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INTRODUCTION

Samsung is a South Korean multinational conglomerate company headquartered in Samsung


Town, Seoul. Samsung was founded by Lee Byung-chul in 1938 as a trading company. Over
the next three decades, the group diversified into areas including food processing, textiles,
insurance, securities and retail. Samsung entered the electronics industry in the late 1960s and
the construction and shipbuilding industries in the mid-1970s; these areas would drive its
subsequent growth. Following Lee's death in 1987, Samsung was separated into four business
groups Samsung Group, Shinsegae Group, CJ Group and Hansol Group. Since 1990s,
Samsung has increasingly globalized its activities, and electronics, particularly mobile phones
and semiconductors, have become its most important source of income.
INTERNAL ANALYSIS
a. Stakeholder Engagement
Stakeholder engagement has a significant impact on Samsung Electronics strategic directions
and their implementation, as well as its sustainable development achievements. Samsung
abide by the Stakeholder. Engagement Standard AA1000SES to build a credible and efficient
way to deal with opinions gathered from a diverse spectrums of stakeholders, related
achievements and responses. In managing stakeholder engagement, Samsung have followed
principles of materiality, completeness and responsiveness based on inclusivity.
b. Internal Risk Management
Samsung Electronics conducts an internal analysis of its sustainable management status and
risks, and assesses their impact on our business. Samsung take into consideration strategic
alignment of risks, their financial and reputational impact to the company in an integrated
manner.
c. Development of Strategies
Samsung has developed the Eco-Management 2020, its mid-to-long term strategy to be
achieved within 2020, by reflecting major issues identified through materiality tests and
analyzing achievements of the EM 2013 (Eco-Management 2013), its mid-term green
management plan for the period between 2009 and 2013. Samsung will enhance its internal
competence and further improve its green management standards by gathering opinions of
internal and external stakeholders and analyzing various risk factors.
d. Employee Compensation
In order to encourage employees proactive participation, Samsung provides diverse
compensation packages to organizations and individuals in recognition of their outstanding

contributions to green management. Each year, Samsung presents the SAMSUNG GROUP
Green Management Awards to those of its operation sites and suppliers who have made
outstanding achievements in the area of green management. Also, the Samsung Electronics
Annual Awards recognizes the contributions made by the companys organizations and
individuals in the area of green management with prizes and additional points on their
performance appraisals.
EXTERNAL ANALYSIS
PESTLE Analysis
a. Political
In most of the markets where Samsung operates, the political environment is conducive to its
operations and though there are minor irritants in some of the foreign markets like India,
overall Samsung can be said to be operating in markets where the political factors are benign.
However, in recent months, it has faced significant political headwinds in its home country of
South Korea because of the countrys tensions with North Korea wherein the company has
had to take into account not only the political instability but also the threat of war breaking
out in the Korean Peninsula. Apart from this, Samsung faces political pressures in many
African and Latin American countries where the political environment is unstable and prone
to frequent changes in the governing structures.
b. Economic
This dimension is especially critical for Samsung, as the opening up of many markets in the
developing world has meant that the company can expand its global footprint. However, this
dimension is also a worry since the ongoing global economic crisis has severely dented the
purchasing power of consumers in many developed markets forcing Samsung to seek
profitable ventures in the emerging markets. The key point to note here is that the
macroeconomic environment in which Samsung operates globally is beset with uncertainty
and volatility leading to the company having had to reorient its strategies accordingly.
c. Socio-Cultural
Samsung is primarily a South Korean Chaebol or a family owned multinational. This means
that despite its global footprint it still operates from the core as a Korean company. Therefore,
there are several aspects to its global operations some of which include adapting itself to the
local conditions. In other words, Samsung being a Global company has had to act locally
meaning that it has had to adopt a Glocal strategy in many emerging markets.

d. Technological
Samsung can be considered as being among the worlds leading innovative companies. This
means that the company is at an advantage as far as harnessing the power of technology and
driving innovation for sustainable business advantage is concerned. This has translated into
an obsessive mission by the company to be ahead of the technological and innovation curve
and a vision to dominate its rivals and competitors as far being the first to reach the market
with its latest products is concerned. however, as we shall discuss later, this has also resulted
in the company cutting corners with its imitation of the legendary Apples product design and
this has brought legal and regulatory scrutiny and troubles for the company.
e. Legal
Samsung has had to face heavy penalties for its alleged imitation of the Apples iPad and
iPhone and this has led to the company taking a beating as far as public perceptions and
consumer approval of its strategies are concerned. It remains to be seen as to how the
company would wriggle out of the legal maze that it finds itself in the developed markets
because of the various lawsuits.
f. Environmental
With the rise of the ethical consumer who wants his or her brands to source and make the
products in a socially and environmentally responsible manner, Samsung has to be aware of
the need to make its products to satiate the ethical chic consumer. This means that it has to
ensure that it does not compromise on the working conditions or the wages it pays to its labor
who are engaged in making the final product.
SWOT ANALYSIS
a.

Strengths
Hardware integration with many open source OS and software
Excellence in engineering and producing hardware parts and consumer electronics
Innovation and design
Focus on environment
Low production costs

b.

Weaknesses
Largest share in mobile phones and 2 place in smartphones sales
Ability to market the brand
Patent infringement
Too low profit margin
Main competitors are also largest buyers

Lack its own OS and software


Focus on too many products

c.

Opportunities
Growing Indias smartphone market
Growing mobile advertising industry
Growing demand for quality application processors
Growth of tablets market
Obtaining patents through acquisitions

d.

Threats
Saturated smartphone markets in developed countries
Rapid technological change
Declining margins on hardware production
Breached patents
Apples iTV launch
Price wars

PORTERS FIVE FORCES ANALYSIS OF SAMSUNG


a. Industry Rivalry
This element is especially significant for Samsung as the other White Goods multinationals
like LG, Nokia, and Motorola not to mention Apple are engaged in fierce competitive rivalry.
Indeed, Samsung cannot take its position in the market for granted as all these and other
domestic white goods players operate in a market where margins are tight and the
competition is intense.
b. Barriers to Entry and Exit
The White Goods industry is characterized by high barriers to entry and low barriers to exit
especially where global conglomerates like Samsung are concerned. Indeed, it is often very
difficult to enter emerging markets because a host of factors have to be taken into
consideration such as setting up the distribution network and the supply chain. However,
global conglomerates can exit the emerging markets easily as all it takes is to handover and
sell the business to a domestic or a foreign player in the case of declining or falling sales.
c. Power of Buyers
The power of buyers for white goods makers like Samsung is somewhat of a mixed bag
where though the buyers have a multitude of options to choose from and at the same time
have to stick with the product since they cannot just dump the product, as it is a high value
item. Further, the buyers would have to necessarily approach the companies for after sales

service and for spare parts. Of course, this does not mean that the buyers are at the mercy of
the companies.
d. Power of Suppliers
In many markets in which Samsung operates, there are many suppliers who are willing to
offer their services at a discount since the ancillary sectors are very deep. However, this does
not mean that the companies can exert undue force over the suppliers as once the supply
chain is established; it takes a lot to undo it and build a new supply chain afresh. This is the
reason why white goods makers like Samsung invariably study the markets before setting up
shop and also take the help of consultancies in arriving at their decision.
e. Threat of Substitutes
This element is indeed high as the markets for white goods are flooded with many substitutes
and given the fact that consumer durables are often longer term purchases, companies like
Samsung have to be careful in deciding on the appropriate marketing strategy. This is also the
reason why many multinationals like Samsung often adopt differential pricing so as to attract
consumers from across the income pyramid to wean them away from cheaper substitutes.
CONCLUSION
The preceding analysis clearly indicates that Samsung has its task cut out for itself as it
navigates the treacherous global consumer market landmine. Indeed, as the company prepares
to expand its global footprint, the stakes could not have been higher in a recessionary era and
an uber competitive technological market landscape. we can now conclude this analysis with
the theme that as the global economy integrates and more emerging markets open up,
companies like Samsung are at an advantage because they have already established
themselves in many markets. However, it must also be noted that each market is unique and
hence, Samsung must not adopt a one size fits all strategy and instead, must approach each
market differently.
REFERENCES
http://en.wikipedia.org/wiki/Samsung
http://www.samsung.com/us/aboutsamsung/sustainability/sustainabilityreports
http://managementstudyguide.com/porters-five-forces-analysis-of-samsung.htm
http://managementstudyguide.com/pestle-analysis-of-samsung.htm
http://www.strategicmanagementinsight.com/swot-analyses/samsung-swotanalysis.html

BUSINESS STRATEGY
STRATEGY ANALYSIS OF SAMSUNG

BY:
TEDO IMANTO (105030200121020)
DEPARTMENT OF BUSINESS ADMINISTRATION
FACULTY OF ADMINISTRATIVE SCIENCE
BRAWIJAYA UNIVERSITY
2014