Competition is a fundamental influence on a business for a successful outcome in the market economy, becoming the pinnacle of who we are. Competition occurs in continuous everyday events, for example through sports, businesses, and so on, which influence our daily lives.
My favorite brand is Apple Inc. (Apple), Apple is a well-known American multinational technological company, that designs and instigates a series of computer software and smartphones. Within the wide range of goods Apple offers, the smartphone would have to be my favorite product. In, Apple has around 18 different models of iPhones to offer to the general public.
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Apple can be considered to stand within two different market structures such as oligopoly and monopolistic competition. Monopolistic refers to having numerous competitors offering products that are similar; for example, their Mac computers. Therefore, we see Apple striving to differentiate its product offering from others, for example, Microsoft. Whereas, Oligopoly refers to a small number of competitors offering similar, but somewhat differentiated products; for example; their smartphones.
A major oligopoly competitor to Apple is Samsung which is a South Korean multinational company, that develops televisions, household appliances, and smartphones. Samsung has become a major competitor to Apple due to the technological field always fluctuating and emerging. According to the “Vendor Data Overview (Worldwide Top 5 Smartphone Company Market Share)” – IDC.com, Samsung was the leading vendor in the worldwide smartphone market with a 23.5% percent market share in 2018 Quarter 1 (Q1). Whereas, Apple was the second largest with a 15.7% market share in 2018 Q1.
Competition can be controlled through the use of a situational analysis providing a precise understanding of the business’s current position. Strengths and weaknesses are internal, occurring inside the business, controlled, and affected by decisions. Whereas, opportunities and threats are external, occurring outside the business, and beyond the control of management.
Although Samsung is Apple’s biggest competitor, it created a weakness within the company due to damaging its image by infringement involving Apple itself. According to the Sydney Morning Herald written by Stephen Nellis & Jan Wolfe (2018), around the 25th May 2018 – US Jury, said “Samsung should pay $US539 million ($711 million) to Apple for copying patented smartphone features”. This dispute had been going on for years when Samsung was found accountable in 2012, but lack of agreement over the amount that needed to be paid led the feud to continue until arguments concluded in May 2018. This weakness from Samsung had affected its brand image negatively therefore not allowing Samsung to reach its intended goals as it drew more consumers to Apple's iPhones.
In comparison, Apple’s competition is growing, due to its high prices remaining unaffordable and difficult for many to purchase as it attracts customers from the upper class. As a result, it limits consumers within the lower-class bracket to simply purchasing these specific products. Apple’s iPhone prices have been on the rise for years now, for example; the most current iPhone XS, has a price of $1,799, and around two years ago, the iPhone 7 Plus, commenced at $929. This goes to show how quickly pricing has increased over a short period of time. When you compare Samsung’s latest phone (Galaxy S10+), it has a price of $1499, furthermore identifying how difficult it is for consumers within the lower class whom in which may be interested in purchasing Apple products. This affects competition between Apple and Samsung, due to Samsung giving the opportunity to customers within the lower bracket to experience life with a smartphone.
Within both companies, there is the rising threat of competition from other companies such as Microsoft and Google offering the same products. Although, these threats, could impose opportunities for each company to challenge one another due to the innovative development of new product lines.
PESTEL analysis is used as a tool to assess the macro-environmental factors that affect Apple and Samsung. There are multiple issues PESTEL controls, influencing managers’ decisions on the business.
Technology allows a better way of doing things, resulting in changes to the expectations and behaviors of customers and clients, which then can have huge effects on how suppliers work. Every business is in constant rivalry to adopt greater technological advancement in order to attract and maintain consumers, to help create a better impression than its competitor. Due to technology growing fast, this creates a greater advantage for Samsung. With their ability to continue to innovate, leads them to keep up with the technological growth happening today. Therefore, with the accumulating demand for technology, will result in Samsung creating new improvements and achieving its intended goals and objectives. As a result, Apple faces imitation of Samsung, resulting in the company having to reassess its strategies and come up with unique innovations to surpass its competitor.
Socio-cultural refers to the factors that affect people’s attitudes and beliefs. In order to succeed, companies must provide flexibility in regard to policies. Fluctuation of consumer preferences in specific markets has led Apple and Samsung to change products in order to compete to satisfy these needs and wants. It presents opportunities due to the increasing use of mobile access. However, competition between Apple and Samsung regarding sociocultural factors is comparable, considering they both experience the need to reform to accommodate all sociocultural facets.
Political factor is the extent of government policies that may affect the business, influencing the marketing decisions. It is directly relevant through favorable treatment at the hands of the government and regulations. For example, when Apple provides its goods to other countries, the business must be aware of the regulations involved with tax legislation and the system for the importation of the products. Political instability can affect the sales and supply chains of businesses such as Apple. A political issue that affects Apple's performance, in particular, is the China-US trade in the Chinese market. If there was a rapid increase in the taxation of imports and/or exports, this could also result in Apple products facing heavy taxes from the Chinese government. As a result, this would affect the demand for Apple’s products such as their smartphones. The competitor of Apple, Samsung in particular has been involved in a number of political scandals. For example, in the article “Samsung… Jay Y Lee jailed for five years…” (August 2017), Jay Y.Lee, the previous vice chairman of Samsung, was sentenced to five years “in prison after finding him guilty of offering bribes to the country’s former president”, and was “also guilty of embezzlement, hiding assets overseas, and concealing profit from criminal acts” This scandal was beneficial for Apple, as after the outcome, shares of Samsung dropped more than 1 percent.
Through the application of analytical strategic frameworks such as SWOT and PESTEL, it indicates that my favorite product Apple Inc. (iPhone) and Samsung are highly competitive. Given both of the company’s current positions, it enables them to broaden their consumer base and enhance services, therefore, undertaking actions to achieve an efficient business - meeting the needs and wants of customers.
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