominance. However, they have each done it differently, hence there is a need to look deep into their cultures. The two companies have different cultural roots in different markets. Most importantly, while the Apple Inc maximized its California effective along with design-enabled product innovation, Samsung has remained keen on its roots in Korea. In that case, Samsung follows the engineer-focused organizational culture alongside specification-obsessed provisions. Nevertheless, it has been argued that the most prominent difference between the two companies is the manner in which they release their products into the markets (Baldwin & Clark 2006). Furthermore, Apple has been known to have kept a product, iPhone, for eight years before it released it into the market. It is the company’s culture to release a product that is no less than perfect. It has also been noted that once the products are released, the company makes major updates; the company remains confident that the initial product was the best to their ability (Yoo-chul 2010).
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As a matter of fact, that ensures that it attains an enthralled technological press, along with an awed public. That way, it necessitates a certain degree of security along with secrecy, which is able to distinguish it from attaining valuable market reply before the launch. On the other note, Samsung has adopted a different culture of releasing a less than perfect item, but iterates its way towards high performance (Valdez 2012). In that case, Samsung has an innovative way of maintaining a long story of releasing items that maintain perfectness from their initial stages. In fact, the first products are aimed at gauging interest and measuring capabilities. Most importantly, the releases by Samsung are perfectly content in a way that they iterate a way to continuous success. A good example that illustrates their differentiated organizational culture is the manner in which they released their smart watches. Early reviews indicated that it was only a small improvement on the available smart watches. That way, Samsung owns the press in terms of quality smart watches, since Apple held back waiting for its version’s readiness (Cacciatori & Jacobides 2005).
As a way of setting high performance targets, Samsung has adopted a different recruitment policy, compared to Apple. Samsung has for a long period adopted a larger number of employees than Apple Inc. For Samsung Electronics, it has an approximately 275,000 employees, as per statistics released in 2013. In the same year, Apple had reported only 80,300 employees. In fact, the only company in the same industry nearing Samsung was Sony that had 105,000 employees (Chesbrough 2003). The company decided to invest heavily on diversified talents in its various departments. In that case, statistics reported that the software engineers in 2013 were recorded at 40,506. The company’s employees have increased by 45% since the year 2011 (Baldwin & Clark 2000). Samsung has a friendly recruitment process that does not involve much technical questions. In fact, Apple Inc has more technical interview questions than Samsung, despite the fact that Apple’s recruitment process has remained under the radar. That is a way of winning professional and competent individuals who bring to it high levels of innovativeness. However, Apple’s recruitment process has been defined as that of positive experience. People working at Apple have been referred to as extremely talented. It is clear that the two companies have a completely different recruitment process, with Apple involving intensive screening and under the radar processes (Cacciatori & Jacobides 2005).
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Use of Market Research
Both Apple and Samsung have been able to use market research practices in order to acquire information that is available in the market in order to expand their shares. The companies have been able to follow market information and provide new innovations every year. For instance, Samsung’s financial revenue in the year 2014 was reported to be lower than expected by the analysts. That way, the operating income was recorded as less with 25% than that of 2013 (Chesbrough 2003). Market information has also proved that sale of Galaxy S5 that was released by Samsung continues to be behind iPhone 5s. That way, Samsung vowed to embark on improving its products and focus on what was next. However, the company failed to offer comments on the shipment numbers for its product. The company’s leaders used the information in the market to defend it, citing that it will embark on product competitiveness through reinforcement of its brand reputation (Baldwin & Clark 2000). Moreover, it indicated that it was to focus on product line-up along with a cutting-edge technology that will enable it to fit the current market size.
On another note, Apple also uses market research information as a way of fitting into the emerging markets. After launching Galaxy S5 by Samsung, Apple introduced iPhone 6. The smartphones came with larger screens that encroached all that had for long been considered as a Samsung feature. Therefore, it can be deduced that the two companies have been able to effectively use market research information and practices as a way of generating, as well as implementing their innovativeness (Eisenberger, Li, Mitrenko, Vajrapu & Xu 2003). In fact, Apple Inc can be regarded as one company that greatly uses market research information within its scope of operations in order to offer innovative products into the global market.
Nature of Competitive Environment
In generating and implementing innovativeness within their industry of operation, both Apple and Samsung companies have shown differences and similarities in their operations. In maintaining and improving their competitive advantages, the two companies have engaged in unique activities (Chesbrough 2003). For instance, Apple has been regarded as a profitable smartphone manufacturer and that has earned great competitive advantage in the industry. The ability of the company to maintain momentum and control over its user experiences along with the design expertise has earned it a great position within the industry. However, there is a difference in the competitive advantage of Samsung towards implementing and generating innovation. In Samsung, it has a large edge above Apple Inc. The company is able to manage its costs and maximize its profits. As per the estimates done last year, Galaxy S4 costs the company around $236 for each unit of a product with an exclusion of manufacturing expenses. In that case, that can be compared to the high figure of Apple that was estimated at $207 for its iPhone 5. However, it was proved that more than 50% of the expenses of every unit go back to the company (Baldwin & Clark 2000). Therefore, as a way of acquiring competitiveness of the companies, they both aim at profit maximization, despite the fact that they use different approaches.
In terms of instilling investor confidence, both companies have different approaches; Samsung, unlike Apple, has been noted to lose a huge percentage of shareholders. In Apple, shares have tumbled by 43% in 7 months. That way, its shareholders have lost $283 billion (Gawer & Henderson 2007). That has been linked to poor ways of maintaining competitiveness towards innovation, especially after the release of iPhone 5. The major loss happened after the death of its co-founder, Steve Jobs, who was after innovation and building talents. However, Samsung has been seen to use a rather vital procedure in maintaining its competitiveness within the industry. Since the year 2009, the company has been able to invest huge amounts of money across its mobile division by production of smartphones and tablets (Graziano 2012). It was not until 2010 that the company was able to produce its Galaxy S that was widely popular in the market. It is clear that Apple’s resilience, especially after Job’s death, is taking time and not until the release of iPhone 6 last year that the company seems to embark to its competitive practices (Cacciatori & Jacobides 2005). However, Samsung continues to be highly competitive.
Many lessons can be deduced from this research in that Apple and Samsung Companies operate in the same industry and have great information to offer in terms of generating and implementing their innovative strategies. One of the most critical lessons that can be deduced from this discussion is that innovativeness of a company can be difficult to measure, since each company has its way of defining its innovation performance. That brings in the idea that innovation is a wide topic of discussion. In fact, many aspects of innovation surround the whole organization, including the small areas that are considered insignificant, such as training for talent development (Chesbrough 2003). Both Samsung and Apple companies have done great in their innovative initiatives to attain their goals and objectives now and in future.