Strategic Management of Samsung - Case Study Example

Strategic Management Contents Strategic Management Contents 2 Introduction 4 PESTLE Analysis 4 Political 4 Economic 4 Social 5 Technological 5 Legal 5 Environmental 5 Conclusion 6 Reference List 7 2. Introduction 8 Ansoff Matrix 8 Market Penetration 8 Market development 9 Product Development 9 Diversification 9 Conclusion 9 Reference List 10 3. Introduction 11 Value Chain Analysis 11 Inbound Logistics 11 Operations 11 Marketing and sales 11 Service 11 Human source management 12 Technology Development 12 Procurement 12 Conclusion 12 Reference List 13 1. Introduction Samsung is a South Korean multinational corporation (MNC) that operates in several countries across the world. It has numerous subsidiaries under the brand name. Since Samsung is a MNC, it is governed by various laws, socio-political structure and cultures of different countries. A PESTLE analysis of the company is carried out so as to understand macro-environmental policies that govern the same. (Source: Marketing Minefield, 2014) PESTLE Analysis Political Samsung operates in fairly conducive political conditions in most countries, apart from those such as, Africa and Latin America, where the political situation is unstable. However, the recent political instability bordering on a war breaking out between North and South Korea had posed serious problems for the company (Haggard and Mo, 2000; Duane and Webb, 2007). Hence, the company has factored into its strategic measures the political conditions of the countries wherein it operates. Economic It is a very critical dimension for the company as emerging markets in the developing countries enable Samsung to build its global presence. The global recession is a concern for Samsung as it has caused a decline in the purchasing power of customers. In the developed countries, Samsung has lost business and has in turn adopted aggressive marketing in the developing markets. The global economic uncertainty has forced Samsung to adjust its macroeconomic policies so as to account for the tapering disposable incomes (Lee and Slater, 2007). Social Samsung has to reorient its strategies according to the market’s socio-cultural factors. Samsung’s diverse markets are strongly influenced by consumer lifestyle. The company has shown great efficiency in tailoring its products according to the changing preferences in each market (Samsung, 2014). Technological Samsung being one of the leading technological innovators has harnessed the power of technology so as to attain a sustainable competitive advantage over the rivals. Even so, in the recent times, Samsung has brought upon itself regulatory and legal scrutiny as the basics was tampered in order to imitate Apple’s latest design (Gil, Bong and Lee, 2003; Keller, Parameswaran and Jacob, 2011) Legal The lawsuits that the company is facing in different countries have affected its public image. Markets of the developed countries were considerably affected by such revelations as consumers are concerned about quality of Samsung products. The lawsuits regarding imitation, price fixing of the memory chips and tampering of evaluation reports of various competitors have brought the company under legal scrutiny. It has also encountered severe criticisms in the global industry forum (Miller, et al., 2012; Coe and Lee, 2006). Environmental Samsung has been convicted of violation related to the labour laws in Brazil. In the present world where consumers prefer brands that follow social and environmental standards, Samsung has to be careful with its production process so as to meet the consumers’ demands (Dasgupta, et al., 2006; Ireland and Hitt, 1999). Conclusion Hence, Samsung has etched its name in the global consumer market for quality of the products offered. However, the company must be careful regarding the negative aspects so as to retain the market share. Reference List Coe, N. M. and Lee, Y. S., 2006. The Strategic Localization of Transnational Retailers: The Case of Samsung‐Tesco in South Korea. Economic Geography,82(1), pp. 61-88. Dasgupta, S., Hong, J. H., Laplante, B. and Mamingi, N., 2006. Disclosure of environmental violations and stock market in the Republic of Korea. Ecological Economics, 58(4), pp. 759-777. Duane Ireland, R., and Webb, J. W., 2007. Strategic entrepreneurship: Creating competitive advantage through streams of innovation. Business Horizons, 50(1), pp. 49-59. Gil, Y., Bong, S. and Lee, J., 2003. Integration model of technology internalization modes and learning strategy: globally late starter Samsungs successful practices in South Korea. Technovation, 23(4), pp. 333-347. Haggard, S. and Mo, J., 2000. The political economy of the Korean financial crisis. Review of International Political Economy, 7(2), pp. 197-218. Ireland, R. D. and Hitt, M. A., 1999. Achieving and maintaining strategic competitiveness in the 21st century: The role of strategic leadership. The Academy of Management Executive, 13(1), pp. 43-57. Keller, K. L., Parameswaran, M. G. and Jacob, I., 2011. Strategic brand management: Building, measuring, and managing brand equity. New Delhi: Pearson Education India. Lee, J. and Slater, J., 2007. Dynamic capabilities, entrepreneurial rent-seeking and the investment development path: The case of Samsung. Journal of International Management, 13(3), pp. 241-257. Marketing Minefield, 2014. PESTLE Analysis. [online] Available at: < http://www.marketingminefield.co.uk/pestle-analysis/> [Accessed 26 August 2014]. Miller, T., Birch, M., Mauthner, M. and Jessop, J., 2012. Ethics in qualitative research. California: Sage. Samsung, 2014. Providing Eco-Friendly And Digitalised Support. [online] Available at: [Accessed 13 August 2014]. 2. Introduction In 1957, Igor Ansoff had developed a model that would take into account the product and the market development as a joint statement (Aaker, 2008). This matrix helps start-up companies to design strategies that enable the products to fulfil its intended need. The growth alternatives are presented below: Ansoff Matrix (Source: AnsoffMatrix.com, 2013) Market Penetration The organisation attempts to increase its market share by way of using existing products or services in the current markets. Samsung has been concentrating on bolstering its distribution network in the developing countries. It has introduced new phones at various price points so as to target maximum sections of the consumer base with various income levels. For example, Samsung Guru and Samsung Galaxy Tab. Using popular stars as face of the brand and leveraging on their popularity is an effective way of brand positioning, given that celebrities are capable of creating a significant effect on the general human psyche. Samsung faces serious competition from local brands of the countries, which offer the same features at reduced prices (Chung and Kim, 2003; Curry, Ringland and Young, 2006). Market development The company aims to target and set up distribution channels in new markets. In the developed countries, the life span of a technology is very short due to extensive research and development conducted therein. Hence due to fast cycle nature of the markets, technology driven companies often try to sell existing product line that has become outdated or that experiences a saturated market in new markets of the developing countries. Samsung has also adopted similar strategies in the past to capture new markets (Dennis, Fenech and Merrilees, 2004; Shaw, 2011). Product Development Samsung is one of the leading technological innovators that have used the strategy of product development to its advantage in an effective manner. It is a MNC that operates in diverse markets and hence, the products are influenced by widely differing consumers’ tastes and preferences. Samsung conducts intensive market research in order to gauge market trends and consumers’ sentiments and subsequently develops its products keeping in mind the local cultures. Samsung also invests heavily in the R&D department and has been able to steer the market in its favour with launch of new products (Kim and Mauborgne, 2005; Jarratt and Stiles, 2010). Diversification It is a high risk move for a company as it is the combination of product and market development. However, companies at times diversify product lines so as to mitigate risks. Samsung has ventured into various industries such as, healthcare, automobile, security device, industrial components, food processing, insurance and education (Ringland and Young, 2007). Then again, Samsung is most famous for and earns the most revenue from production of its mobile phones and semi-conductors (Grant, 2010; Samsung, 2014). Conclusion Samsung as a product developer has gained strong grounds in the industry; nevertheless, its public image has been tarnished to an extent recently. Thus, the company must develop strategies that would help to regain lost reputation. Reference List Aaker, D. A., 2008. Strategic market management. New York: John Wiley & Sons. AnsoffMatrix.com, 2013. What is the Ansoff Matrix? [online] Available at: < http://www.ansoffmatrix.com/> [Accessed 26 August 2014]. Chung, S. A. and Kim, G. M., 2003. Performance effects of partnership between manufacturers and suppliers for new product development: the supplier’s standpoint. Research Policy, 32(4), pp. 587-603. Curry, A., Ringland, G. and Young, L., 2006. Using scenarios to improve marketing. Strategy & Leadership, 34(6), pp. 30-37. Dennis, C., Fenech, T. and Merrilees, B., 2004. e-Retailing. London: Routledge. Grant, R. M., 2010. Contemporary strategy analysis and cases: text and cases. New York: John Wiley & Sons. Jarratt, D. and Stiles, D., 2010. How are methodologies and tools framing managers strategizing practice in competitive strategy development?. British Journal of Management, 21(1), pp. 28-43. Kim, W. C. and Mauborgne, R., 2005. Blue ocean strategy: How to create uncontested market space and make competition irrelevant. Boston: Harvard Business Press. Ringland, G. and Young, L., 2007. Scenarios in Marketing: From vision to decision. New York: John Wiley & Sons. Samsung, 2014. Samsung innovation is bringing people together. Yes, even for business. [online] Available at : [Accessed 14 August 2014]. Shaw, S., 2011. Airline marketing and management. UK: Ashgate Publishing, Ltd. 3. Introduction Samsung has a similarity with Oracle in the design of its value chain. It is an integral part of the production process. Value Chain Analysis Inbound Logistics Samsung has refined and synchronized the inbound activities with inventory control and current scheduling. Operations In order to gain more control over the hardware production, AuthenTec, which is the latest acquisition of Samsung, has to be shifted to Korea. Then again, the rising labour cost in Korea will be a problem in such a case (Porter and Kramer, 2011; Wenliang and Jingjing, 2012). Outbound Logistics Samsung’s outbound logistics are localised in Seoul. The company has an effective streamlined logistics methodology that allows for little delay in gathering, storing or distribution of the smartphones. Marketing and sales Since Samsung is currently focusing on position building, it should develop strategies that would convince the Blackberry and Apple users that the product features offered are superior to that of the competitors. It could also market the security package deal of biometric scanners and the secure email/messaging network (Gereffi and Memedovic, 2003). Service Samsung is well-known for the level of service provided. The acquisitions of AuthenTec and Synchronica should be favourable for the company as the employees are already trained from their previous jobs. However, they can be trained on the specific quality standards that the company conforms to (Humphrey and Schmitz, 2000; Wright, et al., 2005). Support Activities The support activities that assist smooth functioning of the value chain are discussed below. Human source management Samsung is a huge corporation that has around 300 central offices around the world and a team of highly efficient and talented workforce. The company encourages and boosts the moral values of its employees through various programmes. More than 42,000 employees work in the research and development team of the company and there is collaboration between all the R&D departments so that the designs for new technologies can be developed collectively (Henderson, 2002; Porter, 2001). Technology Development Technological advancements made over last few years have transformed the company into one of the major market leaders operating in the production and marketing of media, digital appliances, semiconductors, memory cards and system integration. The quality of Samsung products is recognised all over the world. The company is appreciated for its large product range and constant innovations (Dedrick, Kraemer and Linden, 2002; Porter, 2008). Procurement Samsung has maintained favourable relations with buyers over the years and has constantly endeavoured to enhance the product quality. Even so, the company had come under scrutiny recently due to one of its Chinese suppliers that had abused child labour laws. Hence, the company should focus on applying stricter rules pertaining to supplier laws (Gereffi, Humphrey and Sturgeon, 2005). Conclusion The value chain incorporated has been creating value for the company by dint of the Human Resource (HR) activities and branding of the products. Other sections of the value chain are comparatively weak and require special attention. The inbound and outbound logistics of Samsung has been greatly affected by the recent acquisitions. Reference List Dedrick, J., Kraemer, K. L. and Linden, G., 2002. Who profits from innovation in global value chains?: a study of the iPod and notebook PCs. [pdf] Industry Studies Association. Available at : [Accessed 14 August 2014]. Gereffi, G. and Memedovic, O., 2003. The global apparel value chain: What prospects for upgrading by developing countries. Vienna: United Nations Industrial Development Organization. Gereffi, G., Humphrey, J. and Sturgeon, T., 2005. The governance of global value chains. Review of international political economy, 12(1), pp. 78-104. Henderson, J., Dicken, P., Hess, M., Coe, N. and Yeung, H. W. C., 2002. Global production networks and the analysis of economic development. Review of international political economy, 9(3), pp. 436-464. Humphrey, J. and Schmitz, H., 2000. Governance and upgrading: linking industrial cluster and global value chain research. Brighton: Institute of Development Studies. Porter, M. E. and Kramer, M. R., 2011. Creating shared value. Harvard business review, 89(1/2), pp. 62-77. Porter, M. E., 2001. Strategy and the Internet. Harvard business review, 79(3), pp. 62-79. Porter, M. E., 2008. Competitive advantage: Creating and sustaining superior performance. New York: Simon and Schuster. Wenliang, W. and Jingjing, J., 2012. Analysis and Comparison on Total Innovation Management Mode of Enterprises in China and South Korea: Haier′ s Mode vs Samsung′ s Mode. Technology Economics, 3, pp. 008. Wright, M., Filatotchev, I., Hoskisson, R. E. and Peng, M. W., 2005. Strategy Research in Emerging Economies: Challenging the Conventional Wisdom*.Journal of management studies, 42(1), pp. 1-33. Read More