Competitive Advantage Report 2022

Running head: COMPETITIVE ADVANTAGE
COMPETITIVE ADVANTAGE
Name of Student
Name of University
Author’s Note

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Executive Summary
This report states the competitive advantage position of Apple over Samsung and Huawei and
also the reason for the company to be in top position. In this report different types of
parameters are being used to support the topic of the report. The parameters include
operations, marketing and also the financial structure of the company.

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Table of Contents
Introduction....................................................................................................................3
Advantage of Apple in Corporate Market......................................................................4
Financial Competitive Advantage of Apple over Samsung and Huawei.......................9
Conclusion....................................................................................................................11
References....................................................................................................................12

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Introduction
In this report Apple, Samsung and Huawei’s operations, marketing structure and also
the financial structure are also being explained. This report also discusses about the
competitive advantage of Apple over Samsung and Huawei. The observation being made
over the strategy which is adopted by Apple, Samsung and Huawei to sustain in the market
and increase the market share of the company (Chen and Ann 2016). In this part it is also
explained the way Apple are able to remain in the top position and able to maintain some of
the loyal customers around the world. The report also states the rise of the Huawei
specifically in smartphone market and the threat Huawei possess for Samsung and Apple.
The financial statement are also taken into consideration and analysed on the basis of the
competitive background.

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Advantage of Apple in Corporate Market
There are many speculations about Apple Inc. strategy of becoming the market
leaders and also sustaining the position for more than a decade. It is found out that
Christensen’s disruption theory where it is stated that a successful business grows in size and
the company tends to invest more in the resources so that the company can maintain its
position in the market and also retain the existing customers. The theory also states about the
situation when the company grows then they tend to lose the sight and loose the customers and
the potential customers as well. Apple uses a business model which can be stated as the un-
disruptable (Chen and Ann 2016). It is found out that Apple’s iPhone from a disruption lens
which are to be considered as the premium products. This results in getting the high revenue
which are generated from the market. The targeted customers of Apple are the high grossing
customers who are ready to pay a high price in exchange they can get the premium product.
This made Apple to sale considerable number of products which help the company to have
high revenue. When in the business competitors introduce greeter feature phone in less price,
many thought that Apple will loose not only market share but the company will also see the
demise in the business model of the customers. Many thoughts that the customers who are
users of the low-end model of the iPhone they will tend to move to Samsung high end model
at that cost price. Samsung was also providing Android smartphone which is the more open
source than Mac of Apple iPhone. After the market survey it was fond that customers are tend
to move towards Android smartphone and Apple do loose their market share. The only thing
which remains in the favor of Apple was the performance gap and hence the company was
able to take up the advantage and able to retain its market share in terms of the customers for
the smartphones. In later stage Android smartphones has lessened the gap and the Android
smartphone was able to attract more customers towards them. On the other hand, Apple loose
a considerable number of customers. In this point of time many experts will see the demise of

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the Apple Inc. due to loosing of huge market share in terms of the customers of the company.
However, the world has not seen such demise and iPhone remained as the most successful
product in history. If we can access Apple revenue model then it can be seen that Apple
revenue is primarily driven by selling high end devices only targeting premium customers
around the world. The devices which are produced by Apple tends have very high-end
hardware and user-friendly software. Apple generates revenue from different sources mostly
from the services of the Apple which are termed as the one of the best in the world. The
services of Apple include Apple Music, iCloud and also mostly from the Apple store. Apple
Inc. also has well planned financial planning which lead them to have synergy. These
synergies also come from the users of the Apple devices and also the money which generates
from them. In the last couple of decades it was observed that Apple has very strategically
created a very healthy ecosystem to wards its product and it can act as a barrier around many
high value customers. As per the history of Apple suggests it can be seen that Apple has
strengthen its ecosystem by providing more ground breaking technology like iPhone and other
products which help the company’s. There are some of the factors which are more valuable in
respect to the Apple business and also these factors strengthen the Apple ecosystem in terms
of the business model is concerned. There are some breath-taking products which change the
world’s view. They are iPhone X and its sub parts which revalorize the smartphone world by
introducing the notch in the smartphone. Then came Apple iWatch which also change the
perspective in the watch business. Then came the Mac Book pro which change the world of
Laptop and how we perceive the idea of the computer world. Apple iPad and iMac Pro also
add on to the factors for strengthening the ecosystem of the business model of Apple Inc. the
above-mentioned products are all made after targeting the high-end customers and the want
for the durability of the product. The company’s services are one of the major factors which
increases the value of the customers. These all products contained very high-end hardware

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which will help the customers to enjoy a very cutting-edge technology. In case of software of
the product the company has one of the best software in the world which are liked by many
irrespective of the customers from different purchasing power. These are also one of the
reasons the targeted customers for the company has changed or it can be stated that it has
increased (Cecere, Corrocher and Battaglia 2015). The range of the customers has also
increase from the high-end customers to the mid-section customers. In many countries
specially in the developing countries and the developed counties the amount of middle-class
people is much more than other two polarized group. The company has introduced range of
products which can be affordable to these sections of the customers and in this way, Apple has
increased its market base and also number of customers. The cutting-edge technology like
Face recognition lock which enables the user to open the device and use it. It also has one of
the best voice recognition AI which gets developed in accordance with the users of the device.
These all factors are also one of the important factors which lead the company to enjoy the
increasing synergies. In case of Samsung has also increased its performance mainly in
smartphone where the company has gone to increase the battery performance of the company
which is certainly a big disadvantage in case of Apple. Samsung has also gone for went for
providing different cost phone which are available for every section of the customers. The
companies have gained better market base starting from the low-end customers to high-end
customers. As per the number of customers is concerned Samsung has provided great
challenge to Apple in smartphone market. To tackle with the business strategy of Samsung,
Apple introduced switching cost strategy which help the company to retained its market base
in terms of the customer base is concerned. It was also observed that both the companies want
remove each other from the competition and this is the reason the companies are adopting
such offensive strategy (Dolata 2017). In recent time sit is observed that Apple Inc. has
launches product which are ground breaking and recolonize the technological world and all

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the products are created not only for the premium customers but also for the level B
customers. These strengths the ecosystem of Apple drastically and hence Apple has seen a
distinctive rise in the customer satisfaction which leads to gain new customers as well (Ou and
Chan 2014). It is observed that the company has came back in its track and gained popularity
with the product. This type another type of synergy which lowers the marginal cost of the
customer acquisition for the purpose of the other products. There are situations where Apple
has to take tough decision. In recent years Apple Inc. has provided some of the breath-taking
product which has attracted many customers towards its brand but this some times become
sporadic in nature and some time it may not feel well in case of the long-term strategy of
Apple Inc. in product. It was observed before Apple has made this kind of move where Apple
tends to stop the supply of iPod and introduced iPhone to its customers. This gave Apple an
extra advantage over another smartphone company present in the world. Though it was a great
strategy but it successfully killed the cash cow. In last decade it is observed that Apple has
provided nominalizing product like iPad and MacBook Pro. It can be proved from this term
that the strategy decisions are made from the empathy pays off in the long run (Gehani 2016).
As per the sales structure goes Apple has able to sold 1 billion smartphones all over the world.
This made the company to create a very strong ecosystem. This helps the company to create a
great market base in terms of the number of customers. Apple has also faced some of the
defeat in the PC market where they lost Infront of Microsoft. The company tends to shift the
sales from all the customers to the small loyal group of customers. Apple maintain the relation
with such customers by providing user experience and unimaginable service. In last decade it
can be seen that Apple Inc. has been climbing up the Maslow hierarchy. The main key factors
which lead to the go high up is the iOS app store and other recent devices like iWatch. The
development of iOS app store lead to the increase in the customer base as well. It is observed
that Apple has developed the one stop store which can easily rival the google play store and in

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some cases iOS app store came as victorious (Huang, Dyerson and Harindranath 2015). This
also one of the reasons for Apple to be in top of the ladder. In recent time Apple has also gave
Air Pods which rule the modern headphone world. The above advantage gave Apple Inc. to
come victorious over all the company specially Samsung and Huawei. The strategical
advantage has led to the increase in the market share for Apple Inc.
In case of Samsung and Huawei are the biggest competitor for Apple since the last
decade though Huawei entered the rat race late but that didn’t stop the company to climb up
which literally challenge the position of the heavy weights like Samsung and Apple specially
in smartphone industry and other related gadgets. In recent years it has seen that Huawei has
captured some considerable amount of market share and in last quarter it is seen that Apple
has lost to Huawei by 31%. Though Apple remain as one of the market leaders in the world
but recent study suggest that Huawei has almost reached to the Apple level and in the case of
Samsung, they remained leader in the smartphone industry. While conducting research
researcher has stated that in accordance with the seven dimension of the company which
shows greater score in terms of the performance of the technology. In accordance with the
service of the company it can be observed that the company has seen highest percentage. In
other dimension namely leadership, workplace, governance and citizenship the company has
got above average score. Huawei mainly target the high-end customer and they also
introduced new segment of production line so that they can make they can also intervene in
the below higher-end market. As per scoring matters it can be seen that Huawei has crossed
Samsung and Apple. The company has brought many new technologies in a very low price
than Samsung and Apple (Straker and Wrigley 2016). The company may have scored high in
much aspect but Apple has climbed up the ladder as whole because of the unmatched service
made by the company. Samsung has also competing with Apple mainly in smartphone
industry but Huawei also shown promising performance. Apple has also one of the biggest

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advantages on the ground of the brand loyalty and it can only be matched by Samsung as the
company also enjoys one of te highest brand loyalty. As per the case of Huawei, which is the
young company but still it has provided greater fight to Apple and Samsung.
Financial Competitive Advantage of Apple over Samsung and Huawei
In case of the financial structure of the company is concerned it provides overall
overview of the company and also provides the performance of the company. To prove the
competitive advantage of Apple over Samsung and Huawei financial ratios have been
conducted which leads to the development of the accounting structure and also the present
condition of the companies (Choi, Kim and Yoon 2014). While calculating operating profit
ratio of Samsung, Apple and Huawei it is observed that Apple has competitive advantage
over Samsung and Huawei. In terms of the operating profit ratio of Samsung it can be
observed that company’s operating profit ration has increased in last four years which
directly indicates that the company’s sales has been increased in last four years. The
operating profit ratio Samsung in 2018 is 24.16%. In case of Huawei operating profit ration
has some upward and downward slope. This means that the company’s operating profit ratio
in the year is 11.59% and in the year of 2016 it came down to 9.11% and again the company
has seen a rise for 9.34% and in the year of 2018 the company has seen a sustainable rise in
the operating profit ratio which is 10.16%. This means that the company has seen a rise in
sales in the year 2015 and again seen a rise in 2018. In case of Apple operating profit ratio of
the company has shown decreasing trend which can be proved from the operating ratio
started as 30.48%, 27.84%, 26.76% and 26.69% in the year 2015.2016.2017 and 2018
respectively. This means that the company has lost many customers but still the company
holds more customer than Samsung and Huawei.
To analyses the position of Apple over Samsung and Huawei net profit ratio has also
been conducted using the financial statement of the company. In case of Samsung it can be

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observed that Samsung’s net profit ratio has been increased in the last four years. This
indicates that the percentage of the profit the company kept on increasing between the periods
of 2015 to 2018. In case of Huawei it can be seen that the net profit ratio has decreased in two
years then it has increased in the year of 2018. In case of Apple it can be seen that the
percentage of the net profit ratio in the year 2015 was 22.85%, in the year of 2016 it
decreased to 21.19%, in the year of 2017 it again decreased to 21.09% and in the year of
2018 the company has seen the rise in the profit to 22.41%. This means that the company’s
profit remains almost same over the year which states about the sustainability of the
company. In case of the calculation of the return on asset of Samsung, Huawei and Apple it
can be observed that Apple has come victorious than other two (Dolata 2017). Though Apple
has seen down in the return on asset which means income produced by total asset is getting
lower. The main reason behind this is the poor efficiency of the management of the company
in terms of the sales as well as the financial structure of the company. In case of the return on
capital employed it can be seen that Apple’s ROCE is much higher than Samsung and
Huawei. In this case also Apple’s ROCE has went down but it is better than Samsung and
Huawei, This is an alarming situation for Apple as the utilization of the capital is not efficient
enough and this is the reason it bringing down the ratio in the last four years. This is also one
of the reasons for the management problem as the higher management is not using the capital
efficiently. The return on equity has increased for all the companies but Apple has
outnumbered the other two which means the profitability of the company has increased a lot
(Kotabe and Kothari 2016). This also states about the market supremacy of Apple over
Samsung and Huawei. In case of the degree of the operating leverage we can measure the
sensitivity of the company’s operating income to its sale. It can also be stated change in the
company’s sales which affect the operating income. In this part degree of operating leverage
concerns Huawei has lived up among Apple and Samsung. There is another change in the

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degree of financial leverage concerns Huawei is stated as the market leaders on Samsung and
Apple. The current ratio of the company states ability to pay short term obligations in a single
year. This also provides indication to the investors and also the financial analysts about the
maximization of the current assets on the balance sheet of the company. In this part it can be
observed that Samsung has upper hand over Apple and Huawei. As per the income statement
the solvency ratio of Samsung is much higher than Apple and Huawei (Grimes and Sun
2016). In case of the receivable turnover ratio it can be observed that Apple has upper hand as
the company can able to provide valuable insights regarding the paying debt in a year.
Samsung comes second in this part and Huawei comes last.
Conclusion
As per the above observation it can be seen that Apple has better market standing in
respect to the Samsung and Huawei in the department of operations, marketing and financing
department of the company. It can also be concluded that though Apple has seen downfall in
sales but the company still able to keep the market supremacy.

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References
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smartphone industry: Is there a dominant design?. Telecommunications Policy, 39(3-4),
pp.162-175.
Cecere, G., Corrocher, N. and Battaglia, R.D., 2015. Innovation and competition in the
smartphone industry: Is there a dominant design?. Telecommunications Policy, 39(3-4),
pp.162-175.
Chen, C.M. and Ann, B.Y., 2016. Efficiencies vs. importance-performance analysis for the
leading smartphone brands of Apple, Samsung and HTC. Total Quality Management &
Business Excellence, 27(3-4), pp.227-249.
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Business Excellence, 27(3-4), pp.227-249.
Choi, J., Kim, B.J. and Yoon, S., 2014, June. UX and Strategic Management: A Case Study
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Innovationsforschung, SOI Discussion Paper.

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Dolata, U., 2017. Apple, Amazon, Google, Facebook, Microsoft: Market concentration-
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Innovationsforschung, SOI Discussion Paper.
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