Table of Contents
1. Introduction 1
2. The activities of Apple Inc. and Samsung Electronics Co., Ltd in developing new technology to maintain their competitive advantage 1
2.1. Theory of competitive advantage 1
2.2. Compare and evaluate the activities of Apple Inc. and Samsung Electronics Co., Ltd in developing new technology to maintain their competitive advantage 3
3. Conclusion 10
In today’s fiercely competitive international environment, technology is seen as one of strategic tools for the fast and sustainable development of businesses (Thomas, 2015). In fact, if the enterprises do not develop new technologies, their technology systems, production lines, machinery and equipment will become obsolete, leading to their low economic efficiency and fragile existence. Developing new technology help the enterprises and manufacturers improve the product quality; strengthen, maintain and expand the market share of the products; diversify the product design; reduce the consumption of raw materials and fuel; improve working conditions; enhance the level of safety for people and the production equipment; and reduce negative environmental impacts. In particular, in terms of trade benefits, thanks to developing new technology, product quality is raised, and then, the businesses can create a strongly competitive advantage in the market. In order words, to maintain the competitive advantage of the enterprises, one of the most effective solutions is to develop new technologies (Lichtenthal & More, 2014).
This essay aims at providing the theory related to the competitive advantage, and then, critically comparing and evaluating the activities of Apple Inc. and Samsung Electronics Co., Ltd – two companies operating in the same industrial sector: consumer electronics – in developing new technology to maintain their competitive advantage based on the relevant theory. At the same time, the essay presents their current achievements and potential for sustaining high performance.
2. The activities of Apple Inc. and Samsung Electronics Co., Ltd in developing new technology to maintain their competitive advantage
2.1. Theory of competitive advantage
According to Hassanien, Dale, Clarke and Herriott (2010), there are various definitions of competitive advantage that is referred in many works but they state the the true essence of competitive advantage is to help the businesses reach the higher economic performance than their competitors. Stair & Reynolds (2011, p. 76) state that: “A competitive advantage is a significant and ideally long-term benefit to a company over its competition and can result in higher-quality products, better customer service, and lower costs.” In other words, the authors define competitive advantage through pointing out its key benefits, but this definition may be not enough. Therefore, we can consider the definition given by Porter (1985, p.3), who defines that “competitive advantage grows out of value a firm is able to create for its buyers that exceeds the firm’s cost of creating it. Value is what buyers are willing to pay, and superior value stems from offering lower prices than competitors for equivalent benefits or providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation”. Indeed, this is a full definition of the competitive advantage because it points out the origin, nature and types of this concept through suggesting that “competitive advantage is achieved in some small measure every time a firm sells a products or delivers a service at a profitable price” (Amason, 2011, p. 10). In addition, the author also suggests five factors affecting the achievement competitive advantage of the businesses. They are organized in the five-forces model, including: “rivalry among existing competitors, threat of new entrants, threat of substitutes, bargaining power of customers, and bargaining power of suppliers” (Porter, 2008, p. 5).
Rivard, Harb and Meret (2013) state the important role of new technology in the increase of not only the performance of the businesses but also the daily life of people. In addition, Rajagopal (2012) confirms that the technology is a significant tool that helps the businesses reach the competitive advantage. In other words, developing new technology helps the businesses create the cost leadership and differentiation, thereby maintaining their competitive advantage. In addition, as mentioned above, the competitive advantage can create from the lower-cost achieved by investing in new technology and expanding the scale (Dorsey, 2011). Besides, Porter (1985) also confirms that new technology plays significant role in the development of not only the companies but also the industries, but not any technological change brings benefits to the enterprises. Thus, all businesses need to consider carefully before deciding on technological development in order to avoid waste and low efficiency for them.
Moreover, according to Hile (2013), new technology helps businesses increase their competition and attract customers. However, when the organizations’ competitive advantage is created by developing new technology, there are some ethical issues raised. To identify this, the author provides some evidence of companies producing sport equipment or clothing. Therefore, the businesses should consider carefully before deciding to develop new technology in order to achieve the competitive advantage.