Analysis of Samsung with Respect to the Industry, Competitors, and Value Chain - Case Study Example

Table of Content: Executive Summary…………………………………………………………………………….. Company Profile…………………………………………………………………………….. History…………………………………………………………………………….. Daughter brands and companies …………………………………………………………………………….. Acquisition strategy…………………………………………………………………………….. Code of conduct…………………………………………………………………………….. Specialized domain…………………………………………………………………………….. Procurement Policy…………………………………………………………………………….. Broad line segmentation of strategies: …………………………………………………………………………….. Mission…………………………………………………………………………….. Vision…………………………………………………………………………….. Logistics handling…………………………………………………………………………….. Brand Strategy of Samsung: …………………………………………………………………………….. Value chain…………………………………………………………………………….. Other products…………………………………………………………………………….. Product strategy…………………………………………………………………………….. Samsung Leadership…………………………………………………………………………….. Third Quarter 2013 reviews and reports…………………………………………………………………………….. Sponsorship and marketing strategies…………………………………………………………………………….. Future Trends……………………………………………………………………………. The case of patents and legal suing…………………………………………………………………………….. S.W.O.T Analysis…………………………………………………………………………….. Other critical areas and considerations: ……………………………………………………………………………..Head to head rivalry with Apple Inc…………………………………………………………………………….. Samsung’s edge over Apple Inc: …………………………………………………………………………….. Labor costs constraints…………………………………………………………………………….. Recent hiccups…………………………………………………………………………….. Future ahead…………………………………………………………………………….. Concluding remarks …………………………………………………………………………….. References:…………………………………………………………………………….. Student Name: Instructor Name: Date: Title: Analysis of Samsung with respect to the industry, competitors, and value chain Executive Summary: The modern times are driven by technological innovation and digital equipment. All around us, we see the omnipresence of the digital devices. From homes, to offices, to schools and private business enterprises, all are equipped with digital devices. These digital devices are brought to us by the major few technological giants and electronic companies’ .Samsung Electronics is one of them. It has been around for major part of the 20th century, yet it grew in recognition and strength towards the latter half of the 20th century and since then it has been one of the most dominant forces. The 21st century saw a complete turn in fate and Samsung now stands with the American giants of Microsoft and Apple Inc. This has been achieved through number of salient features and factors. It has been a result of the clients trust building, the quality enactment, technological sharpness, innovation, challenge, and most importantly keeping the clients demands and requirements ahead of any other thing. State of the art technology, top notch managerial skills, presence of the top leadership with ability and the desire and will of the members and the brand in its own to become the role model in the given field of work and electronic industry makes up for the company’s core objectives and guided course of action execution. The strategies undertaken are with regard to the marketing factor consideration, technological factor, corporate sector consideration and all other basic elements and areas that need to be addressed in order to achieve recognized position in the industry. This paper looks into the overall outlook of Samsung electronics. Its business strategies, the critical success factors, the S.W.O.T analysis, the business plan ,the vision and mission, the leadership role, the challenges faced and the potential areas of improvement. Given the fact that the electronic industry is always footed at a fast pace, keeping up with the technological advances and producing new products and services is the key to ensuring presence in the international market. Company Profile: Samsung is a world renowned multinational companies that is based in South Korea originally. It deals in the electronic and digital devices and is amongst the chart runners with regard to the market reach, quality and variety. The Samsung brand is parent to an array of subsidiaries and items that are sold under the patronage and quality name of Samsung. It has its outlets stretched out in different parts of the world ensuring maximum reach to the customers. History: Initially launched from South Korea in 1938(Jones,p. 123), with the passage of time, its scope of operations and products being provided kept expanding and it reached out to the global markets ultimately leading on to the present day existence and successful presence in the cross segmented market. Towards the 50s decade where the Two Korean nations were engaged into a war, the company did suffer a hiccup and was pulled back with regard to the overall standing and performance. However, it gained ground and re started producing and this time in a more comprehensive and formidable manner aiming to expand further. It was towards the 1990s decade when Samsung formally introduced the production of communication devices in the form of mobile phones. At present Samsung has a net bench of over three hundred thousand workers employed in the different outlets across the globe. Its services chains are spread across approximately 75 to 80 countries in total in different continents of the world. It is based on this expansion that Samsung has earned itself the top ten largest electronic items producer in the world. Daughter brands and companies: Samsung has network of companies working under its banner. The few major companies in this regard include Cheil Industries Inc, B.P Chemicals, Everland Inc, Biologics, Economics Research Institute and Fine Chemicals to name a few. B.O.D: The Board of Directors of Samsung comprise of a over half a dozen individuals. Each of them is equally capable and appointed against the educational and other career skills and past records. The Vice Chairman and C.E.O is in the front rank, followed by the Vice Chairman, President, Outside Director and other major individuals and departments within that have been appointed and who have been working diligently towards accomplishing the company objectives and goals and reaching out to the clients in the most effective and professional manner. Acquisition Strategy: Since 2010, Samsung has undertaken the task of going on the expansionist strategy. Despite the global recession and overall low rate of production and profits all over, Samsung has desired to further expand its domains. This is aimed at incorporating more new technological trends, enhancing the domain of Research and Development along with the new markets targeting and the clients’ satisfaction. The investors are lured with the maximum and nearly double dividends from their investments and they are also assured of full support of the company towards their stocks and secure assets that may be invested within the company. (Huang) Other acquisition related factors that have seen relative change in decision making and command from the top management of Samsung includes its cutting off of the self producing chip making function and in turn getting into a collaborative function with the U.K based company which is aimed at bringing about more expanded outlook to the company as a whole. This agreement that was brought about towards 2012 has resulted in the expansion of the entire employees bench by an amount of over three hundred employees who had recently been working directly under the British company and now would work under the umbrella of Samsung, which has recently strived to expand the overall outlook of the number of companies that are under its belt (Sahota). Code of Conduct: Samsung incorporates an effective and updated code of conduct. This code of conduct is a benchmark and guideline for the policies that are needed to be adopted and for the individuals who are involved in the various working disciplines. The code of conduct became more important after a row with Apple Inc. over the patents infringement case that came up in recent times. Specialized domain: It has bench strength of large number of products being sold. These include the communication devices, digital entertainment items, stereos and surround systems, medical appliances; semiconductor based electronic circuit based systems. Samsung is amongst the world’s top ten electronic equipment producing company in the world. Other items within the category of electronics includes the L.C.Ds, the Refrigerators, Air Conditioners, C.R.T modeled Monitors, and most prominently the mobile handsets. Procurement policies: As a giant electronic company, Samsung incorporates number of policies in the overall business environment. The tri angle structured policy entails Openness, Win-Win and Fairness rule. Each of these has a reason and logic behind it. The Fairness factor is more so effective and considered after a legal battle with Apple Inc (Comino and Manenti, p. 164) and with the potential success of Samsung against Apple Inc, Samsung would further strive and put emphasis on the Fairness factor out of the three element procurement policy of the company. Broad line segmentation of strategies: Samsung’s broad line strategies segmentation fall into the H.R handling, marketing domain, technological development domain, supply chain management, R&D units and finally the sales and distribution segments. Each performing in its own domain grouping up into units collectively making up for the success of Samsung. Mission: The mission statement is clear. It is based on the idea of “Digital e-company” excellence achievement and best quality services delivery to the customers in a long lasting relationship. Vision: The vision encompasses the company’s goal and objective of becoming the front runner in the market of digital appliances and ruling by example. To find solutions to the challenges of future, this is also one of the core principle of the Vision of Samsung. Logistics handling: Samsung incorporates the state of the art technologies towards handling of the supply chain matters. It therefore also makes use of the management techniques that are oriented towards the least inventory handling and least delay in the supply chain and transmission processes. The modern digital means of communication are kept intact to bring about coherence in the entire network of supply between different parts of the entire company and manufacturing units. Other disciplines and domains: Samsung also invests heavily in the health care sector. It has introduced large number of appliances that are used in the hospital and other sectors of social outlook. Value chain: The value chain has been created through the mobile industry and other major digital electronic appliances such as the L.C.Ds and L.E.D items. Effective inbound logistics handling makes up for the effective value chain network presence in Samsung. On the employees front and adding variety, the expansion of the overall network by incorporating AuthenTec is believed to have aided support and strength to the value chain of Samsung. Other sectors: It is not just the mobile phone or electronics sector that has been center of attention by the Samsung think tank. Rather they have recently stepped up the efforts towards a more effective and more vibrant presence in the other fields of services and products delivery. One similar example came about in 2013 when the South Asian Samsung head office took steps towards promoting and refreshing the overall strategy of promoting the air conditioning devices. It further aims at expanding its reach to the continent of Australia as well. For this purpose, effective schemes have been undertaken and intensive market survey has been conducted to ensure that the clients’ requirements and other formal procedures are fulfilled before launching a new product in a new market. This shows the overall intent and attitude of the Samsung company that aims at reaching to new markets and establishing itself in the new sectors of products and delivery. Products strategy: Samsung aims at keeping the options expanded in order to attract more number of customers towards its products. It therefore provides wide range of television sets option, wide range of mobile phones from the basic use phones to the latest and fully equipped mobile handsets, the Plasma 3D, the surround systems, and other configuration systems Brand Strategy of Samsung: With views to the overall global challenges and intense competition all over, Samsung has aimed at creating a visible and effective strategy with regard to its products and standing in the market. This strategy is based on the quality products delivery, winning the customers trust, incorporating innovation into items. Other parts include bringing the items and technology first into the market by acting upon the principle of first mover to market. To invest heavy amount into the research and development programs which will facilitate the overall products improvement and further enhanced innovative processes. All these make up for brand strategy principles of Samsung Ltd. Front Line Competitors: While every company is a challenge in context of the quality, innovation and client attraction, yet Apple Inc. is the major rival that Samsung faces. Apple Inc, is an American based multinational entity that has been in place for over four decades. Though relatively younger than Samsung, yet it has made in roads and it is without a doubt the front runner in the field of electronics and mobile phone industry. The sales and reports from the last three to four years give a clear edge to Apple Inc. in terms of the sales, and customers bench. The nearest rival in this category is that of Samsung. Apple Inc. derives its strength from number of factors. One of the factors is that of innovation and creative ideas. Under the guidance and patronage of Steve Jobs, the company was primarily known for bringing about innovative ideas. The stocks shares, the overall financial health of the company and various other factors and variables gives the company an edge over the rivals. It is based on these facts that Apple Inc. which was nowhere in the mobile phone industry till early 2000s, is front runner and the likes of Nokia, Sony Ericson, and H.T.C are struggling hard to match up with the speed of success and reach out of Apple Inc. to the clients. The presence of App store online which has over multimillion users online that download large number of applications every day gives Apple Inc. another edge over its rival Samsung. Samsung 2020 vision: Samsung has incorporated 2020 vision, under which the basic principles and objectives set forth including becoming the market leader in the various disciplines in which Samsung is involved. Other goals include increasing the reach to new markets and providing the clients with large options in each domain. Finally the technological factor is taken care of by expressing the aims of further expanding the R&D domain which will facilitate thinking ahead of the time and providing the clients with the best outputs(Cassidy et.al, 113). Samsung Leadership: Leadership towards any major brand is highly important. The greater percentage of a company’s success is largely subject to the good qualities of the leadership. Samsung is no exception and its present day outlook is largely because of its effective leadership and top management that is in place and making use of their skills and expertise and providing the clients with the best solutions and best technologies enabled systems and support units. While country wise leaders are designated, the main C.E.O and Vice Chairman of the Entire Samsung enterprise is Oh- Hyun Kwon. He along with other contemporaries have been contributing in the different domains and making it possible to bring Samsung to the world’s top few largest companies in its respective field. Another unique move came about in recent times when Samsung hired a former Apple Inc. employee creating a new surprise event of hiring the individuals that were once the members of the rival company. The case of Luc Julia is one similar example. This individual remained part of Apple Inc for considerable time and had a role towards the technological innovations and other creative ideas sharing. Apple Inc. fared well in number of areas that were under the guardian ship and duty of Luc Julia. Surprisingly their top leadership does not make up for the one of the few richest C.E.Os of the world leading companies and the recently revealed facts and data regarding the company’s spendings and pays to the top heads reveal that the top management does not get paid as high as the top heads of their contemporary rivals Google Inc or Apple pay. Perhaps this is a positive sign with regard to the overall spendings which are invested into the Research and Development and other clients oriented domains. Sources: (Nisen) Mobile phones industry: The mobile phone industry saw a boom towards the late 90s. The 1st decade of the new century was an unparalleled one with regard to the overall process made in terms of the technological advances. Samsung joined the ranks of the major manufacturers and started providing its clients with the state of the art communication technologies and equipment. At present Samsung is in the top of the list when it comes to the largest consumer base and clients market of mobile phone devices. It is in strong competition with the likes of Apple’s I Phone, Nokia, H.T.C, Blackberry and other top brands in the present day market. Third Quarter 2013 reviews and reports: Towards the later part of 2013, Samsung saw astounding performance. The third quarter was largely reflected by high growth and increased profits as compared to the previous quarters and 2012 last quarter against the same figure. This increase in the overall sales marked the highest number of items sold in the third quarter as compared to the previous similar sessions. Sponsorship and marketing strategies: Samsung aims at reaching out to its clients in the direct and indirect manner across the globe. It makes use of the major global events in this bid. One similar move was seen by Samsung when it officially took the responsibility of sponsoring the Seoul Olympics that were held in 1998. Since then, it has remained affiliated with the major sporting and other international events across the globe. The dividends of this process were gained in the form of increased sales observed towards the 2002-2003 reports which revealed that the overall sales had risen by 5 billion dollars which was largely subjected to the promotional success. The Olympics sponsor was the case of promotion in relatively earlier times. In present times it must embrace itself to promote its appliance and new products in a more effective way across the digital medium of international media all over the world. Future trends: It is the same policy and same promotional campaign that has brought the South Korean government into action and it aims at winning the bid for the Winter Olympics that are scheduled to be held in 2018. The government has come up into action and also taken help of the former top heads and leadership of Samsung with hopes of bringing those games home, which will help the overall economy of South Korea in a greater way. Samsung is in race against the other global entity of P&G that aims at becoming the formal officials of the winter Olympics. The case of Patents and Suing: The recent times and more predominately the year 2012 and 2013 saw the rift development between the two bigwigs of the electronic industry, namely Samsung and Apple Inc. Each accused other of having breached the original terms and having copied the pattern and model. The two ended up in courts and Samsung won the case leading to penalty payment by Apple Inc. This served extra towards the status of Samsung. It earned on the financial grounds, secondly it did not undergo the name and reputation damage as compared to the rivals. Hence, the entire process was a blessing in disguise allowing Samsung to conduct its promotion and publicity in an unannounced and un intended manner and leading on to promote Samsung as “Fair Player” in terms of the innovation and new ideas. S.W.O.T analysis: S.W.O.T analysis is one of the major tools and technique that is used towards the company and brand’s standing in the market in the context of managerial terms. The S.W.O.T analysis of Samsung would allow clear understanding the actual position enjoyed by it and the challenges and threats faced by it at present and in the long term. Strengths: There are number of areas in which Samsung can easily stand satisfied. One of the major strengths that it enjoys is the presence of the extensive R&D unit that is in place. The R&D unit allows for future ideas sharing, the platform strengthening and coping with the challenges faced in different forms. Another strength enjoyed by the company is its brand name. Samsung is taken for a quality product and service provider and it does not have any major issues or tags against its name in terms of the quality constraint or the customers relationship. The fact that Samsung out ran the established players in the mobile phone industry speaks of the overall performance and outlook of the company. Samsung currently stands ahead of Nokia and H.T.C in context of the sales and the overall profits made in the mobile phone industry. This is one of the strengths enjoyed by Samsung through effective strategy and planning. Other strengths of Samsung include it’s up to date market catch. After a fixed and critically assessed time period, an item and brand model is introduced in to the market. This allows it keeping its presence felt and at the same time competing with the rivals. This also gives the clients a chance to choose from the multiple options provided time to time with each item service different clients bench segment. The established market name and the brand name is one of the major strengths enjoyed by Samsung. Innovation has been the central idea and central stone in the last few years with regard to the Company’s aims and objectives. This makes up for one other major strength. Diverse set of options in terms of products and services provided by Samsung makes up for the strengths enjoyed by Samsung. The brand value maximization is another area that Samsung sits on relatively stable. Other critical areas and considerations: Samsung must ensure that it does not get bogged down into a race and rivalry with the Apple Inc. it must work on its own towards a more effective and more vibrant outlook of the company. The only thing that Samsung must keep as a benchmark for challenge and target is quality and clients consideration. Fulfilling these two considerations with automatically allow for overcoming all the challenges faced in the different domains of working and production. Collaboration and being part of the O.H.A that has over 85 plus companies and brand names under its umbrella makes Samsung a proud member of the group and also gives them a chance to represent themselves in a more accustomed manner. The introduction of Samsung S5 in the coming weeks is an example of Samsung’s up to date existence aimed at ensuring catch up with the market. This comes after nearly one year’s gap after Samsung S4 was launched. Opportunities: Each challenge makes up for an opportunity and opening. The challenge of the competitive environment and the rivals makes up for an opportunity. Exploring on the new horizons and targeting the newer segments within that have been given little consideration in past makes up for the opportunities for Samsung. The legal battles against Apple Inc and the cases won against them provides for an opportunity in the context of being a legal and fair player. Samsung has recently headed towards the Indian Market. Being the multibillion dollar market and multi-billion population market, Samsung finds large amount of opportunities and hope in this context with regard to further improved sales and performance in the longer run. The introduction of the economy packed mobile phone sets is an opportunity to gain the attention of the clients and gradually become a reliable partner in the different segments. Samsung’s edge over Apple Inc: Apple Inc has a disadvantage in this regard, and it is the fact that it only provides the high value and high end products in the mobile phone category. Samsung on the other hand provides variety of mobile phone sets which makes it much more easily reaching out to a more diverse set of clients and customers. Product to product rivalry: Samsung caught up well with its rival in the case of its launch of Galaxy S4 mobile phone in comparison to Apple 5, 5C and 5s. The critics have rated Samsung’s product higher than the Apple’s I Phone 5 and it has been termed to have outsmarted Apple Inc. in this particular aspect. The release of Samsung S5, that is due in few weeks time might well be another advantage for Samsung to gain sales and Apple Inc. a challenge to catch up with its toughest rival in modern times (Nisen). Weaknesses: There are number of areas where Samsung might be termed as the potential slow starter. The fact that it relies on the other operating systems makes up for one of the major weakness of the entire brand. It is still reliant upon the Android Operating system for its software applications. This dependency needs to be eradicated at the earliest and must be addressed through the establishment of more active R&D that enables software independence in the domain of operating systems category. Samsung online stores are relatively on the lower curve and growth as compared to the other rivals. The Apps stores are again reliant on the Google Inc and Android. This makes up for the direct profits and dependency upon the Google Inc and Android. This must be eliminated and Samsung must strengthen its software domain by introducing its own software domain. Threats: The presence of the large and competitive environment is one of the most severe threats faced by Samsung. The element of complacency citing to the recent success and the legal battles success against Apple Inc might prove to be a potential threat and this must be addressed. With regard to the operational and supply chain functions undertaking, Samsung is faced with the continuous challenge of keeping the partners strongly knitted in the entire process. The case of AuthenTec is one of the examples in this regard and it must be handled properly with regard to the company future handling of the supply chain and other manufacturing items between different parts of the company units. The labor costs constraint: Korean market must make sure that the labor costs are reduced in comparison to those of China. China being one of the most dynamic market with regard to the labor work, poses serious challenge in this category and Korea and Samsung therefore need to ensure that the costs of labor are further reduced in order to bring down the rates that are incurred in the different items manufacturing, purchase and dispatch process. In recent times, the presence and most active participation of the labor unions in the digital electronics industry has posed more severe challenge as compared to past. American market does not depict any similar constraint and as a result Apple Inc. may be termed to be sitting safe and sound in this context. The product line of Samsung is relatively extensive. This is a plus but it also at the same time can backfire. This must be taken care of and must be ensured that the supply chain is kept intact and there are items and resources in the backup that will make it possible to work despite the breakdown of an item or product in the entire process. The Chinese brands and other producers of low cost and low quality that are reaching to the masses is a considerable challenge and factor that needs to be addressed duly. Huawei is one prime example in this regard. It is equipping various producers of similar items in the electronic line category and posing serious challenge to Samsung in the Asian market at least. The legal battle against Apple Inc is one of the severe challenges faced. This may well detract the company from its goals and objectives and may strangulate it into the legal challenges. This must be handled critically and correctly and must be ensured that this problem is solved once for all. The issue that popped up in the form of legal battle of Tab 10.1 and where Samsung’s items were stopped from being sold in the markets made up for a serious concern. Any similar move in future or the potential new product may lead to similar challenge in the long run. The absence of own operating system such as one owned by Apple Inc in the form of I.O.S is the major threat. This may backfire in the long term with reliance on the O.H.A and Android O.S. The price war is another threat faced by Samsung. It cannot afford to shoot up the rates as compared to the Apple Inc and its products, neither can it afford to bring down the bar to a rate and line where the profits are compromised. The company heads and decision makers must make wise decisions in this regard. Recent Hiccups: In the modern times where the security threats are ever so high and the agents and the agencies are at the direct threat from the potential exploiting entities, it becomes imperative establishing a secured network frame. However, Samsung did not have the best of experiences in recent times. It came across a hiccup in the form of Knox which was to be implemented for the purpose of enacting more secure network configuration and more secure system operations. The potential presence of bugs and other malwares did not do any good to the name of Samsung and as a result the application was held from implementation. Future prospects: Although Samsung has made a name and brand recognition amongst the individual clients, yet it has yet to reach to the hearts and minds of the government and other major business enterprises. This needs to be done in order to stamp its authority and dictate its terms upon other rivals. This can be done so through the customer service link establishment. Apart from the network establishment, the concerns and factors such as the security and other privacy enactment factors must also be entertained and must be ensured that they are fully protected so as to gain the confidence of the investors and other major tycoons of business world in the different parts of the world (CONNORS). The challenges and hiccups such as the Knox must be curtailed and it must be ensured that no such incident takes place in coming days. Capturing on the moments: With the recent dip in the overall performance of Nokia and the further recent dip in the sales and the customers’ demands and desire towards using Blackberry provides a more promising chance to Samsung to capitalize on this and make the most of the chance. This will allow Samsung expanding its customers bench and at the same time earn the trust and repute of those who may feel dejected at the performance of Blackberry and Nokia. Concluding Remarks: Samsung is the company and name to look for in times ahead. It has made inroads and reached out to the clients in broader way. It at the same time is faced with number of challenges. But these challenges are beckoning opportunities in other words if capitalized on. The rivalry factor must be taken critically, at the same time the legal constraints that are brought up by the rivals must be solved on immediate basis. Finally, the lack of a home assisted operating system is hurting Samsung and Samsung must come up with its own operating system and software application support to become more effective and more irresistible. Quality and customers must be kept as the two keywords towards the company objectives and they must be followed in a professional manner. References: Cassidy, Charlene, Susie VanHuss and Bob Kreitner. Administrative Management: Setting People Up for Success. Cengage Learning, 2014. Comino, Stefano and Fabio Mara Manenti. Industrial Organisation of High-Technology Markets: The Internet and Information Technologies. Edward Elgar Publishing, 2014. CONNORS, WILL. Samsungs Next Challenge: Selling Phones to Businesses. 4 Dec 2013. 9 April 2014 . Huang, Ryan. Samsung hungry for acquisitions, R&D for new growth. 6 Nov 2013. 9 April 2014 . Jones, Tim. Innovating at the Edge. Routledge, 2012. Nisen, Max. Samsung Has A Totally Different Strategy From Apple, And Its Working Great. 16 March 2013. 9 April 2014 . Sahota, Dawinderpal. Samsung looks to cut out chipmakers with CSR acquisition. 17 July 2012. 9 April 2014 . Read More