Strategic Report Analysis for Samsung Electronics

INTRODUCTION

Samsung Electronics is International company founded by lee Byung-chul in 1938 in South Korea. It is operated world-wide through 80 countries with 6 design, 34 Research and Development, 38 production centers and 53 sales & distribution centers and operated in Suwon, south Korea. Samsung Electronics company has three business sectors: Consumer Electronics- i.e.(TVs, AC, refrigerators, washing machines, dish washers, microwaves and vacuum cleaners); Information Technology & Mobile communications-i.e.(Mobile phones, communication systems, and computers); Device Solutions-i.e.(Semiconductor, Display Panels, LCD and OLED panels.

From above three business sectors, I am mainly focusing on information Technology & Mobile communications i.e. Smartphones. Samsung is one of the leading mobile smartphone company in the world which believes in its value preposition towards its consumers. It is a part of Samsung electronics which is a key segment of Samsung group. Samsung smartphone industry added a new dimension in each mobile sector in world.

Nowadays Smartphone industry is undergoing rapid changes on day-to-day basis due to globalization.

This has increased the competition amongst smartphone manufacturing companies. Thus, it is very important that the companies adapt and respond to these changes using various strategies. This essay will present an overview of the market analysis and the current market position of Samsung in the smartphone segment using Porters 5 Forces model and hence will evaluate the suitable strategy to compete and sustain in the market. Samsung being one of the top competitors in the smartphone market, must maintain its competitive advantage to remain sustainable and competitive. SWOT, Value Chain Analysis and VRIO analysis will highlight the key factors that differentiate Samsung from its competitors.

The essay will also contain a section of recommendations suggesting the possible course of actions for Samsung in future and conclusions.

CRITICAL DISCUSSION

SWOT Analysis:

Strength:

• Known for its unique features and design
• Low cost of production as compare to competitors
• Huge market is hold by Samsung smartphone holders
• Samsung is 2nd largest company who invest in R&D sectors
• Products are environment friendly

Weakness:

• Depend on other operating system and software
• Very low margin rate due to price cut
• Manufactures various products

Opportunities:

• Company is growing on large scale in many countries
• Investing a large capital for advertising
• Always demand good quality processor
• Maintaining Competitive Advantage

Threats:

• Price competitiveness
• Rapid change in technology
• Reducing margin on hardware production
• Competitors (other smartphone companies)

Porter’s five force analysis:

Porter’s 5-forces analysis can be used to analyses the market with a view to understand the competitive growing market analysis of the competitive forces as mentioned below: (especially in consumer electronics and mobile smartphones)

Threats of new entrance: HIGH

As lots of Chinese competitors are entering competitive market with updated version of smartphone. i.e. VIVO, OPPO, ONE PLUS etc.

Threats of substitutes: HIGH

Due to growing competitive market of smartphones over the world has various substitute brand with their special feature.

Customer power: HIGH

As there as various types of substitute brand for smartphones are available in market so, the company is afraid that customer can easily switch to another competitive brand smartphones.

Supplier power: LOW

In growing smartphone market there are many suppliers in market, so the company has very low supplier power.

Competitive rivalry: HIGH

Some of the companies in competitive market trying to copy the features and design of smartphones and spreading negative image of Samsung company, fierce completion with Apple.

Emergent strategy:

Advantages:

• Research technology and product development capability are manufactured in 34 R & D centers in different part of the world.
• Manpower with 50k+ research scientists are working on new technology and engineers are working in product design.
• Samsung did not modification his corporate strategy.
• Increased focus on manufacturing so that they are increasing new product development in consumer.

Disadvantages:

• Despite losing market share in smartphones 2014-2016.
• Raising funds for R&D are expensive.

Deliberate strategy:

Advantages:

• Planning strategy helps in better facility on time.
• Planning provides vision to focus.
• Planning helps in improving eco-friendly with hardware’s which can be easily decomposed.

Disadvantages:

• In some cases, unplanned decision is taken so they miss the opportunity due to lack of planning.
• Planning strategy can be bureaucratic.
• Planning strategy is less applicable in an emergency.

Value chain analysis:

Inbound logistics:

Samsung smartphones collection services with respect to Time, Request and Processing should be well planned so that in self return the they can be fulfilled in time and most important Samsung has very huge plant capacity and properly followed by plant scheduling.

Operations:

In operation Samsung smartphones the quality of product is checked, and expectations of customer are being fulfilled, they also manage customer visit for company to promote their new technology to market.

Outbound logistics:

In outbound logistics the online orders for product, order fulfillment according to requirement is done, emergency load according to requirement is fulfilled, on time delivery and inventory management i.e. (Reporting, EDI, Reconciliation, Audit, Invoice accuracy) is done.

Marketing and sales:

Branding and marketing strategies of Samsung have occupied a critical role in its success. Samsung has developed a solid customer-focus which highlights on understanding the requirements and needs of the customers and future needs. Samsung has done this with a worldwide perspective in awareness. Samsung knows the power of well-designed products and services. Through design, Samsung delivers functional and emotional paybacks. Samsung has a strong design philosophy which is simple and in-built, well-organized and adaptive. It wants to come up with environmentally friendly designs not just decent looking products. It tries to create designs that can reflect users’ lifestyles and interact with them. Their designs not only to create exclusive and smart products, but also to engage and interact with customers. Samsung recognizes the power of brands and branding. They also take care of pricing of product according to their customers.

Services:

Samsung customer call centers helps to provide best services to their customers. They also keep upgrading the IOS, so customer threats problem is resolved.

VRIO analysis:

Resources/Capability Valuable Rare Costly to Imitate Organized to capture value

Technology and Product line Capabilities Y Y Y Y

• Brand Value Y Y Y Y
• Quality Y Y Y Y
• Product mix and Customization Y Y Y Y
• Fabrication Capacity Y Y Y Y
• R & D Product Facility Y Y Y Y
• Partners & Customers Y Y Y Y

Technology and Product line Capabilities, Brand value and Quality has sustainable competitive advantages.

Product mix & customization, Fabrication capacity and Partners & customers has temporary advantages.

R & D product facility has parity advantages.

CSF (Critical success factor):

As Samsung electronics outstanding jobs in technology, design and branding so, Samsung electronics invests more R&D. Samsung electronics excessive achievement on product development using new R&D manufacturing procedures and large cost savings. Samsung’s critical success factor was to develop their strategy and brand with innovated design electronics products. Samsung was focusing mainly on quantity and the cost of production. The company’s success to the design and compatibility skills of its products. Even though Samsung had the large manpower to invest into R&D. The problematic was considerable management. They were against this strategy seeing that the company’s objective was spreading in large quantity and overtaking rivals at the low cost.

Success factor behind Samsung electronics was to develop their Brand value in market, develop their Technology and smartphones quality, Reduce the cost of production.

CONCLUSION

As analysis concluded that the smartphone market is currently saturated with products offerings same technology. In order to develop the market leader in the emergent strategy should be followed by Samsung electronics, Samsung smartphones needs to take a more pro-active steps to be the most innovating their design and technology and their R&D becomes a market leader if they follow emergent strategy. Because they have very strong R&D manpower as compare to their competitors. The level that the firm can configure and continuously perform these interrelated activities so that it has costs reduction and maximized brand value, so that they can be supposed to have developed sustainable competitive advantage like Samsung electronics smartphones. The Samsung’s change has been achieved as the first global electric company in world to keep gradually moving upward, it will have to reach a higher level of diversity and decentralization as a global company.

When Samsung follows planning strategy, they have more competitors in raising smartphone market so, they should focus on R&D and marketing sectors that they can hold market as well as customers.

entrant” into the new market and get competitiveness. Although the “fast follower” approach still serves

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