Assignment
Apple iPhone
A good example of some of the drawbacks of global partnerships comes from the increasingly confrontational relationship between Apple, Samsung, and Ericsson. Apple's iPhones are very popular worldwide. Apple does not actually make the phones, however. The components come from a variety of suppliers, while Foxconn, a Taiwanese firm, carries out most of the assembly at a plant in Shenzhen, China. Korean-based rival cellphone manufacturer Samsung Electronics turns out to be a particularly important supplier of Apple. It provides some of the phone's most important components, including the flash memory that holds the phone's apps, music, and operating software and the applications processor that makes the whole thing work. Together, these account for over one-quarter of the component cost of an iPhone. This puts Samsung Electronics in the somewhat unusual position of supplying a significant proportion of one of its principal competitor's chief products in the cellphone market. Supplying Apple is actually part of Samsung's business model: acting as a supplier of components for others gives it the scale to produce its own products more cheaply. For its part, Apple is happy to let other firms handle component production and assembly, because this leaves it free to concentrate on its strengths: designing elegant, easy-to-use combinations of hardware, software, and services. Stranger still, Apple has sued Samsung on several occasions over the design of Samsung handsets and tablets, claiming that Samsung copied hardware and design features from Apple products. Samsung retaliated by counter-suing. Now Swedish-based rival - and third partner - Ericsson is suing both Apple and Samsung, claiming its own patent infringements, and claiming tens of millions on unpaid licensing fees from both firms. Still, the three firms' mutually beneficial strategic alliances in both software and hardware continue. Why?
Task
i. How is it possible for three companies to work closely together in global strategic alliances when they are not only direct competitors in the marketplace, but also suing one another in court?
ii. What does this global partnership tell you about the future of global strategies and competitiveness in dynamic industries such as consumer electronics?
iii. What are the management challenges for Apple, Samsung, and Ericsson in making this long-term relationship work?
iv. Are there lessons from this strategic partnership for other global companies?