STRATEGIC MANAGEMENT

CIA 3 – COMPANY ANALYSIS

By

VIJAYAKRISHNAN K M

2028226

Submitted to

Dr. LAXMINARAYANAN

School of Business and Management

CHRIST (Deemed to be) University, Bangalore

SEPTEMBER & 2021

INTRODUCTION:

Lee Byung-Chull, a South Korean businessman, launched Samsung as a supermarket trade

enterprise in March 1938. In 1969, the business made its first push into the electronics sector
with a black-and-white television. Soon after, the company began exporting its products and
established itself as a significant electrical maker in its native country. In 1970, the firm
purchased a 50% share in Korea Semiconductor. In the early 1980s, the company experienced
fast growth and formed distinct subsidiaries for its numerous electronics industries.

Samsung first entered the mobile phone market in 2000 with the release of a feature phone
with a built-in camera capable of taking up to 20 photos at once. The company had
introduced numerous phones by late 2000, but the Galaxy S series of smartphones was where
the company's global success story began.

Apart from smartphones, Samsung is a significant supplier of tablet computers, particularly

the Android-powered Samsung Galaxy Tab-series, and is widely acknowledged as the
inventor of the phablet category with its Samsung Galaxy Note-series devices.

Samsung is now one of the world's leading electronic component makers. It is also a key
provider of electronic components to firms like Apple, Sony, Nokia, and others, including
batteries, semiconductors, processors, flash memory, and hard drives.

Samsung has also been the world's top television manufacturer since 2006, and the world's
leading smartphone manufacturer since 2011. In 2017, the firm surpassed Intel to become the
world's largest semiconductor chip producer.

Global presence of Samsung

Samsung is a global brand that has grown its company to service customers all around the
world. In 74 countries, the business has created 216 global bases. It has 52 sales offices and
15 regional offices around the world. Samsung has also developed 37 manufacturing
facilities, 37 research and development facilities, and 7 design facilities. It has built a big
global business network in this way. Aside from its global physical distribution network, the
company also sells and supports customers through online channels. Samsung also has a
global supply chain network of over 2500 vendors.
Financial statement:

Inferences

 Samsung's net profit in the second quarter of 2020 was $4.67 billion (up 7% from the
second quarter of 2019), with revenues of $44.4 billion (down 6 percent from last
year).
 Samsung continues to forecast a slowdown in the smartphone market, with demand
likely to be limited to mid- and low-end phones in Q3 2020. Only in Q4 2020 can we
see a full recovery in earnings from mobile screens. The COVID-19 epidemic is still
causing "unfavourable business conditions," according to Samsung, however demand
for monitors has improved as more people work from home.
 Although there are still concerns, Samsung expects higher demand in H2 2020 as "big
customers intend to introduce new products."
CHALLENGES FACED BY SAMSUNG

Global pandemic

Corona's influence on the global economy was swift and massive, affecting businesses like
Samsung on both sides of the supply chain, from production to sales. Corona may have an
impact on global goods sales in addition to disrupting supply chains in many parts of the
world. It will have an impact on employment and incomes in a variety of industries,
particularly travel and tourism. Apple, one of Samsung's main competitors, has already stated
that the spread of Coronavirus will harm its performance in the second quarter of 2020.
Corona has wreaked havoc on Apple's supply chain and distribution network in China.

Cut-throat competition

The smartphone and consumer electronics industries, as well as the semiconductor industry,
are increasingly more competitive. Aside from Huawei and other Chinese firms, Apple is
Samsung's most serious worldwide smartphone opponent. In 2019, Samsung lost its dominant
position in the semiconductor sector to Intel, which had previously held it. Increasing
competitive pressure raises operating expenses since the company must invest more in R&D
and marketing to maintain its market position.

OPPORTUNITIES FOR SAMSUNG

Diversification and Acquisitions

It's vital that Samsung doesn't make the mistake of focusing on just one market. It not only
exposes the economy to risk, but it also generates unwelcome political polarization and
unfavourable media attention. That is why the Asian and European economies have a
commercial vacuum in which Samsung can grow. It also needs to grow its consumer base.
Diversification and acquisitions of other firms are the only ways to do it. Samsung is a well-
known brand that, because to its strong financial position, can earn significant income.

According to analyst, diversification is not only the opportunity but a need for Samsung in
order to avoid any type of crisis.
Introduce Innovative Products

The smartphone industry is fast-paced, with the latest trends quickly becoming obsolete.
Samsung can achieve tremendous development by setting the standard with amazing and
creative goods such as the foldable phone.

During Samsung's Unpacked 2021 event, the company unveiled a number of new items. Two
foldable cellphones are among the new devices, which are part of the company's premium
portfolio.

Chinese market

China is a crucial market for smartphone and consumer electronics companies from a
strategic standpoint. It has quickly risen to become the world's second-largest economy. The
economy is currently under stress due to the coronavirus, but once the situation is stabilised,
the market will begin to thrive again. Samsung's market share in China's smartphone market,
on the other hand, has been declining for several years. Samsung's attention on China and
how it markets its products there should be increased. The company's market share in China
had been slowly declining since late 2016, when demand dropped dramatically due to the
exploding Galaxy Note 7 incident.

BCG MATRIX OF SAMSUNG PRODUCTS

STARS:

This product has a higher rate of growth and a larger market share. SAMSUNG develops
their product in order to achieve a larger market share, increase market growth, and retain a
better market position. In the star category, mobile phones and tablets are found.
QUESTION MARK:

Some SAMSUNG products are still in the development stage, with a low market share but
high demand, such as the SAMSUNG PRINTER. While printers have a higher demand in
the market, the Samsung printer may remain a question mark. Furthermore, the Galaxy 7 has
developed a poor image as a result of the battery overheating.

DOG:

This is the declining stage,

SAMSUNG TV business decline due to small demand from various countries.

SAMSUNG WATCH is not able to gain attention from a customer and higher competitor is
APPLE watch.

CASH COW:

SAMSUNG HOME APPLIANCES, company sells home appliance in different region and
reach in global market, but due to low creativity and doesn't offer the latest technology result
in low market share which is in cash cow class.

BOWMAN’s STRATEGY:

BOWMAN’s CLOCK

Samsung can be regarded to be in position 2 of the Bowman clock approach, which is low
price. Companies in this position, according to clock strategy, are the low-cost leaders. These
are the businesses that run on the bare minimum of prices and benefit from large sales
volumes.

Differentiation is another important strategy for Samsung's success. Differentiation is market

as Position 4 in the strategy clock theory. Focused differentiation, or Position 5 in strategy
clock theory, refers to Samsung premium products like as smartphones and LCD televisions.
Companies differentiate themselves by creating a perceived premium value.

Samsung has been extremely successful in instilling a sense of premium value in its products.
Customers in the Smartphone sector, for example, feel that a Samsung Galaxy is the
equivalent of an iPhone.

Most customers are confused as to why they should pay a premium for an iPhone when they
can get a Samsung counterpart for practically half the price.

ANS OFF MATRIX:

Market Penetration, Market Development, Product Development and Diversification are the
Four main growth strategy used by Samsung.

Market penetration: Samsung's market share remains stable. The company innovates its
product so that potential customers do not become tired with it and new customers can be
attracted. Customers will be more satisfied with the product as a result, and Samsung will
have a larger market share.

Product Development: Samsung's new offering is aimed at the same old consumers. They
can grow their market share by launching a new product, which will attract more buyers to
their product. They advertise on TV, newspapers, pamphlets, and billboards to raise product
awareness.

Market Development: Samsung's entry into a new market will result in increased market
growth and market share for the company. They enter a new market by focusing on new
customers in other sectors by using this method. Samsung's new market could be a new
country or a new city inside the same country where it now operates. Samsung, can pursue
significant growth initiatives in the future. Vertical integration is a key component of
significant growth.

 Vertical forward integration: When a manufacturer decides to manage distribution or

a retail store, this is known as vertical forward integration. Samsung will eliminate
ties with wholesalers in order to sell straight to retailers, who will then sell directly to
customers. Samsung, for example, owns a retail store or franchise and sells its
products directly.
 Vertical backward integration: It is a type of integration in which a company has
direct control over its suppliers. There will be increased efficiency and cost savings.
This might save shipping costs, increase profit margins, and boost Samsung's
competitiveness.

Diversification: Samsung produces a variety of other products in addition to its electronics.

Samsung Heavy Industries, the second-largest shipbuilder in the world, is owned by
Samsung. Samsung Engineering and Samsung C&T are the 13th and 36th largest
construction enterprises, respectively. Samsung is one of the world's 14 largest companies
and offers services such as Samsung Life Insurance.

BLUE OCEAN STRATEGY

The Android operating system's pioneer was competing in a red ocean marketplace filled
with many competitors in the same mobile phone industry. Samsung relied on its existing
technology, innovation, and R&D to launch new phone devices that transitioned from phones
to smartphones by releasing its Android operating system as a new sector and forming a
collaboration with Google. Samsung created its blue ocean from within the existing red
ocean, which was congested by many competitors, by redefining the industry's boundaries.
Samsung surpassed Apple as the global leader in smart phones in 2011 with a 19.1 percent
market share.

"Value Innovation" is the cornerstone of the Blue Ocean Strategy. Both value and
innovation are equally important in Value Innovation. Samsung Electronics must not only
rethink its value proposition for existing customers (clients), but also develop new value
propositions for target categories (customers) who are not now Samsung Electronics
consumers. Samsung Electronics could benefit from value innovation by gaining access to
previously untapped market space.

ALTERNATIVE STRATEGIES GLOBALLY:

Samsung takes an active part in each of the regions where it works and recognizes that
cultures can differ subtly. Samsung thinks that knowing and addressing local demands is
critical to provide the best possible experience, regardless of local appetites, customs, or
preferences. As a result, localizing products is critical to Samsung's capacity to achieve its
objectives.

For example:

Europe: In Europe, Samsung is considered as a low and mid ranged quality product, and it
often considered as a follower instead of innovators. So, Samsung came with different
marketing communication and advertisements accordingly in Europe, to spread and widen
itself as a high-quality brand

India: Samsung considers India as the most potential market. Samsung follows India – first
strategy, to propel its mid-tier smartphone portfolio in the country, aimed at Gen Z and
millennials. Samsung believes that if any handset wins in India the it could win Global
market.

Since India is a country with low-income per capita Samsung followed low price and high-
quality products, as Nokia was already into existence with the same strategy. Though
Samsung established itself as the high-quality brand. Though its other countries the prices
were mid ranged, in India
Samsung uses the waterfall strategy; Waterfall strategy is nothing but a company can learn
from earlier market entries. For instances India is the first market where Samsung releases
their product. Samsung will analyse the performance of the product in Indian market, if any
difficulties are found, that will be rectified before entering the next new market such as UK,
USA and Europe.

Samsung faced more and more attacks as a patents and copyrights breaker. It spends billions
per year in fees and its brand image of follower and copycat does not improve in a good way.
To conclude, Samsung does not have to change its basic strategy but maybe adapt its strategy
in certain markets for end customers.
REFERENCES:

 https://www.business-standard.com/about/what-is-samsung
 https://www.researchgate.net/publication/285370984_International_Strategy_The_Str
ategy_of_Samsung_Group
 https://www.ipl.org/essay/Samsung-Alternative-Strategies-F35DCC57EAJFR
 https://www.kedglobal.com/newsView/ked202108110007
 https://www.locusassignments.com/solution/samsung-business-strategy-assignment
 https://images.samsung.com/is/content/samsung/assets/global/ir/docs/2020_Business_
Report.pdf
 https://research-methodology.net/samsung-business-strategy-competitive-advantage-
effective-exploitation-market-readership/
 https://images.samsung.com/is/content/samsung/assets/global/ir/docs/2020_Business_
Report.pdf
