Samsung Group External Environment Analysis - Case Study Example

Name: Instructor: Course: Date: Samsung group external environment analysis Introduction Samsung is a global brand that deals with what is universally known as the ‘White Goods’ around the world. In simple terms, Samsung group operates in the market of customer gadgets and appliances (SGSG, Web) Additionally, it is owned by a South Korean family and just like any international organization, it has more worldwide aspirations which from the look of recent statistics and opinions, Samsung does not show any signs of slowing their global push. In this case, it is not satisfied with the returns of some current global markets but instead it’s vying to expand to as many countries as possible (SGSG, Web). By so saying, it means that, the external environment of Samsung is vital to its growth. In order for Samsung to realize its global expansion goal, it should establish appropriate strategies that will enable it to analyze its external environment. Owing to the preceding facts, some of the better tools that can help it to study and evaluate the market they would want to engage in thoroughly include the Porters five competitive forces and the PESTLE analysis. In other words, these tools will help Samsung to determine some of the most important drivers that affect the level of the economy and based on the results from the analysis, they will be able to help Samsung formulate vital strategies important for the company (Graham 56). Therefore, this paper will analyze the external environment of Samsung using the pestle analysis and the porter’s five competitive forces and recommend some possible strategies for Samsung. External environmental factors External business environment fundamentally represents the macro-environment attributes that affect the operation of the business. Additionally, macro-environmental analysis is in most cases analyzed using the PESTLE analysis tools. By way of elaboration, the PESTLE analysis of any business organization entails the following factors; social factors, political factors, legal factors, economic factors, ethical factors and technological factors (SGSG, Web). Moreover due to market expansion objective, Samsung is working hard to grow and develop in as many countries as possible. Therefore, in order to realize its objectives, it would be wise to try and analyze some of the external environmental drivers that define the Samsung strategy. Political Most business operations and dealings are basically influenced in one way or the other by the state as well as government policies. In most of the operational centers of Samsung, the overall political environment in Samsung markets can be deemed as conducive apart from some minor cases of political instabilities in some market countries such as India (Vecchiato, 255). But despite such minor irritants, Samsung can be classified as operating in an environment that is politically stable. However, in recent times, Samsung has endured some political threats and headwinds emanating basically from South Korea which is its home country due to the existing tensions between South Korea and North Korea (SGSG, web). Samsung has therefore been forced to not only account for political instability but also the war threat that may befall the Korean Peninsula. Furthermore, besides the Korean Peninsula tension, there is also political pressure emanating from Latin American and African countries which incurs political instability and prone to time to time changes most especially in their government structures (Graham 56) To sum up, the government structure changes has not yet established itself as a primary political environmental worry as Samsung has in one way or the other factored political instability as one of their key strategic calculations. Economic Economic factors are universally recognized as one of the fundamental issues of any business operations. For example, many European countries were affected by the 2008 economic crisis in the Eurozone. In other words, any economic crisis of whichever form or type, will affect the way any business company will affect its dealings and operations either indirectly or directly. Because of these facts, the economic dimension is essential for the external environmental strategy of Samsung (Graham 56) .Also, given the fact that Samsung is opening and expanding markets in the emerging worlds basically means that it also stands a chance of improving its foot print as well. Moreover, the economic crisis damaged the purchasing power in many countries by consumers forcing the Samsung group to divert its strategy in seeking other profitable ventures in developing markets (SGSG, web). The bottom line is that, the macro-economic environment that defines the operations of Samsung globally is characterized by volatility and uncertainty making it to think about re-orienting its initial marketing strategies (Graham, 57). Furthermore, the only thing working in favor of Samsung is the fact that it has re-adjusted particularly well to the consumer disposable income tapering off issue in the developed nations. It achieved this by shifting to the less developed, developing and emerging markets. It is therefore wise to note that, Samsung has started an aggressive push towards the emerging markets, a move meant to make up for the losses they incurred in the developed markets. Socio-cultural Samsung is basically a south Korean Conglomerate or rather a family owned business. By so saying, it means that, despite its international footprint, its main operation is basically conducted from the roots as a Korean organization. In this case, there are a number of factors that Samsung needs to adapt to such as the local conditions of the host country (SGSG, web). By so doing, it has to somehow act locally or rather adopt a global strategy most especially in emerging markets. Moreover, the fast changing tastes and preferences of customers has forced Samsung to tailor its products to suit their needs in the emerging countries where it is operating (Weber et al., 34). The primary point to conclude from here is that, Samsung conducts its business in a market environment that is majorly influenced by the tastes and preference, lifestyles and demand of consumers (Jennifer, web). Therefore, because social factors differ from country to another, Samsung had to re-adjust itself in each and every market accordingly. Technological When it comes to innovation, Samsung can be termed as one of the most influential and leading companies in the world. By so saying, it means that, Samsung boasts of a competitive edge in respect to harnessing the influence and power of technology as well as innovation drive towards well stipulated sustainable business core-competencies (Jennifer web). In other words, technological innovation has developed as one of the obsessive missions of the Samsung Company since it aims to be always ahead of the innovation and technological curve and a renowned vision to reach consumers as fast as possible with the latest technological and innovation trends in products before its competitors (Vecchiato, 258). However, this strategy has resulted in some imitation troubles and scrutiny since its imitation of the legendary design of Apple’s product. Owing to this fact, the striking idea is that, no matter how quick and fast Samsung group is growing in terms of technology, the most crucial thing is performing the most basic things well and right in order to realize success. Legal No matter how big an organization is, it is mandated to adhere by some rules and regulations so as to work in a more secure environment without so many legal penalties. By way of example, taxes, policies, rules and procedures are some of the stipulated legal policies that each and every company must follow (Nyuur, 143). Samsung has had to endure with heavy penalties for imitating an Apple’s iPad which in the end resulted in a setback as far as the consumer perceptions and approval of their marketing and innovation strategies is concerned (Graham, 57). The question that remains in many individuals is how such a big brand name such as Samsung will wriggle out of such legal penalties most especially in the developed markets due to a number of lawsuits filed against it. Environmental/ethical With the increasing level of ethical consumers who requires its brand name to source and produce goods and services in an environmental friendly as well as a socially manner, Samsung needs to realize the desire and need to establish its goods and services to satiate the conditions and expectations of the ethical chic consumer (SGSG, web). By so saying, it means that, Samsung has achieved this by ensuring that it does not at any one point compromise on the workplace conditions and the stipulated wages of the employees responsible for making the final goods and services (Huang et al, 554). Porter’s five competitive forces The five competitive forces of business strategic planning refer basically to an assessment tool that helps organizations to realize their present state as far as competition from other companies are concerned. Porter’s five forces include; power of suppliers, power of buyers, threat of substitutes, threat of new entrants and industry rivalry (Weber et al, 31). Additionally, porter’s tool is a better tool that is used to assess how organizations market drivers such as Samsung and from the results from the analysis, is used to recommend strategies that will help a company to realize the objectives and missions as far as external environment is concerned. Industry rivalry Industry rivalry element is an important factor for Samsung bearing in mind that other gadgets and appliances multinationals such as Nokia, LG and Motorola are participating in fierce competition (Huang et al., 554). Owing to these multinational corporations, Samsung can never take its position in the market for granted since together with domestic appliances and gadget producing companies, all the other global multinationals are as well operating in a market that is characterized by tight margins and intense competition (Li et al, 199). For instance, in India, Samsung faces stiff competition from both the domestic and global players just like the Cola wars of Pepsi and Coke. Therefore, as result, industry rivalry has become one of the essential strategic assessments for Samsung. Barriers to entry and exit The power of buyers as far as Samsung is concerned can be termed as mixed bag since as much as the customers have a variety of options at their disposal, simultaneously, they have to remain with the product for quite some time since they cannot just do away with it since its quite expensive. In other words, the consumers of the product would have no otherwise but to just approach Samsung for spare parts and after sales service (Weber et al., 33). By so saying, it does not necessarily indicate that the consumers are at the mercies of Samsung. However, consumers have the bargaining power most especially those in emerging markets (Li et al., 177).The emerging market consumers are normally classified as finicky when it comes to determining the goods and services to purchase and in most cases; they explore all the available options before reaching a decision. Therefore, it would be wise to conclude that, both the consumers and the company surely need each other Barriers to entry and exit The White Goods business entails maximum barriers to entry while at the same time, minimum barriers to exit most especially where large brand names such as Samsung comes into question. Additionally, it is universally true that a number of factors may make entry into a new market more difficult such as setting up an able distribution network as well as a proper supply chain management (Li et al, 199). In the case of Samsung, exiting the market does not entail much since all it requires to do is sell and handover the business to either a domestic player or an international player just in case it realizes declining prices and net revenues (Graham ,56). In other words, Samsung has penetrated many developing markets slowly by slowly while at the same time, it has exited those markets that were classified as unproductive (Huang et al, 554). Therefore, the consequences of barriers to entry and exit from the market are one of the reasons why Samsung as well as other multinationals conduct a survey and market research before venturing in emerging markets (Graham, 56). Power of suppliers In most Samsung markets, there exist quite a good number of suppliers who are eager and willing to provide their services at cheaper prices mainly because the ancillary industries are very deep (Barnes, 38). The willingness of the suppliers does not necessarily mean that the Samsung conglomerate can put pressure on the suppliers since once an organizations supply channel has been set up, it entails a lot of efforts and resources to undo it as well as setting up a new one (Vecchiato, 257). Owing to these, Samsung has invariably done a market research study as well as engaging consultants across all fronts before making any supply chin decision. Threat of substitutes The white goods markets are flooded with quite a number of substitutes and owing to the fact that most customer goods and services are long term buys; Samsung has to be careful in the establishment of its longer term marketing strategies (Li et al, 199). Additionally, Samsung adopts different pricing levels in an effort to attract the consumers from all levels of income pyramid so as to shun them away from cheaper substitutes. Moreover, the threat of substitutes highlights the trend in most developing markets where individuals have not yet fully integrated their interests on White Goods but instead prefer to rely less on the appliances and gadgets in what they call traditional housework forms (Vecchiato, 256). However, this trend is changing rapidly since many women are entering the workforce hence harnessing the importance of gadgets and appliances for them. Recommendations for strategic options Scholars and consultants have postulated many frameworks that can be used to analyze the strategic options of any organization after long periods of research and thinking (Huang et al, 554). Additionally, whichever the strategic framework postulated, a strategy must be an integrated as well as an overarching concept that shows how an organization will achieve its goals and objectives according to the mission of the company (Nyuur, 145). In this case, if Samsung has to possess a unified and a more binding strategy, then it must have distinctive parts or rather questions to answer in their strategy (Graham, 48). In the analysis of the Samsung’s Strategic options, we will use distinctive questions as discussed below. Where should Samsung operate actively? The Main arenas in which Samsung should operate should be well defined such that, its gadgets and appliances should be well differentiated and bear a unique Samsung logo that can never be counterfeited and avoid imitating other goods such as the Apples iPad legal incident (Schaan, 66). Additionally there target audience should be clearly defined in such a way that each and every product on the market has distinctive attributes that attract individuals depending on their age, gender and social class across the globe (Donald & James, 54). Moreover, being a global conglomerate, Samsung should see to it that it maintains and controls its unique and distinctive global brand name and try as much as possible to accumulate unrivalled design expertise so as to have efficient production and manufacturing of their product designs (Lisa, web). Furthermore, Samsung should rely more efficiently on their supply chain and its long-term suppliers who should see to it that there is an efficient geographically dispersed production. How will Samsung get there? As its main driving vehicle, Samsung should engage more in global and product expansion by establishing its unique and wholly owned Samsung stores (Vecchiato, 257) Additionally, it should not make or adopt acquisitions of the already existing White goods conglomerates but it should instead engage in a number of joint ventures that will increase their innovation and product promotion (Nyuur, 143). In order to realize this objective, Samsung’s top management should fully take charge and control local execution of Samsung’s highly technological and creative marketing concept. How will Samsung win? In order for Samsung to attract more consumers and have a competitive edge, it should establish a platform of offering several significant product differentiators. First, it should ensure that its white goods are of higher quality while at the same time are at favorably affordable prices (Schaan, web). The second thing the top management of Samsung should engage in is ensuring that their clients are treated to a more non-threatening experience and fun in which individuals can slowly walk through A Samsung store to view and buy the products of their own choice in contrast to a more intimating approach employed by other conglomerates (Donald & James, 54). .What will be Samsung’s sequence and speed of moves? Once the Samsung’s management realizes that its marketing approach is best suited in different countries, it should commit itself in expanding its products in the market starting from one region to the next (McMillan, 15). In this case, its strategy should be established in such a way that it employs the limited resources at their disposal in creating a single Samsung store in each and every target market. How will Samsung obtain their return? From the external environment analysis, the strategic economic logic of Samsung basically revolves around the economies of scale and replication efficiencies Stroh, 101). By so saying, it means that, although Samsung does not provide identical products across its geographical markets, Samsung should realize that it possesses enough standardization that can help it take full advantage of establishing itself as one of the world’s leading White Goods provider than Nokia and Motorola ( (Nyuur, 140). In this case, Samsung should ensure that the costs of its suppliers are lower and furthermore, make the cost of supply even lower by the Samsung’s proprietary, easy to design gadgets and appliances (Donald & James, 54) Conclusions The preceding external environment analysis clearly shows that Samsung operation task has been cut out in the process of navigating through the international consumer market. Additionally, as Samsung gets ready to make its footprint grow, the stakes could have endured a slower in a recessionary era as well as in a low technological market landscape (Donald & James, 54). Moreover, as the international market economy integrates while at the same time more developing markets open up, Samsung enjoys competive advantage since it has an already established brand name in many markets (Weber et al., 30). However, it is wise to note that, every distinctive market is unique in its own way hence Samsung should not at any one point adopt a one-size–fits-strategy and instead, it should adopt and approach each unique market differently (Stroh, 101). Furthermore, Samsung must enjoy the benefits of penetrating into many western multinationals that have existed in the White Goods business for quite some time now despite the fact that Samsung is an Asian conglomerate. Work cited BARNES, D., Operations management: an international perspective (2008). London, Thomson. 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