Samsung - Major Challenges, Root Causes of the Problems, Developing Alternative Solutions - Case Study Example

Running Head: Entrepreneurship Entrepreneurship Name: Course: University: Lecturer: Date: Background of the company From the time of its inception a small export business based in Taegu Korea, Samsung the company has grown and become the leading electronic company in the globe. The company is based in South Korea and its headquarters are in Samsung Town, Seoul (Samsung, 2016). The company specializes in digital media and appliances, memory, semiconductors in addition to system integration. As of today a great number of Samsungs innovative as well as top quality of the products and processes are well recognized globally. People are also lumping Samsung together with companies such as Facebook, Microsoft, Apple, Google and Amazon as being among the most essential technology companies now. The company excellence is greatly attributed to the quality control measures that are implemented at Samsung and this ensures that they offer the best products to their consumers (Samsung, 2016). To date Samsung have continued to maintain its high status as the globes best technology provider. Additionally their highly qualified staffs are also striving for excellence in the various fields and this makes the whole company a high success in the long run. The secret to the continuous success at Samsung can also be attributed to the constant improvements that the management structure focuses on and the wide and efficient application of their philosophies and more so the philosophy that they will devote their technology and human resources to the creation of superior products and services and this will contribute greatly to having a better global society. Despite the wide reputation and their success that they have attained over the years, Samsung is also faced y a number of challenges and this challenges needs to be addressed in time for them not to derail the success of the company now and in the future. Define the Problem One of the major challenges that Samsung faces is that due to the weak global economic conditions as well as the heightened competition and mostly in their key business areas more so the memory chips and the Smartphone’s. The effect of this challenge is likely to be persistent based on the fact that there tends to be a low global growth and with greater level of uncertainty that will stem from issues such as the financial risks from the emerging countries (Kondalamahanty, 2016). Though Samsung still holds a formidable place among the largest Smartphone vendors their market share seems to be slipping away. Whereas the Smartphone market is expected to grow further the competition in the industry seems to be intensifying and more so in the emerging markets and this are the markets where Samsung expects much of their growth to come from. Based on these their close competitors such as Lenovo, Huawei and Xiamoi have introduced products that have high end specifications and are priced lowly as compared to those of Samsung and these companies have are slowly finding favor from the budget conscious and aspirational customers. The stiff competition is a major challenge that can have a great effect on Samsung. Some of its competitors such as Apple are being more aggressive when it comes to entering the new markets. Exploration of Samsung Over the years Samsung have been experiencing rapid growth and this means that they an increase in their profits, internal operations and they have also diversified into various industries (Samsung, 2016). Samsung is prone to various challenges and these challenges are mainly attributed to the size of the company and some of additional problems which are closely linked to the major challenge are discussed below. One of such challenge is the rising costs of the components that need to be used in the devices. This is mainly based on the fact that Samsung have paced their latest mobile devices with some pricey features, for example, the new devices are have improved cameras, fingerprint scanners and this are aimed at legging up against their rivals in the crowded field. Despite the increase in the sales volumes an aspects that is inevitable is that they will be decline in profits and this is due to falling in prices of products over time and intensifying competition (Armstrong & Greene, 2007). Another major challenge that faces Samsung and that needs to be treated as a matter a urgency are the recalls that the company have experienced for some period of time. Samsung have released a great number of phones and more so the Galaxy Note 7 and this is after some of them caught fire and exploded and this problem was said to stem from the subtle manufacturing error. This shows how the electronic makers usually face as they try to pack more power in phones that are thinners and also as they try to rush for faster releases dates. When announcing the recall Samsung confirmed of a number of cases when the phones caught fire and exploded and this mainly happened when the phones were charging. Plans are underway to cap the batter recharging s at a capacity of 60 so as to minimize the risks associated with overheating (Lee, 2016). Samsung also faces a challenge in that and more so in relation to their compensation strategy. A grater criticism is mainly placed in the failure of the company to compensate the employees who have developed some health problems as a result of their work at the factories owned by the company. In more precise terms Samsung had denied any form of responsibility to the employees who have developed cancer and other diseases because of working in the chip factories. But recently Samsung apologized and also promised to offer compensation to the affected employees (Associated Press, 2013). This seems to be another issue that Samsung faces. Another challenge is that Samsung is that they tend to use different conditions in the various countries that they operates in. different countries around the globe have different standards and laws that tend to affect the area of employee compensation. In regard to these, a number of countries have a certain minimum wage policy and this means that employers are supposed to offer salaries that are above a certain set limit. Furthermore, the living conditions also seem to be different and high in the same way that the salaries of employees in such countries are supposed to be compensated. This is also a major challenge that Samsung faces. Another challenge that is facing Samsung is that they face a lot of criticism for poor working condition is some of their factories. Determine the Root Cause(s) of the Problem Based on the evaluation of Samsung electronics company, the root causes of the stiff competition that Samsung is experiencing is more related to the fact that the consumers seems to have a clear understanding of what they need and ion response to they need technologically advanced devices. Based in available information the companies operating in the mobile technology are aiming at outdoing each other and gaining a greater market share in the respective markets. Stiff competition is a major issue that faces a great number of the companies operating in every industry. Prior to the recall incidences, Samsung was well known for their high quality products and they strive to ensure that their products are well suited with the changing needs of the people all over the globe and thus they keep inventing new products from time to time. The heightened problems with their appliances are likely to act against the company in that people will prefer to make purchases from other companies. But is also crucial to note that the problem cannot be said to be common to Samsung since none of them existed. In respect to these, the management team at Samsung needs to come up with a way of handling the stiff competition and this will mean that they will be better placed as compared to their major competitors in the industry. The recalls can also be closely linked with a workforce that is not motivated as Samsung faces a challenge poor working condition in some of their factories and also they may be compromising on quality of components used in the appliances. This will work against them in that when consumers fails to trust them they are likely to make purchases from other companies that have fewer recalls and that enhances the safety of their devices. Develop Alternative Solutions Stiff competition is a major challenge that faces companies and as a result they come up with strategies that will place them at an advantageous position with the competitors in the industry. Company’s increases their market share in the market when they can deal with competition from their competitors and this can be done through strengthening of the customer relationships, innovation, acquiring competitors and making use of hiring practices. By having a greater market share in the market companies have a competitive advantage over the others operating in the same industry. Those companies which have a greater market share are more likely to receive better prices from their suppliers since they have larger buying power since my make purchases in bulk. At the same time, an increase in market share and the greater production usually go hand in hand with a decrease of the cost of production due to the economies of scale. One major way of solving the existing problem at Samsung is through constant innovation. By coming up with new innovation Samsung will increase its market share and it will also be able to compete against their competitors. This will be based in the notion that by innovation Samsung will bring along a technology that the competitors are not offering. Another alternative is that Samsung needs to strengthen their customer relationship and companies usually protect their existing customer and they need to do these by preventing the customers form going to the competitor when they rolls out a new offer. This can also be coupled with the making use of the existing customers as advocates of Samsung in that they can refer their relatives, friends and acquaintances that are likely to become new customers. Another way is to bring people with talents onboard and this will play an essential role in that individuals will come up with high quality products created and developed with a lot of expertise. Samsung needs to have a strong customer relationship team and also those tasked with the sales needs to well equipped and have the relevant talents to persuade the customers to purchase Samsung products. Additionally, by offering high and competitive salaries and good working environments the employees will be deducted to their work and these will attract even more competent ones who will be able to deal with the various challenges such as the stiff competition. Another way of dealing with the competition is acquiring the competitors. By doing this Samsung will accomplish two things at the same time. The major accomplishment will be the tapping of the newly acquired firm customer base and it will reduce the number of competitors. Selection and Implementation of the Solution The major issue that seems to be facing Samsung is stiff competition. This problem is likely to have an effect in Samsung since their market share is likely to reduce and this will also mean that their sales and profits will also reduce. By solving the issue of stiff competition, the company will be aiming at sustaining their position in the market (Armstrong & Greene, 2007). Thus, the major plan is deal with the issues and will enhance Samsung as a brand and they include i. Frequent recalls ii. Poor working condition and issues in compensation and iii. rising costs of the components The major solutions that will solve the challenges outlined will be obtained through is acquiring competitors, buying in bulk and ensuring high quality through the use of qualified personnel and maintaining strong customer relationships. The proposed solution will achieve the best outcome when implemented over a concentrate period of time as the management team deems appropriate. References Armstrong, J. & Greene, K. (2007). Competitor-oriented Objectives: The Myth of Market Share. International Journal of Business 12, 1, 116–134. Associated Press (2015, 14 May). Samsung promises to compensate factory workers who suffered cancer. The Guardian. Retrieved from http://www.theguardian.com/technology/2014/may/14/samsung-compensate-factory-workers-cancer Kondalamahanty, A. (1 April 2016). Samsung Sees Tough Year Ahead as Competition Heats Up. International Business Times. Retrieved from http://www.ibtimes.com/samsung-sees-tough-year-ahead-competition-heats-2247447 Lee, Y. (2016). Galaxy Note 7 recall shows challenges of stronger batteries http://bigstory.ap.org/article/c9fbf8615f8646b294b987c30575caf7/galaxy-note-7-recall-shows-challenges-stronger-batteries Samsung (2016).About Samsung. 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