Comparative Analysis of Apple &Samsung :

Profit MaximizerVs Revenue Maximizer

AMITY UNIVERSITY

Submitted by:Ashish Raj

B. Com. (Hons.) IIIA7004614138

Specialization:Finance

Under guidance of:Faculty GuideDr. AmitSinha

ProfessorA.B.S. Lucknow

AMITY BUSINESS SCHOOL

AMITY UNIVERSITY UTTAR PRADESH LUCKNOW

SYNOPSIS

Student is required to provide the following information at the time of registration

within a week of joining their course.

Student’s Name : Ashish Raj

Enrolment No : A7004614138

Program : B.Com (Hons.)

Industry / Organization’s Name : A.B.S.

Address (If applicable) : Amity University, Lucknow

External Guide’s Name : Dr. AmitSinha

Designation : Professor

Contact Details : 9984842785

E- Mail Id : aksinha1@lko.amity.edu

FACULTY CERTIFICATE

Forwarded here with a Company Report on “Comparative Analysis of Apple

& Samsung : Profit Maximizer Vs Revenue Maximizer” of Finance,

submitted by ASHISH RAJ , Enrollment No - A7004614138, student of B.COM

(HONS) IIIRD Semester (2014-17).

This project is a partial fulfillment of the requirement for the degree of

Bachelor of Commerce from Amity University,Lucknow CampusUttar

Pradesh.

Professor

Dr. AmitSinha

AMITY UNIVERSITY

LUCKNOW CAMPUS

UTTAR PRADESH

STUDENT CERTIFICATE

Certified that this report prepared is based on Company Report project

undertaken by me on

“Comparative Analysis of Apple & Samsung : Profit Maximizer Vs

Revenue Maximizer ”

Under the able guidance of Professor Dr. Amit Sinha in partial fulfillment

of the requirement for award for the degree of Bachelor of Commerce

(B.Com IIIRD Sem.) from AMITY UNIVERSITY, UTTAR PRADESH

Date:

Ashish Raj Dr. Amit Sinha Prof.V.P. Sahi

(Student) (Faculty guide) (Director ABS)

TABLE OF CONTENT

S.NO. PARTICULARS PAGE

1. Preface 1

2. Acknowledgement 2

3. Executive Summary 3

4. Introduction of Topic 4

5. Objectives of Study 7

6. Methodology & Tools 8

7. Scope of Study 10

8. Limitations of Study 11

9. Company Profile 12

10. Analysis & D.I. 16

11. Recommendations 23

12. Conclusion 24

13. Bibliography 26

14. Annexure&Questionnaire 27

PREFACE

The Company Report in any organization is an integral part of B.Com (Hons.)

Course because it exposes students to the problem areaand provides knowledge as

how to solve these problems. There is always gapbetween theories and practices

and the training is aimed at removing thisgap. The project report is concerned with

the“Comparative Analysis of Apple &Samsung : Profit MaximizerVs Revenue Maximizer ”of Finance. During my project I studied the variousdevelopment tools

and deeply analysis the functions. In the project I have tried to study the products of

Samsung and Apple &analysis them on the basis of their popularity and there after

stating shortcoming along with suggestions. This report is written account of what I

learnt and experienced duringmy project work and I have tried to complete this report

with as much perfectionas possible. With the questionnaire I make it clear that

practical knowledge is must,which gives us and opportunities to give practical

entries.

ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deepregards to my

director PROF. VIJAY PRATAP SAHI ,my area head PROF. ANIL DUBEY, my

faculty guide DR. AMIT SINHAfor their exemplary guidance, monitoring and constant

encouragementthroughout the course of this thesis. The blessing, help andguidance

given by her time to time shall carry me a long way in thejourney of life on which I am

about to embark.

EXECUTIVE SUMMARY

Apple has been synonymous with the word innovation but what is its future and, specifically, its struggles against a top tier competitor? How well does the future of Apple stack up to its rival, Samsung, After doing some in-depth comp analysis this past week, I believe Apple's share price is fully justified relative to its financials. However, Samsung is better positioned for growth and has greater upside potential.From creating and designing computers to delivering the I Products, Apple has come a long way. It has placed itself in the most redefining moment of our generation,Apple is at the epicenter of the technological revolution era. The company has an intangible asset that puts it in the forefront of the minds of consumers and investors alike. But now, Apple faces its biggest threat as Samsung has slowly gained market share. In 2012, Samsung sold 63 million units of the Samsung Galaxy and made more money than Google makes from all its businesses. 

Despite this, Samsung is still nowhere near Apple's ability to generate revenues. Apple has sold 5 million iPhone 5's in a weekend, and will probably continue to outsell Samsung's Galaxy phones for some time. However, it's safe to say that Apple will forever remain the leader in the smartphone market. I believe Apple has been approaching fair value. Whether you are an Apple believer or not, it can't be disputed that the company posts incredible gains year-on-year, maintains a very healthy balance sheet. It's not as if Apple is a sinking ship; rather, it's a function of whether this value is already priced into the stock. Samsung's rise will continue to hammer at Apple's price. Apple's limited number of new product initiatives (at least those mentioned to the public) aren't the game-changers of previous years. 

The gross profit margin over the years have been shooting upwards with a large margin as compared to Apple Inc. based on financial findings, both companies have been recording tremendous earnings in terms of gross profits which also have been growing for the past three years of operations. However, the rate of growth of gross profits at both ends is quite different. While Samsung earns above 20% of what Apple are able to make, it is apparent that the difference is as a result of pricing strategies at both companies. Samsung is known to retail most of its products at affordable prices while Apple’s products retail at optimum costs due to superior

brand name. Nonetheless, none of the companies have recorded gross loss hence the two are tightlycompeting on technology provision basis.

- Chapter 1 -

Introduction

1.1 INTRODUCTION OF TOPICThe report is based on mainly two criteria -

1. Profit Maximizer

2. Revenue Maximizer

And on the basis of various financial analysis and other tools it has been shown that

the Apple is a Profit maximizer whereas Samsung is a Revenue maximizer. Before

going further it is very important for us to know the concept of Profit maximizer&

Revenue maximizer and also on the principal it works.

Profit Maximizer

- The profit maximization principle stresses on the fact that the motive of

business firms to maximize profit is solely justified as being a method of

maximizing the income of their shareholders.

- The rules that apply for profit maximization are:

1) Increase output as long as marginal profit increases

2) Profit will increase as long as marginal revenue (MR) > marginal cost (MC)

3) Profit will decline if MR < MC

4) Summing up (2) and (3), profit is maximized when MR = MC

- What this means is that the production and sale of the business’s product

reach a point that if the business were to sell one more unit, it would begin to

lose money because the costs of producing that unit would exceed the unit’s

price on the market. Achieving this goal with precision in the real world is

difficult, but it illustrates the overall strategy of maximizing the owners’ annual

return, even if that means not making sales that could have been made if the

business produced more.

- Increase in profits by minimizing the costs.

RevenueMaximizer

- Revenue is essentially another word for SALE’S. or how much of the goods or

services that your business produces is sold to consumers.

- Revenue does not take into consideration the costs necessary to produce or

market your business’s product, so it does not reflect what the owners

ultimately receive.

- Revenue maximization strategy dictates that a business should do whatever is

require to SELL as much as of its products, so it can build major market share

and a reputation in the market.

- Easily helps in entering into new markets.

1.2 OBJECTIVES OF STUDY

• To study about Apple & Samsung.

• To explore various strategy used by both the companies to acquire market.

• To know which is the Profit maximizer& which is the most Revenue maximizer.

• To know market share of both the companies upon different variables.

• To know problems faced by these companies.

• To find out awareness level & reaction of customers towards these companies.

• To find causes of distinction between Apple & Samsung.

• To provide suggestions for the both companies.

• To compare their Financial Statements of past Five Years.

• To describe the business of both the companies in there different products.

• To predict the future selection of youth among these two companies.

• To demonstrate the Financial Position of both.

• To describe the Business Matrix of Apple & Samsung.

1.3 METHODOLOGY AND TOOLS

"Research comprises of defining & redefining hypothesis or suggestedsolutions,

collecting, organizing & evaluating data making deductions &reaching conclusion"

The term research Methodology here comprises of all researchactivities carried on in

connection with the “Comparative Analysis of Apple &Samsung : Profit MaximizerVs Revenue Maximizer ”. The basic purpose of research methodology is

to describe the researchprocedure. It helps the researches to adopt the right way to

move on forcarrying the study.

STEP IN RESEARCH PROCEDURE • Defining and analyzing the problem.

• Determining sources of information

• Preparing data collection format

• Collection of data

• Analysis of data

• Interpretation of data

• Preparation of report

RESEARCH DESIGN A research design is like arrangement of conditions for collections &analysis of data

in a manual that aims to combine relevance to the researchpurpose with economy in

procedures. A research design is purely & simply the framework of plans for a

studythat guides the collections & analysis of data the research design is

theconceptual structure within which the research is conducted. It constitutes theblue

print for the collection, measurement & analysis of the data.

DESCRIPTIVE RESEARCH DESIGN These are concerned with describing the characteristics of a particularsphenomenon

in detail the descriptive study requires a clear specifications ofwho, what, when,

where, why & how aspects of research.

The methodology adopted to achieve the project objective involved descriptive

research method.

SOURCES OF DATA COLLECTION To make the research complete it is very necessary to have useful andauthentic data

there are two types of data collection sources.

PRIMARY SOURCE OF DATA COLLECTIONPrimary data are those which are collected afresh & for the first time, &this happens

to be original in character. Simple well drafted questionnairewas circulated among all

respondents. Full freedom was provided to anindividual to answer the questions.

Personal & Telephonic Interviews, observation, personal opinion &viewpoints of the

respondents about the various schemes helped incompletion of the project.

SECONDARY SOURCES OF DATA COLLECTIONThese are those which are collected by someone else & which havebeen passed

through statically process.Brochures, Manuals, Journals, Magazines, Site of HDFC

Bank andvarious Articles provided lot many inputs for successful completion

ofproject.

SWOT ANALYSIS- Strength

- Weakness

- Opportunity

- Threat

Tests will be conducted in order to determine the position of both the companies.

INCOME STATEMENT ANALYSISComparing the Income statements of both Apple & Samsung and on the basis of it a

clear picture of revenue and profit will be calculated and it will determine the

objective of the Company Report.

PERCENTAGE ANALYSISComparing the percentage of Income statements of both Apple & Samsung.

1.4 SCOPE OF STUDY

The Scope of the report lies to the following aspects –

- Income Statement of both the companies

- Percentage Analysis

- Strategy of both companies

- Analysis

- Suggestions

- Limitations

1.5 LIMITATIONS OF STUDY

Data Collection

Panel of questionnaire :

In this project, the respondents are focused on the Metropolitan people group. It just

shows the market share of smartphone between Samsung and Apple in India,

because all of the respondents are Indians. For this reason, it just shows the

Cantonese to buy the smartphone preference in different brand. But Apple and

Samsung are the international companies. There are many of the international

market. From the part of international market, this survey is not generality.

Small Sample Size :If the survey shows the entire market share in India between Samsung and Apple,

the sample may not have persuasiveness. Because 100 sample sizes are quite

small, the population is over the million people in the smartphone market. But we just

have the limited material resource, this survey might not be accurate when the whole

population is taken into consideration.

-Chapter 2 -Company Profile

2.1 APPLE INC.Apple Inc. (commonly known as Apple) is an American multinationaltechnology

company headquartered in Cupertino, California, that designs, develops, and

sells consumer electronics, computer software, and online services. Its best-

known hardware products are the Macpersonal computers, the iPod portable media

player, the iPhonesmartphone, the iPad tablet computer, and the Apple

Watchsmartwatch. Apple's consumer software includes the OS X and iOSoperating

systems, the iTunes media player, the Safari web browser, and

the iLife and iWork creativity and productivity suites. Its online services include

the iTunes Store, the iOS App Store and Mac App Store, and iCloud.

Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayneon April 1,

1976, to develop and sell personal computers. It was incorporated as Apple

Computer, Inc. on January 3, 1977, and was renamed as Apple Inc. on January 9,

2007, to reflect its shifted focus towards consumer electronics. Apple joined the Dow

Jones Industrial Average on March 19, 2015.

Apple is the world's second-largest information technology company by revenue

after Samsung Electronics, the world's largest technology company by total assets,

and the world's third-largest mobile phone manufacturer. On November 25, 2014, in

addition to being the largest publicly traded corporation in the world by market

capitalization, Apple became the first U.S. company to be valued at over US$700

billion.As of July 2015, Apple employs 115,000 permanent full-time employees

maintains 453 retail stores in sixteen countries, and operates theonline Apple

Store and iTunes Store, the latter of which is the world's largest music retailer.

Apple's worldwide annual revenue in 2014 totaled $182 billion for thefiscal

year ending in October 2014.The company enjoys a high level of brand loyalty and,

according to the 2014 edition of the InterbrandBest Global Brands report, is the

world's most valuable brand with a valuation of $118.9 billion.By the end of 2014, the

corporation continued to receive significant criticism regarding the labor practices of

its contractors and its environmental and business practices, including the origins of

source materials.

2.2 SAMSUNG

Samsung Electronics Co., Ltd is a South

Korean multinational electronics company headquartered in Suwon, South Korea. It

is the flagship subsidiary of the Samsung Group, accounting for 70% of the group's

revenue in 2012, and has been the world's largest information technology

company by revenue since 2009. Samsung Electronics has assembly plants and

sales networks in 80 countries and employs around 370,000 people. Since 2012, the

CEO is Kwon Oh-Hyun.

Samsung has long been a major manufacturer of electronic components such

as lithium-ion batteries, semiconductors, chips, flash memory and hard drivedevices

for clients such as Apple, Sony, HTC and Nokia.

In recent years, the company has diversified into consumer electronics. It is the

world's largest manufacturer of mobile phones and smartphones fueled by the

popularity of its Samsung Galaxy line of devices. The company is also a major

vendor of tablet computers, particularly its Android-powered Samsung Galaxy

Tab collection, and is generally regarded as pioneering the phablet market through

the Samsung Galaxy Note family of devices.

Samsung has been the world's largest manufacturer of LCD panels since 2002,

the world's largest television manufacturer since 2006, and world's largest

manufacturer of mobile phones since 2011. Samsung Electronics displaced Apple

Inc. as the world's largest technology company in 2011 and is a major part of

the South Korean economy. In June 2014 Samsung published the Tizen OS with the

new Samsung Z.

APPLE SAMSUNG Founded Cupertino, California, U.S.

(April 1, 1976; 39 years ago)

Founders Steve Jobs

Steve Wozniak

Ronald Wayne

Headquarters Apple

Campus, Cupertino, California,

U.S.

Number of locations

453 Apple retail stores in 16

countries (March 2015)

Area served Worldwide

Key people Arthur D. Levinson (Chairman)

Tim Cook (CEO)

Jonathan Ive (CDO)

Luca Maestri (CFO)

Revenue  US$ 182.795 billion (2014)

Operating income  US$ 52.503 billion (2014)

Net income  US$ 39.510 billion (2014)

Total assets  US$ 231.839 billion (2014)

Total equity  US$ 111.547 billion (2014)

Number of employees

115,000 (as of July 2015)

Subsidiaries FileMaker Inc.

Anobit

Braeburn Capital

Beats Electronics

Type Public

Traded as KRX: 005930, KRX:005935, 

LSE: SMSN,LSE: SMSD

Industry Consumer electronics

Telecoms equipment

Semiconductors

Home appliances

Founded 1969 (Samsung Electric Industries)

1988 (Samsung Electronics)

Headquarters Suwon,

Area served Worldwide

Revenue  ₩206.205 trillion (2014)

Operating income

 ₩25.025 trillion (2014)

Profit  ₩23.082 trillion (2014)

Total assets  ₩230.422 trillion (2014)

Total equity  ₩168.088 trillion (2014)

Owner Samsung

Number of employees

326,000 (2014)

Parent Samsung

-Chapter 3 -Analysis & DataInterpretation

3.1 INCOME STATEMENTSamsung Electronics Co Ltd. (KRW)

Apple Inc.(USD)

3.2 PERCENTAGE ANALYSIS

Samsung Electronics Co Ltd.

Apple Inc.

3.3 FINANCIAL POSITION

Samsung Electronics Co Ltd.(USD)Year Revenue Gross Profit 2010 136317 45809 2011 145460 465962012 177286 656342013 201608 802192014 181785 68698TTM 172640 64675

Apple Inc.(USD)Year Revenue Gross Profit 2010 65225 256842011 108249 438182012 156508 686622013 170910 643042014 182795 70537TTM 224337 89087

TTM when applied to financial statements data means “Trailing Twelve Months”  i.e. if there has been a recent interim (half year) or quarterly results announcement it is incorporated into the numbers to create a more up to date 'trailing twelve month' period.  This should be contrasted with the last annual results data (which so many financial websites use) which can become very out of date as a company reports through the year. 

3.4 STRATEGY OF APPLE & SAMSUNG

APPLE

TechnologySoftware enhances the appeal of the hardware compatibility.

QualityHigh cost, High quality.

DistributionLimited products to sell in retail store.

MarketingDirect owned storeOnline stores

SAMSUNG

Superior QualityLow cost, expectable quality.

Superior efficiencyR&DInvesting on scientific talents.

Superior CustomizationNew product yearM net software.

Superior innovationNew digital technology.

3.5 RECOMMENDATIONS

To Samsung

To compete with Apple, Samsung should focus on increasing its value proposition in

the smart phone market. Samsung could develop new products having stylish and

modern design, in order to attract buyers who expect stylish, trendy and fashionable

smartphones.

On the other hand, Samsung should keep on producing the existing models of

smartphones which are relatively less costly to tap the middle class and lower Upper

class of population. A strong focus on R&D and taking advantage of being the first

mover in launching.

As a result, the market share of Samsung would increase and has more strength in

the competition with Apple.

To Apple

From the results of the statistics tests, many Apple’s users are trendy and some of

them are short-term users. In order to keep these customers, Apple should always

produce new products to avoid losing them.

Beside the results reveal that there is a relationship between age groups of the

interviewees and the reasonable prices they think. The lower age the lower

reasonable price of a smartphone they think. Apple could attract young buyers by

lowering its price. For instance, Apple could produce new smartphones with lower

cost and hence to lower the price. As a result, Apple could increase its market share,

even attract the users of different brands of smartphones.

- Chapter 4 -

Conclusion & Bibliography

4.1 CONCLUSION

From the above tables and graphs, we can know that even though “Samsung” has

more sales than “Apple” the Net Profits and Profit Margins are less than Apple.

Hence we can conclude that Samsung is following “REVENUE MAXIMIZATION”

concept and where as Apple is following “PROFIT MAXIMIZATION” concept and

earning huge profits than Samsung.

But we can say major market shares are occupied by Samsung.

Profit Maximization can be achieved where MR=MC.

Revenue maximization can be achieved by selling maximum number of products to

capture major share of the market.

Finally, profit maximization is not a physical activity which can be performed. The

other activities which can possibly and practically be performed are selling and

production of the product. We know that profits are function of revenues and costs.

Factually, the revenue generation and cost incurrence are not a simultaneous

activity. Costs are incurred first to do the production activity and then selling of the

product is initiated. Prices also are not known when the product is being produced.

After the cost incurrence which may be considered sunk cost, only objective left is to

maximize the revenues as the cost are no more controllable by the managers. Both

have pros and cons and their applications depends upon strategies followed by

companies.

4.2 BIBLIOGRAPHY

Books:

Research Methodology - By C.R. KothariBusiness Research & Methods - By Donal R. & Schindler, Cooper

Magazine:

Business TodayBusiness World

Annual Report:

ManualsBrochuresWebsites

www.samsung.comwww.apple.com