Samsung Electronics Ltd
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Student Declaration
It is hereby declare that this project report titled “Samsung Electronics Ltd” is executed as per the course requirement for the post graduate program in Business Administration. It has not been submitted by me to any other university or institution for obtaining any other degree or diploma certificate. It’s my own work.
Place: University of Education
Date: February 10, 2019 Muhammad Usman Ahmad
1st Semester, MBA (1.5)
(2018-2019)
Acknowledgement
I earnestly hope that it provides useful and workable information and knowledge to any person reading it. During this small time frame in which the project reached its completion, there were a few people whom I would like to make a mention of and without whose help the project would have never seen the light of the day. I wish to express gratitude to my supervisor, Mr. Asif Malik, for his careful guidance and profound knowledge in supervising my project. Without his guiding instructions at every step I may not be in a position of successful completion of my project. He always guided me whenever I found myself confused and in trouble. I dedicate this project to my late father who were extremely kind and who always went out of the way to help me. Without his support, co-operation and help it would have not been possible for me to stand a day out here and to pursue my education like the way I am pursuing.
Preface
“All human actions have one of these seven causes: chance, nature, compulsion, habit, reason, passion and desire.” The major cause for me to take over this project was reason. As a part of the MBA Curriculum and in order to gain practical Knowledge in the field of management, we are required to make a report on “Samsung Electronics Ltd”. In this project report I have included various concepts, effects and implications regarding Samsung’s business strategies. Doing this Project report helped me to enhance my knowledge regarding the work in to the attitude of consumer towards Samsung products and its competitors’ products. I undergo many experiences related with my topic concepts. Through this report I come to know about importance of time management and role of devotion towards the work. Researching about SAMSUNG ELECTRONICS LTD has been a pleasure I take this opportunity to present the project report and sincerely hope that it will be as much knowledge enhancing to the readers as it was to use during the fieldwork and the compilation of the report.
Table of Contents
1 Introduction
Samsung Electronics Ltd. is unquestionably the most important company for the South Korean economy and a world leader in electronics Innovation Company. It is the world's largest technology company in terms of revenues, the largest mobile phone maker and television manufacturer and second largest semiconductor chip producer. If it currently occupies a prominent place on the world market, it does remains that Samsung continued to seek business opportunities and explore in all markets where the company will expand its empire. This study is a general analysis of Samsung Electronics to develop a comprehensive picture of the company. The goal is to clearly identify the different aspects that make up Samsung and is to assess, in a second step, the possibilities and opportunities for this company to come and its investment. The analysis will be divided into three distinct parts: first, we will develop the overall picture of the company in dealing with the history, mission and vision, values and products manufactured. Second, we will focus on the strategic intentions of the company using a SWOT analysis and PEST analysis, SWOT matrix and BCG matrix identifying areas where Samsung currently invested and identifying key sectors covered by this company. Finally, we will establish some recommendations for potential investment.
1.1 Company Profile:
Samsung, South Korean company that is one of the world’s largest producers of electronic devices. Samsung specializes in the production of a wide variety of consumer and Industry electronics, including:
ü Appliances,
ü Digital media devices,
ü Semiconductors,
ü Memory chips, and
ü Integrated systems.
It has become one of the most-recognizable names in technology and produces about a fifth of South Korea’s total exports.
Samsung was founded as a grocery trading store on March 1, 1938, by Lee Byung-Chull. He started his business in Taegu, Korea, trading noodles and other goods produced in and around the city and exporting them to China and its provinces. After the Korean War, Lee expanded his business into textiles and opened the largest woolen mill in Korea. He focused heavily on industrialization with the goal of helping his country redevelop itself after the war. During that period his business benefited from the new protectionist policies adopted by the Korean government, whose aim was to help large domestic conglomerates (chaebol) by shielding them from competition and providing them easy financing.
During the 1970s the company expanded its textile-manufacturing processes to cover the full line of production, from raw materials all the way to the end product to better compete in the textile industry. New subsidiaries such as Samsung Heavy Industries, Samsung Shipbuilding, and Samsung Precision Company (Samsung Tech win) were established. Also, during the same period, the company started to invest in the heavy, chemical, and petrochemical industries, providing the company a promising growth path.
Samsung first entered the electronics industry in 1969 with several electronics focused divisions, their first products were black-and-white televisions. During the 1970s the company began to export home electronics products overseas. At that time Samsung was already a major manufacturer in Korea, and it had acquired a 50 percent stake in Korea Semiconductor.
The late 1970s and early ’80s witnessed the rapid expansion of Samsung’s technology businesses. Separate semiconductor and electronics branches were established, and in 1978 an aerospace division was created. Samsung Data Systems (now Samsung SDS) was established in 1985 to serve businesses’ growing need for systems development. That helped Samsung quickly become a leader in information technology services. Samsung also created two research and development institutes that broadened the company’s technology line into electronics, semiconductors, high-polymer chemicals, genetic engineering tools, telecommunications, aerospace, and nanotechnology.
In the 1990s Samsung continued its expansion into the global electronics markets. Despite its success those years also brought about corporate scandals that afflicted the company, including multiple bribery cases and patent-infringement suits. Nevertheless, the company continued to make advancements on the technology and product-quality fronts, with a number of its technology products, ranging from semiconductors to computer-monitor and LCD screens climbing into top-five positions in global market share.
The 2000s witnessed the birth of Samsung’s Galaxy smartphone series, which quickly not only became the company’s most-praised product but also frequently topped annual lists of the best-selling smartphones in the world. Since 2006, the company has been the top-selling global manufacturer of televisions. Beginning in 2010, the Galaxy series expanded to tablet computers with the introduction of the Galaxy Tab.
2 Mission Statement:
“Inspire the world with our innovative technologies, products and design that enrich people’s lives and contribute to social prosperity by creating a new future.”
2.1 Components of Mission Statement:
Samsung mission statement can be evaluated on the following points,
Does it include? | ||
Customers | Products/Services | Market |
Yes | Yes | Yes |
Technology | Concern of survival | Philosophy |
Yes | No | No |
Self-Concept | Concern for Public Image | Employees |
No | Yes | No |
2 Overview
Samsung’s statement is clearly too short and doesn’t provide enough information about what the company does or why it does it. The statement only includes five essential components out of nine and has a customer-oriented philosophy. Customer-oriented statement defines organization’s purpose in terms of meeting customer needs rather than focusing on what products to produce and services to serve. Samsung also doesn’t mention in their philosophy any of the values we use in our evaluation but the company provides them separately:
ü People
ü Excellence
ü Change
ü Integrity
ü Co-prosperity
These values show what guides Samsung’s actions and decisions. The company mentions excellence, integrity and co-prosperity (or citizenship) as their values, which should have been included in their mission as well.
3 Vision Statement:
“Inspire the world, create the future”
3.1 Overview:
This vision is at the very core of Samsung’s commitment to lead innovations in technology, products and solutions that inspire communities around the world to join its aspiration for creating a better world full of richer digital experiences. As the company recognize its responsibility as a creative leader in the global society, it also dedicate its efforts and resources to offering new values to the industry and customers while fulfilling shared values of its employees and partners. At Samsung Electronics, they want to create a future that is exciting and promising for all together.
As a guide to common understanding and measurable goal, a set of specific objectives is incorporated into the company’s vision. By 2020, they seek to achieve annual sales of USD 400 billion while placing Samsung Electronics’ overall brand value among the global top 5. Three key strategic pillars that are now part of their culture, business operation and management describe the governing initiatives to this end: ‘Creativity ’, ‘Partnership’ and ‘Great People’.
Samsung pride itself on delivering the world’s best products through operational excellence and innovation prowess. As they look forward to exploring new business areas including healthcare and biotechnology, they are excited for new challenges and opportunities ahead. Samsung Electronics will continue to build on top of its current achievements new capacity and expertise to further its competitiveness and its history of innovation.
4 Products/Services:
Samsung has extended its business to beyond limitations by providing almost every kind of products and services. Now, Samsung is in for many businesses like as follows;
ü Home Appliances
o Refrigerators, Cooking Appliances, Air Conditioners, Washing Machines
ü Information Technology
o Monitors
ü TV &AV
o QLED 4K TV, Premium UHD 4K TV, Full HD/ HD TV
ü Mobile Phones
o Smartphones, Wearable, Accessories etc
ü Smart Applications
o Smart View, Smart Switch, Samsung Health, Smart Things, Samsung Dex, Bixby.
4.1 Samsung Products:
Samsung is leading the market in many of the products but some of the core products are discussed below:
4.1.1 Radio Access: Enhancing Network Experience
Samsung's Radio Access Solution combines high performance hardware capability and feature-rich software to meet the complex challenges placed on today’s networks.
4.1.2 Small Cells: Enhance the Capabilities of LTE
Samsung Small cell products integrate the Digital Unit (DU, or baseband unit) and Radio Unit (RU) into a single, small form-factor casing in order to deliver efficient network capacity and performance enhancement at an optimum cost of ownership.
4.1.3 Enterprise Wireless LAN:
Samsung Enterprise Wireless LAN delivers seamless data experience with guaranteed security.
Samsung Wireless LAN is an enterprise grade solution, developed from the ground up to address the needs of the new mobile generation. Offering best-in-class performance, ease of installation and network management.
4.1.4 Core Networks:
Discover how the most compelling and advanced Powerful core networks products
Samsung's Core products provide high capacity, reliability and a full feature set that ensures operators can control and optimize network traffic.
4.2 Samsung Services:
Samsung is providing numerous services to its customers, some of them are discussed below;
4.2.1 Network Deployment:
Samsung service experts ensure smooth and efficient network deployment in a cost-effective and timely manner with the best quality of service. Samsung always does its best to provide operators with telecommunications systems.
4.2.2 Maintenance:
Samsung helps operators sustain a high-performance network for the best end-user experiences with proactive and reactive care. Samsung Maintenance Service provides processes and policies based on deep understanding of customer's needs and requirements at a practical level.
4.2.3 Professional Services:
Samsung service professional's experiences from the world's most data-intensive markets and complicated network environments help operators meet their needs in an efficient and effective manner.
4.2.4 Cognitive Analytics:
Samsung’s Cognitive Analytics platform taps into elements throughout the network, as well as important radio performance information from user devices themselves in order to collect a vast amount of network-relevant data in real time.
5 Target Market:
Samsung's targets a very wide range of consumers ranging from normal day to day usage devices to industrial standard equipment. The usual target age group of customers range from the 20s to 50s or even older, as long as the person has the ability to purchase and use the products that Samsung has to offer in the market.
Teenagers to early adults (age 14 ' 25) ' This age group of Samsung product consumers is usually Samsung's smartphone target customers as they are mostly technology savvy. This group of customers is growing as Samsung saw that this group has more spending power in recent years compared to in the past.
Adults (age 26 ' 50) ' This specific group of targets the largest portion of Samsung's target market as this is the group of consumers that have the most ability to purchase any of the product Samsung has to offer in the market be it smartphones, smart television, cameras or any other household products like vacuum cleaners or washing machines. This portion of customers will continue to grow in the years to come.
6 Management Structure:
At Samsung Electronics, the three divisions of CE, IM, and DS conduct business independently in accordance with product characteristics to boost their respective competitive edge. The CE division manufactures and sells TVs, monitors, refrigerators, washing machines, medical devices, and other electronics. The IM division manufactures and sells smartphones, computers, network systems, and other telecommunication devices, and the DS division manufactures and sells DRAM, NAND flash, mobile So-Cs (System-on-Chips), and other components for use in IT and mobile devices.
6.1 Management Chart:
6.1.1 Visual Display Business:
In 2016 Samsung Visual Display Business released quantum dot TV and was globally recognized for its best-in-class picture quality, and its Serif TV ushered in a new design paradigm in the TV industry and elevated its position as an industry leader.
The year 2017 Samsung launched the world’s first and only QLED TV that delivered the perfect 100% color resolution, a newly emerging standard of picture quality measurement that strengthened its leadership position in the premium TV market.
Moreover, ‘The Frame’ which transforms any living room into an aesthetically-pleasing gallery, along with other diverse accessories equipped for each product line-up will enable Samsung to cater diverse consumer preferences. Furthermore, more developed version of our Smart Hub will allow customers to enjoy a wide spectrum of content on a single screen and feel the out-standing user experience by controlling their set-top box, game consoles, and all other peripheral devices on a single remote control.
6.1.2 Digital Appliances Business:
Samsung Electronics is relentless in their efforts to deliver innovative products and experiences that maximize user convenience and make the lives of consumers better.
In 2016, Samsung saw an increase in sales throughout Asia in addition to revenue growth across premium appliance markets in North America, Europe, and Korea. This year, Samsung launched innovative products that shifted market paradigms, like the Family Hub refrigerator, Add Wash washing machine, and Wind Free air conditioner. They continue to garner positive feedback from our consumers. The Company also focused on strengthening and expanding its business with a new built-in lineup and system air conditioners.
In addition, Samsung is continuing to invest in revolutionizing products and distribution methods for their high-growth, high-profit B2B business.
6.1.3 Memory Business:
Since 1993, Samsung have firmly maintained our No.1 leadership in the global memory semiconductor market while contributing to the overall growth of the global IT market and building an unrivaled competitive edge.
In 2016, Samsung pushed the limit of memory semiconductor technology even further by introducing a host of industry-first products: the 10-nanometer class 16Gb LPDDR4 DRAM chips enable an 8GB mobile DRAM package for high-end smartphones and tablets, and the 15.36TB SAS SSD based on 48-layer 256Gb VNAND technology delivers the industry’s highest storage capacity for leading enterprise customers.
In the previous year, Samsung have been proactively responding to broader market needs from mobile, PC, enterprise, and cloud services to Augmented Reality (AR), Virtual Reality (VR), and automotive applications. Samsung will also continue its advancements in the 10-nanometer process technology for DRAM solutions and next-generation V-NAND technologies to maintain its leadership and contribute to the growth.
7 SWOT Analysis:
This Samsung SWOT analysis reveals how the second largest technology company used its competitive advantages to become a leader in consumer electronics, home appliances and semiconductors industries.
It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most.
The company is the world’s largest mobile phone and smartphone vendor. It is also the largest memory chip and TV manufacturer. Samsung operates in 79 countries, where it sells a range of more than 100 products.
7.1 Strengths:
7.1.1 Brand Image:
One of the key strengths of Samsung is its brand image and that’s why it is one of the most popular electronics and IT brands globally. Apart from being an innovative brand that has brought several market leading products likes Galaxy smartphone and High Definition screens, it is also known as a socially responsible brand. A strong brand image is a sign of popularity and Samsung ranks among the top brands in the Asian markets in terms of popularity. In the recent years several successful product releases and a great branding strategy have strengthened this image further.
7.1.2 Global Presence:
Global presence is also a key strength of Samsung. It has 217 operation hubs operational globally. Apart from that, it has offices across 73 countries that employ around 320,671 people (as of end 2018).
7.1.3 Large Production Portfolio:
Samsung has a large product portfolio of products including semi-conductors, displays, smartphones and consumer electronics as well as computer products. It also has a nice line of laptops and desktops as well as printers even if its market share in the computing industry is small. However, it surpassed Intel a few years ago to become the leading chip maker of the world.
7.1.4 Dominant Position in Smartphone Market:
Around the world smartphone sales and usage are growing. A very large part of the global population uses smartphones and this market is expected to grow faster in size in future. Samsung’s smartphones have been highly popular in the global industry and its dominant position is mainly due to its Galaxy smartphones. The dominant position in the smartphone industry has played a key role in the growth of revenue of Samsung. This is also why the brand is focusing on innovation in this area so as to tap this huge market to its full potential and grow its revenues faster.
7.1.5 Strong Focus on Research and Development:
Samsung is a major technology brand but the tech industry is marked by intense competition. To retain its leading position in the tech industry, the company has maintained heavy focus on research and development and invests a major sum every year. This is a critical advantage since spending on R&D enables brands to grow sources of competitive advantage as well as bring unique products ahead of their competitors. However, this focus on R&D has also earned Samsung very high level of popularity around the globe.
7.2 Weaknesses:
7.2.1 Weak Position in the PC Market:
While the PC market has declined during the recent years, still it is a major market with huge potential. HP, Lenovo, Dell and Apple are the leading players in this industry and Samsung’s market share is much small as compared to them. While Samsung has brought a nice line of computer products still competition is intense and it has not been able to be among the top six in this industry.
7.2.2 Higher Dependence on the American Market:
Samsung depends on the American markets for a large part of its revenue and this can be a weakness. Fluctuations in the American markets can affect its revenue and profits. To reduce it, Samsung would need to penetrate the Asian and European markets deeper. Moreover, depending too much on American markets can subject it to unnecessary pressures which can be avoided by having a more consistent performance globally.
7.3 Opportunities:
7.3.1 AI and Innovation:
Technological advancement are happening at a fast pace and this offers the technology brands a major opportunity to take their products and consumer experience a step ahead of their competitors. AI is a hot area right now which can help Samsung improve its customer experience manifold. Moreover focusing on this area can help it bring superior products and grow its popularity faster. The technology market has grown highly challenging and competitive and the best option before any technology brand looking to grow its business and revenue faster is to invest in innovation.
7.3.2 HR Management:
HR in the technology industry is a major source of competitive advantage. The leading technology brands are investing in this area to hire and retain the best as well as train their employees to perform at their best. Investing in better HR management will improve Samsung’s productivity and overall performance. It must invest in training and engagement of its employees to grow its competitive advantage and revenue.
7.3.3 Digital Marketing and Supply Chain Management:
Digital technology has progressed fast in the recent years and brought new opportunities of marketing as well as HR and supply chain management for the business brands. Marketing and supply chain management are very important areas for any technology brand. Samsung can use digital technology to engage its customers and supplier better. Moreover, digitizing the supply chain has been found to offer several important benefits like reducing costs and lead time.
7.3.4 Diversification and Acquisition:
Samsung must try to grow its market share and customer base through diversification and by acquiring other businesses. In the technology industry there are several related areas where diversification can easily open new channels of revenue and growth. Moreover, since Samsung is in good financial shape, it will be easy for the brand to generate new sources of revenue by acquiring other smaller businesses that strengthen its core offerings.
7.4 Threats:
7.4.1 Competitive Pressure:
Competitive pressure in the consumer electronics, computing products and smartphone industry has grown. From Apple to Huawei and Xiaomi, all these brands are posing a tough challenge before Samsung. This can lead to higher pressure related to product innovation and marketing. Growing competitive pressure results in financial pressure as well.
7.4.2 Legal and Regulatory Threats:
The legal and regulatory difficulties before the global technology brands has grown making it more difficult for them to operate internationally. While laws differ from market to market, there are several to comply and non-compliance results mostly in heavy fines. From labor to environment and product safety, there are strict laws in each area that require to be complied with.
7.4.3 High Expenses on R&D Marketing:
Expenses on research and development as well as marketing has kept growing at Samsung. The brand is facing intense competition in the global markets which is causing a rise in expenses in these areas.
7.4.4 Increasing Raw Material and Labor Cost:
The costs of raw material and labor have kept rising over time leading to higher operational costs for Samsung. This can be a major threat requiring better management of supply chain as well as Human resources. It also leads to higher operational costs and burden on revenue and profit margin.
7.5 Conclusion of SWOT
Samsung is a leading chip maker and brand of smartphones. In the recent years, it has achieved major growth in revenue and profits. While its smartphone sales have grown, its revenue from chips has also grown faster. However, the competitive challenge is still intense making it mandatory for the brand to invest in R&D as well as marketing. Samsung has continued to push its investment higher in these areas. Its position in the American as well as Asian markets is strong. It must focus on making its position stronger in European and Asian markets to reduce its dependence on American markets. To grow its market share and consumer base, it must try to diversify and acquire new smaller businesses. It can also use digital technology for better engagement of its customers, employees and suppliers. Investing in innovation in areas like AI can also bring faster growth for the brand.
8 PESTEL Analysis:
As Samsung is being operational in a global market, the brand is also subject to various kinds of pressures. This is a PESTEL analysis of the brand analyzing how the brand is affected by the political, economic, social, technological, environmental and legal forces
8.1 Political:
Political factors can have a deep and direct or indirect impact on businesses. The direct impact is felt in the form of regulation or trade relationships between countries. If two countries have good relationship, then a business from one country finds it easy to do business in the other and vice versa. In case relationships between two nations are strained then the impact can be bitter on trade too. In such a case a business from one country may not find the business environment in the other very conducive or profitable. Politics can affect business in many other ways too. Political disruption can disrupt the operations and supply chain and result in disrupted business. Any kind of political turmoil can result in business disruption and loss of business. Samsung’s business is spread over 80 countries and any kind of geopolitical turmoil in any of the countries results in loss. Moreover, the fear of terrorism also looms large in several areas. All these factors can have a negative effect on business. However, if the political environment of a market is good then that can be highly profitable for businesses.
8.2 Economic:
Economic factors too have a deep and direct impact on the international businesses. 2018 was a year of economic uncertainties globally. The changes happening globally like changes in US monetary policy, higher volatility in the emerging stock markets as well as constant fluctuation in exchange rates. At the same time, the Korean economy also faced severe difficulties like higher household debts and the restructuring of shipbuilding and steel industries. However, despite these economic difficulties, Samsung had sales of KRW 200. 7 trillion (South Korean Won). Such businesses on the one hand are impacted by economic forces and on the other hand they have an important impact on the world economy. These companies employ thousands. The condition has changed a lot since the recession and the level of employment and economic activity around the globe has gone up. This is a positive sign for international businesses like Samsung. When level of employment is high and people have enough dispensable income, they spend on electronics and entertainment. In this way, rising economic activity can be highly profitable for businesses like Samsung and falling economic activity bad.
8.3 Social:
Apart from others, the socio cultural forces also have a deep impact on businesses. Changing socio cultural trends can lead t a rise in profits for one business and fall for another. As these trends change they affect businesses and their sales. Moreover, these socio cultural factors have an important value in terms of marketing. Brands have to take care of these cultural forces in their marketing efforts. The socio cultural trends are favorable for Samsung and the brand is investing in the smart phone technology. Especially, its Galaxy series has been quite famous and popular. The demand for large screen smart phones and mobile gadgets has grown and Samsung’s smart phones and tablets have acquired quiet high popularity in most markets including the Asian markets. In this way, socio cultural factors can have both direct and indirect impact on businesses and their profitability.
8.4 Technological:
Technology has come to play and increasingly important role in the context of business whether for the technological or the other brands. In the 21st century from operations to marketing and customer service, technology affects quality in every area. Every brand is in a race to adopt technology for attracting and retaining customers and to cast a better impression than the competitors. Samsung is itself a technology company that makes electronics, smart phones and other technological equipment including medical equipment. Apart from that it also makes use of digital technology for marketing and better customer service. The role of technology in its business is very big and the brand also makes heavy investment in research and development. Its SUHD televisions have become a special attraction. In this way, you can see that technology has helped Samsung overcome competitive pressure and maintain its position in the market effectively.
8.5 Environmental:
Sustainability is not just a trend but has emerged as key focus area for businesses which are not just working to save energy and minimize their carbon footprint but also to protect the environment. Apart from managing and reducing energy consumption, the brand has also focused on managing water resources risks. The brand has also enforced a chemical substance management policy. Samsung has also enforced a pollutant management program. In several other areas too, it has taken firm steps in the direction of sustainability.
8.6 Legal:
Legal risks also abound for Samsung and these risks can be quite big and severe. From employment to environment and tax related laws, there are many that Samsung is required to follow and which can affect its profitability. Apart from its own operations, Samsung also ensures that its suppliers also abide to law and remain compliant in labor, operations and the other areas. Legal tussles can be quite costly and fine in any area can range in millions and therefore cause huge losses for any business. Samsung has framed and enforced rules and regulations to ensure that its staff remains compliant and no laws area violated at the workplace. In this way, you can see law has a major and direct impact on businesses and compliance risks can be highly costly.
9 Five Forces Model and Their Effect:
This is a five forces analysis that evaluates how the brand affects and is affected by competition. The five forces model was developed by Michael E Porter, in 1980. At its core are five important five forces that are a part of every industry and market and affect competitive intensity.
9.1 Bargaining power of suppliers:
The sources from which firms obtain raw materials for the purpose of production are called as suppliers. The suppliers are an important group and their bargaining power and important force affecting the firm. The higher the bargaining power of the suppliers, the lower is the competitive strength of the firm. In case of Samsung, the bargaining power of the suppliers is very low. The low bargaining power of the suppliers is due to several factors and one of them is their small size and low financial strength. Moreover, Samsung can easily switch from one supplier to a new one. In case of the suppliers, losing business from Samsung can mean a big loss of financial support for a supplier. Samsung frames the rules that the suppliers are required to follow and conducts regular investigations to check if the suppliers are following the rules. There are rules related to labor welfare, child labor as well as sustainability. All these rules are important and Samsung can eliminate the suppliers that do not follow the rules.
9.2 Bargaining power of customers:
Samsung makes a large range of products including mobile products, TV and Home theatres, computing related products and home appliances. The bargaining power of individual customers may be low, but that of the corporate buyers and the customers as a group is significant. In the 21st century there are many factors that have led to rise in the bargaining power of the customers. The customers are well informed and they have several options for most products. They can easily select a brand of their choice and shop from several sources. There are no switching costs and the result is that the bargaining power of customers .is high. There is a high level of competition between the brands and most of them are competing for customers. Overall bargaining power of the buyers is low to moderate because there are also several factors that moderate the buyers’ bargaining power. Samsung is an established brand name and its continuous focus on technological innovation is also an important factor that leads to higher bargaining power of the brand compared to the customers.
9.3 Threat of new entrants:
The threat of new entrants for brands like Samsung is low. The reason is that while there is a major investment in building such brands, there is also enough investment in attracting talent and building a brand through marketing. The regulatory pressure has increased which has also become a barrier for the new entrants. Any new brand trying to enter the market, can start business on a smaller scale but to grow into a large and global brand it will need to invest in so many things including marketing, human capital and operations. So, overall the barriers are quite large for new brands trying to enter the market.
9.4 Threat of substitutes:
The threat of substitutes for Samsung is moderately high. There are several competitors like LG, Sony and more international and local brands that offer competing products and services. The switching costs for the customers are low. The factors that moderate the threat from the substitutes are a great brand image, technological innovation and similar more factors like customer convenience.
9.5 Competitive rivalry between the existing players:
Competitive rivalry between the existing players in the electronics industry is intense. The main reason is that there are several large brands like LG, Apple, Microsoft, Philips, Toshiba and more. The level of rivalry is very high and it is why the new brands too find it difficult to enter the market. The largest players are well known brands and there are several factors that have led to higher competition in the market space. These brands have to depend on technological innovation for growth and deeper market penetration.
10 Samsung Competitive Profile Matrix (CPM):
Samsung | Apple | Nokia | |||||
Critical Success Factors | Weight | Rating | Score | Rating | Score | Rating | Score |
Innovative Culture | 0.10 | 2 | 0.20 | 04 | 0.40 | 3 | 0.30 |
Market Share | 0.12 | 04 | 0.48 | 03 | 0.36 | 02 | 0.24 |
Customer Loyalty | 0.10 | 4 | 0.40 | 4 | 0.40 | 3 | 0.30 |
Market Penetration | 0.11 | 03 | 0.33 | 4 | 0.44 | 03 | 0.33 |
Advertising | 0.07 | 04 | 0.28 | 03 | 0.21 | 04 | 0.28 |
Product Variety | 0.09 | 04 | 0.36 | 02 | 0.18 | 04 | 0.36 |
Brand Reputation | 0.11 | 04 | 0.44 | 04 | 0.44 | 03 | 0.33 |
Product Quality | 0.08 | 04 | 0.32 | 04 | 0.32 | 03 | 0.24 |
Price Competitiveness | 0.10 | 03 | 0.30 | 2 | 0.20 | 04 | 0.40 |
Successful product promotion | 0.06 | 03 | 0.18 | 04 | 0.24 | 03 | 0.18 |
Employee dedications | 0.06 | 04 | 0.24 | 04 | 0.24 | 03 | 0.18 |
Total | 1.00 | 3.53 | 3.43 | 3.14 | |||
11 External Factors Evaluation (EFE) Matrix:
Key External Factors | Weight | Rating | Weighted Score |
Opportunities | |||
1.The strong purchasing power of middle class people with regards of market change. | 0.12 | 03 | 0.36 |
2. Provision of cutting edge technologies | 0.09 | 04 | 0.36 |
3. Widespread branches which are located in their strategic countries | 0.26 | 02 | 0.52 |
4. A powerful capability of making its own hardware | 0.07 | 03 | 0.21 |
Threats | |||
1. The people brand loyalty and dependence about other competitors products | 0.05 | 03 | 0.15 |
2. Water shortage crisis | 0.29 | 04 | 0.16 |
3. A strong and competitive competition in the market | 0.12 | 03 | 0.36 |
Total | 1.00 | 22 | 2.21 |
12 Internal Factors Evaluation (IFE) Matrix:
Key Internal Factors | Weight | Rating | Weighted Score |
Strengths | |||
1. Strong brand image and reputation in the society | 022 | 03 | 066 |
2. Product diversification | 0.08 | 04 | 0.32 |
3. Innovative product design | 0.10 | 03 | 0.3 |
4. Affordable price accepted by consumers | 0.04 | 02 | 0.08 |
5. Controlling and creating big global market in the society especially technological sectors | 0.15 | 04 | 0.6 |
6. Strategic partnership with well-established companies | 0.06 | 03 | 0.18 |
Weaknesses | |||
1. The product supply which cannot meet the over amount of demand | 0.17 | 04 | 0.68 |
2. A lack of customer service management | 0.1 | 03 | 0.3 |
3. Limited coverage of products distribution (only in several partner and strategic countries) | 0.04 | 02 | 0.08 |
4. Limited operating system product update and package while makes people become reluctant to purchase | 0.04 | 04 | 0.16 |
Total | 1.00 | 32 | 3.36 |
Note: Score of 3.36 is above the average score 2.50 which means that it is internally strong.
13 Samsung SWOT Matrix
The concept of determining strengths, weaknesses, threats, and opportunities is the fundamental idea behind the SWOT model. To present the model in a more understandable way, scholars came up with so-called SWOT matrix. SWOT matrix is only a graphical representation of the SWOT framework.
The above is a schema of how SWOT works. You start at the top level and go down to details. When this is filled with content, it gets the shape of a matrix
Strengths | Weaknesses | |
1. Strong brand image and reputation in the society. 2. Product diversification 3. Innovative product design 4. Affordable price accepted by consumers 5. Controlling and creating big global market in the society especially technological sectors 6. Strategic partnership with well-established companies (Google). | 1. The product supply which cannot meet the over amount of demand. 2. Lack of customer service management 3. Limited coverage of products distribution (only in several partners and strategic countries) 4. Limited Operating System product update and package which makes people become reluctant to purchase. | |
Opportunities | SO Strategies | WO Strategies |
1. The strong purchasing power of middle class people with regards of market change 2. Provision of cutting edge technologies 3. Widespread branches which are located in their strategic countries 4. A powerful capability of making its own hardware. | 1. Adding as the (S4, O1) 2. Conducting the creativeness of online event by using the Samsung application itself(S6, O5) | 1. Product demand expansion and related diversification (W1, O3) 2. Management training (W2, O4) 3. Market Development(W3, O1) |
Threats | ST Strategies | WT Strategies |
1. The people brand loyalty and dependence about other competitors 2. Water shortage crisis 3. A strong and competitive competition in the market | 1. Designing new innovative products (S3,T2) 2. Providing product diversification which are distinguished from competitors and affordable by customers (S2, T3, T4) | 1. Forward integration (W4, T4) 2. Strengthening and empowering competent human resource pools (W2, T3) |
4 BCG Matrix
BCG Matrix also known as the growth-share matrix is used by organizations to classify their business units or products into 4 different categories: Dogs, Stars, Cash Cows and Question Mark.
Growth rate of an industry and the market share of a respective business relative to the largest competitor present in the industry are taken as the basis for the classifications, for that reason, BCG Matrix is also called as Growth-Share Matrix.
Let’s check out the BCG Matrix of Samsung and see what products of the company fall under what quadrant.
14.1 Dogs:
Dogs are those products that were perceived to have the potential to grow but however failed to create magic due to the slow market growth.
Failure to deliver the expected results makes the product a source of loss for the organization, propelling the management to withdraw future investment in the venture. Since the product is not expected to bring in any significant capital, future investment is seen as a wastage of company resources, which could be invested in a Question mark or Star category instead.
With an aim to cater to the growing need of the digital world, Samsung launched its Samsung Smart watch but the product failed to achieve the success that it was expected to achieve.
Samsung Smart watch: Tough competition from competitors like Apple watch led to the downfall of the product.
Hence Samsung Smart watch can easily be placed in the Dog quadrant of the BCG Matrix.
14.2 Stars:
The products or business units that have a high market share in high growth industry are the stars of the organization. In the case of Samsung, Mobile phones, Tab, and TV business fall in the Star Category of the BCG Matrix of Samsung.
Mobile phones: Samsung Galaxy and Note Series are quite a hit among customers and have their own base of loyal customers. In order to maintain its market share and ward off the competition, Samsung launches new smartphones with new features and design.
Samsung TV: LED and OLED TV from Samsung are gaining good traction from the global market and can be considered as the Stars of the company. The company is experimenting with new technologies and it coming up with new TV’s with technologically advanced features to gain customers.
14.3 Cash Cows:
Samsung Home appliances which include Samsung AC’s, Refrigerators, Washing Machines and Cooking Appliances are the Cash Cows for the company.
Over the years, Samsung Home Appliances have become a household name and stand for quality and trust. Samsung has been able to attain a good market share across different industry segments and still holds a good potential to grow in the coming future.
14.4 Question Mark:
There are products that formulate a part of the industry that is still in the phase of development, yet the organization has not been able to create a significant position in that industry. The small market share obtained by the organization makes the future outlook for the product uncertain, therefore investing in such domains is seen as a high-risk decision.
Considering the performance of all the products that Samsung to offer, Samsung Printer is one such product which can be placed in the Question Mark quadrant of the BCG Matrix of Samsung.
High competition and small market share of the product in the industry is what makes it place in this quadrant.
15 Quantitative Strategic Planning Matrix (QSPM):
Key Factors | Market Penetration | Market Development | |||
Opportunities | Weight | AS | TAS | AS | TAS |
1. The strong purchasing power of middle class people with regard of market share | 0.17 | 3 | 051 | 4 | 0.68 |
2. Provision of cutting edge technology | 0.09 | 03 | 0.27 | 04 | 0.36 |
3. Widespread branches which are located in their strategic countries | 0.21 | 4 | 0.84 | 3 | 0.63 |
4. A powerful capability of making its own hardware | 0.07 | 02 | 0.14 | 04 | 0.28 |
Threats | |||||
1. The people brand loyalty and dependence about other competitors products | 0.14 | 2 | 0.28 | 04 | 0.56 |
2. Water shortage crisis | 0.22 | 03 | 0.66 | 03 | 0.66 |
3. A strong and competitive competition in the market | 0.10 | 03 | 0.3 | 03 | 0.3 |
Total | 1.00 | 3 | 3.47 | ||
Strengths | |||||
1. Strong brand image and reputation in the society | 0.22 | 3 | 0.66 | 4 | 0.88 |
2. Product diversification | 0.08 | 4 | 0.32 | 4 | 0.32 |
3. Innovative product design | 0.10 | 03 | 0.3 | 3 | 0.3 |
4. Affordable price accepted by consumers | 0.04 | 2 | 0.08 | 4 | 0.16 |
5. Controlling and creating big global market in the society especially technological sectors | 0.15 | 4 | 0.6 | 3 | 0.45 |
6. Strategic partnership with well-established companies | 0.06 | 3 | 0.18 | 03 | 0.18 |
Weaknesses | |||||
1. The product supply which cannot meet the over amount of demand | 0.17 | 2 | 0.34 | 03 | 0.51 |
2. A lack of customer service management | 0.1 | 2 | 0.2 | 03 | 0.0.3 |
3. Limited coverage of products distribution (only in several partner and strategic countries) | 0.04 | 3 | 0.12 | 4 | 0.16 |
4. Limited operating system product update and package while makes people become reluctant to purchase | 0.04 | 2 | 0.08 | 3 | 0.12 |
Total | 1.00 | 2.88 | 3.38 | ||
Sum total attractive score | 5.88 | 6.85 | |||
16 Conclusion:
Samsung Electronics Ltd is famous all over the world because of its services, excellent employees and innovative-reliable products. A responsible approach to business and global citizenship and globalization with partners and customers.
Samsung is taking the world in progressive direction for new generations.
The mission of Samsung is to be the best ‘Inspire the world with our innovative technologies, products and design that enrich people’s lives and contribute to social prosperity by creating a new future. It complies with low and ethical standard cares environmental health and safety. Maintain a clean organized culture value and respect to customer shareholders, stakeholders, employees and socially responsible cooperative citizens. So it is trying to be the best brand in the field of electronics materials in the world by improving its size, price quality, capacity or power of the devices.
17 Recommendations:
Samsung Company may sell its products directly to consumer and customer. People can buy its goods direct on internet also. Samsung groups have direct sells models and telephone network. They may also maintain the negative cash conversation cycle from this model. The company should receive the payment before when they have to pay for new raw-materials. They may also use just in time management. They should be able to provide their products (electronics goods) in the right time, right places, and right cost in the right way. By the JIT approaches they may make computers and other electronics goods only after customer local area orders and the requesting materials which are direct concern to customer needs and satisfaction.
Samsung electronics should maximize their stockholders value by marketing for balance their financial sides. They should emphasis their standards based technologies as well as customer services and customer desired. They should offer skims, more warranty as well as guaranty .customer insurances, electronics materials insurances.
They should design and marketing strategic according to diversity and different economic, environments, their business strategic should focus on their enterprises business. They should products their electronic goods on the base on customers desired, needs and demands of times. It means they should change their design base on the required markets and new technologies as well as marketing policy. If they want to become the world largest and number one quality able electronics brands, then they should adopt TOYTA, SONEY, LG and PANASONIC groups also.
It is better for them, they should manufacture theirs goods as same quality but different prices and it means they should focus their market not only high and rich people but also poor and medium as well like Chinese electronics markets. They may produce their products in different quality and different prices on the base on their capacity and design. They should management their recruitment and selection process. They must be focusing their recruitment and selection of employees on flexibility, diversity, equal opportunity, sample selection etc. They should motive their employees on the base on their performance and work efficiency. They should improve their market and marketing policy. They should increase their shareholders as well as stockholders.
The standard base, skilful employees and best performances shows that, they will able to success to become the world number one electronics brand as well as mobile. The process design of Samsung electronics is good. The product has so many designs in the base on price and quality and customer desired, different diversity. The supply network design is also good. People can buy through the online also. By the help of Samsung website, we can find out a lot of information of Samsung electronics, about its goods, management system, and supply chain. The company have to own websites. We can apply for the job through the online.
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