Samsung's Strategic Management - Report Example

Introduction to Strategic Management Report Table of Contents Introduction 3 Strategic Analysis 3 Industry Analysis 3 Competitor Analysis 4 PEST Analysis 4 Market Analysis 5 Analysis of Business Strategy 5 Strategic Evaluation 5 SWOT Analysis 6 Strategy Formulation 6 Strategy Implementation 8 Critical Evaluation 9 Conclusion 10 Reference List 10 Appendices 12 Appendix 1 12 Introduction Strategic Management is described as the method of accessing the enterprise and its atmosphere towards meeting the long-term goal of the company, so that the firm can take benefit of the availing opportunities in the marketplace to the finest of its capability. The process of strategic management involves three main components: strategy analysis, strategy formulation, strategy implementation and evaluation (Alkhafaji, 1994). It is primarily about situating the underpinning purpose of the organization, selecting the most suitable goals or objectives towards those aims, and satisfying them together over time (Dess, Lumpkin and Taylor, 2005). As the definition implies, it focuses on incorporating managerial capabilities and techniques for example marketing, accounting/financial, production management, management of human resources, research & development in order to achieve the success of the organization (Karami, 2012). The chosen company is Samsung which is a conglomerate company. It comprises of various subsidiaries as well as affiliated businesses. It has evolved as a world class company with the businesses that covers advance technology, skyscraper, consumer electronics, apparel, petrochemical, electronic components, precision instruments, medical equipment, telecommunications equipments, and semiconductors (Samsung, 2014). Their discoveries and inventions allowed them to become a leader in the technology fields; thereby continuously pushing the businesses forward. Their vision for the year 2020 is “Motivate the World, Build the Future” (Samsung, 2014). By recognising internationally as an industry leader, it positions itself among the top ten international brands (Samsung, 2014). In terms of Smartphone market, it ranks second with a market share of 28.4% (Comscore, 2014) (See Appendix 1). The report aims at providing the theoretical outline synopsis of the strategic management process along with stressing on the fact that how a company become successful by applying the elements of strategic management method in its business process. Strategic Analysis Strategic analysis is a hierarchical notion which generally includes four steps such as industry analysis, market analysis, investigation of business strategy, and strategic evaluation (Boulton, 2001). Industry analysis involves the competitor analysis and PEST (political, social, economic, and technological) analysis; market analysis includes market and product segmentation; analysis of business strategy includes explanation of the business strategy and strategic goals of the company; and strategic evaluation includes SWOT (strength, weakness, opportunity, threat) analysis covering the external and internal factors that have an effect on the business strategy of the company (Khosrowpour, 1999). Industry Analysis The main purpose of doing industry investigation is to measure the weaknesses and strengths of a company in relation to its rivals. It underlines the structural facts of particular business and the degree of competition in that industry. Through the industry scrutiny, the company can discover whether the selected field is eye-catching or not and also measure its own place within the business (C.A.Rao, B.P.Rao and Sivaramakrishna, 2009). It helps to recognize both profitable and unprofitable opportunities (Reiily and Brown, 2011). Competitor Analysis Competitor analysis gives both a defensive and an offensive strategic perspective for identifying threats and opportunities. The offensive approach permits firms to quickly utilize opportunities and take advantage of the strengths. The defensive strategy permits them to effectively offset the threats created by the competitors. Through the competitor scrutiny, companies can identify their main competitors and their strategies and objectives which will help them to attain competitive advantage (Healey, 2013). The main competitors were Apple Inc, and Nokia. Apple adopted the strategy of premium pricing and product differentiation. It increased the demand for its products by making an attractive and unique product and also through innovative advertising. It manufactured a sleek designed premium product with superior quality and features. Moreover the user interface and hardware are designed to present value for the cost, which helps in keeping the profits high. Its business objectives include intensifying the sales to those people who have still not owned the Apple’s product and to make products which are hassle free thereby providing satisfaction to customers. The strategy of Nokia is to construct trusted customer relationships by presenting convincing as well as valued customer solutions. It invests in its business divisions which focus on the digital maps as well as on growing the intellectual property and research teams of the company. Its objectives are to offer value-added services and products, such as phone services which are simple to use and are also user friendly (Scott, 2014). PEST Analysis A PEST (political, social, economic, and technological) analysis is the investigation of exterior macro environment which affects all the firms (Murray-Webster, 2010). Political: Samsung faces much political stress in Latin American and African countries where the political atmosphere is unstable as well as prone to numerous changes in the structures of the government. Economic: Economic dimension is an alarm for the company as the ongoing international economic catastrophe has rigorously dented the consumer’s purchasing power in most of the developed markets thereby forcing Samsung towards seeking profitable projects in the rising markets. Socio-cultural: Being an international company it operates locally which means that it adopts local strategy i.e. (offering its product in the rural market) in most of the emerging markets. As the socio-cultural aspects are dissimilar in every country, the company has to readjust itself in every market accordingly. Technological: It is considered among the chief innovative companies of the world. This indicates that Samsung is exploiting the power of expertise and technology and also driving modernization for sustainable company advantage. There are advantages as well as disadvantages of doing PEST analysis. The advantages are that it supports and encourages the progress of the strategic assessment within the company and enables to assess propositions of entering the new marketplace both globally and nationally. The disadvantage is that it is needed to be performed regularly in order to be effectual and generally the companies do not invest so much in this process (Fleisher and Bensoussan, 2008). Market Analysis By doing the market analysis a company get to know their current customers in the market. Basically it includes market and product segmentation (O’Guinn, Allen and Semenik, 2008). Most of the users of Samsung products are adults such as businessman, teachers, self employed, and students. Moreover its products are used by the lower middle, middle, upper middle, and by the high income level people. The company is also categorizing its customers on various levels depending on its diverse lifestyle such as culture oriented, outdoor oriented and sports oriented (Mukit, 2014). The product segmentation of Samsung includes skyscraper, consumer electronics, apparel, petrochemical, electronic components, precision instruments, medical equipment, telecommunications equipments, and semiconductors (Samsung, 2014). Analysis of Business Strategy Business strategies mainly comprises of strategies and goals of the company. From these strategies, a competitive advantage can be formed over the rivals. Samsung adopted the combined differentiated plus low cost strategy. The pros of this strategy are that it is difficult to apply by other firms; companies aiming to apply this strategy frequently stuck in middle; and the product of other companies are very costly in order to compete with the providers of low cost product. It was capable to have better profit margins in relation to its rivals because of cheap labour, better sourcing, and use of new rules of design. Samsung is also having price advantage as it was capable to have the higher profit margins in comparison to its rivals by offering modified memory chips and having enhanced quality control, thus leading to its reliability (Sylvia, 2014). Beating Apple is the foremost goal of Samsung. Samsung is not just the largest adopter of Android software of Google but also have the smartphones which are running the operating system (OS) of Windows Phone as well. Whereas Apple is tapering to its personal iOS; Samsung deluged the market because they diversified their hardware as well as software that operate on their smartphones (Psu, 2014). Strategic Evaluation Strategic evaluation is done by the company to identify how good their tactical plans are as well as to recognize how well those plans are being implementing. It involves doing the SWOT analysis of the company (David, 2003). SWOT Analysis The SWOT analysis of Samsung involves: Strengths: The strengths of Samsung includes integration of hardware with many software and open source operating system, excellent design and innovation, superiority in engineering, low cost of production, major share in the mobile phones, and capability of marketing the brand (Studymarketing, n.d.). Weaknesses: The main weaknesses are that the major competitors were also the largest buyers, focuses on excessive products, and keep its profit margin very low (Studymarketing, n.d.). Opportunities: There are various opportunities in terms of growing Smartphone market, increasing demand for the excellence application processor, and obtaining patents by acquisitions (Studymarketing, n.d.). Threats: Price war is the main threat for the company. Apart from this, other threats are saturated markets of Smartphone in the developed countries, rapid change of technology, and launch of Apple iTV (Studymarketing, n.d.). The advantages of conducting SWOT analysis are that it helps the company to understand their business better, deter threats, address weaknesses, and help to develop business strategies and goals. The disadvantages are that it does not offer solutions, and generate excessive ideas that could not help to select the best one. However, conducting a SWOT analysis has a positive impact on the strategic process of the company because it helps them to take benefit of new opportunities, execute new technology, and also to deal with the changes (Afuah, 2009). Strategy Formulation It is the method through which the company selects the most suitable courses of action in order to accomplish its defined objectives and goals. The process of strategic formulation is very essential for the success of the organization because it presents a structure for the acts that will direct to the probable results. The strategic plans of the company should be discussed with all the employees in order to make them aware about the objectives, purpose, and mission of the organization. Strategy formulation compels the company to carefully gaze at the altering environment and also to be organized for the probable changes. It also enables to assess its resources, to establish the most suitable plan for increasing the return on investment, and to allocate its budget (Saylor, 2013). The steps in the strategy formulation process are as under: Define the company: First step is to define the company which means identifying the customers of the company. A company will not become successful without customer segmentation whose requirements are fulfilled by them. A company should recognize the factors which are appreciated by its consumers. The company should remember that customers are buying advantages of the products not the features; so they should define their business in such a way that it reflects their product benefits (Saylor, 2013). The customers of Samsung products are adults such as businessman, teachers, self employed, and students. It defines its business by leveraging three main strengths i.e. new technology, creative solutions, and innovative products (Samsung, 2014). Identify the strategic mission: The strategic mission of the company provides a long term viewpoint of how the company will attempt to go forward. A clearly defined mission will present the company with a lead in order to reach towards its plans (Saylor, 2013). The mission of Samsung is to devote their technology and talent towards creating advanced products as well as services that add to an enhanced global society (Samsung, 2014). Define the planned objectives: The third stage in the process of strategy formulation requires the company to classify their planned objectives. These goals and objectives include: required market share, market position comparative to its rivals, production of goods as well as services, enhanced customer services, technology advancement, sales increases, and corporate expansion (Saylor, 2013). The objectives of Samsung includes providing quality products to customers, requisite market share, better market position in comparison to its rivals, improved customer services, increased sales, business expansion, and advancement in technology (Samsung, 2014). Define the company’s competitive strategy: It requires the company to decide where it actually fits in the market. It also requires them to develop positive responses towards potential changes prevailing in the market. Moreover, they are also needed to identify their resources and determine how those funds will be utilized (Saylor, 2013). Samsung adopted the low cost as well as differentiation strategy and thus was capable to have better profit margins by offering various ranges of products in relation to its rivals and also because of cheap labour, better sourcing, and use of new rules of design (Sylvia, 2014). Implement strategies: The Company should take all the essential steps in order to identify the marketplace and the competition. Though, without strategy implementation, the work of the company will be of no value. By implementing the strategies, the company will be capable to recognize which of the attempts are more thriving than others. This will encourage them to discover new implementation methods, if necessary (Saylor, 2013). By implementing its strategy of low cost and differentiation, it becomes the world leader in terms of innovation of digital technology. Evaluate progress: A continuous evaluation of methods and outcomes is very crucial to the ongoing success. A company must keep record of the growth it is actually making. If objectives are not met, the company must be flexible and adaptable to identify that some changes may perhaps be needed (Saylor, 2013). A constant evaluation of its process is done by the company and it also keeps the records of its growth in the market. It ranks second in terms of Smartphone market. Through its continuous evaluation method it is regarded as one of the largest provider of total technology safety measures solutions (Samsungsecurity, 2014). Corporate Strategy of Samsung: Corporate strategy is related with the growth and long term endurance of the business organization. It includes the selection of objectives and goals, the exploration for development that may facilitate to meet the objectives; as well as the recognition of those progresses which are most probably viable with the existing resources of the organization (Sutton, 1980). As discussed earlier, the corporate strategy of Samsung includes product differentiation and low cost strategy. A range of external and internal factors helped Samsung to achieve its desirable position. It successfully customized its products in the region of core design and the large portfolio of products helped the company to achieve its success. Their corporate strategy helped them to have a better command on their operating margins in comparison to their rivals (Sylvia, 2014). Strategy Implementation Strategy execution involves taking the actions at functional, corporate and business levels in order to carry out a tactical plan. Therefore, it includes putting the programs of quality improvement into place, positioning the company products in a different way in the market, changing the method of designing the product, offering dissimilar versions of product to the different groups of consumer, implementing price decreases or increases, expanding all the way through acquisitions and mergers, and downsizing by either selling off some parts of the business or by closing down. It also involves designing the finest structure of the organization, culture, as well as control system in order to put the chosen plan into action (Hill and Jones, 2008). There are five stages to better strategy implementation which are discussed as under: Align your new plan: A crucial road towards the failed execution is when the company make a new plan or strategy but then keep on doing the similar thing as before. A new plan means new activities and new priorities across the business. Every activity except the most practical must be reassessed against its significance towards the new plan or strategy. A good method is to generate a tool for measuring the strategic value for the new and existing initiatives. The initiatives should be evaluated against their considered value and their impact towards the organization (Verweire, 2014). Align funds and performance: Ideally the capital funds are decentralised; therefore each division should manage and allocate the budgets in order to deliver the strategic initiatives of the division. The performance of the company should be directly aligned to the strategy. The performance measures must be put against the strategic objectives across the company and each staff member and division. All employees will have work functions which will have an impact on the strategy. Most employees will also have impact across the sequence of strategic objectives. The company should ensure that the employees are responsive towards their roles and responsibilities and this will have an influence on the strategy delivery as well as on performance. Similarly, performance incentives must be directly related to performance against the strategy. The company should incorporate a mixture of corporate, team, and individual performance measures to have a direct impact on the strategy performance (Verweire, 2014). Structure follows the strategy: A renovation strategy may need a makeover towards the business structure. A company that attempt as well as force a fresh strategy or plan into a non-operational structure would discover that their strategy execution eventually does not progress (Verweire, 2014). Engaging staff: The main reason for the failure of strategy execution is that sometimes the organization does not include its staffs in their strategy implementation process. So, if the staffs and stakeholders are not aware of the strategy and does not engage in the strategy execution process, then strategy fails. Strategy includes change and there comes many hurdles in implementing the change in the existing process; those obstacles are cognitive, motivation, resource as well as political hurdles. Therefore, it is important for the company to understand each obstacle and develop business strategies in order to conquer them. The company need to bring the influential employees apart from the executive teams, into the process of planning. It is important to listen across the company during the strategy formulation because some of the superior ideas come from within the company. It should also ensure that each employee is aware of the strategic vision and their roles towards delivering the vision (Verweire, 2014). Monitor and adaptation: The business strategies of the company should be flexible and adaptable so that they can react to changes in external as well as internal environments. Strategy meeting must be held on a continuous basis where direction and initiatives are measured for strategic relevance and performance. The plan should be reviewed at least once in a year to test it against the modification in the external, competitive, and internal environments. It tells about the operations and structure of the company (Verweire, 2014). Samsung introduced various range of products and implemented the low cost strategy. It is considered among the chief innovative companies of the world which means that the employees are responsive towards their roles and responsibilities and this impact the performance of the company towards providing advantage to the customers through their products. The business strategy of Samsung is adaptable so it reacted towards the changes in external as well as internal environments. Critical Evaluation Samsung is well known for its differentiation and low cost strategy which helps them to have better profit margins in relation to its rivals because of better sourcing, and use of new rules of design. It also operates locally by offering its products in the local market. It integrates its hardware with many software and open source operating system. The product differentiation strategy may have a positive as well as negative effect on the company. On the positive side, it offers a various range of products thus getting more customers and on the negative side it may confuse the customers in making their selection among the products. Moreover, there is a supposition that it has copied the technology of Apple and offering the same benefits at lower cost and therefore having the price advantage by embracing better margins than its rivals. However, the price advantage is also due to modified memory chips offered by the company and is also having enhanced quality control. By doing the PEST analysis the company will be able to measure the propositions of entering the new marketplace both globally and nationally. SWOT analysis will help to understand their business better and help to develop business strategies and goals. Conclusion The strategic management process incorporates strategy analysis, formulation of strategy, and implementation of strategy. Strategy analysis is the main step as the information obtained in this phase will outline the subsequent stages. It requires examining the external and internal issues that can have an effect on the objectives and goals; and also identifying the weaknesses and strengths as well as opportunities and threats that may take place along the way. Strategy formulation involves reviewing the information collected through the analysis. The matters facing the organization must be prioritized by means of their importance towards the success of organization. Once prioritized, the company needs to formulate the strategy. Last is the strategy implementation stage which is the action phase of the process of strategic management. If the strategy works with the current business structure then it is good for the company, but if it doesn’t work then a new arrangement should be done. Everybody in the organization should be made apparent of their roles and duties. When everything is in place then the plan should be executed. Thus, all three stages fit together into the strategic management process and contribute towards the organization success. Reference List Afuah, A., 2009. Strategic Innovation: New Game Strategies for Competitive Advantage. New York: Routledge. Alkhafaji, A.F., 1994. Competitive Global Management – Principles and Strategies. Florida: CRC Press. Boulton, W.R., 2001. Strategic Analysis Model. 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United States of America: Idea Group Publishing. Mukit, M., 2014. Samsung Electroni ns Market and Analysis. [pdf] Available at: (Accessed 1 Dec 2014). Murray-Webster, R., 2010. Management of Risk: Guidance for Practitioners. Ireland: The Stationery Office. O’Guinn, T., Allen, C. and Semenik, R., 2008. Advertising and Integrated Brand Promotion. United States of America: Cengage Learning. Psu, 2014. Apple’s Use of Litigation as a Business Strategy and the Ripple Effects of the Mobile Marketplace. [online] Available at: [Accessed 1 Dec 2014). Rao, C.A., Rao, B.P. and Sivaramakrishna, K., 2009. Strategic Management and Business Policy. New Delhi: Excel Books India. Samsung, 2014. Samsung: Making a Better World. [online] Available at: [Accessed 1 Dec 2014]. Samsungsecurity, 2014. Samsung Techwin. [online] Available at: [Accessed 1 Dec 2014]. Saylor, 2013. Strategy Formulation. [pdf] Available at: < http://www.saylor.org/site/wp-content/uploads/2013/02/BUS208-7.3.1.1-Strategy-Formulation-FINAL.pdf> [Accessed 1 Dec 2014]. Scott, M., 2014. Nokia Announces New Strategy, and a New Chief to Carry It Out. [online] Available at: < http://www.nytimes.com/2014/04/30/technology/nokia-announces-new-strategy-and-chief-executive.html?_r=0> [Accessed 1 Dec 2014]. Studymarketing, 2014. Sample of SWOT Analysis: SAMSUNG Case. [online] Available at: < http://www.studymarketing.org/articles/Strategic_Management/Sample_of_SWOT_Analysis_:_SAMSUNG_Case.html> [Accessed 1 Dec 2014]. Sutton, C.J., 1980. Economics and Corporate Strategy. England: Cambridge University press. Sylvia, N., 2014. Business level strategy SAMSUNG. [online] Available at: [Accessed 1 Dec 2014]. Verweire, K., 2014. Strategy Implementation. New York: Routledge. Appendices Appendix 1 Market Share of Samsung in terms of Smartphone Market Top Smartphone OEMs 3 Month Avg. Ending Jul. 2014 vs. 3 Month Avg. Ending Apr. 2014 Total U.S. Smartphone Subscribers Age 13+ Source: comScore MobiLens   Share (%) of Smartphone Subscribers Apr-14 Jul-14 Point Change Total Smartphone Subscribers 100.0% 100.0% N/A Apple 41.4% 42.4% 1.0 Samsung 27.7% 28.4% 0.7 LG 6.5% 6.4% -0.1 Motorola 6.3% 5.7% -0.6 HTC 5.3% 4.7% -0.6 (Source: Comscore, 2014) Read More