Professional Documents
Culture Documents
Submitted By:
(Group 3, Section-B)
WMP09059 Abhay Vig
WMP09064 Alok Mishra
WMP09070 Arun Kr Sharma
WMP09079 Gaurav Bhati
WMP09097 Prateek Raizada
WMP09109 Shweta Rastogi
Agenda
Vertical Integration
Smartphone-Industry Analysis
Samsung
Apple
Competitive Advantage Apple Vs Samsung
Historical Financial Analysis
Scenario Based Financial Projection
Vertical Integration
Firms
choose
to
vertically
integrate
to
achieve
Vertical Integration
Forward
Aiming towards finished products or towards End in
supply chain
Backward
Towards Raw Material i.e. at the Start in supply chain
Smartphone
Brand - design, manufacturing and
distribution
Hardware including features such as
Camera, RAM, ROM, Design etc.
Target Group affecting pricing and
advertising
Software design, manufacturing and
distribution
Supporting applications
Add on Options printers, card readers
Bargaining Power of
Suppliers (Low) for Apple &
Samsung
Industry Dominance
Smartphones: Leading Companies by % Volume
Share 2010-2013
Global Brand Owner
(GBO)
Samsung Corp
12 19 28 31
Apple Inc
17
17
17
15
Nokia Corp
25
12
LG Corp
Sony Corp
Huawei Technologies
Co Ltd
Yulong Computer
Communication
Technology
(Shenzhen) Co Ltd
Samsung
Samsung Electronics
Flagship company of Samsung Group
Contributes 70% revenues of Group
195 Subsidiaries world-wide
Consumer
Electronics
In-Home
Consumer
Electronics
Portable
Consumer
Electronics
Digital TVs
Wearable
Electronics
Smartphones
Ultimatum
Produce mobile
phones
comparable to
1993-96
Motorola
Galaxy S Launched
2012- Worlds largest
cellphone maker
2010
1998
A Humble
Beginning
Android
Era
Go Global
New
Management
1983-93
Future
Tizen?
Focus on
Component
Manufacturing
(Source: In the Belly of the Beast: Samsung Electronics Supply Chain and Workforce in South
Korea, Jiwon Han, Wol-san Liem, and Yoomi Lee)
Manufacturer
Accelerometer / Gyro
Invensense
Application Processor
Samsung
Audio CODEC
Cirrus Logic
Baseband Processor
Samsung
Samsung
Maxim
Image Processor
Samsung
NFC Controller
Samsung
Power Management1
Samsung
Power Management2
Samsung
PowerManagement3
Samsung
Pressure Sensor
STMicro
RAM
Samsung
RF Transceiver
Samsung
ROM
Samsung
Touchscreen Controller
STMicro
WiFi / Bluetooth
Samsung
Wireless Charging
Texas Instruments
Can make all the major components of a phone cheaper and then
bundle and sell those components to a phone vendor
Competitive Advantage
In-house DRAM
NAND Flash
Displays including LCD, AMOLED
Major Share in company manufacturing OLED display for Mobile
handset
Cost Efficiency
Assured supply for critical components
Technological Innovation
Differentiation
% of total sales
3.7
2.6
2.5
2.2
Handsets, etc
1.3
Handsets, etc
1.3
Performance
Advantages of VI to Samsung
Newer Technology at Faster Rate
Owns and controls research, component supplies, manufacturing
Devices equipped with faster RAM, extra storage, AMOLED screens
Apple
Apple
Companys main product lines: computers and portable consumer
electronics, software, cloud services and retailing.
Success can be attributed to software and service products such as
iTunes that complement Apple Incs hardware line, creating an
industry-leading content consumption platform for mobile devices.
Premium pricing of its products
Unaffordable for mainstream consumers in many emerging markets.
Apple
Hardware
Though not produced within, its product are Slim,
ergonomic, user-friendly and they tend to have a price
premium over other competing products.
emphasize simplicity in the operation and minimalist
design, along with other key performance features as
battery life, graphics etc.
Software
iOS mobile operating system various media consumption
and third party applications.
Its primary content offerings are the core of its delivery
platform.
Wide selection of software - In 2013, there were six million
developers in Apples developers community,
Apple
Integrated ecosystem of its products and services
unmatched line-up of the media consumption devices and
associated services
Advantage
It locks consumers within the ecosystem, making switching
between platforms somewhat difficult. This along with the small
number of alternatives has made its users loyal.
Apple Inc.
Apple outsources the manufacturing of all the
products, and purchases other key components
from third parties. It has to rely on external
suppliers for manufacturing and assembling.
VI explained through
Operating System (Proprietary iOS),
numerous application supporting the Operating
system (iTunes & iCloud),
Apple Online Retail Store for most of the products
Premium pricing of its products
Not able to penetrate mass segment
Drivers of Apples VI
Scale and Scope Economies Since the outside suppliers are supplying
majority of their producers to Apple Inc. only hence their ability to take
advantage of economies of scale and scope by aggregating the demand is
very less. Hence Apple gains maximum from Vertical Integration.
Asset Specificity - As Apple Inc. is using same software and distribution
system and also same suppliers for its hardware hence its Asset specificity
is very high. Therefore Apple Inc. will benefit maximum from Vertical
Integration.
The Asset Specificity of Apple Inc. has reached to that level where
transaction costs of market exchanges are so large that Vertical Integration
is more agency efficient than market exchanges.
Product market scale and growth As Apple Inc. control a large chunk
of the computer and mobile market hence it will have maximum advantage
from Vertical Integration.
Financial Analysis
Financials
Historical Financial Analysis
Scenario Based Projections
(Excel File)
Financial Analysis
Thank You