Environmental Analysis of Samsung Company in China - Case Study Example

Title: Environmental analysis of Samsung Company in China Name Institution Introduction Samsung is a smartphone manufacturing company in South Korea. It has expanded its market share to most parts of the world both in developing and developed nations. United States and United Kingdom are developed nations which are served by Samsung while Africa, Asia and Australia are among the developing nations served by Samsung. This analysis will focus on macro environment analysis of Samsung Company in China (Samsung Electronics, 2012). Macro environment analysis of Samsung Company in China a) Political-legal environment The reputation of Samsung phones in Australia is good like in other countries of the world. However, the entrance of Samsung Company to China market has called China Government to come up with measures to protect local companies like Apple. The preferential policies of foreign companies in China are decreasing in order to protect domestic companies. In 2010, China Government strengthened ‘Foreign Enterprise In.c Tax Law’ in order to control imports to the country. This was a big shock to Samsung Company among other foreign enterprises with market share in China (Li & Chen, 2012). These changes are very important since it has reduced the rate of expansion and growth of Samsung in emerging economies. Also, the potential customers for Samsung phones have been limited and my perceive Samsung as not taking responsibility in serving their needs. As a result, the investment on the target segment in China will bring back low returns even if more efforts are put. It will be difficult for Samsung Company to make profits in China due to these inevitable political and legal measures. Therefore, the Samsung Company together with other foreign enterprises in China should engage in an international dialogue that will tend to develop franchise kind of business. This will be a source of direct revenue to China Government. On the other side, Samsung Company will have the ability to explore China market (Samsung Electronics, 2012). b) Social-cultural environment It is clear that the modern China is currently an open country. Young people in the country are more than glad to learn foreign cultures and lifestyles as well. Like Samsung, Apple Company has designed diverse brands (iPod, iPhone and iPad) as an important step in addressing the contemporary needs of the consumers. The popularity of Apple brands in China culture has made difficult Samsung brands to flourish in this culture. Apple Company is more adaptable to China culture than Samsung and therefore has sophisticated attractive designs which meet the fashion demands of consumers. It is important that Samsung phone brands like Galaxy S has an adaptable features in China culture. Therefore, provision of phones with attractive and simple features will probably change the perception of China consumers on Apple phone brands. As a result, the consumers will likely shift to preferring Samsung Brands thus raising the revenue of the company. It is important for Samsung Company to monitor the changing needs of Chinese consumers such that they respond accordingly if a change on the taste of the brand is needed. This will be achieved through regular market analysis and consumer satisfaction survey. Though it is difficult to change cultural aspects of a society, Samsung will attempt to create stylish brands to match the demand of the contemporary global culture particularly on phones (Churchill, 2013). c) Technological factors Technology in China has advanced over the recent years and this has largely affected how things are being done. It is clear that the technology changed how business is being done especially with the use of social media. Using social media will be a sustainability strategy for Samsung Company. Although most of the close competitors are using including Apple Company, Samsung needs to create more traffic to their brands to allow customers to access the product with ease. The higher technology update within a short time in China has made Samsung Company not to hold to the leading player in the market. Therefore, there is need to build up innovate-patten capitals within China so as to control the influence of technology on the company. Apparently, the advantage will go Samsung Company since they have strong capital base to sustain itself in the changing market thus making it a big potential to serve China market (Li & Chen, 2012). The three macro environment factors are likely to significantly affect the growth of market share in China for Samsung Company. However, it is important to note that economic and demographic environment will have impacts on the Company’s growth in the region. Ecological environment China government has introduced a take-back system where phone and electronic producers are expected to volunteer in collecting back end of life phones. This has been embraced by domestic companies like Apple which is a close competitor to Samsung Company. This is an environment change that would consider electronic companies to be responsible of the environment and its habitants (in this case customer). Samsung Phones are eco-friendly products from Samsung Company and from production t end of life disposal. However, the spirit of product development in China needs a lot of accountability and responsiveness with particularly from the manufactures (Li & Chen, 2012). Therefore, Samsung will be needed to increase the number of depots in China if they need to adapt to the needs of the environment. Deports or retail outlets will enable ease access of consumers especially when they are returning Samsung phones. Customers will be rewarded as well with small compensation. The company will benefit from this system since they will reduce the cost of obtaining raw materials in the manufacturing of the new brands. Economic environment The economic situation in China at the moment is favourable. However, the future of the China’s economy seems to deteriorate due to fewer exports of electronics. This implies that land utility will expensive and also importing Samsung products will be quite expensive. There is a need to develop a plant within China so as to assemble Samsung phones within China. The will counter the future economic uncertainties both to the company (Samsung and country) since the plant will employ more than 4000 China people. As a result, the Samsung will be learning to adapt to the variability of economic situations in the country and its supply to customers will be less likely to be affected (Samsung Electronics, 2012). How culture may impact Samsung Company and its Phone brands in China Every global company talks about China culture as a potential threat to various economies (Li & Chen, 2012). Most of the electronic and phone manufactures in China are private firms and are family-owned. Therefore, the idea of most foreign companies is to squeeze very much possible to partner with local companies in order to adapt to the China culture. Using Hall’s model of cultural dimensions, there are three cultural factors that may likely to impact the performance of Samsung Company in China. These factors include language and communication, cultural etiquette and negotiation. Hall’s in his model pointed out three aspects that need to be focused on in order to promote cultural competence. 1. Context: According to Hall, the message context should be important as massage itself. Samsung is informing the China people on the phone brands they produce. The way in which China’s target customers receive this information will impact the sales of Samsung phones either positively or negatively. 2. Space: The element of space depends on the conceptualization of message in China context. Simply to say, customers in China will comfortably share information regarding Samsung products over the physical space (China market) if they understand its context and message at the same time. 3. Time: The Company’s interaction with China target customers will be valued over time. This aspect of culture often affects timeline goals and objectives of the company. Impacts of these factors on 4Ps Product: English has been perceived to be a widespread language that connects most of global countries. However, this is not the case in China where majority of the target customers are not well conversant with English. This is a language barrier that will affect the communication of Samsung Company’s product information with technical specification meant to persuade and convince China consumers. It is important to understand that China market is segmented into two in terms of level of education. The two segments need information with the right content and in the right time. Price: It will depend on Samsung etiquette in the China market when it comes to selecting prices for its brands. Apple is a domestic company that is protected by countries economic policies and therefore choosing to lower the price would mean a shift of customers to Samsung. Place: Locating a good access by customers means that Samsung will have to install a good channel of distribution. In most cases, channel of distribution merely originates from cultural traditions of the country. In this case, Samsung Company has to critically evaluate not only the needs of china customers but also check on why, when and how they buy the brands. Promotion: Samsung Company Identity in China will only be revealed when the right language is used to communicate its brands in the market. Also, language barrier may affect the effectiveness of promotion strategies of Samsung Company in china. Culture verses Positioning The customers’ image on domestic companies such as Apple and their brands may hinder Samsung’s ability to position itself the same way it does in South Korea. Due to China’s culture, Samsung will have to adapt to the position of Apple especially when it is introducing new brand to China market. It is important that Samsung has reputable global image and this would help in repositioning itself after effective market entry to China. Culture verses Branding Samsung will ‘gamble’ particularly when introducing new brands to China market. This will largely affect brand image of the company which will reflect negative performance of Samsung Company in China. Promotion will represent an opportunity to inform and persuade target customers in China but language will remain a bib barrier. Effective positioning of the company in China particularly using tactical strategies in the global market perhaps will boost the performance of new Samsung brands in China which will have the synergy to compete with Apple (Poirier & Houser, 2012). It is highly recommended therefore, in the process of globalization, Samsung Company should design marketing strategies to suit each target market. This will perhaps address the components of marketing mix. The development of a marketing information system (MIS) The structure The structure of MIS of Samsung Company is developed in such a way that it will monitor environmental factors (both internal and external factors). Internal reporting system: The information on financial, marketing, logistics and production is captured here. This information will help decision makers particularly on functional areas of the company. Marketing research system: This will entail practical search of information in the target segments. In this case, the company will only capture customers’ purposeful information to specifically address their needs in the market. Marketing intelligence system: The data obtained from the market is sifted and used to make decisions. Samsung Company for instance will conduct market survey in various segments identified in China. Since the system is customer-driven, all those responsible in collecting data have to be proactive in order to convey marketing intelligence to the system. All the data will be used to make three types of decisions: Strategic decisions, control decisions and operational decisions. The figure below shows the flow chart structure of Marketing Information System (MIS) (Miller, 2011). The source information There will be three main sources of information for the marketing information system. They include: a) Information from the company (internal source). These include sales, customer profile and customer service report. b) Marketing intelligence: information gathered from suppliers, distributors and customers. c) Market research: information obtained from specific niches and thus provides up-to-date information for the company. How MIS can be used to improve performance Managing consumer demands: The system will ensure that every marketer needs to update the information about the requirements of consumers in various market segments. Therefore, the company will use this information to analyse the gaps in the market and invest appropriate resources in order to create value for the company. The taste and style of consumers are constantly changing in the market and this needs to be communicated immediately to the company. The input information from market survey will be synthesised the response given appropriately within a short time thus improving sales and customer service which reflects positive advance in performance of the company. Technological developments: The current market needs advance ideas and new ways of doing things (Poirier & Houser, 2012). Therefore, introduction of marketing information system (MIS) would provide latest information concerning the behaviour of customers in the market that will be based of direct interaction. Online surveys through direct emails and social media networks will increase the efficacy of interaction between the company and the customer thus improving operational performance of the company. Marketing information system (MIS) may be used to stimulate proactive accounting and measurements of the company. Since the current market environment needs fast flow of information, MIS motivate the progress of various teams in the company such as marketing team (Strydom & Smith, 2011). For example, Samsung Company is able to identify strength and weaknesses with the up-to-date information of employees’ performance in various market segments. The company is able to point out areas of improvements particularly on their business operations. Also, the company may use customer data to initiate new strategies of promotions of the new brands. The company may use MIS to facilitate unconnected market information and collaborate it using spreadsheets or word processors which can be easily comprehended and dispersed. In this case the market information is made permanent and visible to all and dispersed through marketing tools such as blogs. In this case, the company will have captured a wider market thus improving the market presence and performance. References Churchill, G. (2013). Basic marketing research. Fort Worth: Dryden Press. Li, D., & Chen, Y. (2012). Computer and computing technologies in agriculture V. Heidelberg: Springer. Miller, J. (2011). Marketing Information System. University Of South Central Los Angeles Los Angeles, United States Of Am. Oh-Hyun Kwon; Samsung Electronics. (2012). Seoul. Poirier, C., & Houser, W. (2012). Business partnering for continuous improvement. San Francisco: Berrett-Koehler Publishers. Strydom, J., & Smith, M. (2011). Principles of business management. Cape Town: Oxford University Press. Read More