Apple, Samsung and Tata

What is the connection between these three big names? 


I thought of discussing something about their strategies and how they have carved a niche for their products in markets they serve. 

Apple believes in differentiation. It is guided by Steve Jobs philosophy that if apple products can wow customers, price does not remain a criteria for them while deciding to buy those products. They see ‘value’ for the price they pay. In short, apple attempts to convince them that what it sells is perhaps what the customers were deprived of for so many years. Example, iPod.

Samsung believes in cost leadership. It constantly attempts to achieve lowest possible cost for a given degree of sophistication around an established product that sells in market. It does not strive to come out with magical inventions. It only innovates to bring down the cost and make the product accessible to more and more aspiring consumers. Example, it did not invest millions of dollars in inventing touch screens for mobile phones. But once the concepts sinks into market, Samsung makes it cheap and affordable (Galaxy brand).

Tata, the company, is a splendid combination of the above two extremes. Tata invests to bring out Indian versions of global products and at the same time reduces their cost to increase their reach in Indian markets. Jaguar, the luxury car brand, is now manufactured by Tatas at a substantial low cost. They have achieved such cost reduction with what I call as Cost Innovations. They have substituted expensive auto components with their low cost counterparts wherever possible. And JLR now contributes to more than 50% of Tata Motors net profit!

Michael Porter, a ‘Grandmaster’ of Strategy had proposed these three ‘intents’ long time ago while he was publishing his views in Harvard Business Review, a journal of theory & practice of strategy formulation and implementation. He was indeed a visionary. All around us we see today what M.E. Porter saw years before it happened. 
Advertisements

Author: anilkshatriyablog

I work as Assistant Professor in the area of Accounting at IMT Nagpur. I love teaching, writing and cycling. I follow a simple principle, 'Help ever, hurt never'.

2 thoughts on “Apple, Samsung and Tata”

  1. Hi Anil, I am not sure if I would be/am able to articulate my thoughts in the best possible way but I will give it a shot. the question you have laid down is an interesting one. I also see the point you are trying to make in terms of strategies and positioning of Apple and Samsung. Tata is an open point for me, so we will come to that later.

    In regards to the comparison between Apple and Samsung. As I see them, they are vastly different companies from their philosophical stand point and genesis. This is what is getting reflected in their current strategies.

    Apple has lead in creation of great first to market customer (retail) fronting technology. it has been a core model for Apple. They have a cultural advantage here on Samsung because Apple can tap in the western markets psyche (this includes US, EU, Aus/NZ) much easily than Samsung could (atleast in the formative days). This advantage proved hugely beneficial to Apple. Samsung (like the hardware version of Indian IT model) started out with making products and components for the companies (like Apple) that knew how to understand whats to be sold and how to make it cool. Samsung manufactured the early versions of Apple iPhone, they supply parts for Mac Book computers. Even to this day Samsung makes large number of chips and parts for Apple ( & other players') products.

    Apple has deep UX and brand perception focus. Its because they have the same cultural and consumption psyche as of their primary/driver consumer market. Samsung on the other hand would struggle here to be a innovator as they are foreign to this. But Samsung is a quick learner/copier and much more efficient in production and technology (hardware) (if your competitor buys from you, thats a good validation). With Google doing to the work of UX innovation for free Samsung has to focus on what it does best. With Google's help Samsung is now able to command a lot higher price for the hardware it manufactures and brand as 'Samsung' instead of being just an outsourced manufacturer, and that for no additional cost or risk. That is now borne by Google. This comparison of Samsung to Apple was a point in case for their mobile computing and telecom side. Outside this, Samsung is a leading player on supply side innovations (cost reduction) rather than UX or market creation.

    I think Tata is much closer/almost similar to Samsung in philosophy and genesis (but with a different portfolio composition). Tata has a wide and deep presence in India but outside India they are narrow and deep. wrt JLR, I believe most of the cost efficiencies have been achieved by re-orging the supply chain and processes than introducing/substituting parts. JLR made in India are assembled there not manufactured. this might change in near future. I think a lot of successful Asian businesses share this trait but what India and Indian economic system truly needs are our own 'Apples' that can go global.

    Like

  2. Sarang, thanks for your views on the subject. Personally, I am not a big fan of Samsung! Well, I am not sure if Apple will continue to keep fanning my curiousity about their Out Of the Hat thinking. I am great believer of Tatas. Future belongs to them, in India.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s