Module 4: Case Study on Apple and Samsung Diversification

This report provides a case study analysis of Apple and Samsung's diversification strategies, exploring both related and unrelated diversification approaches. It examines how Apple has expanded its customer base through products like the Apple Watch and its use of social media marketing, and contrasts this with Samsung's diversification into areas like solar cells and biopharmaceuticals. The report delves into the strategic aspects of backward and forward vertical integration for both companies, highlighting how Apple leverages R&D and retail stores, and how Samsung focuses on cost-effectiveness and market expansion through partnerships. Furthermore, it analyzes the implications of horizontal integration, including the use of mergers and acquisitions, and the potential for economies of scale, while also addressing the complexities and potential anti-trust issues. The report concludes by emphasizing the importance of vertical integration in controlling the industry value chain and the strategic use of conglomerate strategies for product and service diversification, aiming to enhance investment returns and industry growth.

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Module 4-
Case
 Related diversification of Apple relates to the expansion of the scope and arena of the
business for increasing the customer base. In case of Apple, mention can be made of
the Watches, which is a latest attraction among the customers. Strategic aspect in this
direction is reflected from the adoption of social media marketing for disseminating
the information about the special schemes, discounts and offers (Oladimeji & Udosen,
2019). On the other hand, unrelated diversification examples for Apple are computer
software products like iOS applications, which has helped the customers to obtain
innovative products and services. This innovation expands the scope and arena of the
corporate social responsibility of the brand, acting as an agent in terms of gaining
higher satisfaction from the customers.
 Related diversification in case of Samsung extends to the products like solar cells,
rechargeable batteries, and biopharmaceuticals among others. In case of the unrelated
diversification, mention can be made of the services like textiles, insurance and
securities.
 Backward Vertical integration for Apple manufacturing of the electronic devices,
hardware components. Investments in the research and development has proved to be
beneficial in terms of attaining technological development for altering the business
outlook (LI & GUO, 2017). On the other hand, forward vertical integration, in case of
Apple, are the schemes like Best Buy in the retail stores, where the customers can get
the exclusive products.
 For Samsung, the backward vertical integration strategy revolves around achieving
higher flexibility in terms of the cost price of the smart phones. Using competency
model is assistance for achieving better results. In case of the forward integration, the

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strategies relate to tie ups with the malls for expanding the customer base (Wu, 2017).
Currently, the independent retail outlets enhance the brand image.
 Both Apple and Samsung intend to diversify the strategic management for expanding
the customer base through embracing innovation. Presence of the products and
services in the retail outlets is an initiative towards catering to the needs, demands and
requirements of the customers (McGowan, 2017).
SLP
 For adopting horizontal integration, Apple and Samsung needs to focus on the
competitors, who have the same supply chain network. This approach would affect
the processes and structure of the operations. Along with this, the structural design of
the networks would also be altered. Options in this case relates to mergers and
acquisitions, which would be effective in terms of expanding the scope and arena of
the supply chain network. Cooperation with the manufacturers would help in
enhancing the standards and quality of the products and services. Alfaro et al. (2016)
is of the view that this horizontal integration would be upgrade the economies of scale
in terms of expanding the market share. Synergic approach towards sharing the
resources would contribute to the sustainable development. Apart from this,
horizontal intergration would enable Apple and Samsung to increase the market
power by reducing the operational costs. In this context, Zanchettin, and Mukherjee,
(2017) highlights the issue of increased workload and responsibilities, which can
aggravate the complexities in terms of executing the operations. Monopoly and anti-
trust issues also accounts as a negative outcome of the horizontal integration.
Therefore, strategic management needs to be proper
 Vertical integration is needed for Apple and Samsung in terms of controlling the
industry value chain. In this context, Alfaro et al. (2016) is of the view that corporate

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level strategies are beneficial in terms of organizing the activities according to the
needs, demands and requirements of the clients and customers. However, McGowan,
(2017) states that costs benefit analysis and scope needs to be conducted for averting
the issues of dilution of the competencies to fulfil industry capabilities. Forward
integration would imply retention of the prospective clients and customers. On the
contrary, backward integration would reflect retention of the prospective suppliers for
introducing effective products and services for the stakeholders and shareholders.
According to the arguments of Wu, (2017), horizontal integration would be effective
in terms of expanding the market capital through acquisitions.
 Conglomerate strategies can also be effective for Apple and Samsung in terms of
diversifying the workplace culture. As a matter of specification, this strategy would
add to the diversification of the products and services, assisting in fulfilling the
corporate targets, yielding higher investment returns. This approach would also be
effective for Apple and Samsung to contribute in the growth and development of the
industry. According to Oladimeji and Udosen, (2019), conglomerate strategy would
form an integral component for expanding the product line. Formulation of the
budgets would act as a planned action and reasoned behaviour for averting financial
instabilities.

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References
Alfaro, L., Conconi, P., Fadinger, H., & Newman, A. F. (2016). Do prices determine vertical
integration?. The Review of Economic Studies, 83(3), 855-888.
LI, K., & GUO, X. L. (2017). A Literature Review on the Vertical Integration Strategy of
Industry Chain. Industrial Economic Review, (3), 8.
McGowan, D. (2017). Digging deep to compete: Vertical integration, product market
competition and prices. The Journal of Industrial Economics, 65(4), 683-718.
Oladimeji, M. S., & Udosen, I. (2019). The Effect of Diversification Strategy on
Organizational Performance. Journal of Competitiveness, 11(4), 120.
Wu, C. (2017). Strategic aspects of oligopolistic vertical integration. Elsevier.
Zanchettin, P., & Mukherjee, A. (2017). Vertical integration and product
differentiation. International Journal of Industrial Organization, 55, 25-57.