Evaluation Of Samsung’s Business Environment And Internal Capabilities

Organizational Overview

The business organizations in the present environment are actively required to focus towards evaluating and identifying the key business trends and based on such the decisions are to be made that can contribute towards business growth and advancement. The present business environment can be identified to be highly dynamic and influenced by the external factors including the social, political, legal as well as the technological factors. However, such external threats or business issues can effectively be eliminated by focusing towards that on the improved internal effectiveness and leadership strength of the organization (Hamilton & Webster, 2018).

This discussion is focused towards evaluating the business environment as well as the internal capabilities of Samsung in the international marketplace. The discussion will adopt strategic tools and approaches to defining upon the present market condition as well as the challenges faced by Samsung. Further based on such the leadership style of the organization will be evaluated and key recommendations will be provided that can be adopted by the management at Samsung to overcome the present industry challenges and threats. This discussion will help to understand the diversified roles involved in strategic management as well as the need to evaluate and appraise the practical situations to ensure business growth and advancement.

Samsung a South Korean brand established in 1938, is among the leading brands in consumer electronics and digital media devices. Samsung’s focus towards product quality and innovation has been the key factor contributing towards the business success and advancement in the international marketplace. The management at Samsung effectively ensures evaluating the market trends and accordingly has adopted the approaches towards business expansion and growth. In 2000, the introduction of innovative feature phones has been the success factor for the brand which helped Samsung to establish its brand identity and further, the introduction of smartphones has helped Samsung to ensure its competitive brand positioning in the industry (Business Standard, 2022).

The effective focus of the brand towards the product and service innovation and advancement has been the key success factor for Samsung. As per the industry records, it can be reflected that Samsung has a 24% year-on-year growth in 2021, on the sale of premium smartphones and electronic appliances. Samsung’s latest innovation including the quantum-dot OLED TV has further been a key factor contributing towards improved competitiveness of Samsung. However, despite such there are several key challenges or threats being faced by Samsung in the market that is to be identified and further efforts are to be adopted that can help to improve the brand positioning and advancement in the industry (Byford, 2022).

Macro-Environment Analysis

Samsung can be identified to be operating in a highly competitive and challenging business environment and to ensure the retention of the business positioning it is required that the evaluation of the prevailing and changing market environment is being done and further based on such evaluation the strategic decisions are to be made. The evaluation of the business environment helps in order to identify key challenges as well as the market opportunities for the brand. Such can be conducted through focusing towards the PESTLE approach (Perera, 2017), it includes the focus towards key industry/external factors including:

• Political factors: Samsung operates across the international market and has effective support from that of the inter-political relations in the global market, which further reflects that it has a low or no impact over Samsung’s business operations.
• Economic factors: The international currency exchange rates, the national tax rates as well as the economic stability within the nation has major impacts over the consumer disposable income as well as their purchasing power. In developing economies, the government has high tax rates, which may affect the prices of Samsung’s products and services in the marketplace(Adnan, 2019).  
• Social factors: In the international environment, Samsung is also required to have a focus towards the social factors or the needs and requirements of the stakeholders within the industry. It can be reflected that Samsung’s stakeholders require the brand to have an effective focus towards innovative and advanced products and services as well as contributing towards the social needs and development.
• Technological factors: The industry in which Samsung operates is highly influenced by technological innovation and advancements. The recent advancement within the industry including that of the foldable screens as well as the low emission appliances are the key technological advancement which has contributed towards improved competitive brand positioning of Samsung in the industry.
• Legal factors: In the competitive and dynamic market environment the brands are required to focus towards key legal rules and regulations so that the business effectiveness can be retained. As it can be reflected that Samsung is facing lawsuits and industry criticism for its unethical and unsustainable business practices or approaches in the industry. Such is further to be considered as in the long run such legal challenges may result in having a major impact over the business growth and brand name.
• Environmental factors: Sustainability and climate protection are among the key areas upon which organizations are required to focus upon. As the increasing awareness among the stakeholders about the need and importance of sustainability is the key threat or challenge being faced by the brand in the market(Wulff, et al., 2019).

Apart from the above-discussed factor, the industry competition can also be identified as a key element of a firm’s macro-environment. Such industry competition can be evaluated by focusing towards Porter’s five forces model/framework. The model focuses on five key factors including:

• The threat of new entrants (Moderate): The industry in which Samsung operates has a low threat from that of the new entrants, as it requires strong finance as well as a market presence so that the targeted customers in the international market can be served.
• The threat of existing competition (High): In the market, it can be identified that Samsung faces a major threat from the existing competition including that of Apple, Xiaomi, Huawei, Vivo and Oppo in the smartphone segment(Alam, 2021). On the other hand, it faces Sony and LG in the consumer electronics segment.
• The threat of substitutes (High): Due to the presence of a number of competitors in the marketplace, Samsung also faces a major threat of product substitution with other brands.
• Bargaining power of buyers (High): The buyers in the consumer electronics and smartphone segment has high options and substitute choices available resulting in increasing buyer ability to bargain within the marketplace.
• Bargaining power of suppliers (Moderate): The suppliers in the segment can be identified to have a low or moderate bargaining power due to the presence of a large number of suppliers in the international market(Kabeyi, 2018).

Based on the analysis of Samsung’s market and industry environment it can be reflected that the market is highly competitive and to ensure the retention of the business position in such marketplace it is required that the management actively focuses towards changing market needs and trends and accordingly the business growth strategies are to be formed.

It has been evaluated that Samsung within the present business environment has several key challenges upon which the management is required to be focused upon. Such challenges can effectively be identified through the implementation of the SWOT analysis framework and further the framework can be utilized to identify the internal strengths and capabilities of the organization (Hidiroglu, 2021).

Based on the conducted SWOT analysis it can be reflected that the key resources of Samsung that contribute towards the business growth and advancement include the focus towards:

• Effective human resource: Samsung’s key resource that contributes towards its improved capabilities within the industry environment is the presence of effective human resources within the organization. As effective human resource contributes towards the evaluation of the changing market needs and further based on such innovative and creative solutions can be adopted(Iwai, 2020).
• Financial strength: Samsung’s financial strength can also be identified as a key resource that helps the organization to actively contribute towards the development of innovative and advanced products and services. As in F.Y 2021, despite of covid 19, Samsung has recorded a net revenue increase of 26.4%. Also, the brand can be identified to be financially strong and contribute towards value creation for its investors in the marketplace(Samaung, 2021).
• Patents: The patents and the legal rights being held by Samsung is also key strength or resource that further contributes towards improved competitive strength of the organization. As per an industry report, Samsung holds more than 200,000 patents worldwide related to of mobile semiconductors, smart TVs as well as the system’s large-scale integration. Such ensures that Samsung has a competitive edge in the innovative and competitive marketplace (Eun-jin, 2021).
• Research and Development: Further the ability of Samsung to invest towards research and development activities is among the key organizational strength or capability which ensures business growth and competitiveness. Samsung can be identified to have more than 34 R&D centers across the world with over 10,000 researchers working. The key purpose and vision of such R&D centers are to shape the future with innovation and intelligence (Samsung, 2022).

Further, it can be reflected that Samsung as a brand has an effective focus towards understanding the market trends and accordingly adopting the strategies that can help the brand to ensure improvement of its brand image in the industry. To ensure such strategic effectiveness, Samsung’s management adopts both the intended as well as the emergent strategies in the international marketplace. The focus of the brand towards the customers and the development of products and services accordingly is the key strategic approach being adopted by Samsung in the market. Focusing towards that of the intended strategy it can be reflected that Samsung focuses towards that of the product diversification in the marketplace so that the needs and requirements of the diversified customer base can be addressed (Kim, et al., 2021).

Evaluation of Company’s Capabilities

Focusing towards that of the emergent strategies being adopted by Samsung it can be reflected that the brand has an active focus towards identifying the emerging market opportunities or threats and based on such ensures adoption of key practices that can help in order to overcome any of the operational threat or issue and further the business strategic positioning can be retained. As in 2017, after the launch of its Galaxy Note 7 various incidents in respect to the blasting of phone battery due to heating was being recorded. In the scenario, the management effectively adopted an emergent strategy of accepting the fault and further communicating and interacting with the stakeholders which further contributed towards the improvement of 9% in Samsung’s brand value (Dua, 2017). Such reflects upon both the intended as well as emergent efficiency of Samsung in the present competitive marketplace.

As it has been defined that the human resource at Samsung is among its key strength or resources. But to ensure proper utilization of such internal resources there is a need for the brand to have an effective leadership or management style within the organization. Focusing on the business analysis of Samsung as well as its strategies it can be reflected that Samsung as a brand actively focuses towards an entrepreneurial leadership style within the organization (Selko, 2014). The entrepreneurial leadership ensures that the business leaders and managers adopt practices and approaches towards innovation and risk taking. The business leaders at Samsung ensures that the internal strategies can be developed in a manner that the company can perform extraordinarily in the global marketplace. The leadership at Samsung can be identified to be focused towards introducing innovative products and services, promoting effective internal structure, as well as keeping a proper balance between the diversified stakeholder groups including that of the customers, employees, business partners, and its investors (Samsung, 2022).

Such effectiveness of Samsung’s leadership can be defined through focusing towards the leadership approaches being adopted by the organization in challenging times such as Covid-19. As per the available industry reports and news, it can be reflected that Samsung has actively contributed towards providing the required support to its stakeholders in such challenging times. The leaders at Samsung have adopted five key areas during the covid-19 to ensure employee management and satisfaction including the work purpose, employee health and wellness, change need, motivation and trust among the employees and the organization. The leaders reflected that in such challenging times more focus is to be ensured towards proper communication and individual health so that the employee can actively contribute towards business growth and advancement even in such challenging times (Behbehani, 2020).

Samsung’s Leadership Style

Also, along with that of the internal stakeholders, Samsung has ensured extended support to its suppliers or external stakeholders, by paying them in advance during the pandemic and providing them with loans in case required. As per the available data, it can be justified that Samsung has provided about $1.3 billion to its suppliers in advance and has also provided many of them with about $830 million in form of loans. The leaders reflected that the purpose of conducting such practices was to ensure that the organization has positive relations with the stakeholders and such can further be utilized to ensure business growth in both terms i.e., financially as well as reputationally (Patchett, 2020).

It can be reflected that during such challenging times, the brand faces major threats from that of external factors including that of the economic and political factors as well as market competition. But Samsung’s leadership has actively managed to overcome such strategic issues and challenges within the industry. Focusing towards the social needs and challenges during covid-19, Samsung leaders has provided over 500 Chromebook to indigenous communities present in Canada, so that they can be linked with the technology and further their education and advancement in such times can also be ensured (Samsung, 2021).

Apart from that of the business advancement and competitive positioning in the marketplace, it can be reflected that Samsung faces certain key challenges within the present marketplace which is to be considered and further decisions are to be made accordingly. Focusing towards such issues and challenges the key threats or business issues can be identified as:

Increasing competition: The key issue or challenge being faced by Samsung in the present marketplace is increasing competition. As in developing economies such as China and India, customers are more price-focused and prefers affordability along with the features offered by a smartphone. Due to such the brands as Xiaomi, Oppo and Vivo within the market, as in 2017, Samsung lost to Xiaomi in being the leading smartphone brand in the Indian markets. Hence, there is a need for the brand to actively focus towards such increasing industry competition and to retain its strategic positioning (Lohchab, 2020).

Shortage in raw materials supplies: Apart from the industry competition, the shortage or lack of required raw material is also a key threat or issue being faced by Samsung in the present marketplace. Such shortage has resulted in a decline of 56% of the brand’s profit from that of the smartphone segment. Such reflects upon the brand’s high dependence over the supplier for the semiconductor chips or the raw materials, and such dependence in long run may result in having a major impact over the business growth and advancement of the organization in the competitive industry (BBC, 2019).

Inter-political relations: Also, a key issue or challenge being faced by Samsung in the present marketplace is the emerging inter-political tensions or the uncertainties in international politics. As the trade war between US and China has been a key issue affecting Samsung’s growth and revenue. As China is among the major markets being served by Samsung, also due to the trade war the shortage in the semiconductor chips has increased, as China is the major supplier for such chips which are a key component for the manufacturing of consumer electronics and devices. Hence, the increasing inter-political tensions and conflict are also major operational threats being faced in the exiting work environment (BS, 2019).

Rapid Innovations: As Samsung can be identified to have an innovative strength and focus towards research and development within the marketplace, the present industry scenario and approach towards rapid innovations can be a key challenge or threat for the organization. The industry competition, as well as the key innovations being adopted by the competitors, can be a key threat or issue being faced by Samsung in the marketplace. It can be reflected that Samsung has introduced innovative phones such as Fold and Flip phones, but still, it lags behind the customer satisfaction and quality being offered by Samsung to its customers (Bajarin, 2021).

Focusing towards the identified market issues and challenges as well as the potential threats that Samsung as a brand may face, there is a need for the adoption of key innovative and advanced approaches so that the business overall growth can be ensured and further the strategic brand positioning in the marketplace can be improved. As Samsung has been aligned towards product and service innovation and advancement and accordingly the products and services are being developed. But along with such, there is also a need for the management and leaders at Samsung to evaluate and understand the key competitive strength or the product attributes being offered by Apple in its product that attracts the customers.

As it has been discussed that despite of Samsung’s focus on innovative products, it is not able to secure its customers against the competition from Apple, therefore efforts should be made towards conducting market research and analysis so that such market gap can be identified and further the product effectiveness can be improved. Considering the emerging threat of rapid innovation in the business environment, it can be reflected that Samsung should focus towards industry disruptions rather than just being involved in introducing changes in the existing product and services. Such focus towards disruptions will be at high risk but will help Samsung as a brand to improve its market positioning and brand image in the marketplace.

Further, it can be recommended, that Samsung should focus towards developing its ability to manufacture required raw materials rather than being dependent over the industry suppliers. Such would help the brand to reduce its market dependency and further will be able to contribute more towards business advancement and growth even in such internationally unfavourable market situations.

Conclusion

The overall discussion has been focused towards evaluating the strategic effectiveness of Samsung Electronics. Samsung has been the leading player in the competitive and dynamic business environment. Such has been due to its effective approach towards customer orientation and product offering in the marketplace. Samsung’s brand image, its human resource as well as the financial capabilities of the organization can be identified as key strengths or organizational capabilities which have helped Samsung to establish its competitive position in the industry. Despite of such a leading position and the business advancement, the market competition, as well as the external industry factors has a major impact on the business operations of Samsung in the marketplace.

The discussion also reflects that Samsung has an effective leadership within the organization which ensures evaluation of the business needs and requirements and further based on such the business strategies are being developed that can contribute towards both the business advancements as well as the improved competitiveness. It can further be recommended that Samsung’s management should focus more on the industry disruptions and innovations along with quality so that it can be able to overcome the threat or issues arising from that of the competitors in the marketplace.

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