Samsung Company Overview And Strategy

History of Samsung

Samsung is a South Korean electronic company that was started in the year 1938 by the founder Lee Byung-Chul as a trading company. The company is found in South Korea and has spread its roots all over the world and it is a multinational Conglomerate (Comprised of two or more corporate companies) with its’ headquarter in Samsung town. It comprises other affiliated businesses which are united under Samsung brand and is the South Korean largest Conglomerate (Gupta & Sharma, 2014). Samsung Company focuses on provision of the following product to the consumer; telecommunication network,semiconductor, LCD digital appliances and digital media.

Samsung Vision is to; inspire the World, and create the future. Its’ Mission is to; 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.

Samsung industrial affiliates have over the years been well ranked in the world in the following ways; Samsung Electronics is world’s 2nd largest information technology company measured by 2015 revenues and 5th in market value. Samsung Heavy Industries was measured the world’s 2nd largest shipbuilder by 2010 revenues and Samsung Engineering and Samsung C&T respectively were the world’s 13th and 36th largest construction companies. Other notable subsidiaries includes Samsung Life Insurance which is the world’s 14th largest life insurance company, and Cheil Worldwide which is the world’s 15th largest advertising agency measured by 2012 revenues.

The internal mechanisms of the Samsung Company are clearly demonstrated by what was introduced in 1993 by Lee Kun-Nee (the internal competition). This internal competition is designed to insure high productivity within the company, increase profit and also enable smooth operations (De Wit & Meyer, 2010).  This is really in control by the good choice Lee made. External mechanisms are controlled outside the organization and affect business operations greatly as it serves the objectives of entities such as regulators, governments, trade unions and financial institutions. This includes debt management and legal compliance. All these exist as regulatory or guidelines imposed by the external stakeholders. 

This is comprised of inner goals and society goals respectively as below.

• Create the products and services that give customers the best satisfaction
• Retain the 1st position in the world in the same line of business

• Contribute for common interests and a rich life
• Perform the mission statement by a member of the community

Samsung Company is owned by a South Korean business magnate and the chairman of Samsung Group Lee Kun-hee who is the third son of Samsung founder Lee Byung-chul (Kim, 2014).

Industry overview and analysis  

Samsung company organizational structure is divisional and is categorized into three main divisions and these are, IT & Mobile Communications (IM), Consumer Electronics (CE), and Device Solutions (DS). The reasoning behind Samsung choice of divisional organizational structure was because of Samsung’s large product portfolio and differences between products and services it offers to  wide range of its’ consumers( Kim, 2014).

Samsung Products and Services

Though there has been many crisis and difficulties that has faced Samsung company over the last 46 years, the company has grown rapidly by strengthening its muscles. The company is committed to overcome new challenges pursuing its dream towards making a better and bright future world for everyone. The current business offers complex environment pushing the company to think of redoubling its effort and increase innovation (Gupta, & Sharma, 2014). The company tends to realize this dream by relying on their existing knowledge and wisdom in overcoming this crisis in their commitment to blaze new paths in their passion to serve their customers.Despite Samsung surprising its observers by posting fore-cast beating 14.4 trillion won in operating profits in 2017 second quarter which was a 73 per cent rise from the previous it still faces major future challenges. This raised Samsung competitiveness with the rival Apple for the first time.

Samsung electronics was started in 1969 as a division of Samsung group and the name corporation changed to current Samsung electronics from 1984.   It manufactured products includes color TV, electronic calculator, watches, cash registers, as well as electronics home appliances. Today it is one of the largest electronics company around the globe,

• Barriers to entry and exit. White markets for goods have high entry and exit barriers to big conglomerates like Samsung. Setting a distribution network and supply chain becomes the big stumbling block making it difficult to enter the emerging markets. In case a conglomerate wants to exit market it can only sell and handover the business to foreign or domestic incase there is fear to decline or fall in sales. Through step-by-step Samsung has entered many emerging market both profitable and non-profitable raising a need to do keen assessment of the new emerging market before making entrance.
• Power of buyer (strong).The power of buyers for Samsung products is somewhat a mixed bag. Even if the buyers have several options of the similar products to choose from, they are at times forced to stick with the product since they can’t through it away due to its value. It should however be noted that buyers have the power over the companies and can choose a company due to after sale services or spare parts. But one important aspect is that both buyers and the companies need each other to satisfy their needs and get sale profit respectively.
• Power of suppliers (weak). Samsung operates in many markets with many suppliers willing to offer their services at discount since supplementary sectors have gone so deep. Samsung is required to deeply study the marketbefore setting their shops and do lots of consultation before arriving to their decision.
• Threats by substitutes (weak). Samsung as a company is not the only that provides services of its nature. Whites goods market are overwhelmed by lots of substitutes and given that customers durables are mostly longer term purchases, companies like Samsung need to be careful when deciding on appropriate marketing strategy. Multinationals company like Samsung then adopts differential pricing to win customers where cheaper products are sold.
• Industry rivalry (weak). White goods multinationals such as Apple, LG, Nokia, Motorola, are fierce competitors rival for Samsung. Samsung should be keen as not to take this position in the market for granted since all the other foreign and domestic white goods players are operating in very tight markets margins with intense competition. Winning this Samsung places itself better in the market. 

Electronic Industry Cost Structure Benchmark

Advertising 3%, of consumer sales, transportation 4%, warranties 3%, public relations 0.5%and Sales promotion 5%. With exclusion of wages Samsung shows a total of 15.5% of consumers sales paid in SG&A expenses. Samsung spends too much on sales administrative expenses.

Electronic Industry Competitive Landscape

The competition in the electronic industry is severe and it has led to aggressive investment and innovation helping in raising a digital economy. The global electrical and electronics manufacturing markets are expected to have reached $3 trillion as of 2020, Asia Pacific being the largest market geographically, China by market coverage, as India expect to grow by rate  16.8 percent in 2020. This is in accordance to report Electrical and Electronic Manufacturing Market briefing of 2017.

Major Companies in Electronic Industry.

Electronics market is dominated by big four companies which are; IBM, in U.S, Volkswagen Group in Germany, Samsung Electronics in South Korea and Daimler in Germany (Hill, Jones, Schilling, 2014).

Key Success Factors in the Automotive Industry:

• Competition. Competition in the electronic companies has resulted in in more innovative technological products. Reports by IBM experts indicate that competition between Japanese electronics companies and western corporations, has led to the industry developing more attractive products with incorporation of more of more advanced technologies. Sony and Microsoft competition for instance, has competed to distribution of two most successful play station and xbox.
• Working Environment. Electronics Companies has one of the best working environmentsattractive to the employees and labor market. These Companies have become the most sought employers by the most educated today, due to their high pay rates by the educated individuals due to the fact that they provide the most comfortable social conditions. They therefore enjoy the best talents increasing their competences and progressiveness in their work.
• Exported production. Technological giant’s electronic companies have successfully exported their production abroad as well as establishing assembly plants in Asia and pay less for production resources and labor costs. They save production cost and boost revenue and production quality.
• Demand response. After the introduction of the first mobile phone there has been big response from the public for the mobile phones. This has led to the incorporation of color displays, cameras and business applications on mobile devices.

Opportunity Cost

Samsung is the best when it comes to analyzing of the opportunity cost. Opportunity cost refers to the loss of potential gain that one suffers when choosing the second best alternative at hand. The adoption of relevant decision making has helped Samsung company over the years to minimize its opportunity cost due to accurate market scan in a much planned manner over the years. Samsung almost maintains a new launch of a mobile phone every month before the craze of the previous one fades out. 

Samsung Vision and Mission

Demand and Supply

Samsung as a brand has done very well in the recent times and its products are in big demand due to the quality of making. For instance, high end smartphones are in high demand and the company tries to balance demand and supply in the market through distribution and before the demand of the smart phones dies another would be in the market with upgraded new features performing even better (Gnyawali, 2011).

Market size. 

The demand for quality products continues to rise with the high volume of user running to enjoy all the applications available on phones. This provides better business opportunity for the major manufacturing companies to exploit the markets.

Innovation

The most valuable asset for Samsung is innovation and creativity the reason why it has been globally recognized and its product increasingly on high demand.

SWOT Analysis 

Strengths

Samsung is the best and largest successful brand in electronics industry as a manufacturer of TVs, LCDs smartphones and mobile phones in the world.  

In second quarter of 2015, Samsung become the leading in marketing of mobile phones with a global market share of 21.4 in the world followed by Apple with 13.9%.

Samsung has strong manufacturing and marketing capabilities seen through maintenance of an established relationship with its retailers in Europe and U.S. This helps in providing continuous and stable sales channel for its products and services.

Weaknesses

Apple continues to be the biggest threat of Samsung’s products in U.S market share of smartphones and Samsung has not been able to match Apple’s marketing capabilities. Samsung market share in us between 2014 and 2015 dropped by 2.3% and Apple’s grew by 34.9%.

There is a high market competition with some Chinese smartphones catching up to Samsung smartphones. Huawei’s share grew by 48.1%, between 2014 and 2015 followed by Xiaomi’s share growing by 29.4% bringing high completion to Samsung smartphones.

United States and Europe markets are where Samsung depends upon consumer electronic sales and has a limited growth potential.

Opportunities

Due to unfamiliarity of developing markets like Africa and India with PCs,there is growing market for smartphones, mobile devices and other tablets. The Sales of table has been chosen over traditional computers in 2015.

New technologies such as wearable tech

There is an expansion of markets for consumer electronics because of the growing middle class in the developing world.

There’s growth of online market from sales channels such as Amazon.com

Samsung Industry Rankings

Threats:

Apple has emerged as the dominant smartphone and tablet brand in some markets, such as the United States. Samsung has not been able to overcome Apple’s reputation for reliability. Apple has emerged as the smartphone market dominant as well as tablet brands in some markets such as United states as Samsung tries to overcome its not able to defeat reputation.

Apple has a good reputation for reliability, sophisticated and quality products.

Average people who are the majority have preferred iOS than Google Android Operating System used by Galaxy devices. .

Samsung faces serious emerging market competitor from Chinese manufacturers such as Huawei and Xiaomi Samsung’s is falling slowly.

VRIO Framework Analysis

• Valuable.Yes, as per the new ranking, Samsung is currently the tenth most valuable brand in the world.
• Yes, they have manufactured Samsung Galaxy S phones and people go crazy about it. There are other more Samsung rare models. E.g. Samsung Galaxy J1, SAMSUNG Galaxy Core Prime, Samsung Galaxy Grand Prime, Samsung Galaxy Alpha and Samsung Galaxy Avant.
• Yes, high quality inimitable inspired cases and skins for almost every one of its smartphones brand by artist and designers around the world.
• Organization. Samsung company organizational structure is divisional and is categorized into three main divisions and these are, IT & Mobile Communications (IM), Consumer Electronics (CE), and Device Solutions (DS).

Samsung’s Efforts in Emerging Economies

Samsung electronic continues to be the best choice in the developing world according to report from mobile marketing firm upstream.If Samsung would reduce its prices, more consumers from Brazil, India, Nigeria, and Saudi Arabia would become their next gadget.  An online survey of 1,000 adults across the Brazil, India, Nigeria, and Saudi Arabia where Samsung has a presence was the most desired. 

Case Study: Samsung’s Successful Strategy

Samsung Electronics is one of the largest multi-billion dollar corporations in the world, having exceeded $100bn mark in annual sales in 2007 for the first time since its inception. This ranked it as one of the world’s top three companies in the electronics industry following two other companies, Siemens and Hewlett-Packard, which have posted larger revenues. Samsung just like it slogan ‘leading the digital convergence revolution’ has lived to its dreams and talking of electronics it is one of the leading electronic Companies in the world (Doz, &Kosonen, 2010).

In 2003, Samsung’s cost advantage was clearly evident from the comparison of costs (and their elements) borne by the company and its competitors. Its overall cost was 24 per cent lower than the slated average cost of the other four producers. For instance, the cost structure, such as raw materials and labor, took 36 and 27 per cent lower separately. The overall superiority of Samsung over its competitors therefore exceeds 51 per cent when expressed by means of relating the average selling price to cost (Doz, &Kosonen, 2010).

Other meaningful factors that that should be put into consideration are: higher yields. This has been achieved through use of common core design for different products supported by the flexibility of production lines leading to 12 per cent lower investment in capital assets(De, & Meyer, 2010).

Samsung Organizational Mechanisms

As a way of remaining in a competitive market, Samsung uses the following ways; Copying what the competitor has brought to the market and try to make a more desirable products than one already in market. Increasing cost of advertisement, for instance, in 2012 the company increased its advertising budget to $401 million from $78 million this is $68 million ahead of Apple, and $200 million ahead of its nearest competitor in the Android market. Being a conglomerate, a manufacturer, and the world’s largest chip-maker, Samsung enjoys more flexibility in terms of what it produces and when to produce it as many of the components go into its smartphones giving it a cost advantage.

• Samsung must continue with its plan to expanding beyond domestic markets, become consumer centered, Attract and retain necessary talents.
• It should also be noted that as the two theories of strategic management suggest, no firm can survive on its own without joining hand with the competitors in one way or another even as it tries to maintain its position in the market. Samsung must join hand with the competitors and suppliers.
• Samsung just like it slogan ‘leading the digital convergence revolution’ has lived to its dreams and talking of electronics it is one of the leading electronic Companies in the world.
• Samsung must continue striving to fight it out with the apple to win the developed countries like Europe and U.S market in an effort to become the leading and preferable electronics brand.

Conclusion

As we have noticed Samsung is one of the largest electronic Companies with a fourth quarter of 2017 smartphone market share of not less than 18.4 %. The Company employs over 300 thousand people worldwide spending more than 10billion U.S Dollars on research and development annually. It is one of the Companies that have ranked amongst companies with the most granted patent in U.S.

Samsung company organizational structure is divisional and is categorized into three main divisions and these are, IT & Mobile Communications (IM), Consumer Electronics (CE), and Device Solutions (DS). The reasoning behind Samsung choice of divisional organizational structure was because of Samsung’s large product portfolio and differences between products and services it offers to  wide range of its’ consumers.

The company uses one of the most rewarding strategies to increase smoothness of operation by using internal competition by also hiring management from western as well as rewarding its employers according to their work. In maintaining competitive advantage they do the following; new product developments, maintaining Strong leadership from the top, and Carrying out effective market readership.

Samsung industrial affiliates have over the years been well ranked in the world in the following ways; Samsung Electronics is world’s 2nd largest information technology company measured by 2015 revenues and 5th in market value.

Samsung Heavy Industries was measured the world’s 2nd largest shipbuilder by 2010 revenues and Samsung Engineering and Samsung C&T respectively were the world’s 13th and 36th largest construction companies. Other notable subsidiaries includes Samsung Life Insurance which is the world’s 14th largest life insurance company, and Cheil Worldwide which is the world’s 15th largest advertising agency measured by 2012 revenues 

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