Strategic Management Assignment

BY
R. Arun Kumar- 13MBA006
M C. Karthic- 13MBA026
S. Jayachandran 13MBA141

Company Background
Name

Samsung Electronics Co., Ltd.

Industries

Consumer

served
Geographic

Appliances

areas served
Headquarters
Current CEO
Revenue
Profit
Employees
Parent

electronics,

Telecoms

Equipment,

Semiconductors,

Home

Worldwide
South Korea
Kwon Oh Hyun
228.69 trillion (2013)
59.28 trillion (2013)
221,726 (2012)
Samsung Group
Apple Inc., Nokia OYJ, Intel Corporation, LG Display and LG Electronics,

Main

Sony Corporation, Texas Instruments Inc., Lenovo Group Limited, Hewlett-

Competitors

Packard Company, Sanyo Electric Co., Ltd., Toshiba Corporation, SK Hynix

Inc., Western Digital Corporation and others.

Samsung Electronics Co., Ltd. is the largest worlds technology company in terms of revenues. It
is the largest mobile phone maker and television manufacturer and second largest semiconductor
chip producer.

STRENGTHS

WEAKNESSES

1. Hardware integration with many open

1. Patent infringement

source OS and software

2. Too low profit margin
2. Excellence

producing

in

engineering

hardware

parts

and
and

3. Main competitors are also largest

buyers

consumer electronics

4. Lack its own OS and software

3. Innovation and design

5. Focus on too many products

4. Focus on environment
5. Low production costs
6. Largest share in mobile phones and 2

place in smartphones sales

7. Ability to market the brand

OPPORTUNITIES

THREATS

1. Growing Indias smartphone market

1. Saturated smartphone markets in

developed countries
2. Growing mobile advertising industry
2. Rapid technological change
3. Growing

demand

for

quality

application processors

3. Declining

margins

production
4. Growth of tablets market
4. Breached patents
5. Obtaining patents through acquisitions
5. Apples iTV launch
6. Price wars

SWOT Analysis

on hardware

Samsung CSR
Samsung Electronics Co Ltd has announced the launch of Samsung Hope Project, which aims
to make a difference in the lives of underprivileged children by providing them quality
education.
Samsung aims to reach out to children across 100 villages in Tamil Nadu through Aid India, its
selected partner and in Delhi and Uttar Pradesh through Smile Foundation. Consumers too will
get an opportunity to participate in this educational initiative and support this movement. For
every Galaxy Note sold in the period between February and June 2012, Samsung will contribute
Rs 100 towards supporting the selected projects. Company sourced said.
The Samsung HOPE Project that we are launching today is aligned with our Global Hope for
Children programme that seeks to bring attention to the worldwide need for childhood education
and healthcare. Through the Samsung Hope Project, not only do we aim to provide good quality
education to under privileged children, but also create an environment which is conducive to
their overall growth and development. By using modern teaching methods and available
technology, our objective is to ensure that children are encouraged to go to schools and are
mainstreamed. We are pleased to partner with Aid India and Smile Foundation and are confident
that together we will be able to make a difference, said BD Park, President & CEO, South West
Asia HQ & Managing Director, Samsung India Electronics Pvt Ltd.
Samsung had constituted a high profile jury to evaluate and select partners for this programme.
The jury was headed by Dr Raghunath A Mashelkar, former Director General of Council of
Scientific and Industrial Research (CSIR), and currently the President of Indian National Science
Academy (INSA).
AID India Samsung Super Kidz Program
AID India was founded in July 1997 and has been working in Tamil Nadu for the last 14 years in
the field of education. Founded by IIT and BITS alumni, it works closely with the Government

and UNICEF to develop curriculum and methodologies to improve education quality in schools.
Under the Samsung Super Kidz Program children from 100 villages in Tamil Nadu will benefit
from AID Indias vast experience and will learn Tamil, English, Math and Science through
innovative teaching techniques. Comprehensive skill assessment and monitoring, individual
attention, special focus for weaker students and regular interaction with parents, will ensure that
the development of each child is taken care of. Through the program, children will be enabled to
improve their grades and those that are drop outs are encouraged to re-join the formal school
system.
Smile Foundation Mission Education Program
Mission Education, established in the year 2003, is the flag ship programme of Smile
Foundation. The programme reaches out to more than 12000 children across 19 states in India.
The program ensures education of under privileged children from backward rural/ urban
locations. It aims at imparting education to bring changes not only in the amount of knowledge
gained but also in the abilities to think and acquire habits, skills and attitude which characterize
an individual who is socially accepted and adjusted. Through Samsungs support, Smile
Foundation will reach out to children at two centres in New Delhi and Noida. The program will
enrol children in the age group of 6-16 years in bridge courses and enable them to get
mainstreamed in formal schools. Children will learn subjects including Maths, Science, English
and EVS. To ensure their overall development, regular events, extra-curricular activities and
medical aid will also be provided.

PESTEL Analysis
Political
Samsung operates in many countries the political environment is conducive to its
operations and though there are minor irritants in some of the foreign markets like India.
Samsung 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.
And also 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.
This is not yet a major cause for worry as the company has more or less factored the
political instability into its strategic calculations.

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.
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 macroeconomic environment in which Samsung operates globally is beset with
uncertainty and volatility leading.
The saving grace for the company is that it has adjusted rather well to the tapering off of
the consumer disposable incomes in the developed world by expanding into the emerging
and the developing markets.

 This is the reason Samsung has begun an aggressive push into the emerging markets in
the hope of making up for lost business from the developed world.

Social
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.
Samsung being a Global company has had to act locally meaning that it has had to adopt
a Global strategy in many emerging markets.
Samsung has had to tailor its products to the fast changing consumer preferences in the
various markets where it operates.
Samsung operates in a market niche that is strongly influenced by the lifestyle
preferences of consumers and given the fact that socio cultural factors are different in
each country; it has had to reorient itself in each market accordingly.

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.
It 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.

 The other technology driven companies from Samsungs experiences and it is that no
matter how fast you are to reach the consumer in this age of Big Bang Disruption, doing
the basics right is still the key to success.

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.

Environmental
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 consumer.
It 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.

Organizational Structure

CEO

Digital media &

communication

Consumer Electronics

Visual Display
division

Device solution

IT & Mobile
communication

Memory division

S. SLI division

LED Business
division

Digital Appliance
division

Mobile
Communication
division

IT Solution
division

Network
division

Digital Imaging
division

Media solution
center

Porters Five Forces Model

Barriers to entry:
High barriers to entry and low barriers to exit especially where global conglomerates are
concerned.
It is very difficult to enter in emerging markets because the factors have to be taken into
consideration such as setting up the distribution network and the supply chain.
Large industry size.

Industry competitiveness:
All other domestic goods players operate in a market where margins are tight and the

competition.
High capital requirements
Industry requires economies of scale
Strong brand names are important.
Advanced technologies are required.

Bargaining Power of Suppliers:

There are many suppliers who are willing to offer their services at a
discount since the ancillary sectors are very deep.
The company 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.

Bargaining Power of Customers:

When there are large numbers of customers, no one customer tends to
have

bargaining

Samsung.

leverage.

Limited

bargaining

leverage

helps

Threat of Substitutes:
Differential pricing so as to attract consumers from across the income
pyramid.
Goods are flooded with many substitutes and given the fact that

consumer durables are often longer term purchases.