Competitive Strengths of Samsung Electronics Company - Coursework Example

Case Study: Samsung Introduction Samsung is one of the leading companies in the consumer electronics market in the world at the moment. The companyhas a lot of business portfolios such as mobile phones, televisions, washing machines, refrigerators, semiconductor devices, computers, tablets etc. Even though competition is getting intensified in the consumer electronics market, the company is able to maintain phenomenal growth rates at different parts of the world. Even though Samsung is a Korean or an Asian company, the company is able seize considerable market share even in America and Europe. Even though the recent recession has caused severe problems to many of the arch rivals of Samsung, the company was able to escape from the recession problems because of its ability to innovate new products and business ideas. According to Kun hee Lee, the chairman of Samsung group, Samsung takes crises as opportunities for innovation (Farhoomand, 2013). Samsung Electronics Co. is so big and profitable that the measure for telling when the company is doing better than normal is when it goes on a streak of setting record quarterly profits. It happened in 2010 and it’s happening now. Samsung’s second quarter results broke the record set in the first quarter. Some analysts think the third quarter will be even better, but that net income will drop sequentially in the fourth (Samsung 5 Lessons: The 2nd Record Edition, 2012). This paper analyses how Samsung was able to transform crises into opportunities during the recession period. Samsung and recent recession Nokia, Sony and Motorola, three of the major competitors of Samsung have faced huge problems after the recent recession (Farhoomand, 2013). In fact, Nokia has been acquired by Microsoft recently. One of the major reasons for the survival of Samsung is its ability to innovate new products based on the feedbacks from the market. The company was able to change its business strategies based one the present trends in the market. For example, Samsung’s present business strategies are based on four principles; build layers of advantages, search for loose bricks, change the terms of engagement and use collaboration (Kim, 2007). Taking these strategies into consideration, Samsung has implemented many changes in its operational, functional and structural levels. So many new tasks were implemented by the company as part of the introduction of change management principles in the company. Until 2010, Samsung was functioning under single CEO system (Farhoomand, 2013). In others words, a single person was working as the CEO of the entire company until 2010. The 2007-08 recession, has forced the company to think about dividing the responsibilities of the single CEO. From 2010, onwards, the company has introduced a system of two persona management (Farhoomand, 2013) in order to reduce the workloads of the single CEO. Moreover, the entire company has been divided into three departments and each department started to function independently under different managers. All these structural changes helped the company to build layers of advantages as well as to fix the loose bricks. Unlike Apple Inc, Samsung never bothered too much about establishing meaningful collaborations even with competitors. For example, Google is a major competitor for Samsung in the smartphone market. Yet, Samsung was able to establish collaborations with Google, in order to use Google’s android operating system in Samsung phones. It should be noted that the smartphones from Apple Inc. use Apple’s operating system. Apple’s IOS operating system is believed to be inferior to Google’s android OS. However, Apple Inc. is not ready to use Android in its smartphones. In other words, Samsung is able to utilize the best available OS in its smartphones and Samsung’s smartphones get added advantages because of that. Samsung has got many opportunities in global market because of the recession problems in the US and Eurozone crisis (Farhoomand, 2013). The value of dollar and euro has been declined considerably during the recession period. The drastic changes in the exchange rate helped South Korean companies like Samsung to make inroads in global consumer electronics market, especially in the smartphone market. It should be noted that South Korea is located nearer to China. China is the most rapidly emerging economy as well as the cheapest labour oriented country in the world at present. In other words, China offers a good market as well as a good manufacturing location for Samsung. The company was able to exploit these opportunities very well. “In 2011, Samsung had the largest market share for mobile phones, smartphones and televisions in China” (Farhoomand, 2013, p.11). Globally Samsung has 55000 engineers and other researchers working in various departments (Farhoomand, 2013). A substantial portion of these engineers are working in the R & D department. In other words, Samsung is keen on developing new products as well as new features for its existing products. The company seems to be following the blue ocean strategy. “The key to exceptional business success is to redefine the terms of competition and move into the “blue ocean,” where you have the water to yourself. The goal of these strategies is not to beat the competition, but to make the competition irrelevant” (The Wall Street Journal, 2013). Samsung never tried to beat Apple Inc. or Sony. Instead of imitating the products of these companies, Samsung tried to incorporate new features in its products, instead of copying the features of the competitor products. For example, “Samsung’s TouchWiz user interface allows seven applications to be easily managed from a bottom tray on the main screen. Users can also customize their home screens using Samsung’s Live Panel” (Boulton, 2011, p.34). Samsung knows very well that it is difficult for them to destroy companies like Apple or Sony, however, the company believes strongly that it is possible for them to make the completion from these companies irrelevant. Efficient supply chain management is another critical success factor for Samsung. Samsung’s In Transit Tracking System helps the company to track the delivery of items from the factory to the ordering party worldwide (Farhoomand, 2013). None of the competitor companies have such efficient supply chain management system as possessed by Samsung. Samsung knows the importance of new customers as well as existing customers very much. As a result of that the company has various communication strategies to keep its customers satisfied all the time. A lot of marketing innovation strategies has been implemented in Samsung as part of the customer relationship management. “Marketing innovation in Samsung is meant for creating fresh approaches at every level of customer contact and to drive sales” (Wolf et al. 2006, p.6).Ultimately customers decide the fate of a company. In other words, customers can make or break a company. Therefore, Samsung is keen in enhancing its relationships with the customers. Branding is another area in which Samsung has beaten its competitors comprehensively. “Samsung has adopted an aggressive branding and advertising strategy to transform the company from the manufacturer of cheaper Japanese brands products to a global brand known for innovations, cutting edge technology and leading design” (Farhoomand, 2013, p.13). Samsung is a socially committed company. It has immense faith in corporate social responsibility and sustainable development. It builds its brand and reputation with the help of sustainable business practices. The company is keen on giving something back to the communities in which it operates. Samsung Hope for Children, Innovations for development of the community, Hope for Culture and Sports Sponsorship are some of the activities through which the company is able to demonstrate its responsibility towards the society. Another interesting facts about Samsung is the fact that majority of its competitors are its clients also. World’s leading technology companies such as Apple Inc., Sony, Dell and Hewlett Packard are some of the major clients as per the statistics of 2010. These companies are purchasing electronic components such as DRAM, NAND Flash, LCD panels, AP Mobile processor, Lithium Ion batteries etc from Samsung (Farhoomand, 2013, p.13). In other words, the reliability of the competitors on Samsung has helped the company to improve its corporate image further. “SEC commands technology leadership by launching innovative products such as 50-nanometer 16GbNAND flash memory and Mobile WiMAX, next generation wireless communication technology” (Samsung, 2006). From the above statistics, it is evident that Samsung has a wide range of electronics products as well as components whereas its competitors have only few electronic products. In other words, Samsung has diverse business portfolios which helped the company to excel in global market even when the recession hit other companies. Conclusions Samsung Electronics Company or SEC is one of the most rapidly growing technology companies in the world at present. The company was able to deliver more than what it promises. As a result of that, it became one of the most trusted companies in the world even at the time of recession. While most of the competitor companies failed to overcome the recession problems, Samsung was able to convert the recession challenges into opportunities. The company has implemented many changes at various levels such as operations, functional, and business, in order to survive during the recession period. Samsung has no problems in establishing meaningful collaborations even with its competitors. In fact many of its competitors are its clients also. In short, innovative products as well as business ideas helped Samsung to become world’s most trusted consumer electronics company at the moment. References Boulton, C. 2011. Samsung Galaxy Tab 7.0 Plus: From T-Mobile Costs $249.99. eWEEK News. December 5, 2011. Farhoomand, A. 2013. Samsung electronics: Managing innovations in an economic downtown. Asia case research centre. Hong Kong. Kim, R. 2007. Samsung’s Competitive Innovation and Strategic Intent for Global Expansion. Problems and Perspectives in Management / Volume 5, Issue 3, 2007 Samsung 5 Lessons: The 2nd Record Edition. 2012. [Online] Available at: http://blogs.wsj.com/korearealtime/2012/07/27/samsung-5-lessons-the-2nd-record-edition/ [Accessed 13 November 2014] Samsung. 2006. Annual Report, 2005. [Online] Available at: www.samsung.com[Accessed 13 November 2014] The Wall Street Journal, 2013. What is Blue Ocean Strategy? . [Online] Available at: http://guides.wsj.com/management/strategy/what-is-blue-ocean-strategy/ [Accessed 13 November 2014] Wolff, M. F, Jones, T and Lee, D. 2006. Samsung, Others Adopting Value Innovation. 2006. Research Technology Management. Sep/Oct2006, Vol. 49 Issue 5, p5-7. Read More