Samsung Performance over the Past Years - Case Study Example

Samsung Strategic Assessment Name Institution Samsung Performance over the Past Years Over the past years, Samsung has financially performed well compared to its competitors. Analysis of its net income shows that the firm has posted positive net income between 1985 and 2003. The company’s total assets has also been increasing over the years, having total assets of $748m in 1985 and by 2003, the total assets were $32892m. From the analysis of the company’s return on assets, it is clear that the company effectively uses its assets to generate its revenues. Apart from financially performing well, other areas where Samsung has performed well compared to its competitors include: Design and production In comparison with its competitors, Samsung has always worked towards creating new uses of the DRAM, through research and development in order to enhance creation of good designs of its products. Samsung throughout its production has come up with product specific applications in its products, for instance in laptops. Development in Technology Samsung’s team has high competency in applying latest technology in its production process. Samsung has always invested in technology for instance the 1990’s $1 billion investment towards mastering of the new chips technology. The investment paid well and Samsung was able to increase its market share and in 1992 became number one in the DRAM industry, which it was able to maintain for over ten years. Product mix The company has product mix that fits in various markets in the world. By 2003, Samsung was offering 1200 different DRAM products. The mix of its products enable it penetrates various markets and is able to increase its market share. Samsung is able to differentiate its products to fit in its market. Analysis of the weighted average of production volume over the total production volume for 128Mbit DRAM shows that Samsung’s 16.9% weighted average is higher than that of its competitors by 4.2%. This also applies to Samsung’s 512Mbit DRAM, 256Mbit DDR2 SDRAM, 256Mbit Rambus DRAM, 128Mbit DDR2 SDRAM and 128Mbit Rambus DRAM whose weighted average is higher than that of the competitors by 1.6%, 2.8%, 2.5%, 0.71%, and 0.51% respectively. Organization structure Samsung’s organization structure that covers five business units has enabled the company work effectively towards its goals. The company’s business units include semiconductor business, digital media business, telecom business, LCD business and digital appliances business. With a common corporate goal, the business units work closely toward the achievement of the corporate goal. Samsung credits its success to teamwork. Human Resource Policies For Samsung to achieve its corporative objectives, its employees must be motivated to work. Samsung’s strategy of hiring employees does not require asking an individual where he or she has done its education. This was not in line with the competitors’ strategy who could ask an individual where he or she has undertaken his or her education. In comparison to its competitors who recruited locally, Samsung recruited most of its employees from the foreign countries. Some of the foreign talents Samsung has seen recruited include Dae Je Chin who was once the president of digital media business Samsung’s Strategies For a company to perform well in a highly competitive industry it needs to have strategies that is able to outdo competitors. Therefore, Samsung is not an exception and must have strategies that enable it increase sales and the market share. Some of the identifiable strategies of Samsung include customer satisfaction strategy, cost leadership strategy and product differentiation strategy. Customer Satisfaction Strategy Samsung adopted Market Driven Change (MDC) in the year 2003. MDC was meant to orient the company towards the market and the customers. The main aims of MDC include, identification of customer needs, developments of products with favorable functions and prices, and maximize on value to customers. This strategy involves listening to customers’ needs in order to ensure satisfaction. Since 1992, Samsung have been conducting research to measure customer satisfaction in relation to their competitor’s level of customer satisfaction. The research helps Samsung in identification and sharing of their strengths, weaknesses and opportunities in order to facilitate improvements in order to enhance customer satisfaction. This strategy has enabled Samsung over the years to increase its market growth for DRAM, Flash and SRAM. Cost Leadership Strategy In comparison with its competitors, Samsung has been able to focus on production of low cost products. This has been made possible by the company’s management through product differentiation and its product mix, where the company comes up with products that suit each customer available in the market. A clear look at the Samsung’s Average selling price shows that Samsung has led over the years in low cost products. Recommendation of Strategy Change Samsung has different strategies that has enabled it perform well in the semiconductor industry. Due to the entrance of Chinese companies in the semiconductor business, Samsung need to have new strategies that will enable it to continue thrive in this competitive market. Some of the available strategies that the company can employ to enhance its performance should revolve around the business and corporate. Business Strategy Samsung should do more selling and promotion campaign for their products in order to prepare for the price wars with the coming Chinese companies and other available competitors. Samsung considers the entry of Chinese companies into the semiconductor business a threat to demand for their products, general revenues and their available strategies. One of the ways to counter the Chinese competitors is to come up with new promotional and selling strategies in order to increase their sales and revenues. Samsung should come up with products that consume less energy, with green technology and with no toxic materials. Samsung should develop environmental friendly products in order to win confidence of the public and their customers as one company that favors environment conservation. The company should also come up with valuable brands and effectively communicate the product values to the consumers. The brands should made affordable to the customers in order to gain the competitive advantage against the Chinese companies who are ready to sacrifice their revenue in order to increase their market share. In addition, Samsung should do sub-branding especially in high-end market to facilitate market penetration and high positioning as providers of high quality products. Corporate Strategy Samsung should enhance its operation in China by building more business and taking advantage of the lower labor cost in China. This will help the company block some of the Chinese competitors. Increasing its operations in country with high population like China will enable Samsung increase its market share and improve its international culture. Samsung should work towards expansion of its business to downstream that is forward vertical integration; utilize its expertise in technology, and ability to manufacture large-scale electronic materials. Implementation Strategy Communication of the company’s mission and vision to the employees. The company management should clearly communicate its mission and objectives to the employees in order to be able to implement its strategies and achieve the desired sales, revenue and market share. Ensure the business sections goals are in line with the corporate goals. The company management should align the goals of its business section with those of the organization since it will enhance achievement of the corporate goals. Formulate an integration strategy, in order to provide business units with the way forward. The company management should come up with a forward vertical integration strategy for its related business units to enhance achievement of the corporate objectives, for instance semiconductor business, digital media business, telecom business, LCD business and digital appliance business as specified in the company’s structure. Invest more on research and development in order to facilitate innovation process. Research and development will enable the company improve on its technology and production of cost effective products. In addition, research and development will enable the company to come up with ways to improve the quality of its products. Samsung management should develop an organization that will fit in the international market more so in China. In line with this, the company in its Chinese organizations should recruit more Chinese in various positions in order to enable it familiarize itself with the Chinese market and culture. Conclusion Samsung is one of the companies that have performed well in their businesses over the past years compared to its competitors. Due to its profitability, the industry has witnessed entry of various Chinese companies into the semiconductor business. Samsung considers competition as its main strategic challenge. Therefore, to effectively compete in the industry and improve its performance, the company needs to apply strategies that will help it outdo its competitors. The strategies need to revolve around the business and corporate objective. References Jordan I. &, James J. Samsung Electronics, Harvard Business School, 2006 Read More