STRATEGIC

MANAGEMENT
ASSIGNMENT

Submitted To-

Submitted By-

Mr. Jagandeep Singh

Amanjot Kaur
BE+MBA, 10th Sem
Batch: 2011-16
UM11502

SAMSUNG
Mission Statement
"Inspire the world, create the future."

Vision 2020
As stated in its new motto, Samsung Electronics' vision for the new decade is, "Inspire the
World, Create the Future."
This new vision reflects Samsung Electronics commitment to inspiring its communities by
leveraging Samsung's three key strengths: New Technology, Innovative Products, and
Creative Solutions. -- and to promoting new value for Samsung's core networks -- Industry,
Partners, and Employees. Through these efforts, Samsung hopes to contribute to a better
world and a richer experience for all.

As part of this vision, Samsung has mapped out a specific plan of reaching $400 billion in
revenue and becoming one of the worlds top five brands by 2020. To this end, Samsung has
also established three strategic approaches in its management: Creativity, Partnership,
and Talent.
Samsung is excited about the future. As we build on our previous accomplishments, we look
forward to exploring new territories, including health, medicine, and biotechnology. Samsung
is committed to being a creative leader in new markets and becoming a truly No. 1 business
going forward.

The Samsung Philosophy

At Samsung, we follow a simple business philosophy: to devote our talent and technology to
creating superior products and services that contribute to a better global society.
Every day, our people bring this philosophy to life. Our leaders search for the brightest talent
from around the world, and give them the resources they need to be the best at what they do.
The result is that all of our productsfrom memory chips that help businesses store vital
knowledge to mobile phones that connect people across continents have the power to
enrich lives. And thats what making a better global society all is about.

Companys Values We believe that living by strong values is the key to good business. At Samsung, a rigorous
code of conduct and these core values are at the heart of every decision we make.

People
Quite simply, a company is its people. At Samsung, were dedicated to giving our people a
wealth of opportunities to reach their full potential.

Excellence
Everything we do at Samsung is driven by an unyielding passion for excellenceand an
unfaltering commitment to develop the best products and services on the market.

Change

In todays fast-paced global economy, change is constant and innovation is critical to a

companys survival. As we have done for 70 years, we set our sights on the future,
anticipating market needs and demands so we can steer our company toward long-term
success.

Integrity
Operating in an ethical way is the foundation of our business. Everything we do is guided by
a moral compass that ensures fairness, respect for all stakeholders and complete transparency.

Co-prosperity
A business cannot be successful unless it creates prosperity and opportunity for others.
Samsung is dedicated to being a socially and environmentally responsible corporate citizen in
every community where we operate around the globe.

Samsung SWOT Analysis

Samsung is a big electronic company and leading the electronic device in the world. Samsung
have been created a lot of alliance with many big corporations in term of providing electronic
device to their partner. The technology of Samsung is still in the leading in work market as
compared with the Apple Plc.
1.) Strengths
The strengths of Samsung is integration of hardware, Samsung provide the open source for
OS and also with other software. It means that all its device it can be used by many software
and OS, which provide the competitive advantage for Samsung over Apple.
2.) Threats
The strengths of Samsung is integration of hardware, Samsung provide the open source for
OS and also with other software. It means that all its device it can be used by many software
and OS, which provide the competitive advantage for Samsung over Apple.
3.) Weaknesses
Patent infringement. Samsung is infringing Apples and some other firms patents, thus,
damaging its reputation and having to pay a huge amount of money in damages.
4.) Opportunities
Growing Indias smartphone market. Indias smartphone market is one of the least penetrated
among Asia/Pacific countries. Samsung has a strong presence in Indias market and could use
this opportunity to expand its sales.

CORPORATE LEVEL STRATEGY SAMSUNG

Vertical Integration and Product Volume
Samsung operates like many other Asian producers, such as NEC Corporation or Sony
Corporation, with an emphasis on vertical integration and a flood of products. Samsung is
present in dozens of markets, including flat panels, sensors, LED lights, batteries, gaming
systems, cameras, TVs, appliances, cellphone carriers, tablets, smartphones and even medical
electronics.
Samsung is so much more than a smartphone-maker. It is a conglomerate, a manufacturer,
and the world's largest chip-maker. It makes many of the components that go into its
smartphones giving it a cost advantage and allowing it to be much more flexible in terms of
what it produces and when.

Samsung relies on vertical integration as a chief competitive advantage. While Apple still
imports billions of dollars' worth of components from its rival every year, Samsung is
beholden to nobody. It is not a magical formula, Nokia was almost as integrated before being
steamrolled by Apple and Samsung, but Samsung controls some logistical certainty in a way
that Apple does not.
Declining profit margins in 2014 and 2015, however, forced some introspective analysis
within Samsung's executive team. Chairman Lee Kun-hee saw his company's global share of
smartphone sales drop from 35% in 2013 to 24% by early 2015, and his son, Lee Jae-yong,
reportedly wants to respond through mergers and acquisitions (M&As) and partnerships. This
would be a historic shift in focus, likely signalling a departure from self-funded R&D and
into outsourced innovation

BUSINESS LEVEL STRATEGY SAMSUNG

From business-level strategies, a competitive advantage of a business can be created over its rivals.
Differentiation vs. cost leadership

The company has an experience of pursuing both, cost leadership as well as product
differentiation strategies during its lifetime.
In 2010, the strategy was mainly cost efficiency prior to Asian Financial Crisis of
1997.
With Eric Kim becoming chief marketing officer of the company, dramatic changes
were bought to the strategy of the company pursuing product differentiation
strategy.
Target market-broad vs. niche play
Samsung, because of the unique ecosystem created around it, has successfully spread
its product line across both of these dimensions

Samsungs Combined Low-cost/Differentiated Strategy

Difficult to implement
Firms aiming to do this are often stuck in the middle
Firms products are too costly to compete with low costs providers product, and too
undifferentiated to command the price premium gained by the differentiated firm

A variety of internal and external factors have helped Samsung achieve this desirable position
Samsungs success has been due to a variety of factors:

Successfully customized products around a core design

Large product portfolio (occupy the entire spectrum for a broad market play)
Collocation of fabrication and R&D facilities (internal conversation among engineers
to decrease time to market)
Easy access to Asian market
Combination of educated guessing and pure luck (e.g. stack design v/s trench design)
Talent pool strategy: Access to local talents, sponsoring employees for PhD and MBA
education)
Availability of capital: E.g. from 1983 to 1985 during recession of semiconductor
industry, Samsung allocated significant capital to build capacity
Differentiation
Faced with the challenge that the DRAM industry might fall into a commodity trap and therefore be
subject to cutthroat price competition and price fluctuations, Samsung developed the below
classification of broad product differentiation.

Frontier: Cutting edge products with the highest margins

Legacy: Current products, potentially manufactured using technology used to develop
the frontier products resulting in cost savings

 Specialty: Products to target niche markets

Cost advantage
Samsung was able to command better operating margins as compared to its competitors because of

Cheap labor: 35% cheaper as compared to non-Chinese manufacturers

Use of new design rules: This allowed Samsung to produce more chips per wafer (the
key raw material in chip manufacturing).
Better sourcing: Raw materials cost 37% less than its competitors probably due to
volume discounts and better bargaining power
Better manufacturing processes
- Yield rates were are at 80%, as compared to 50-67% for the competitors
- Samsung was able to get 2.4 times the amount of dies by using 12-inch wafers as
compared to 8-inch wafers, at 90% of the costs per chip leading to better gross
margins
Lower depreciation costs: By collocating and scaling its fab investments, Samsung
saved an average of 12% of the fab construction costs
Price advantage
Samsung was able to command a higher average selling price as compared to its competitors because
of its
1. Ability to offer customized memory chips that no other manufacturer could offer allowed them to
command premium pricing on these products
2. Better quality control that lead to reliability enabled Samsung to obtain an average price premium
of 1% average price

Aggressive investments in R&D

The memory chip industry is technology driven. A significant investment is required in R&D at the
product design stage. As illustrated in exhibit 1 Samsung Electronics had maintained its technology
leadership by outspending its rivals in R&D by over 1.5 to 20 times from 1998 to 2003, which was
possible thanks to the Samsung groups diversified portfolio that allowed it to take calculated
financial risks.
Since Samsung was able to create and maintain technology leadership it was able to earn a very high
premium at the initial stages of a new product to recover its initial investment and if competitors
began producing the same product it could aggressively lower prices to make it difficult for followers
to stay in the competition.

Samsung has pursued its differentiation strategy in a way that it has allowed to lower their cost
structure at the same time. This may pose serious threats to both the cost leaders and differentiators
over time.
Two dimensions of competitive strategy are
1.) Competitive advantage - low cost vs. differentiated play
2.) Target Market - broad vs. niche play
Samsung, because of the unique ecosystem created around it, has successfully spread its product line
across both of these dimensions

To conclude, Samsungs marketplace strategy is to flood the market with a myriad of products in a
short period of time. Samsung appeals to more markets by providing a plethora of gadgets such as cell
phones, smart phones, tablets, etc. to both low and high-end markets meaning at least one of their
products will, presumably, appeal to a person. Samsung has done well in the low-end market, but has
only recently begun increasing its presence in the smart phone market and has enjoyed a good amount
of success thus far as a result. For example, in the past year has seen Samsung gain a lot of share in
the smart phone market. Its market share has doubled to more than 36% in Q2 2011 from about 18%

during the same period last year. Samsungs rapid market share increase in the smart phone
marketplace can be partially attributed to Samsungs large amount of different devices as compared to
Apple and other competitors along with, Its huge lead over Apple in the second quarter of 2012,
when it sold nearly twice as many smart phones as Apple, was partly driven by the success of the
Galaxy S III which sold more than 10 million units in under two months. The successful launch and
subsequent consumer reaction to the Galaxy S III, i.e. Samsungs answer to the iPhone, was another
reason for such a large growth in their market share. Lastly, Samsung is not only the biggest adopter
of Googles Android software, but they also have smart phones running the Windows Phone OS as
well. While Apple is narrowed to its own iOS, Samsung is not held by these same boundaries;
Samsungs flood the market strategy works so well because they are able to not only diversify their
hardware, but the software that runs on their smart phones as well.

APPLE
Apples vision statement and mission statement are bases of the companys success as one of the most
valuable companies in the world. Established in 1976 in Cupertino, California, the firm has become a
symbol of innovation and elegance in design. These characteristics are linked to Apples mission
statement and vision statement, which continue to motivate the companys employees to support and
contribute to innovation for competitive advantage. Apple Inc. has changed its mission statement in
recent times, including changes to Steve Jobs original mission statement for the company. Also, Tim
Cook has introduced Apples new vision statement to reflect the current position of the company.
Thus, the firms mission statement and vision statement evolve over time to address changing
organizational and market conditions.
Apple follows its vision statement and mission statement to maintain its competitive strategy. The
vision statement shows the direction of the companys growth and product development. In relation,
Apples mission statement indicates the actions needed to ensure that the company continues in its
success path.

Mission Statement
Apples mission statement has also changed over time. The company considers the changing business
landscape, which influences the possibilities of what Apple can do. The company recognizes the
changing market and industry.
Apples current mission statement is,
Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and
professional software. Apple leads the digital music revolution with its iPods and iTunes online store.
Apple has reinvented the mobile phone with its revolutionary iPhone and App store, and is defining
the future of mobile media and computing devices with iPad.
Apples mission statement is very specific in indicating what the company does and will do. Details
about certain product lines are included to show the firms current condition. The mission statement
mentions Macs, OS X, iLife, iWork, and others. These details are important in recognizing and setting
the baseline for future actions that Apple will implement. These future actions are also provided in
detail. The mission statement includes details about what Apple intends to do in its various businesses.
For example, the firm states that it is defining the future of mobile media and computing devices.

This part of the mission statement shows that Apple plans to continue focusing its research and
development on mobile devices and related media. Such mobile media may include online media via
iTunes, which is accessible through mobile devices like iPad and iPhone. These points show that
Apples mission statement is accurate in depicting the companys situation and goals. However, the
mission statement is quite narrow in representing possibilities for Apple, which is currently in the best
position to explore a wider variety of options. It is also worth noting that this mission statement is a
departure from Steve Jobs original mission for the company: To make a contribution to the world by
making tools for the mind that advance humankind. Apples mission statement has shifted away from
a general picture of the business, toward a specific reflection of what it wants to achieve in terms of
goods and services.

Vision Statement
Apples current vision statement was introduced by CEO Tim Cook, who stated, We believe that we
are on the face of the earth to make great products and thats not changing. We are constantly focusing
on innovating. We believe in the simple not the complex. We believe that we need to own and control
the primary technologies behind the products that we make, and participate only in markets where we
can make a significant contribution. We believe in saying no to thousands of projects, so that we can
really focus on the few that are truly important and meaningful to us. We believe in deep collaboration
and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And
frankly, we dont settle for anything less than excellence in every group in the company, and we have
the self- honesty to admit when were wrong and the courage to change. And I think regardless of who
is in what job those values are so embedded in this company that Apple will do extremely well.
Apples vision statement is considerably detailed and reflects the companys comprehensive approach
in ensuring continued growth and success. For instance, the vision statement enumerates a number of
major points, such as the emphasis on innovation, which directly relates with Apples rapid innovation
strategy. In addition, the vision statement specifies simplicity, which is also an integral aspect of the
companys approach to product design and development. Apple is known for user-friendly and easyto-use products that help improve daily activities. For instance, the simplicity of the design of iPhone
and iOS make it easy to communicate, use apps, and access the Internet. Moreover, Apples vision
statement shows careful selection of markets. This factor reflects the firms use of market research to
guide decision-making in product development and strategic formulation. Also, even organizational
culture is included in this vision statement. Apple highlights employees collaboration and excellence
as keys to its business. This detailed vision statement is quite comprehensive in addressing the
different aspects of Apples business. It effectively shows the holistic approach of the companys
leaders. Thus, based on conventions on vision statement construction, Apples vision statement is
satisfactory because it clearly shows the direction of the company. This direction is stated for the
business as a whole, as well as the various aspects or components of Apples organization. Such a
detailed vision statement is beneficial to business because it helps guide decision-makers and other
employees in working toward the desired condition, which in this case is a condition of Apples
continued global success based on excellence and innovation.

SWOT ANALYSIS

Strengths
Strong brand image
Customer loyalty
High customer switching costs
Research and Development
Outstanding financial performance
Frequent product introduction
Weaknesses
Dependence on the third party software developers
Products and services experience quality problems from time to
time(inconsistency).
Opportunities
Increasing demand in emerging foreign markets, for example, China and India
Retail store expansion
Increase lifestyle brand image
Threats
Intense competition in the industry
Intellectual rights infringement.
Political events, terrorism, etc

CORPORATE LEVEL STRATEGY

Apple uses a corporate level strategy competing on various levels. Apple possesses diversification in
levels from moderate to high with related constraints. Their offers include home computers, personal
computers, phones, music players, software and applications which resemble similar design
techniques and are able to work synchronized. Apple is also one of the few computer based companies
that also manages retail stores. Customers can either order their desired product online from
apple.com or visit an Apple Store or a retailer. All of Apple's businesses are linked to each other and
they are moved forward by simultaneous implementations.

They use both corporate relatedness and operational relatedness. Their human resources is
very important to them, and they use a lot of the same people in more than one business.
They have something between moderate and high level of diversification, with related
constrains. All of their businesses are in the same area.
This is a value-creating diversification, because it gets harder for their competitors to
understand why they are doing so well, and since they have a lot of both tangible and less
tangible resources that can be used in a lot, or all of their business, this can lead to economics
of scope.
Apple: Design, Integration and Outsourcing
From its target marketing, research and product design, Apple is a much more focused
company than Samsung. It is also a much more profitable company. Apple succeeds on
design and integration, and no small degree of risk. All of Apple's products include programs
that work very well with each other, but not with any of competitors' products, which makes
it easy for customers to keep buying Apple and difficult to switch to someone else. Nearly
three-quarters of Apple's revenue comes from the iPhone lineup, making the firm single
product-dependent.
Able to suppress R&D costs by outsourcing hardware component production and assembly,
Apple's CapEx look radically different from Samsung's. This inflates margins and boosts
Apple stock, and is one of the chief reasons Apple can grow at astounding clips.
Apple does not race to be first; it lets other companies spend time on R&D and early market
development before swooping in and improving everything. Consider the iPod, the first
breakthrough product during Jobs' second stint as CEO, which came out years after the Sony
Walkman. Not content to just throw out an imitator product, Apple worked diligently with
record labels and created a small, sleek-looking replacement. There are similar stories with
the smartphone and tablet markets, each considered pillars of Apple innovation but neither of
which the company invented.

Dominant Business type of diversification: 70%

95% of their revenue comes from a single business
The dominant business: computer business
Supporting businesses: software and chips businesses
Related constrained diversification

BUSINESS LEVEL STRATEGY

Apple is determined to bringing the best personal computing, mobile
communications and portable digital music and video experience to its
customers (students, educators, businesses, government agencies) through its
innovative products such as hardware, software, peripherals, services and
Internet offerings. The company's business strategy supports Apple's unique
ability to design and develop its own operating system, hardware, application
software and innovative industrial design. Apple trusts continual investment in
research and development is critical to the evolution and enhancement of
innovative products and technologies.
Differentiation Competitive Advantage: Uniqueness
Competitive Scope: Broad
Integrated set of actions designed by Apple to produce or deliver goods/services
at an acceptable cost that customers perceive as being different in ways that are
essential to them.
Targeted audience perceive product value. Customized Products differentiation
on as many features as possible . They can differentiate in many ways and in
many value chain areas.
In addition to their progress in personal computers and connected solutions,
Apple continues to finance the convergence of the personal computer, mobile
communication and digital consumer electronics by developing innovative
products such as iPhone, iPad and iTunes Store. Apple desires to support a
community for the formation of third-party products that complement Apple's
offerings through its developer programs. Apple offers various third-party
application software and hardware accessories for Mac computers, iPhones and
iPads through its App Store. Apple's strategy also covers expanding its
distribution network to effectively attain more of its targeted purchaser and
supply them with a high quality sales and post-sales experience.
Focused Differentiation Competitive Advantage: Differentiation
Competitive Scope: Narrow Industry Segment
An integrated set of actions taken to produce goods or services that serve the
needs of a particular competitive segment.
They focus on aligning their business strategy and their marketing strategy with
product development. This is something that they do much better than their
competitors, and this is a huge advantage for them.
Apple's target market is people who are willing to pay more for products with
better user experience, people who like to have fun with technology, music
enthusiasts and people who work with media and design professional. They have
done a good job by finding out which customer needs to satisfy. They have found
out that these customers wants a nice, beautiful and simple design and user
input, and they have focused on programs that help you to take pictures,
programs that edit both pictures and videos, and good music programs, both to

listen, and to make music. To make these programs, they have to have to focus
on innovation, and have programmers and designers that can make program like
this, that are both easy to use, beautiful to look at, and can do everything you
can expect from programs like these.

BUSINESS STRATEGY UNDER STEVE JOBS

Apple and Samsung, notably, utilize very different business strategies and
models within the marketplace; Apple releases few but highly anticipated highend products while Samsung inundates the market with a wide variety of
products. In order to understand Apples litigation strategy and the effects on the
mobile marketplace, it is paramount the overall business strategies for each
respective company are explained and understood.
In the beginning, Apple was very careful about its mobile and tablet releases by
originally allowing for long development cycles that grow anticipation and
showcased new innovations with each new release under Steve Jobs.
Dr. Panos Mourdoukoutas, a Professor and Chair of the Department of Economics
at LIU Post, succinctly describes the business model developed and utilized by
Steve Jobs as, based on Schumpeterian entrepreneurship and churned out
families of radically new products that marry art and technology; and turning
market niches into mass markets.
Steve Jobs strategy was to develop and sell brand new, innovative products of
which blended art and technology in order to provide a simple and streamlined
user experience; the business strategy skyrocketed Apple to the forefront of
smartphones making Apple a force to be reckoned with beginning with their
original release of the iPhone in 2007.
Apple was able to gain an even larger following beyond its successful iPhone
release by continuing to innovate in the mobile device market through
smartphones at first and then eventually tablets; a loyal customer base
eventually formed around their brand and mobile products. Jobs and, as a byproduct, Apples strategy during his reign as Chief Executive Officer (CEO) was to
use a long development cycle that produced at least one large innovation each
cycle. They would release these products usually in a yearly selling period, while
still marketing the earlier models at cheaper prices. This allowed Apple to gain a
large amount of anticipation for new products, as consumers were expecting
something new and innovative each time a new product was announced while
still offering cheaper alternatives to consumers via their old smartphone models.
Apple was also able to attract and keep many consumers by bundling their other
product offerings, such as iTunes, together with the use of the iPhone and iPad;
the iPhone can double as an iPod for all intents and purposes.

BUSINESS STRATEGY UNDER TIM COOK

After Steve Jobs relinquished his position as CEO of Apple, the succeeding CEO
became Tim Cook who has seemingly adopted a new business model for Apple
that is not necessarily akin to Steve Jobs. While Tim Cook also believes in Steve
Jobs former method of new and innovative products, he has been utilizing
Apples significantly sized market share of loyal customers in order to provide
only incrementally changed products while knowing the companys large and
loyal user base will upgrade to the newest devices being produced.
Dr. Panos Mourdoukoutas asserts that, Under Tim Cook, Apple has been
churning out new versions of old products that are destined to reach their limits,
as was the case with Sonys (NYSE:SNE) products in the early 2000s. Tim Cooks
Apple has yet to launch a new product that may replace the iPhone, the iPad and
the MacBook. The business model of Apple has shifted from the Steve Jobs to
the Tim Cook era; Steve Jobs emphasized the construction of brand new
innovative technologies whereas Tim Cook has only been producing slightly
improved versions of existent Apple products.
Under Tim Cook, Apple has focused more on strengthening its already created
products. Where Jobs was building up a company that almost declared
bankruptcy, Cook took over a juggernaut in the tech market meaning it was a
much different company than when Jobs was CEO. So far, he has focused on
tweaking the already existing products that Apple has released. For example,
instead of having any true innovation with the newly released iPhone 5, Cook
focused on tightening up many aspects of the existing smartphone model, i.e.
the iPhone 4; he increased its size, allowing it to compete with other larger
phones such as those created by rival Samsung and cut Apples contract with
Google for its Maps service and replaced it with a proprietary map system. While
there have been problems with the new map service initially, the move allowed
Apple to rely less on Google and shore up its own service platform, which will pay
off in the future.
As a result of these two differing philosophies, a pattern has arisen within Apple,
which has turned into a 2-3 year cycle for significantly new and improved
products. The first product that is released is the large new hardware upgrade.
This upgrade brings new changes such as larger screen, better camera, faster
processor, etc. Around a year later, Apple then releases an updated version of
this hardware, mostly consisting of slight upgrades and new chips. Apple often
adds a keynote new feature to each iPhone release along with a hardware
upgrade, e.g. Siri, cloud storage, etc. In essence, the 2-3 year cycle of large
hardware upgrades is interspersed with small yearly hardware/software upgrades

Differentiation strategy
Focuses on high quality and innovation
Offers strong graphic performance with great design
Creates brand loyalty
Products can be imitated at a lower cost structure
than Apple focuses on superior quality and
innovation focuses on superior quality and
innovation

APPLE v/s SAMSUNG

Just a few years ago Samsung was struggling to catch up in the smartphone
market. Now it makes more of them than anybody else and has Apple on the
back foot, in addition to being the world's largest technology company by
revenue.
The heavily hyped launch of its flagship Galaxy S4 smartphone is the latest step
as it tries to overtake Apple, and they've gone all out with a massive screen and
impressive new features.
Here are some of the core pillars of Samsung's strategy.
The ultimate fast follower
Samsung is better than anybody else at learning from its competitors. "A market
reader is sort of the classic fast follower," explains Barry Jaruzelski, senior
partner at Booz&Co and the co-author of the Global Innovation 1000. "It doesn't
mean they ignore their customers, but they're very attuned to what competitors
are doing and what other people are bringing to market first and observing what
seems to be gaining traction, then very rapidly coming up with their own version
of that innovation."
Samsung's aggression has gotten it into trouble in the past, losing a high profile
case to Apple for imitating its design. But the reputation hit and the fine were a
small price to pay.
The company pivots and produces quickly, coming out with a variety of devices.
It sees what the market responds to, pushes successes, and kills failures. And
now, rather than just providing a cheaper and lesser iPhone, it's differentiated
itself with larger screens, different features, successful marketing, and delivering
what consumers want.
The Note is a perfect example. The company found through market research that
Asian-language speakers in particular wanted a device that they could handwrite on, because drawing characters is easier with a pen. The result was a
combination phone/tablet ("phablet") that's been an unexpected hit.
The company combines market research and unparalleled execution with,
despite its reputation, a lot of innovation of its own. Samsung was second only to
IBM in the number of U.S. patents filed last year, and filed 150 patents related to
the new technology in the Galaxy S4.
When you've got cash, use it aggressively, or risk falling behind
Apple has a huge cash pile, but Samsung seems to be more willing and able to
put their money to use. Samsung's research spend is 5.7 percent of its revenue,
compared to 2.4 percent for Apple.

Samsung is a diverse business with chips, displays, and other technology. This
pays dividends, allowing it to compete on price and increasingly, offer features
Apple hasn't gotten to. Although, many would argue that Apple chooses not to
include certain features Samsung offers.
When Samsung wants to get behind something, it can do so with considerable
weight.
That's certainly been the case for its flagship Galaxy phones. Samsung's
advertising push has been absolutely massive. In the U.S., where the iPhone is
still pretty dominant, last year the company increased its advertising budget
five-fold, to $401 million from $78 million. That's $68 million ahead of Apple, and
more than $200 million ahead of its nearest competitor in the Android market.
And that's only a fraction of its ad budget.
This push has paid off too, with Samsung scoring many points at Apple's
expense.
Supply chain and distribution
Samsung is so much more than a smartphone-maker. It is a conglomerate, a
manufacturer, and the world's largest chip-maker. It makes many of the
components that go into its smartphones giving it a cost advantage and allowing
it to be much more flexible in terms of what it produces and when.
Apple, on the other hand, though it has a diverse, well-managed, and futuristic
supply chain, relies on external partners, which can lead to delays and
difficulties.
And though Apple is trying to move away from Samsung chips, the company's
smartphone competitors still have to buy them. In a way, they help finance its
cost advantage.
As Christopher Mims at Quartz points out, the company also has a huge
advantage in distribution. The company's new Galaxy S4 will be available on 36
percent more carriers and in 55 percent more countries than the iPhone 5.
Samsung's in more places than Apple with a brand new phone, as well as lower
end options for the developing world.
The management lesson: You have to commit
Samsung is very much a Korean company, and has been, at times, accused of
being overly hierarchical and dominated by its founding family. That also
provides some advantages. You can fault some things the company does, but not
its ambition or commitment.
When Samsung decides to get into a business, it goes hard. Within the past
decade, it went from just beginning to invest in making batteries for digital
devices and flash memory to being a global leader.

Former P&G CEO A.G. Lafley argues that companies fail because they're hesitant
to make decisions and hesitant to commit because they fear failure and want
simply to play rather than win.
Samsung wants to be the dominant player in the smartphone market, it has a
strategy to do so, and it's using every tool it has as it attempts to succeed at it.
Apple and Samsung, notably, utilize very different business strategies and
models within the marketplace; Apple releases few but highly anticipated highend products while Samsung inundates the market with a wide variety of
products.
Apple Vs. Samsung: Endless Patent Lawsuits
The most acerbic interactions between Samsung and Apple take place in
intellectual property rights court, where Apple has repeatedly reached into its
bag of litigation tricks to assail Samsung for patent infringement. Lawsuits are a
common strategy from Apple, which is one of the most legally aggressive firms in
the world, but the focus on Samsung is particularly repetitive and intense.
The future
The key test of whether Samsung can move from a close-and-gaining second to
becoming truly dominant is whether it can deliver products that are truly gamechanging. To really start pulling customers away from iPhones in droves, it needs
to differentiate itself beyond marketing and a bigger screen.
It's aggressively investing in Silicon Valley with several big campuses to help it
start to lead in software as it already does with hardware.