Google vs. Apple. Comparing Different Strategies to Establishing Self-Driving Cars


Seminar Paper, 2016
23 Pages, Grade: 1,7

Excerpt

Table of Contents

List of Figures

List of Tables

1 Introduction

2 Analytical Framework: The Resource-Based View

3 Analysis of Apple
3.1 The Resource-Based View Applied to Apple
3.2 Apple’s Strategy for Establishing a Self-Driving Car

4 Analysis of Google
4.1 The Resource-Based View Applied to Google
4.1 Google’s Strategy for Establishing a Self-Driving Car

5 Conclusion

References

List of Figures

Figure 1: The Resource-Based View

Figure 2: Infrastructure Spending in 2013

Figure 3: Search Engine Market Shares from 2010 to 2016

List of Tables

Table 1: The Resource-Based View Applied to Apple

Table 2: The Resource-Based View Applied to Google

1 Introduction

Self-driving cars are highly topical and much research is done in this field by leading international technology companies and car manufacturers. Google and Apple are both likely to launch a self-driving car in a few years and compete in being the first to develop the required technology.

Google has been very open about its car project and has even launched a Google car website, whereas Apple has not made an official statement so far about working on developing a car. Nevertheless, there are plenty of rumours dealing with Apple’s so-called “Project Titan”. Exploding investments in research and development indicate that the company is working on developing a self-driving car (Above Avalon, 2016). Besides, Apple has hired qualified personnel coming from the automotive industry (Mac Rumours, 2016) and bought real estate expanses which could be used for building a car manufactory (Wall Street Journal, 2016).

Google, however, has officially confirmed a collaboration with Fiat to build 100 cars together (Bloomberg, 2016) and plans to establish a self-driving engineering center in Detroit (Wall Street Journal, 2016). Moreover, there are large amounts of data available on Google’s vehicles and test statistics (Google, 2016). Google is currently running tests with its own car prototype and has also integrated its technology into the Lexus RX450h SUV. The company works with plenty of partners in the automotive industry (Google, 2016).

The technology required for driverless cars includes a computer software specifically developed for self-driving, sensors consisting of lasers, radars and cameras to indentify objects in all directions, electric batteries, back-up systems taking over the driver’s tasks and a car shape that does not interfere with the sensors’ field of view (Google, 2016).

There is still much research to be done in this field, but it is quite sure that driverless cars will work in a few years. This paper reveals two entirely different strategies to establish self-driving cars by comparing the two technology giants’ way of bringing a car into the market.

For this purpose, the firms’ resources are analysed with the help of the resource-based view. Then, this paper derives the different company strategies and applies them to the self-driving car projects of Google and Apple.

2 Analytical Framework

2.1 The Resource-Based View

The resource-based view is one of two different approaches to implement a company’s strategy. Literature mainly distinguishes market-based and re- source-based strategies (Polster, 2001; Stein, 2005). The resource-based view focuses on a company’s internal resources and potentials and how to employ these in order to gain competitive advantage (from the inside to the outside), whereas the market-based view states that competitive advantage is generated by market positioning (from the outside to the inside), as a firm’s environment influences its strategy (Polster, 2001; Stein, 2005).

In this paper, the resource-based view serves as analytical framework, because by using this theory, differences in firms’ potentials and strategies can be revealed appropriately.

The resource-based view mainly states that a firm’s resources have to fulfil specific criteria in order to create sustained competitive advantage (Barney, 1991). The following figure visualises the resource-based view developed by Barney.

Figure 1: The Resource-Based View

illustration not visible in this excerpt

Source: Author’s own illustration.

According to Barney (1991, here and in the following), “firm resources in- clude all assets, capabilities, organizational processes, firm attributes, infor- mation, knowledge etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness”.

Competitive advantage, however, can only be generated when resources are heterogeneous and relatively immobile in an industry. Otherwise, all firms in an industry either possess the same resources or are able to obtain any re- source, so that no firm has an advantage. Instead, a resource should be im- mobile in a way that it stays with a single firm and cannot be employed by another.

Additionally, firm resources generate sustained competitive advantage when they fulfil four empirical indicators: value, rareness, imperfect imitability and substitutability.

First of all, a resource is valuable when it enables a firm to implement efficient and effective strategies that exploit opportunities or neutralise threats in a firm’s environment.

The indicator rareness is self-explanatory: a resource only creates competi- tive advantage if no or only a few competitors possess the same resource.

Next, resources must be imperfectly imitable in order to create sustained competitive advantage. If other firms are able to imitate a specific resource, competitive advantage is limited to a short period of time. Reasons for im- perfectly imitable resources are either unique historical conditions, causal ambiguity or social complexity. Unique historical conditions deal with firms’ intrinsic histories, which means that every firm depends on the condi- tions of the time. Historical conditions can be exploited by firms and once these conditions change, they become imperfectly imitable for possible imi- tators. Causal ambiguity, however, exists when the connection between a firm’s resources and its sustained competitive advantage is not or only poorly understood by competitors. If a competitor does not specifically know which resources lead to sustained competitive advantage or does not know anything at all about the resources exploited by the focal firm, it is not possible to imitate the firm’s strategy. Another reason for imperfect imita- bility is social complexity. This phenomenon describes complex interper- sonal relationships between a firm’s reputation and its customers and suppli- ers or a firm’s culture. If these factors lead to sustained competitive ad- vantage, they are mostly well understood by competitors. Social firm resources, however, are not managed directly and are difficult to create on purpose. Thus, these resources are imperfectly imitable.

Last, but not least, a resource has to be non-substitutable. If a firm’s re- sources cannot be imitated, some can at least be substituted by a similar product. Then, there is no sustained competitive advantage for the focal firm. It has to be made sure that the firm offers a product that customers cannot do without, even if there are equivalent products available.

All these characteristics of resources creating sustained competitive ad- vantage imply that a firm’s strategy is successful when it is not employed by any competitor at the same time and when it is not possible to imitate the strategy.

3 Analysis of Apple

3.1 The Resource-Based View Applied to Apple

Before analysing Google and Apple’s resources in detail, it is necessary to take a closer look at resource heterogeneity and immobility in the technology industry. Only when resources are heterogeneous and relatively immobile, the resource-based view can be applied. In the technology industry resources are definitely heterogeneous: technology giants like Samsung, Apple and Google all have different assets and corporate strategies. Samsung and Apple both produce mobile phones, but Samsung sells rather low-priced phones, because it lacks the positive brand image Apple profits from. Apple offers phones in the upper price segment which are considered to be symbols of status (iPhone Hacks, 2013). Nevertheless, Samsung has a higher market share than Apple and an excellent process intelligence (IDC, 2016). Both firms are not able to obtain its competitors’ resources, at least not in the short term. This proves that resources in the technology industry are heterogeneous and immobile. The differences between Google and Apple will be explained in the following of this paper.

Apple belongs to one of the most successful international companies and gen- erates extremely high revenues each year. Analysing Apple’s resources re- quires a closer look at its products and business strategy. Apple is a technol- ogy company offering both hardware and software. The hardware product range includes iPhone, iPad, iPod and Mac, the software product range con- tains iOS for iPhone and iPad and OS X for Mac (Apple Annual Report 2015, here and in the following). Therefore, Apple’s different product categories are compatible with each other and fulfil the company’s goal to offer seamless integration and high usability for the customer. The focus lies, however, on Apple’s hardware products manufactured by outsourcing partners located in Asia (Annual Report 2015, p. 6). The company states that its business strategy is based on Apple’s “unique ability to design” (p. 1) and potential to design innovative products. Apple aims at attracting and retaining customers and in- vests heavy sums in research and development in order to develop new prod- ucts and technologies ($ 8,067 million in 2015, cf. p. 28).

With this information at hand, possible resources are to be examined with the help of the resource-based view.

To start with, Apple refers to its design of products as unique, which implies that its ability to design could be a possible resource. Apple presented the first iPhone in 2007 and protected it against imitation by patenting it (Fortune Magazine, 2012). At that time, there was no equivalent competitive product available. The iPhone was the first smartphone containing a full touchscreen and offered not only functional features, but also multimedia features like a mobile web browser (Pocketnow, 2014). The iPhone was definitely an inno- vative break-through project and sold one million times in only 74 days after the release (Apple Press Release, 2007). Consequently, the first generation of iPhones provided Apple with a highly valuable first-mover advantage in smartphones, which the company still benefits from. Moreover, the favoura- ble brand reputation, which will be explained in detail later, is strongly related to Apple’s well-designed products. Competitors like Samsung and Sony are not able to imitate the minimalist and elegant design of Apple’s whole product range, which implies that Apple’s design is rare as well. The thesis is sup- ported by the market research firm Harris Poll that found out Apple was top- ranked in the categories computer, tablet and mobile phone in 2013 (The Har- ris Poll, 2013). The study shows that Apple’s hardware products are ex- tremely popular and possess positive brand associations, which is a valuable asset for a company. One reason why imitation is impossible is that Apple has patented a lot of features of the iPhone (Patently Apple, 2016). Further- more, the unique historical conditions due to the first-mover advantage ex- plain the imperfect imitability of this resource. Substitutability is limited, too, because Apple is a design specialist and highly appreciated for this by its cus- tomers who even do not want a substitutive product offered by competitive firms. Steve Jobs is quoted having said: “A lot of times, people don't know what they want until you show it to them.” (BusinessWeek, 1998). This shows that Apple’s focus is on designing products in a way that entices customers to buy them, even if they did not know they needed them before.

[...]

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Details

Title
Google vs. Apple. Comparing Different Strategies to Establishing Self-Driving Cars
College
University of Münster  (Institut für Genossenschaftswesen)
Course
Unternehmenskooperation
Grade
1,7
Author
Year
2016
Pages
23
Catalog Number
V367564
ISBN (eBook)
9783668460379
ISBN (Book)
9783668460386
File size
529 KB
Language
English
Tags
Unternehmenskooperation, Apple, Google, Self-Driving Cars, resource-based view, Ressourcenorientierter Ansatz, selbstfahrende Autos
Quote paper
Christina Hennemann (Author), 2016, Google vs. Apple. Comparing Different Strategies to Establishing Self-Driving Cars, Munich, GRIN Verlag, https://www.grin.com/document/367564

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