Coursework Header Sheet228385-47 Course Coursework Tutor BUSI1271: Global Strategy: Analysis & Pr Group case analysis VJ Torlo Course School/Level B/PG Assessment Weight 30.00% Submission Deadline 12/11/2015 Coursework is receipted on the understanding that it is the student's own work and that it has not, in whole or part, been presented elsewhere for assessment. Where material has been used from other sources it has been properly acknowledged in accordance with the University's Regulations regarding Cheating and Plagiarism. 000853425 000865483 000880507 000867907 000865455 Tutor's comments Grade Awarded___________ For Office Use Only__________ Final Grade_________ Moderation required: yes/no Tutor______________________ Date _______________ Strategic analysis: case of Samsung Electronics Submitted By: Rohit Dixit 000865483 Kuldeep Singh 000853425 Kewin 000865455 Sandeep Kadilya 000867907 Pawan Bellam 00088050 Global Strategy: Analysis & Practice|Mba International Business 1 . ............ 3 External environment analysis............ 3 Pestle analysis......... 10 VRIO Framework.................................................... 9 Outbound logistics........................................................................................................................................................................................................... 7 Value chain analysis........................................................................ 13 2 .................... 6 Internal Environment Analysis............................................................................................................................................................................................................................................................................................................................................ 0 Introduction............................................ 3 Strategic Overview of Samsung................................................................................................................................................... 10 Services.............................................................................................................................................................................................................. 6 Internal analysis................................... 4 SWOT analysis........................................................ 11 Conclusion..... 9 Inbound logistics........................................................................................................................................................................................................................................ 10 Marketing and sales............................................................................................................................................................................. 6 External analysis............................................................................................. 10 Reflection on strategic position of Samsung.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 3 Porter’s 5 forces analysis.......................................... 12 Reference...................Table of Contents Coursework Header Sheet........................................................................................................................................... 9 Operations................................................... Samsung is operated in countries with politically stable environment. create the future) depends on the vision company make a strategy (Samsung. Alliancing with leading global technology players for standardization and to secure stable supplies for its products. Ltd' 2014).com. Due to ongoing global economic crisis. The vision of the company is vision2020 (inspire the world. creates an investment and market opportunities for multinational enterprises (MNE’s) like Samsung. 2015) Strategic Overview of Samsung Samsung’s aim is to increase the corporate and brand value in global consumer market. televisions. it was established in 1938. dryers. Seoul. Political instability in Korean peninsula due to rising tensions with North Korea. which reduces their exposure to risks associated with a particular market. (Olympic. As the. Economical There exists a need of finding a perfect strategic solution. purchasing power of consumers have been reduced. Rise in liberalization of emerging and developing economies. They have a diversified geographic presence. Diversified products and marketing in the major global events like Olympics. 2015) External environment analysis Pestle analysis Political In general. 3 . Profitability of company getting affected by developing political pressure in Latin American and African countries due to frequent shift in governmental regimes.. It is a worldwide electronic company with 161 subsidiary companies throughout the world including nine related headquarters for CE (consumer electronics) and IM (information technology and mobile communication) division and five related headquarters for the DS (device solutions) Division. Building an In-House Competency to compete with their competitors.Introduction Samsung is a South Korean company headquarters in Samsung town. toasters.org. company separately operate each and every division ( Samsung. 2015) The company offers an all home appliances like refrigerator. mobile phones and tablets.com. Company is consistently stressing on their research and development (Samsung Electronics Co. porter five forces analysis framework tool is utilized. Need for self-adaption and restructuring according to rapid change within preferences of consumer is culturally different emerging markets. Technological factors Low entry barriers due to usage of Google android OS platform. it affected profitability and cash flow of the company as a hefty sum needed to be paid as penalties. 2015). Moreover. 4 . Recycling and processing waste in an environment friendly manner would help Samsung in gaining better reputation. Heavy investments by Samsung in Research and Development to gain sustainable competitive advantage among its rivals (LEE and CHENG. leading to difficulties in product differentiation (BAGUR. Legal Lawsuit filed by Apple in context of imitating key features of iPad and iPhone jeopardized company’s reputation. Surge in Samsung’s profit in developing economies would help in compensating lost business within developed economies. Social Organizational culture of Samsung is significantly influenced from national culture of South Korea. Environmental No direct effect of environmental concerns on profitability or business of Samsung. Apple differentiates itself clearly by offering is self-owned IOS operating system (Fox News. For example. Porter’s 5 forces analysis To visualize an overview of existing competitiveness within industry. 2015). Higher gains and product differentiation to companies offering proprietor OS. 2015). and HTC with no extra additional cost. 2015). Nokia. rising commoditization and standardization of mobile Operating Systems of mobile phones 5 . HTC etc. Samsung. due to adoption of Google Android OS as operating platform for smartphone by large number of companies including Samsung (Cheah et al. Price based competition among companies is one of the attribute of such an industrial environment (Managementstudyguide.com.Figure 1: Porter’s five forces Framework (www. presence of a significant number of companies with comparatively similar manufacturing and distribution capabilities increases rivalry among the companies. product differentiation becomes more difficult on basis of hardware and design. 2013).com. Moreover. 2015) Rivalry among competitors: Significantly High Within a slow growth industry such as consumer and mobile sector. Moreover. as Samsung customer can easily shift any other company such as Apple. 2) low cost advantages due to operations in economies of scale 3) product differentiation challenges 4) new entrants in this sectors are usually discouraged from investors and government authorities (Wilkinson.investopedia.. Threat of potential entry: Not significant To tackle threats from potential entrants there exist significantly high entry barriers within consumer electronics and mobile sector such as 1) existing number of large players in similar domain such as Apple. Threats of substitutes: Potentially high There exists a high potential threat from substitutes as the switching costs are low for buyers. Bargaining power of Buyers: significantly high Increasing price sensitivity of consumers on product specification leads to high bargaining power of buyers. 2013). Samsung have to cope with the substantially high bargaining power of Google. 2015).further enhances buyer’s bargaining power as they fails in providing addition economic value or cost saving (Dudovskiy. the other components suppliers of Samsung smartphone do not hold a similar strong position like Google in bargaining power. Bargaining power of suppliers: High for suppliers of essential components Due to lack of alternative platform for its smartphones and high dependency on Google’s android platform for its OS. as major share of their business is dependent upon bulk volume of orders given by Samsung (Dudovskiy.3% in FY2013 (LEE and CHENG. it is global leader in flat TV with a global market share of 26.8% in FY 2013.3% of global smartphone market (Samsung Electronics Annual Report. SWOT analysis Figure 2: Situational analysis of Samsung. In contrast. 2015). as it is a leading player in memory business with market share over 38% for NAND Flash memory and 39. by 6 . In addition. Research and development With over 4676 registered patents in US. Internal Environment Analysis Internal analysis Strength Solid market share and brand value Samsung holds a high brand equity index and market share. 2015). 2015). In addition.8% in global dynamic random-access memory. Samsung is highly focused on innovation and research and development by increasing R&D expense of 24. Samsung had historic sales 100 million units of its mobile devices by capturing a market share of 32. Moreover. Recently Apple filed a $1. Diversified geographic presence It benefitted Samsung by reducing risk associated with constrained geographical market. this could affect negatively on company’s profitability. by providing proximity to customers by building close relation to its customer.establishing an open innovation system which further enhances its partnership with foreign research institutes and facilitates in gaining competitive advantage in market. Samsung is posed to an evident strategic disadvantage due to dependency on Google android OS for its smartphone.05 billion lawsuit against Samsung on charges of patent infringement. External analysis Opportunity Growing smartphone and tablet market. 7 . cash flow and brand value (Fox News. negative implications on the company’s revenue. performance and financial position can be seen. 2015). Figure 3: representation of sales revenue of Geographical market (Samsung Electronics Annual Report. Dependency on Android OS As smartphone’s hardware and design differentiation is susceptible to fade or eroded with time. In contrast. Apple possesses its self-owned iOS for its smartphones. 2015). Weakness Legal issues relating Patents Due to increasing patent litigations against Samsung. Handset market. growing market would further enhance company’s sales in coming years. As. there exists an evident risk of impact on company’s balance sheet. 2015). 8 .1%.3% between years 2013 to 2017. In addition. Therefore. Growing smart TV and Flash memory market Strong brand positioning of Samsung in smart TV which is valued at $255 billion by 2017. and in 3D flash memory market would enable Samsung to capture maximum return out of growth trends. due to currency exchange fluctuations. Threats Commoditization of mobile sector A downward pressure on pricing is being witnessed due to commoditization of mobile sector. cash flow and income statement in conversion or translation of foreign currency in Korean Won. Samsung holds the second largest market share of tablets with 19. dominated by smartphones by 50% is estimated to grow at the compounded annual growth rate (CAGR) of 13. due to presence of Google android ecosystem which reduced the entry barriers of mobile sector product differentiation have become extremely difficult (BAGUR. Foreign exchange risks As Samsung is exposed to various currencies of its countries of operation. intense competition and increasing commoditization would impact company’s profitability and share in market. demand for flash memory is driven by surging usage of tablets and smartphones would provide an topline growth opportunity. With the combined effect of risk of direct and indirect litigations of intellectual property rights in android ecosystem. 2015).4% of its supplychain expenses occur in Asia. This is followed by Americas (14. Samsung possesses various logistics firms as its backups.8%). Inbound logistics The dominant part of Samsung suppliers are situated in Asia and accordingly. with the expansion of logistics.4%) and other places. Device assembly packaging: batteries and other components. sales subsidiaries. which assume such a critical part in an organization of the extent of Samsung. Samsung manufacturing operations comprise the following: General manufacturing: semiconductors and components. the company maintained 213 worldwide operations hubs that included subsidiaries. System manufacturing: application and software. 79. 2015) Operations As of December 31. 2014. 9 . Europe (4. and research centres. (Chul Jung Sang. Figure 4: value chain analysis of Samsung (Samsung.Value chain analysis Samsung value chain is based broadly on the Oracle value chain for hi tech businesses. All together control inbound logistics part of the business all the more adequately. design centres. label assembly. Samsung has turned out to be exceptionally quick in launching its own products to compete with Apple. 2015) Marketing and sales The target client segment to the apparent upper hand of the brand connected with amazing and advanced functions and capabilities of products. Samsung's quality and dependability esteem driver keeps clients from changing to contender’s items. Samsung has adapted sales promotion as one of the centre components of its marketing technique. These quality drivers avert impersonation by new contestants.Outbound logistics Introducing modern smartphones. quality and item blend/customization capacities. internal resources and capabilities of an organisation is analysed using VRIO Framework. 2015) VRIO Framework To understand the source of sustained competitive advantages. manufacture limit. 2015) Services Samsung strives to convey the client administrations of the most elevated measures. (Chul Jung Sang. 10 . Dangers from Chinese maker output turn out to be huge over the long haul in the event that they make up for lost time with worth drivers in the transitory maintained upper hand class. Viable outbound logistics framework assumes an imperative part for Samsung as far as having the capacity to convey upgrades of its well-known items to customers in a timely manner. for example. Samsung has various assets and abilities that give a managed upper hand. Our investigation highlights Samsung's quality drivers as far as mechanical focal points and protected innovation in their boondocks items. (Chul Jung Sang. The organization conducts consumer loyalty overviews oversaw by outside gatherings in a customary way keeping in mind the end goal to accomplish and maintain elevated amounts of consumer loyalty (Chul Jung Sang. These incorporate variables. In spite of the fact that it is profitable because of its expertise employees and preparing projects. Overall. to increase profit margins and create product differentiation. as now smartphones can only be differentiated on basis of hardware and design. Then again it is not uncommon in light of the fact that there are organizations with such exchange off between value and quality of product. So essentially there is no separation between Samsung a large portion of its rivals as far as of value-for-money. 2012) The product innovation (design) of Samsung’s smartphones/mobile phones is just a transitory upper hand on the grounds that regardless of the possibility that it is profitable. Moreover. it is not troublesome for the contenders to copy it. In addition. In addition. On the strategic front. uncommon and all around abused by the organization. (Yun joo sung.Samsung has a value-for-money positioning strategy which is a competitive parity. Samsung need to accelerate its own Operating system development program to help its products gaining competitive edge compared to Apple iPhone series. high R&D expenses and other significant moves ensured Samsung gaining competitive advantage and labeled as an innovative company. Thus just turning into an aggressive equality (Don. Reflection on strategic position of Samsung In 2015. Samsung regains its number 1 position in smartphone market globally and continues to be a market leader in consumer electronics goods. understanding the strategic position of Samsung. regardless of the fact that the organization tries to patent everything. 2011) Human Capital is the last upper hand that Samsung has. there arises need of strict compliance management strategy to mitigate risk of cost penalties involved in patent infringement lawsuits. It is imitable and supreme as not each organization can anticipate and have the capacity to change with the constantly evolving environment. resulting in high growth and profits. It is an upper hand just amid pretty much 6 months and afterward it gets to be out of date. high dependency on Google android platform have affected its product differentiation and thus margins. (Lam wayne. Samsung has done exceptionally well by its geographical diversification to both emerging markets and developed economies. It is extremely profitable to the organization particularly in a quick cycle cell phone market. Samsung has completely used its capacity to adjust in a quick changing business sector can be considered as its economical upper hand. By offering value-formoney products. it is not uncommon in light of the fact that different organizations for instance. 11 . Samsung address the clients' issues outstandingly well since it can offer fantastic item with generally sensible cost. additionally have great choice and training projects in their own specific manner. 2012). Conclusion Samsung’s Internationalization strategy is to maximize the brand equity and market share through superior design. marketing and customer service and to constantly deliver the highest quality products. 12 . To be known as best and most respected brand in the world. p. 2015]. Wayne lam. Google Sign Patent-License Deal. (2013). Samsung.com/porters-five-forces-analysis-of-samsung. 2015]. 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