MTKM5063 - Technology and Operations Management

M061210001 M061220001 M061220002 M061220003 M061230002 M061230009 Lim Mei Chin Muhammad Fikry Farrahiyah Ismail HaryaniAbKarim Najmin Yusoff Samiyah Othhman

Outline
Introduction Samsungs competitive advantage Samsungs management analysis Samsungs corporate strategy Competitive analysis on Samsung Key drivers for future growth Value chain analysis Conclusion

Introduction
Samsung has realized how to combine early-fancyinnovative-cutting edge technology and mindblowing advertisement to dominate mobile phone industry. Samsung Electronics Co. Ltd., as part of Samsung Group has become the worlds largest mobile phone makers (Gartner, Inc, 2012; and IDC, 2012). Samsung sales have continued to accelerate and have widened the gap with Apple in the Smartphone market.

Samsungs Direct Competitors

Competitor Name Apple
Founded in 1966

Facts

$ 56,508.00 M in sales in 2012

72,800 employees

Sony Co.

Founded in 1946 $ 78,912.00 M in sales in 2012 162,700 employees

Phillips Electronics

Founded in 1891 $ 29,237.50 M in sales in 2012

125,241 employees

LG Electronics

Founded in 2002 $24,222.50 M in sales in 2012 35,286 employees

Competitive Advantage
Samsung capable to produce variety products with customized product and at the same time Samsung can maintain the core design of its products. Samsung success attracts various customers from the low income customer to high income customer to occupy the Smartphone market. Samsung success aims Asian market to promote low-cost Android mobile phones. Samsung is always saving and control their capital, so during recession in 2009, Samsung has allocated capital from the semiconductor industry to build Smartphone industry.

 Samsung has always supported and respect the choice of customers. Samsung has built a geographically dealer and indirect distributor to promote and sell Samsung products. Policies used as a means of attracting foreign investments could lead to reduced benefits from these investments for host countries as a whole. FDI can have undesirable outcomes such as rising inequality between individuals, groups or regions. As Samsung continuously increases research and development spending, Samsung strong determination to leading technology and obtaining intellectual property stay solid. At the same time, Samsung creates new technology affordable so customers can enjoy the latest technology that provide by Samsung.

Samsung Management Analysis

Samsung build telecommunication business with full package following customer needed. Samsung launched a strategic product system to develop new products. Samsung already learned for imitation for their product. For example mobile phone R&D helped Samsung to achieve target market in telecommunication. Even On 2005 Korean market drop and slow but Samsung still achieved global market in mobile phone sales. Eventually Samsung will present the good products and technologies and it is the one of competitive advantage for Samsung.

 Samsungs top management was decided to expand their products and technologies on telecommunication. Samsung Electronics is growing in partnership. In 1994, Samsung Electronics established a strategic agreement with ISB whereby Samsung Electronics helped them develop next generation chips. Samsung main brands today concentrate on mobile phones and semiconductors. The Chairman also stressed more on Samsung products and said that Samsung product will have disappeared in next decade.

Corporate Strategy
Branding
Sponsor for Seoul Olympic
Alliances with world wide companies Listed in the Top 100 brands by Interbrand

Market Penetration
African market & gained 41% market share

Product Development
Develop products in various aspect
New technology - OLED

Corporate Strategy (Contd)

Product Diversification
Wide range of product vs Apple Latest product Samsung Galaxy Camera with 3G

Unrelated Diversification
In Insurance & Heavy industries Listed in Fortune Global 500 Company

Horizontal Integration
Acquire UK Chipmaker CSR handset technology Do not want to depend much on 3rd party silicon suppliers Grant of using intellectual property

Samsungs Corporate Strategy

Branding Strategy Market Penetration Product Development Product Diversification Unrelated Diversification Horizontal Integration

Competitive Analysis
Competitive Analysis - to provide an understanding of the competitive forces that have to be found within any given organization's competitive environment; it will attempt to understand an organization's industry, its competitive position within it, the prerequisites for survival and prosperity and the nature of competition and the market process. (Oxenfeldt and Schwartz, 1981). Competitive analysis has done specifically with the external environment of an organization and has been shaped by five factors, which are:
1. 2. 3. 4. 5. 6. economic factor; social, cultural, and demographic environmental factor; political, governmental and legal factor; technological factor; and competitive factor

Economic Factor
Fact:
1. Samsungs 2011 financial statement has stated the net income has increased from 180 billion won in 2010 to 4 trillion won. 2. Samsungs financial statement September 30 2012, stated that net income rose to 6.56 trillion won. 3. Samsungs Best Global Brand ranking has increased from 19th position in 2009 to 9th position (rankingthebrands, 2012) 4. Samsung Sales in 2009 - 0.6 million, 2010 - 23.9 million, 2011 - 97.4 million, 2012 300million for smart phones. In 2013 Samsung aim 510 million handsets to sell, 390 million are slated as smartphones and 120 million, feature and budget phones (koreatimes.co.kr)

Economic Factor cont.

One of the tremendous factors that have contributed to Samsungs success sales is Samsungs willingness to increase promotional spending to take over mobile phone market share and brand building, through marketing.
Samsung has maximised the promotional spending advertisement to support of their mobile brands, Galaxy S series and Note in particular through television ads, newspaper ads, and online ads.

Social, Cultural, and Demographic Environmental Factor

1. The changing in age structure - young generation has represented the largest demographic population around the world; and young generations have been addicted and have become consumers of communication and entertainment. 2. Increasing number of women in businesses. Samsung added new specialties in order to make easier womens life with washing machine, microwave, vacuum cleaner, and etc. 3. Samsung social and cultural forces have defined on psychographic segmentation which is based on the
personality, motives, and lifestyles of the targets especially on high income group

Environmental Factor Cont.

http://stopsamsung.wordpress.com/ They are SHARPS (Supporters for the Health And Rights of People) in the Semiconductor industry. SHARPS are composed of independent labor unions (KCTU), human right groups, occupational safety and health (OSH) groups, progressive political parties, and workers organizations against Samsung.

Political, Governmental and Legal Factors

Politic - Allegation that Korean Government protect Samsung (stopsamsung) Governmental - Reuters (2012) has reported Malaysia is potentially to be largest international offshore operation by 2015 (head quarter outside of Korea). Legal - Samsung VS Apple

Technological Factor
West country co. (Apple, Google, BlackBerry, Nokia) better in software engineering. East country co. (Samsung, LG, Sony, HTC) better in hardware engineering and reverse engineering Google produce free Android O.S that help east country to overcome and compete Apple monopoly in smart phones. Samsung R&D cost = Apple + Google

Technological Factor Cont.

Apples Research towards Top Reasons for Buying an Android

Competitive Forces
Medium - Threat of new competition Low - Threat of substitute products or services High - Bargaining power of customers (buyers) Low - Bargaining power of suppliers High - Intensity of competitive rivalry

Key Drivers for Future Growth

Technology Innovation & Research and Development (R&D) Samsung need to produce innovation in their products and engage in R&D in order to growth. The Samsung Advanced Institute of Technology (SAIT) is the Samsungs technology competitiveness in core business areas. Their global R&D network spreads six Samsung centers in Korea and 18 more in nine other countries, counting in the United States, the United Kingdom, Russia, Israel, India, Japan and China, as well as other research centers and universities.

Empower Branding (Marketing) Strategy

Two options to stimulate the growth; intensive advertising campaign, and offer products with unique functions. The branding strategy started in 1996 by its Chairman Kun Lee, whose aim was to launch a coordinated global program to make Samsung an international brand. Samsung annual investment in branding and marketing is about US$3.5 billion per year, which has been spent to increase its brand awareness around the world.

Rapid Expanding on Smartphone Industry

The profits of smart phone industry are predicted to grow in the coming years hence will raise worldwide demand. Sales volumes of smart phone are anticipated to arise globally at 26% compound annual growth rate (CAGR) from 2011 to 2015 to reach 1.18bn units. Demand for smart phones, the development of high-speed telecom networks in emerging markets and robust growth in Korean smart phone markets.

Figure 5.1: US Smartphone penetration Source: Asymco June 2012

Emerging of Android Operating System in Smart phones

Samsungs accession can be contributed by their adoption of Android. Samsung has made the breakthrough by launching Samsung Galaxy S which shipped in June 2010. Demand for smart phones are causing a reduction in Googles margin.

Figure 5.5: Google vs. Samsung Source: Asymco June 2012

Develop sustainability at Samsung

Figure 5.6: Main approaches to sustainability at Samsung Source: Our Sustainability Reports - Citizenship - About Samsung - Samsung

Samsung Value chain

Primary activities
Inbound logistics
mainly concerned with supplier, storage and handling the external sources material currently subsidies their major logistics activities to Samsung Electronics Logitech primary handles both inbound and outbound logistics and goes further in handling payments and processes with outsourced companies working seamlessly with the global ERP system maintained by Samsung SDC

Primary activities
Operation
the product components throughout the world but the most factories are located in Korea, China, Vietnam and Indonesia 196 subsidiaries across the world total workforce reached at 101, 973 working in Korea and 119,753 outside of Korea

Primary activities
Outbound logistics.
Samsung Electronic Logitech
being given a full range of trade support functions as well as logistics where all the activities related to the gathering, storing or distribution of their finished products

Marketing and sales

two core divisions
Digital Media Communications (DM&C) division based on marketing operation Global marketing organization (GMO) budget, controlled the global brand campaign, in coordination with Samsungs in house agency and its outside advertising agency.

Primary activities
After sales
products are entitled a least a year international warranty for every item purchase. Any defects are normally replaced with the new item so that the failed product can be studies. training of the employees in all category given to maintain the value of the product and the services in term of safety standard by the Samsung technology

 R&D Organization sector as Technology Development

involved two activities in value chain
Technological
expend about 7% (US$7-10 billion) in innovations and intellectual properties focusing on recycling technology or green technology

Supporting activities

product planning and design and engineering sector.

productive in produces various types of Hi-tech product in different segment emphasis on the unique and soft design of the product, which maximize user experience, enhance the feel of comfort, familiarity and convenience in product development

Supporting activities
Procurement.
build the relationship between the Samsung Company and the supplier create a family of accredited within the supplier and give opportunities to internal division cooperative policy is to promote a win-win policy based on cooperation for mutual benefits with cooperative companies

Supporting activities
Firm Infrastructure and HR Management
enhance all the value created Firm infrastructure will be modified to account for new employees gained through acquisition, which will include adjustments in the accounts related to said employees and their companies, the management of these employees, the quality of the newest items produced, and in the information systems required to communicate live data across national borders.

Conclusion
Samsung has devoted electronic market nowadays with variety products; from smart phones to home appliances Samsung has become innovative company with strong determination to supply their customer with the newest but affordable technology. Samsung have strong culture and ecosystem to grow bigger in the future. With variety products Samsung success survive in electronic market; even now become the leader in smart phones technology. Samsung already invest in branding and marketing; introduce themselvesas innovate company that generate technology that made for humans.