SAMSUNG ELECTRONICS : ENTERING INDIA

SAMSUNG GROUP
1938 Lee launched a business named Samsung in South Korea. Initially exported dried fish, vegetables and fruits to other nations 1945- company started manufacturing and began sales activities by setting up flour mills and confectionary machines 1948- Lee moved the company to Seoul and founded Samsung corp. 1950- Samsung lost it assets as a result of Korean war

 1951- Samsung moved to Pusan, where Lee could understood the scope of electronics business. 1969- Lee established the brand Samsung. 1987- Samsung expanded rapidly into Electronics and became a corporate giant. 1994- Samsung Electronics was the 7th largest manufacturer of semiconductor and largest in the memory products in the world. 1995- Demand of memory products was growing

COMPANY PROFILE
Parent Company : Samsung group Home country : Korea Founder : Byung-Chull Lee Incorporation : 1988 Initial capital : 30000 Won Industry: Semiconductors Headquarters : Suwon, Gyeonggi Province , South Korea. Area served : World wide

KEY PEOPLE
Chairman : Lee Kun-hee Vice chairman : Lee Jae-yong Vice chairman and CEO : Kwon Oh-hyun President : JK Shin President : BK Yoon

CHALLENGES
Country had a Poor record of IPR. Faced difficulty in accessing advanced foreign technology. High rate of increase in labor cost. Lost cost advantage over other competing brands. Economic crisis of Korea

INDIA- A GIANT EMERGING MARKET

In july 1991 GOI initiated liberalization Delicensing of industrial investments trade reforms entailing gradual reduction of import duties and promotion of exports Deregulation of industries reseved for public sectors Encouragement to FDI Exchange rate reforms such as rupee convertability Capital market reforms such as free pricing of equity and access to offshore equity and debt Financial sector reforms such as capital adequacy and establishment of pvt banks Public sector reforms and tax reforms.

ECONOMIC TRENDS
In 1991-92 indian economy witnessed a sharp decline in GDP . Severe recession in manufacturing sector In 1993 indian economy had been growing at 6% supported by high industrial growth. Thus by 1994 the impact of liberalisation was visible.

POLITICAL ENVIRONMENT
Generally business friendly Negatively influenced by bureaucracy Redtape Ongoing tensions between India and Pakistan Terrorism Politically motivated attacks on foreign projects Political uncertainty after the parliamentary election in 1996

INVESTMENT CLIMATE
Since 1991 country had been showing positive attitude towards FDI foreign equity investment from 40% to 51% Liberal plant location policy Low cost labour Labour militancy became extinct Enforcement of IPR Size of capital market improved

CHALLENGES FACED
Infrastructure was major bottleneck Shortages of energy Limited handling capacities at ports Saturated rail and road networks Inefficient and slow moving bureaucracy.

INDIAN CONSUMER MARKET

Vast middle class with PP Indian market was widely diverse and was not easy for most new entrants Prior to reforms: i. High cost and low quality due to tariff barriers Post reforms: I. World class products at reasonable prices II. Best known international brands entered india III. Consumers were quality conscious and demanding

SWOT ANALYSIS

STRENGTHS
Hard ware integration with many open source os and software Excellence in engineering and producing hardware parts and consumer electronics Innovation and design Focus on envt Low production cost Largest share in mobile phones ability to market the brand

WEAKNESS
Too low profit margin Lacks its own software Focus on too many products

OPPORTUNITIES
India's growing market potential Increasing demand for quality applications Obtaining patents through acquisitions

THREATS
Rapid technological change Heavy competition Price wars Breached patents

THE CONSUMER ELECTRONICS MARKET-COLOR TELEVISION

CTV transmission was launched in India in 1982. Reduced import duty on color picture tubes -> reach of middle class customers Entry of MNC brands Emerging local Indian brands : BPL, Onida, Videocon and Optonica

PROBLEMS FACED BY INDIAN CTV PLAYERS

High cost of imported components Low economic scale Low level of market penetration

MNCs followed Screw-driver assembly operations in India Local firms launched in-depth manufacturing processes

DEMAND FOR INDIAN CONSUMER ELECTRONICS MARKET

Price After-sales service Purchasing power Income levels of buyers Financing options Level of competition Penetration Positioning and distribution strategies Channel explosions Special events

 Replacement Market
1. 2. 3. Upgraders Replacers First time buyers

1990 s most old TV sets became obsolete -lack of Sbrand facility to receive large No. of channels AKAI was successful on replacing old sets. Earlier major buyer segment considered as luxury and only affluent class of society later it was procured by every household.

Rural market market of tomorrow. Grown faster Greater purchasing power ( lower cost of living) Rural customers were more brand loyal. Urban market became saturated and highly competitive

TECHNIQUES USED BY EXISTING PLAYERS

1. 2. 3. 4. 5. 6. 7. 8. 9. Pushing dealers Using a hire purchase scheme Attractive financing options Product differentiation through high level of technology Discounts during special events Price-cutting and brand- building Aggressive advertisement and promotional efforts Improvement in distribution channels Improvement in customer service

ENTRY STRATEGY CONCERNS

6 overseas production bases 1. SAMEX(Mexico) 2. SFH(Hungry) 3. SEMUK(UK) 4. SETAS(Turkey) 5. TSE(Thailand) 6. TTSEC(China) Can India be the location ? High political risk Foreign exchange risk Highly competitive domestic market Price sensitive domestic market

MODE OF ENTRY
Export Joint venture Technical licensing Fully owned subsidiary

 Samsung entered India in December 1995 as a 51:49 joint venture with Reasonable Computer Solutions Pvt Ltd (RCSPL), owned by Venugopal Dhoot of the Videocon group. In 1998, RCSPL diluted its stake in Samsung to 26% and in November 2002, the FIPB cleared Samsungs proposal to buy RCSPLs remaining(23%) stake.

MARKETING STRATEGIES
Product strategy Samsung India has segmented their products into 5 categories Mobile phones TV/audio/Video Home appliances PC/peripherals/printers Camera/Cam recorder

 It repositioned all series of its products decided to penetrate the upscale market and gave up lower-market in order to exalt its brand image The strategy of reposition helps SAMSUNG starting to build its noblest image

Pricing strategy

SAMSUNG believes in providing good products at reasonable prices to its customers. technology plank communications helped the company to gain market share, even though it did not offers any discounts or exchange scheme when it entered India. They have always been a hi-end technology driven player and want to keep that equity.

Promotion and advertisement

launched corporate advertisements highlighting its technologically superior goods. The initial advertisements communicated presence of SAMSUNG in worldwide market sand its dominance in those markets SAMSUNG also focuses on promotional schemes to increase its sales.

THANK YOU !