"Samsung Electronics and Apple Inc - External Business Environment and Market Positioning Strategy"

 
 Analysis of External Business Environment Apple Inc. and Samsung Electronics are two popular multinational companies conducting business in the global electronics industry. The external business environment of the two firms can be evaluated with the help of PEST model. PEST Political Samsung and Apple needs to strictly follow the legal rules established by the political authorities of different countries. The government bodies of emerging markets such as Russia and India encouraged the foreign direct investment made by these companies in their own economies. However in order to protect the interests of the domestic firms, the public authorities of these nations are now imposing greater restrictions on the foreign companies. For instance, Apple and Samsung pay additional taxes for business in China, under the rule of Foreign Income Tax Law PRC (Appleton, et al., 2004). Political issues in some countries such as Thailand adversely affect the business growth of these giant firms in their economies (Goldstein & Pusterla, 2010). Economic Being multinational in nature, the business revenue and profitability of Apple and Samsung are subjected to currency and exchange rate risks (Appleton, et al., 2004). Research reports show that the discretionary spending power of the consumers in most western economies such as Portugal, Greece and Italy have declined after the recession caused during the global financial crisis. The aggregate revenue generated by Samsung and Apple have decreased from these countries due to such adverse economic conditions. Apple, Samsung and other electronic companies are now expanding their business in several middle income economies (Goldstein & Pusterla, 2010). The demand for electronic products has substantially increased in the middle income countries such as Poland, India and Brazil because of the rise in the employability and per capita income levels in these economies (Appleton, et al., 2004). Social Over time, individuals are becoming before familiar with the usage of electronic products. Popularity of social media has augmented the demand for electronic goods such as samrtphones and tablets. Moreover, with the essence of increased per person income level and improvement of living standards, the individuals have increased their demand for entertainment and comfort products sold by companies such as Apple and Samsung (Appleton, et al., 2004). The impact of status symbol demand is high in the electronics goods industry, where the consumers create demand for expensive electronic products, for portraying their social status in the market. Rise in population density in all the countries have also facilitated in increasing the demand for Apple and Samsung’s products. Technological The state of technological knowhow has significantly improved in the electronic goods industry. In order to experience the benefits of such innovations, Samsung and Apple invest large sums of money for research and development purposes. With the help of new technological modernization, these companies designs and manufactures unique products that helps to differentiate their services in the market (Grover & Malhotra, 2003). However the companies incur large expenses for patenting these newly invented technologies in their business. Excessive investment in research and development has lowered the profit margins of these companies in the recent era. Analysis of the Industry Both the companies provide their services in the electronics industry. Bargaining Power of Buyers (Relatively Low) The consumers of the electronics industry experience low switching cost because similar types of electronic products are sold by several companies in the market. However giant electronic companies such as Apple and Samsung share high brand values and offers highly differentiated products to its consumers (Grover & Malhotra, 2003). These companies own a large share of market demand and hence the bargaining power of a single buyer in the industry is low for these two companies. Threat of New Entrants (Relatively Low) The threat of new entrants faced by the giant electronics companies is extremely low. This is because a new company in the market needs to make large investments for research and development purposes in order to commence its own business in this industry. Moreover, the new firms require time for establishing legal copyrights and patents for its newly invented technologies (Samsung Group, 2014).