Samsung Versus Apple, Research Paper Example

Some of the external economic factors that may affect the performance of both Samsung and Apple Inc. include financial stability across most of the developed nations and trade-wars between the U.S. and China. Others include rapid economic growth in developing countries and increased disposable incomes in the target markets. These factors may affect the firm either negatively or positively, depending on the profitability. For instance, the trade war between the U.S. and China will adversely affect Apple’s profitability as it produces more than 90% of its products in China (Zhu and Levine). However, it will have a positive impact on Samsung, which is a South Korean international company. It will experience reduced competition from its primary rival in the tech industry provided Apple’s production reduces. The rest of the external economic factors aforementioned allow both firms to expand their operations and consequently increase their profitability.

Recently, the U.S. government increased its trade tariffs on import goods from China and other Asian nations. It is a decision that would negatively affect Apple’s productivity in the technological industry. However, it did not change Samsung, given that it has closed most of its production factories in the recent past. For instance, it has closed its Shenzhen and Tianjin factories, and it is in the process of closing its major factory in Huizhou. It is slowly moving its production units to Vietnam and India, nations that still guarantee reduced production costs (Huifeng).

Samsung should ensure a multiplier effect on South Korea at all times. Apple also owes the United States of America the responsibility of multiplier effect. In providing the multiplier effect, these two tech giants should consider the direct or indirect impacts on their respective local economies, other than any other nation. Even though production in China and other countries such as India and Vietnam gives them a competitive edge over their rivals in the tech industry, thus increasing their profitability, it does not significantly directly impact their local economies. Both Samsung and Apple provide employment opportunities to foreigners as opposed to the locals. Only their stakeholders benefit from its profitability, thus causing a minimal multiplier effect on their local economies.

Meeting tax obligation is any local company’s economic, corporate social responsibility, and both Samsung and Apple are not exceptional. Apple’s decision to transfer its manufacturing unit to China as a competitive strategy originated from the increased taxation by the U.S. government. Likewise, Samsung’s decision to move its production unit from South Korea to China and then to India and Vietnam seeks to increase its profitability. In other words, they both avoid meeting their tax obligations. President Trump remained steadfast in his quest to have local companies return their manufacturing plants into the United States. While it is not clear whether Apple will move its production facilities back to the U.S or not, it is evident Samsung has moved to Vietnam and India. The nations do not suffer from trade war between the U.S and China, thus giving it a competitive advantage over its rivals. But, it does allow it to meet its tax obligation to South Korea.

Finally, both Samsung and Apple have the CSR responsibility of creating equal investment opportunities. However, various factors may influence the execution process of this economic responsibility. Apple opened two research and development centers in China, a nation that hosts its manufacturing unit (Gartenberg). Samsung, on the other hand, despite operating its production unit in China for a more extended period, has not developed such a facility. It has not created equal investment opportunities has it has established its country of origin. It has, therefore, failed to meet its corporate social responsibility of creating equal investment opportunities in its areas of operations.

Works Cited

Gartenberg, C. “Apple is opening two more R & D centers in China.” The Verge (2017).

Huifeng, He. “Will Closing Last Samsung Factory Hurt China’S Role In Global Value Chain?”. South China Morning Post, 2019, https://www.scmp.com/economy/china-economy/article/3014564/samsungs-last-china-smartphone-factory-closing-raising. Accessed 25 Nov 2019.

Zhu, Sirui, and Ally Levine. “92% Of Apple Products Made In China Could Face Tariffs By Year’S End”. Reuters, 2019, https://graphics.reuters.com/USA-TRADE-APPLE/0100B25R11Y/index.html. Accessed 24 Nov 2019.