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BU530 Samsung Company Case Studies

By

Raushan Ibrayeva

BU530 Winter 2019

Globalization of Business

Southern States University

Dr. Kim, Rachel ( DBA & MBA)

February, 2019

SAMSUNG

Samsung is the largest company in Korea. Samsung Electronics was founded in 2011 and is a large subsidiary. The Korean company receives about $ 150 billion a year and has 144 consolidated branches, including 28 recently merged at the end of 2014.

The company plans to develop innovative technologies and efficient processes that will open up new markets, make people's lives better, and Samsung will become the leader in the digital market. The company aimed at markets such as India, in order to reduce the cost of the product, reducing high technology.

The company was not going to standardize this product worldwide, at that moment there could not have been a better strategy for this company.

1.Company Mission and Goals

Samsung's mission is to create your brand and become a creative leader in new markets. Samsung to win the title of creative leader in new markets believes that they need to change the culture and strategy of the company.

The 2020 Samsung's Mission is “Inspiring the World, Creating the Future.” With this vision, Samsung plans to inspire its communities, taking advantage of its key strength, creative solutions, innovative products and new technologies. This vision includes partners, employees, and industry. Samsung hopes to contribute to the world the best and great experience for everyone. In addition, Samsung plans to reach an income of 400 billion dollars and enter the top five world leaders by 2020.

2. Core Competency and Value Creation

Core competencies: Samsung has four core competencies: innovative culture, consumer value creation, technological leadership, and creative people.

Competitive Advantage: Samsung products are design-oriented, and product design must match market demand. In addition, all Samsung products are of good quality, introducing new and powerful technologies and new products for this. There are also technical advantages in the semiconductor industry. Samsung can articulate a competitive advantage in the following terms: “reducing costs and creating advantages in terms of cost-effectiveness in the production of a large number of IP devices”. They think that Samsung’s competitive advantage lies in its ability to innovate and in scale.

How Samsung creates value. Samsung is a very large and complex company that has three main divisions, such as: Consumer Electronics, Gain, and IT.

Despite its impeccable reputation and many of its own innovations, Samsung combines market research and unprecedented execution.

3. Value-Chain Analysis

For analyzing the value chain, Samsung takes as its basis an analytical analysis that helps identify business operations that can later create a competitive advantage and value for a huge electronics company. In order to more effectively manage the incoming logistics component of the business, Samsung has a number of subsidiaries.

• Samsung operations

Samsung Electronics is a huge company with 38 production bases in 17 countries of the world. The company produces 90% of its products independently. Samsung operations are divided into three main divisions:

Consumer Electronics (CE)

Device Solutions (DS)

IT and Mobile (IM)

• Samsung Outbound Logistics

Samsung has proven that it can release its products very quickly. An important role in the timely delivery of Samsung plays an important outbound logistics system with updates to popular products for customers.

The bulk of the logistics operations Samsung Electronics Logitec makes it easier to work abroad. She also conducts a wide range of logistics operations, reviews insurance claims and negotiates collection of payments on behalf of Samsung. It is safe to say that one of the main sources of value creation for Samsung Electronics is the effective integration of information and communication technologies.

• Samsung Marketing and Sales

The main activities, such as marketing and sales, are aimed at targeting the consumer segment to the competitive advantage of the brand, associated with the expanded functions and capabilities of the products and, of course, with high product quality.

Meeting the needs and desires of customers at an effective level is one of the main sources of value for Samsung in terms of marketing and sales in business.

• Samsung Service

Samsung is doing everything possible to provide customers with the highest standards and service. The company constantly conducts customer satisfaction surveys in order to achieve and maintain a high level of customer satisfaction.

4. Three Levels of Corporate Strategy

• Corporate-Level Strategies

Samsung Electronics has developed a global strategy. This can be a rather low response rate and differentiation. These attributes are accompanied by advantages but also problems.

Depending on local costs, the company is engaged in production, research, and development. The company uses to attract cheap labor to countries such as China and Vietnam. Samsung in 2013 began construction of mobile phones in Vietnam, Thailand and Nguyen. In our country there is everything that is needed for a compromise between labor and the necessary supply of energy for the European market. SE uses tax savings and high competencies of local employees. The California government made a tax rebate to attract SE when the company opened its Silicon Valley center.

• Business-Level Strategies

The best leadership and cost strategy provides a high-quality and valuable product at a cheap price compared to its competitors. This method focuses much on improving the quality of the product than on competitors, because when considering the cheapest cost to get an advantage over competitors, new knowledge and modern technologies become much better than competitors.

Better supply: may be due to volume discounts and better market power, raw materials are 37% cheaper than its competitors.

Reduced depreciation: Samsung saved an average of 12% of construction costs by scaling up its investments and co-location.

Price advantage

Compared with competitors Samsung managed to set a higher selling price for the products.

• Department-Level Strategies

In the international market The Samsung Group is a leader in big business. It includes more than 30 subsidiaries with various activities. It acts as a supplier, manufacturer, engineering, and also offers other various services.

But despite all this, Samsung also faces major international challenges. To benefit from scale efficiency and to be local to meet local needs, the SE must be global and standardized. In addition, as the SE hired foreign employees, a cultural discord arose. We dare to say that foreigners are responsible for local internal management, and not for end-users.

5. Number of competitors in each market (domestic and international)

Samsung has 21 competitors

Samsung is the leader among smartphones. Samsung has released several beautiful phones using the Google Android operating system, which subsequently conquered the whole world. A huge part of the smartphones sold by Samsung. These are such series as Samsung Note, Galaxy Edge and Samsung Galaxy.

It is believed that Samsung’s largest competitor is Google. Google does not produce as many smartphones and consumer electronics as Samsung, but they compete in the technology world to be considered the most innovative and progressive company. This competition is more important. This company will be most successful in their chosen markets, which are usually considered the newest, even if these markets are different.

6. Market share 

For three years, the share of Samsung in the smartphone market has increased markedly. None of its competitors have seen such a significant increase over the past few years. To the extent Samsung was able to maintain its leadership position in the global market. In 2015, Samsung shipped more than 320 million smartphones worldwide, which represents 21.6% of all smartphone shipments worldwide.

7. Whether each competitor’s product appeals to a small market segment or has mass appeal

Distribution channels and communications are analyzed by commercial infrastructure. The prevalence of free market principles is assessed by economic freedom. Market "openness" is assessed by market susceptibility. The country assesses the political, financial and economic risks for doing business in the market. Currently, more important issues are: management and labor, efficiency of local infrastructure and the cost of training local managers.

8. Whether each competitor focuses on high quality or low price

Based on the triumph of the previous version, the new model retains the same appearance and introduces more subtle improvements.

Samsung focuses its efforts mainly on small and invisible changes that lead to a better impression, but do not drastically change.

After a big change in the design of Samsung, we know what a premium phone is - these are good things like display, design and bad things like software.

9. Whether competitors tightly control channels of distribution

Samsung is a large company in Korea that deals with almost all areas of business, including heavy equipment, shipbuilding, aviation, chemicals, electronics, food, finance, clothing, retail, and more. They even have a medical unit at the Samsung Medical Center Cancer Center, one of the largest in Asia.

Distribution channels

Distribution channels are divided into three different forms;

1. manufacturers sell directly to consumers

2. Products are sold to retailers and then to retailers to consumers.

3. production for sale to wholesalers who sell to retailers who subsequently sell to consumers.

Samsung may sell directly or indirectly to consumers. The company sells its product wherever it wants. In addition, it has the ability to expand and saturate the market with its products anywhere in the world, except America, because the relations between American telecommunications companies are strictly demanding that Samsung create different versions of its phones. Samsung also has a distribution network of existing enterprises. This is a very important point, because, unlike other companies, Samsung does not need a lot of resources to bring its products to new markets. These distribution channels will subsequently be available for further distribution to other Samsung products. This means that if they want, it will be easier for them to sell more products than just electronics.

10. Customer loyalty commanded by competitors

The analysis shows that, despite the fact that Samsung has already its own audience, a shortage of products may lead to some consumers looking for products elsewhere in the holiday season.

If the Company fails to provide its inventory as the holiday approaches, competitive companies can take advantage of this opportunity: during a shortage of their favorite electronics brand, 17 percent of consumers said they would look for an alternative from other manufacturers.

11. Potential threat from substitute products

• Threat of new entrants:

• Threat of substitutes:

Samsung has several competitors such as Sony, LG and other local and international brands that offer competing products and services and with low switching costs. In this regard, for the Company, the threat of replacement is moderately high. Factors that prevent and mitigate the threat of substitutes are technological innovation, a great brand image, customer convenience and other such factors.

12. Potential entry of new competitors into the market

An important role in the development and change of competitive dynamics of any industry was played by the possibility of new participants. This threat is both influential and significant. It changes the competitive environment and has a direct impact on the profitability of an existing firm. If there is a high threat to new entrants, this means that there are low barriers to entry and there is a high probability that the profit potential of the industry as a whole will decrease. This all happens because more competitors will compete for the same amount of business. Sales and market shares will be redistributed, and this may affect the price and quality of products.

13. Competitors’ control of key production inputs (such as labor, capital, and raw materials)

The resources that are used to produce products, goods, and services are called production factors. These are the necessary resources that a company needs to make a profit by producing goods and services. Factors of production are divided into four categories: land, labor, capital and entrepreneurship.

Production factors

Earth is a natural resource, the company uses it to produce goods and services for profit. Resources are natural materials that are included in the production of goods and services.

Labor is the amount of work that workers do for the production process.

Capital is any tool, machine, or building that is used to produce goods or services; it varies by industry.

Entrepreneurship combines all these factors of production for profit.

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