PEST analysis for Samsung - Report Example

A report on PEST analysis for Samsung By Introduction Samsung is global company with its center of operations in Samsung, Seoul in South Korea. The company has of a range of related additional firms. Samsung provides an umbrella for the subordinate firms beneath the brand name Samsung. A number of remarkable supplementary firms consist of; Samsung electronics, Samsung weighty industries, Samsung C & T, and Samsung engineering. Samsung electronics is the most recognized subsidiary of the international business corporation. Its income at 2010 poses it as the supreme information technology corporation. The corporation deals with the end user appliances and electronics; manufactures, and markets a variety of consumables such as TV’s, cellular phone, Washing Machines and many more things (Institute of Marketing, 2009). The company is mainly concerned with consumer centered electronics division and given its energetic edge the company has been able to gather the greatest market share by itself. The growth of the company has been practically the same as with the growth of the so-called “Asian Tigers” (the countries of South East Asia). It has industriously predisposed the flourishing global market for consumer electronics and has struggled to stay on crest of the competition (Doole & Lowe, 2005). The company has faced a lot of competition since its creation mainly from Sony electronics Motorola and the Nokia mobile. The company has however managed to suppress them in the resent past due to improved products and investment in new technologies. The sale in Samsung electronics were poor in the early 1990’s due to stiff competition from Motorola which occupied over 60% of the market share as compared to Samsung which controlled only 10% of the market. Samsung’s Macro and Micro Competitive Environments Samsung’s business atmosphere is influenced by both peripheral and interior factors, which have a collision equally on the local and international performance of its products. The macro environment is understood through a PEST analysis while SWOT analysis is intended to analyze the company’s micro atmosphere. PEST analysis is carried out by the business or organization to: find out the present external factors upsetting an organization; identify the external factors that may vary in the future; And to take advantage of the changes (opportunities) or protect against them (threats) in good health than competitors would do. The main reason is therefore to appreciate the overall picture surrounding the company PEST analysis             This section of the paper evaluates the company’s approach by the Pest assessment. Pest approaches consist of political/legal, economic, social, technological factors. Political factors These points to government procedures including the strength of economy involvement, types of goods and services that an investor should put forward to the general public, government’s subsidies, and priorities in conditions of business aid. According to Muralidaran (2007) a country’s political legislation can have consequences on a variety of essential areas such as schooling of the labor force, intensity of infrastructure and the health of the population.   Samsung is subjected to worth mentioning levels of political risks in its countries’ of operation. The levels of political risks differ from one country to another, in that it is favorable in some and problematic in others. South Korea’s political environment has offered an upsetting factor for the business that now is faced with political unsteadiness at quarters. The quarter’s country’s state of affairs is far removed from and not severe when compared beside other countries. Various regions markets where Samsung is going through a challenging dealing environment consist of the African and south East Asia nations (Institute of Marketing, 2009). The business environment in these places is aggressive where African countries are constantly faced with political instability and tribal wars which adversely affect business operations in the area which has a negative impact on the company. Countries such as china and India offer an advantageous business environment due to the easier policies that have been put in place to facilitate business and investment; this has enabled Samsung to it to focus on the markets in an appropriate way. The politics of UK pending the next general election political parties have lead to confusion over the rate of growth for short-term future, plus confusion as result of different policies from political parties. They promised decrease of trade in tax for global corporations in the event that they succeed in the election Samsung can have inducement tax. In recent times, Apple launched a court case accusing Samsung in April 2011 claiming Samsung hackneyed blueprint features of the iPhone in its Android phones. Even though most of cases are unconvinced, the expenses coupled with lawful wars can hinder or sluggish the discharge of novel handsets making it easier said than done for the producer to stay competitive. Economic factors These factors involve the relationship between finance and resources of the country. Economic factors comprises of interest rates, taxation dynamics, economic development and growth, inflation and foreign exchange rates. These factors can have an extraordinary impact on the business maneuver of a firm. Elevated interest rates have a propensity of dropping borrowing aptitude since it is costs extra to borrow. On the other hand, inflation calls for higher remunerations by human resources, which brings about the high cost of operation. These financial situations are key consideration in the decisions of Samsung in any particular country of operation. The company has predetermined appropriate policies in the markets of operation basing on the economic strength and size of the targeted consumers. The company employs a discriminatory targeted market policy in view of the fact that its products require a larger consumer disposable income. Additionally, it invests in countries where its goods are at beginning stage. On the other hand, this is not the case with developed nations where its products are at turn down stage. There has been a 6.1% decrease in sale due to recession. Consumer buying power has strong impact on the revenue of the firm in the home country. The far above the ground joblessness has unconstructively impacted on buyer assurance and has led to a decline in buyer expenditure. Bloomberg reports consumer spending dropped 0.2% in June 2011 which provides evidence the decrease in hiring and wage increases below the inflation rate are affecting consumer spending. Social-cultural factors The social atmosphere consists of ethnicity, practices and traditions that vary from one social group to another. Variations in the social status affect demand for a product and the readiness of people to work. Getting old as a social factor has the predisposition of escalating the pension expenses by firms since people are living longer, this is becoming very expensive to firms. Ageing population increasingly influences demand of the Samsung mobile phone. ComScore, suggested that the highest increasing age segments in Smartphone embracing are 13-17 year of age and those aged above 55. Samsung has succeeded prevailed over the social challenges by incorporating itself in new markets. The move towards “think global and act local” has efficiently coupled the social and cultural gap between its indigenous country and foreign country (Dahlén et al., 2009). However, the corporation admits that it faces corruption to be presented with a business chance operation. Technological factors Inventions change products and their production processes. An example of innovation is the e-market and PC designs; these are referred to as improvements. The most important advantage of technology is its capacity to cut downward production costs and improving quality. Samsung is proud of its inventive proceed to technology and improving it for manufacturing products that deploys design technology and features. It is across the world renowned that Samsung is physically powerful on technology. The dynamic force at the rear the company’s enormous capability and delight is its embedded customs of innovativeness. Furthermore, it has pioneered key technological inventions that it employed in introducing new products in global trade. The most important characteristic of the technological environment in this case is the cellular network infrastructure. Samsung has sufficient advancements in position which makes it possible for both voice and data transfers. However, rural regions may have poorer quality of service, and do not always support data transfer. However, most population is concentrated in urban and sub-urban areas in the market countries; these areas have the wireless facilities in place to sustain uses of smart phones. Recommendations             From an individual point of view, Samsung firm is supposed to devote in to the 3D video gaming deal with Microsoft company. This will facilitate the company to take advantage of and get hold of the available market. This will enable Samsung to use the XBOX 360gaming console from Microsoft. The company should put in place a short-term target of budding gaming packages for its consumers. Research reveals that gaming companies registered huge profits in 2009 and this should be an inducement to Samsung. The company ought to capture the “glasses” era and get ready for a “non-glass” 3D TV. The company should strengthen campaigns for glass television awaiting the release of glass free television. This will facilitate them sustain their supremacy in “glass” age hence they stand a likelihood to bring in a newer innovation with a lot of ease. This will assist in upholding their status by consumers and enable easy shift of consumers. Samsung Company is supposed to invent another new product to continue uploading the current market share by carrying out widespread study on customer tastes and preferences. It is not easy for a company to rise within a short span of time, the way Samsung did. It has proved to the world that it is possible to outshine the greatest United States and Japan international business corporations. Technology was the driving power at the rear Samsung’s success. Samsung went auxiliary adopting its own technology apart from adapting to the already existing technologies. Samsung’s case provides an honorable and an encouragement to company executives of other business firms. The significant success characterized by the progression from black and white television manufacturers to technologically advanced semiconductors offers a recommendation to new contemporary companies. Samsung’s situation is an assertion of circumstances knowledgeable by the company between 1970s and 1980s, which brought into the open the accomplishment of reverse order policy. However, the present business atmosphere had changed due to the World Trade Order establishment that had advocated for latest economic and trading policies. As a result, Samsung had to jump the cluster again to outfit in the current competitive market conditions. This called for quick and well-organized decision by the management on various strategies to put into practice due to the wide-ranging business conditions. It is recommended that the corporation should develop universal strategies. Exhaustively analysis of the company’s business doings and technological progression will advocate that Samsung should produce global strategies in formation and local in execution within the markets of services. It is prudent for Samsung to be more forceful and get hold of the balance of payments markets; this would stipulate reorganization of strategies and execution of extreme end pricing apparatus. Conclusion In wrapping up, Samsung has less threat as compared to its strengths; this implies that the corporation is still able to enjoy the supremacy in 3D TV. To get away with risk the Samsung needs to collaborate with Microsoft to play a role in the gaming market. Samsung has sufficient and competent resources in terms of labor, which facilitates the advancement of semiconductors, utilized in the 3D TV manufacture. The greatest threat faced by Samsung is the slow rate of dissemination of 3D TVs, which slows goal accomplishment. The paramount opportunity that Samsung has to boost its profitability is investing in gaming consoles. References Doole, I & Lowe, R, 2005, Strategic marketing decisions in global markets. London: Cengage Learning EMEA, Institute of Marketing, 2009, Marketing, London: Haymarket Press Muralidaran, S., 2007, Business environment analysis: an introduction, London: Icfai University   Press. Read More