Competitive analysis of Apple Inc. and Samsung Electronics

Firm Selection and Background

The two publicly listed company selected are Apple Inc. and Samsung Electronics. These two companies compete and are the biggest players in the mobile phone industry. In particular, these two firms are major competitors in the mobile market, possessing the greatest market share and presenting the most pioneering products in the mobile industry. The purpose of this paper will be to analyze and discuss the internal environment and external environment of each of the two companies, Apple Inc. and Samsung Electronics.

Analysis of External Environment

The economy

The American economy has been on an upturn, recovering from the financial crisis and has not adversely influenced the financial performances of the two companies. However, both Samsung and Apple are experiencing the adverse effects of market saturation as well as the slump in the Chinese economy. As a result, projections indicate that Apple will possibly encounter its first sales decrease in over 12 years. At the same time, Samsung is still experiencing stringent competition from low-cost brands in China that have continuously decreased the profit margins of the firm and also eroded its market share. This problem is accentuated with the recent economic depression in China (Iglauer, 2016).

The industry in which the firms operate

Apple Inc. and Samsung fiercely contend in the mobile industry. In particular, the mobile market is currently a two-horse race, with regard to profitability shared between these two companies, as they command an unnaturally large share of the profits the industry makes. Such a scenario becomes possible because its rivals are in fact losing money in the smartphone business (Hughes, 2013). For instance, in the 2014 fiscal year, Apple took home 56% of the profits whereas Samsung took 53% (Hughes, 2013).

Major markets

Apple Inc.'s two major markets are North America and South America, with the two regions accounting for more than 35% of the total revenue generated by the company. Trailing these two expanses is Europe, which constitutes for just over 20% of the revenue sales. Lastly, there is China, which is a growing market for Apple, as it constitutes about 17% of its total sales (Mattera, 2015). On the other hand, Samsung's major markets include the Asia-Pacific region together with Africa and Europe. These two companies are constantly battling for market share in regions where they overlap. However, in terms of sales, Samsung still boasts of having the most revenue.

Major competitors

Apple Inc. has several competitors in the industries. However, the major competitors can be categorized into differentiation, technologies and range of products. Google is Apple's competitor in several areas. It offers Google Drive, which is in direct competition with Apple's own iCloud, in the cloud service field. Google is a parent company to Motorola, which revealed its android- based smartphone which would compete against the iPhone. Google has already beaten Apple on innovative, wearable tech products, by offering Google Glass. In the segment of PC's and laptops, Apple's main competitor is HP. It is the world's largest provider of PCs and is also a big player in the cloud computing industry. Other major competitors of Apple in this segment are Microsoft and Blackberry and Dell. Samsung, on the other hand, faces stringent and stiff competition from LG Corporation, Panasonic Corporation, and Sony Corporation. Taking into account Samsung has a diversity of products, this level of rivalry ranges in the utility segment comprising of televisions, fridges, and other home equipment (Samsung, 2016).

Environmental, regulatory, legal, and ethical context and challenges

According to Samsung Annual Report (2013), the company has been able to address major key issues environmental issues in the economic, social, and technological areas. These encompass electronic goods recycling, GHG emissions management, biodiversity protection, and also the application of eco-friendly products and packaging materials. In recent times, one of the legal and ethical challenges that Apple has had to face is with regards to privacy. In particular, Apple had to fight a legal battle with the Federal Bureau of Investigation over the unlocking of its iPhone products. This was a challenge as the firm's policy guarantees safety and protection of its consumers' information that might be sensitive and in turn expose them to dangers (Lutes, 2016).

Global challenge

These two companies face a couple of global challenges. To begin with, the downturn in the global IT market and also the economy at large is a challenge that worries both firms, with Apple being required to undertake its complete production in the United States. The growth and elevation of social networks and message services, an area, in which Apple Inc. has been weak has caused the company to be playing catch-up. Another element is the emergence of cheaper phones globally. Majority of the Android phones, manufactured by Chinese firms have cost less than $200, which not only sways consumers but also cuts down on Apples' profits margins and market share (Swartz, 2016).

Analysis of Internal Environment

Managerial makeup

Apple Inc.'s top management consists of nine executive members led by Timothy Cook who is the Chief Executive Officer. This executive committee works together in the designing of the products created by the company. The team of people also offers leadership and makes the decisions necessary in the operation of the company. The top management team of Apple has a vast experience in management positions and has steered the company's performance over the past few years quite admirably (Apple Inc., 2016). On the other hand, Samsung is led by Oh-Hyun Kwon, the Vice Chairman and CEO of the Group. Dr. Kwon has been with the company for over three decades now and has been a significant player in the advancement of the company and industry as well. Mr. Choi, a visionary leader who has been with the company for just about three decades oversees the North-American operations of the group. The company is governed by an autonomous board of directors that acts on behalf of the stakeholders (Samsung Group, 2016).