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A PESTEL analysis, which examines the conditions of an industrys external environment, was performed on U.S. smartphone industry. The analysis revealed that this industry has strong governmental involvement and economic influence. There are U.S. agencies that exist just to protect consumers from unfair or fraudulent businesses, and to regulate the manufacture and operation of certain products and devices such as cell phones and other electronic devices which communicate by emitting and receiving radio waves (Federal Trade Commission, 2021). On the cultural front, U.S. firms have quickly transformed their segmentation strategies due to how globalization has influenced culture, ethnicity, gender, generation, income, and other factors (The Pew Charitable Trusts, n.d.). A positive attribute in the U.S. is the reliability, availability, and overall quality of infrastructure (Best, 2020). Climate change, however, may be a concern with the range of extreme temperatures, some of which are extremely destructive and may pose a risk to communications infrastructure, manufacturing, and logistics (NOAA, 2021).

A Diamond Model analysis was also performed to examine the smartphone industry from a different perspective. The analysis revealed that the industry has a highly skilled labor force but is dependent on foreign countries for low-skill labor. There is a high drive for innovation and quality products but new entry threat is low due to a saturated market. However, there are direct threats with large capital companies who can invest heavily in R&D and marketing. Smartphones have many related industries, mainly, mobile telecommunication, banking, and social networking.

The strategic problem with the smartphone industry in the U.S. is that penetration has reached 85%, which leaves little opportunity for other competitors to enter this market space. Samsung is by far Apples top competitor, however LG, Blackberry, Nokia, and Google were included in a competitive analysis and evaluated on innovation, expertise, customer service, delivery time, regulations, and safety. The competitive positioning map shows that Apple ranks the highest in brand image and innovation. However, their highest competitor, Samsung, is just as innovative and with only a slightly weaker brand image. This creates a competitive environment where Apple must continually strive to maintain their lead in these areas.

Porters Five Forces is a framework that was completed to analyze Apples competitive environment. It revealed that the threat of new entrants is weak in that they would not only need substantial capital but would also need to pursue the endeavor of establishing brand recognition within an industry that already has several strongly branded companies (Beers, 2020). In addition, the threat of substitutes is low as similar products have limited capabilities compared to Apples products. However, as noted in the competitive analysis, the level of established competition within this sector is high. The bargaining power of buyers is weak but the strong of suppliers; buyer power is weak due to consumers investment in a diverse suite of integrated Apple products which would make switching costs very high (Maverick, 2019), and bargaining power of suppliers is high as the vast majority of processor chipsets are manufactured by only two companies (Lee, 2021). In light of this market saturation, a TOWS matrix and SBU analysis were created to identify the cash-flow (also known as cash-cow) and question mark strategies. Based on these strategies, I am recommending a marketing strategy to pay for the implementation of these strategies. Once implemented, I expect a 35% ROI and 50% revenue from services segment increase over the next 5 years.

Strategic Problem

Smartphone penetration in the U.S. has reached 85% (ODea, 2021), leaving very little room for further penetration by competitors in the known market space. Firms in the high tech industry are competing against each other to increase their market presence while continuing to face challenges like slim operating margins, high capital expenditure, shortening product lifecycle and managing a global supply chain (Kamann et al., 2011, p. 5). In a fully saturated zero-sum market, companies need to accelerate innovation in order to win new market share away from their competitors especially in a market such as this where the majority of consumers are not particularly price sensitive.

PESTEL Analysis

The PESTEL analysis opens the door for an organization to see the conditions of an industrys external environment, which will help dictate their actions and performance. The PESTEL is an acronym that symbolizes the Political, Economic, Sociocultural, Technological, Environmental, and Legal analytics that can impact a business.

Political  In terms of the political environment, the government is heavily involved. For the high-tech industry, the government can pass and change legislation over privacy, surveillance, censorship, security, and antitrust laws at any time. The U.S. governments impact has been so pronounced that big tech companies have turned to nonmarket strategies to yield some influence. A new report from consumer advocacy nonprofit Public Citizen says that big tech companies are now the biggest lobbyists, and that the money they spend on influencing government policy has allowed them to harm consumers, workers, and other businesses alike (Lovejoy, 2021). With the passing of time and as technology evolves, corporations may overstep their boundaries, which would mean that the tech industry can anticipate that the actions of government bodies will continue to influence the decisions and behavior of firms. In other words, political pressure due to changes in legislation and regulations can be expected.

Economic  As much as political factors can affect corporate strategies, the same impact can be articulated with economic factors. The U.S. growth rate, inflation, deflation, interest rates, and exchange rates can have drastic consequences to a firms overall strategy. Within the United States and globally for that matter, the Great Recession created a sharp decline in the economic activity of the country for which has not been seen since the Great Depression. Forbes analyzed data from the Great Recession and found that tech companies that acted swiftly to counteract the downturn ascended to the tops of their markets, but that nearly half of market leaders slipped to the back of the pack (Montgomery, 2020). Additionally, a change within macroeconomic factors, such as an increase of the level of unemployment, can indicate increased lost wages, and manifest a reduction in consumer buying power. Since then, the economy has grown; however, the constant vigilance and mitigation to the changing characteristics of economic conditions needs to be continuous (NOAA, 2021).

Sociocultural  The term continuous is also applicable within the sociocultural factors in the PESTEL model. Sociocultural factors capture a societys cultures, norms, and values. Because sociocultural factors not only are constantly in flux but also differ across groups, strategic leaders need to closely monitor such trends and consider the implications for firm strategy (Rothaermel, 2021, p. 78). In the advent of globalization, demographic trends in age, ethnicity, socioeconomic class, gender, generation, income, among other factors, have quickly transformed firms segmentation categories and strategies in the United States. Societal changes drive public policy. These shifts include an aging population; the growth of high tech and service sector jobs; evolving views on race, ethnicity, and immigration; and changes in family structure (The Pew Charitable Trusts, n.d.). Regardless of the industry involved, it is imperative that corporations repeatedly scan, monitor, and evaluate external factors and trends, which can create both opportunities and threats.

Technological  The U.S. ranks high in overall availability and quality of infrastructure. Municipal water and sewer services, power utilities, communications and broadband internet, and reliable transportation infrastructure are all readily available in almost all portions of the country, though there are regional differences in availability and quality as could be expected (Best, 2020). The vast majority of the landmass of the U.S. is covered by LTE rated cell service from one of the nations four largest wireless carriers: AT&T, T-Mobile, UScellular, and Verizon (FCC, 2021) which constitutes LTE coverage for 98% of the population (Heisler, 2015) and over 99.9% of the population have at least a 3G connection (SDG, 2017). Ninety-seven percent of Americans own a cell phone of some kind with 85% of Americans owning what would be considered a smartphone (Pew, 2021).

Environmental  The overall climate in the U.S. is relatively temperate with a range at the extremes from the Alaskan tundra to the tropical climate in Florida and Hawaii (Weather and Climate, 2021). The U.S. does experience some destructive extremes in weather, most notably hurricanes in the southeastern coastal states, which have been on the rise since 1970 (NOAA, 2021). The U.S. does have some significant issues with pollution with overall air quality being problematic in many places. Additionally, there has been an ongoing municipal water crisis in Michigan for many years which has highlighted the problems with some of the aging infrastructure present in the country (Tiseao, 2020). The U.S. ranks 24th on the Environmental Performance Index which suggests that, while there are some pollution issues present in the country, overall the US does better than many other countries with regard to environmental protection and pollution (Yale University, 2021).

Legal  The U.S. has a very robust degree of protection for Intellectual Property to deter counterfeiting and industrial espionage thereby preserving the drive for ingenuity and entrepreneurship that the country is renowned for (U.S. Department of State, 2021). There is also a significant body of labor law and anti-discrimination law present in the U.S. that prevents discriminatory practices, abusive and dangerous working conditions, child labor, and other undesirable conditions that may be present in other labor markets around the world (U.S. Department of Labor, 2021). There also exist in the United States agencies that protect consumers from unfair or fraudulent businesses (Federal Trade Commission, 2021), from monopolistic business practices (Federal Trade Commission, 2021), and from false reporting of operating results and finances (U.S. Securities and Exchange Commission, 2020). The Food and Drug administration and the Federal Communications Commission share joint responsibility in the regulation of cell phones and similar electronic devices that emit and receive radio frequencies (FDA, 2021).

Competitive Analysis

Apple

Mission & Vision: Apples current mission is to bring the best user experience to customers through innovative hardware, software and services while their vision is to make the best products on earth and to leave the world better than we found it. (Abbott, 2021) Despite frequent changes in their mission and vision statements, one thing always remains the same  quality products and services for its customers.

Company Profile: Apple was founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne and has been a global leader in the technology industry. The company, based in California, is known globally for its innovative solutions for computer software, electronics, and online services. (Apple Mission Statement 2021: Apple Mission & Vision Analysis 2021) Apple is one of the Big Four tech companies as they not only design and sell consumer electronics such as the iPhone and Apple watch but also for developing computer software and offering online services as well. They have 80,000 employees as of 2020 (Apple: Job Creation, 2021). At the end of Q1 on December 26, 2020, Apple reported a record $111.4 billion in revenues driven by strong iPhone sales with a record $65.6 billion from iPhone sales. (Abbott, 2021)

The core values adopted by Apple go a long way in maintaining its consistent growth. The companys core values include Accessibility, Education, Environment, Inclusion & Diversity, Privacy and Supplier Responsibility.

The companys focus on innovation is a leading source of competitive advantage. The other areas where Apple has been able to achieve a strong competitive advantage include marketing and product quality.

Strengths

• Proprietary ecosystem: The ecosystem is successful due to the ease of use of products and how well they integrate with each other and the services of the company.
• Brand Recognition & Customer Loyalty: Apple is recognized world-wide but also demands loyalty due to the way it sells its products.
• Management and Culture: Apple has transformed into a behemoth not only focusing on the iPhone but expanding into Wearables, Services, and more all while building a strong corporate culture. Theres a reason the company is consistently ranked one of the best places to work year after year.
• Domination of the advanced consumer electronics supply chain. Apple has effectively created a closed ecosystem, controlling every part of the supply chain from design to retail (Clarke & Boersma, 2018).

Weaknesses

• Overreliance on iPhone Revenue: 50% of Apples revenue in 2020 was from iPhone sales. If for some reason (economic, political, social, etc.) Apple cant sell as many phones in a particular quarter or year, it will likely have a material impact on results.
• Declining Global Smartphone Market Share: Over the last 3 years, Apples global smartphone market share has stayed relatively flat while other carriers continue to take share.
• Few Successful Product Innovations Introduced Over the Past Decade: Historically Apple has been considered one of the most innovative technology companies in the world for releasing breakthrough products like the iPod, iPhone, and iPad yet in the past decade when it comes to product innovation they have slowed down significantly only introducing AirPods and the M1 processer. Apple needs to do more for product innovation to stay successful especially as hardware products become more commoditized.
• Apples ethical decision making has come under question multiple times due to the nature of their supply chain putting the burden of cost and production onto the laborers through low wages and unsafe conditions (Clarke & Boersma, 2018).

VRIO Analysis

LG

Mission & Vision: One of the first things a strategic leader must do is to shape an organizations vision, mission, and values, as each of these plays an important role in anchoring a winning strategy (Rothaermel, 2021, p. 34). As this author articulates, companies with a good strategy generates value for society. This is what LG portrays in their mission and vision. The essence of LG means Life Good. Their vision and mission are to maintain a hard-earned reputation for bringing added value to the lives of consumers. They do so by constantly researching and introducing a full range of innovative, greener products and services (Comparably, 2021). This mission/vision allows them to maintain a dynamic strategic fit to the ever-changing external environment.

Company Profile: Goldstar Co. (now LG Electronics) was established in October 1958 in South Korea. Their first trademark was for electrical machinery and urea resin products. They produced the first Korean radio and within a few years began establishing themselves in key industries within the cosmetic, laundry soap, telephone, and electricity meters. By 1965, they had produced the first domestic refrigerator and shortly expanded by producing televisions, air conditioners, elevators, escalators, and even washing machines.

Through the years of 1970-1994, the company experienced a high-growth period through state-of-the-art technology development and internal management capabilities. They produced the first Korean cassette recorder, started mass producing color televisions, created the first electronic Korean VCR and also moved towards computers, video cameras, and microprocessors (LG Communication Center, n.d.).

The LG brand name became incorporated in 1995. Today, they are a global conglomerate corporation that employs 75,000 employees throughout 118 nations and 71 unique companies (LG Electronics, 2019). LG is constantly pursuing innovations and solutions within the home appliance and air solution industry, the home entertainment industry, and vehicle component solutions industry.

LGs strategic activity system has been developed to respond to changing environments. Strategic leaders&need to adapt their firms activity system by upgrading value-creating activities in response to changing environments. To gain and sustain competitive advantage, strategic leaders may add new activities, remove activities that are no longer relevant, and upgrade activities& (Rothaermel, 2021, p. 143). And this is exactly what LG did. Within their first-quarter 2021 financial results, they experienced the highest quarterly results in the companys history with consolidated sales of 16.90 billion and an operating profit of 1.36 billion. Compared with the first quarter a year ago, revenues grew by 27.7 percent and profitability soared by 39.1 percent, reflecting very strong demand for LG home appliances and home entertainment products& (LG, 2021). LG was able to accomplish this performance growth through their corporate strategy of diversification. While they experienced an operating loss within their mobile communications SBU with a deterioration of 28 percent from the same quarter a year ago, the combined growth of the LG Home Entertainment Co., the LG Home Appliance & Air Solution Co., and the LG Vehicle Component Solutions Co. was an increase in sales of 102 percent (LG, 2021). This performance shows the relevance and importance of strategic corporate strategy.

Strengths

• Strong Brand Recognition  LG has grown into a well-known global company and has a strong reputation to back them. For its luxury brand, LG Signature uses the brands focus on innovation and takes it to a higher level by optimizing the artistry of design (Light, 2019).
• Recognized as a high-quality brand.
• Extensive differentiation in product mix and distribution network.
• Ethical Decision Making  LGs Code of Ethics encompasses two key corporate principles, Creating value for customers and Respecting human dignity, and as such we will continuously pursue mutual benefits for our stakeholders on the basis of trust and cooperation. LG is committed to act uprightly and make value judgments in accordance to the code of ethics (LG Code of Ethics, n.d.). This commitment can also be seen in their vision within corporate social responsibility to constantly research greener products and services. With an emphasis of sustainability and ethical decision making, this can be viewed as a company strength.

Weaknesses

• Low Market Share on cellphone market  LGs U.S. market share currently stands at about 10%, research firms Gartner and Counterpoint estimated (Patnaik & Mehta, 2021).
• Continued Loss in Profit Margins  Experiencing years of losses in the smartphone market due to intense competition.

Due to the intense competition on the cellphone market with companies such as Samsung and Apple, LG has decided to leave the smartphone production business. The strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions (Toh, 2021). This aspect might be in favor of Apple inc. since this company develops the most attractive to the new customers production.

VRIO Analysis

Samsung

Mission & Vision: Samsung follows a simple business philosophy: to devote its talent and technology to creating superior products and services that contribute to a better global society. To achieve this, Samsung sets a high value on its people and technologies. Samsung believes that living by strong values is the key to good business. Thats why these core values, along with a rigorous code of conduct, are at the heart of every decision the company makes. In an expression of its commitment to corporate social responsibility as a world leading company, Samsung Electronics announced the Five Samsung Business Principles in 2005. The principles serve as the foundation for its global code of conduct in compliance with legal and ethical standards and the fulfillment of its corporate social responsibilities (Samsung Mission & Values, 2021).

Company Profile: The Samsung Group is a South Korea-based conglomerate, operating globally, that includes several subsidiaries. Its one of the largest businesses in Korea, producing nearly one-fifth of the countrys total exports with a primary focus on electronics, heavy industry, construction, and defense. Other major subsidiaries of Samsung include insurance, advertising, and entertainment (Burris, 2020). Samsung has around 267,937 employees as of 2020 (Eun-jin, 2021). For the 2020 fiscal year, Samsung reported KRW 236.81 trillion [approximately $211.5 billion] in revenue and KRW 35.99 trillion [approximately $32.1 billion] in operating profit (Sajid, 2021). This was weaker than anticipated due to the ongoing global COVID-19 pandemic but was still a growth of 2.7% from the previous year (Byford, 2021).

Samsung was founded in 1938 by Lee Byung-chul as a grocery store  trading and exporting goods produced in and around Taugu city. In the 1960s, Samsung entered the electronics industry with the formation of several electronics-focused divisions. The company then entered the telecommunications hardware industry in the 1980s, initially building switchboards but expanding into telephone and fax systems and eventually mobile phone manufacturing. Soon after the death of founder Lee Byung-chul in 1987, Samsung Semiconductor and Telecommunications merged with Samsung Electronics. The merged organization focused on home appliances, telecommunications, and semiconductors. The next decade brought additional growth and achievements. Samsung soon became a world leader in chip production, formed Samsung Motors, and began producing digital TVs (Burris, 2020).

Samsung entered the phone market in the early 2000s with the SPH-1300, an early touch-screen prototype phone. They then acquired companies that developed technologies for electronic devices in the early 2010s, releasing the Galaxy phone in 2011. The year 2012 marked Samsung becoming the worlds largest mobile phone maker. They made several acquisitions in the following years, including organizations that would help it expand its offerings in medical technology, smart TVs, OLED displays, home automation, printing solutions, cloud solutions, payment solutions, and artificial intelligence (Burris, 2020).

Strengths

• Very high research and development (R&D) expenditure resulting in one of the strongest patent portfolios among technology companies (Jurevicius, 2020)
• Dominates the Smartphone Market (Parker, 2020)
• Product innovation and design capabilities. (Jurevicius, 2020)
• Strong global brand tied to consumer electronics (Martin, 2019)
• Synergistic support among divisions or subsidiaries (Martin, 2019)
• Ecologically Friendly Innovations (Parker, 2020)
• Stronghold in the Asian Markets, particularly India and China (Parker, 2020)

Weaknesses

• Heavily dependent on the American Markets (Parker, 2020)
• Product Failures that have eroded confidence and trust in the company (Parker, 2020)
• Lack of a competitive comprehensive platform for hardware, software, and services (Martin, 2019)
• Too Large Product Diversity (Haque, 2021)
• Despite a heavy emphasis on ethics and corporate social responsibility on their website, Samsung continues to be exploitative and unethical due to the exploitation of their workers and consumers  facing multiple lawsuits due to misleading ethical claims (Singh, 2020).

VRIO Analysis

Blackberry

Mission & Vision: Blackberrys mission is to be the worlds leading provider of end-to-end mobility solutions that are the most secure and trusted while their vision is securing a connected future you can trust. (BlackBerry, 2021)

Company Profile: BlackBerry Limited was incorporated in 1984 and is headquartered in Waterloo, Canada. The company also operates leased facilities of over 1,285,000 square feet in North America, Europe, Middle East, Africa, and Asia-Pacific (BlackBerry, 2021). These facilities house 3,497 employees of which approximately 51% are in Canada, 32% in the U.S., and 17% outside of North America (BlackBerry, 2021).

The company uses artificial intelligence and machine learning to deliver solutions for cybersecurity, safety, and data privacy and endpoint security management, encryption, and embedded systems (Yahoo, 2021). They provide intelligent security software and services to enterprises and governments worldwide and software vendor developers who integrate the security features of BlackBerry right into their own mobile and web applications (Yahoo, 2021). BlackBerry annual gross profit for 2021 was $643 million, a 15.73%

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