Many modern technology companies try to diversify their own production, and Apple and Samsung are no exception to this rule. Diversification expands a company’s field of influence and increases its economic efficiency, but more importantly, it creates a protective resource in case of a crisis or loss of sales of the main product (Diversification, 2019). Both Apple and Samsung are involved in diversification because they sell additional products and services combined with the core product. Apple’s main product can be called the iPhone, as its sales are the highest among all product lines (Vailshery, 2021).
At the same time, the company also produces other electrical devices, including computers, tablets, headphones, and speakers. In addition, Apple is developing an expanded network of online subscription services, which should also be considered companion products to the company (Homepage, 2021). Although Apple offers a plurality of choices for the consumer, all products do not go beyond electric devices or services for them, so the company is only engaged in related diversification.
The situation is somewhat different for Samsung, which also develops smartphones as its core manufacturing product. In reality, the range of products from Samsung is much broader and includes televisions, printers, computer devices, home appliances, and even refrigerators (Homepage, 2021). While all of these products can be summarized as electrical goods, in reality, they turn out to have little to do with each other. There is little connection between Samsung’s smartphone and refrigerator, so it is true to say that the company is engaged in both related and unrelated diversified manufacturing policies.
Vertical integration is also a sound business development strategy. In this case, the disconnected phases of production and assembly of a product or service are assembled into a single system to form a unified and coherent chain from beginning to end. In this case, direct vertical integration is understood as the purchase of companies that are closer to the end consumer in the logistics chain (Holden, 2011).
In contrast, reverse integration refers to a situation in which a company buys supplier firms to control the raw material market and provide more significant benefits. In the case of Apple, the most characteristic description of the company is the strategy of reverse vertical integration since it is perfectly known that the company has bought firms and brands responsible for creating materials for production (Harper, 2021).
Among other things, Apple is known for buying small startups with high technological potential. Samsung has also been seen in reverse vertical integration strategies, with the company buying up raw materials manufacturing and startups (Heater, 2017). At the same time, both companies have their retailers, which means that direct integration strategies are also characteristic of these companies, although not to the same extent as the inverse ones.
So, when summarizing the business policies of the two companies in question, it is important to emphasize their apparent similarities and differences. In particular, product differentiation and vertical integration are critical strategies for successful modern business in the technology industry.
Apple and Samsung practice differentiation, but in reality, Samsung deals with related and unrelated types, while Apple is characterized only by connected differentiation. At the same time, both companies are more prone to reverse vertical integration, but the representation of their products in personal brand stores — not just in retailers — also confirms the development of direct integration strategies, although to a comparatively lesser extent.
References
Diversification: Definition, levels, strategy, risks, examples. (2019). iEduNote. Web.
Harper, J. (2021). Apple buys a company every three to four weeks. BBC News. Web.
Heater, B. (2017). Samsung buys another Al company as it continues to build out Bixby. TechCrunch. Web.
Holden, P. (2011). Business integration — vertical, horizontal and conglomerate. YouTube. Web.
Homepage. (2021). Samsung. Web.
Homepage. (2021). Apple. Web.
Vailshery, L. S. (2021). Unit sales of Apple worldwide by product/operating segment from the 1st quarter of 2012 to the 4th quarter of 2018. Statista. Web.