Professional Documents
Culture Documents
The political factors that influence Samsung Electronics are the political policies and
processes such as the tax policy, fiscal policy, tariffs, the political climate, the financial
institution's strengths, and others in the country which the companys headquarter is located:
South Korea. Ever since South Korea and North Korea had split, they have been at a constant
conflict, making the both countries to always prepare for a strike from the other. This condition is
affecting their political situation. The recent news of the arrest of Jay Y. Lee, the vice chairman
as well as the heir of Samsung company, as one of the suspect of the bribery case to South
Koreas President, Park Geun Hye (Sang-Hun, 2017). Mr. Lee had been indicted to have given
43 billion won ($36 million) to the Ms. Parks confidante through a subsidiary of Samsung. This
news shows that the government is having big control of the economic situation, thus driving
companies to take a shortcut through bribery. Besides, the countrys tax rate is also influencing
companies including Samsung in creating its competitive strategy. South Korea has three
classes of corporate tax: 10% rate for corporates which generate Korean-sourced income up to
KRW 200 million, 20% rate for companies with the income from KRW 200 million up to KRW 20
billion, and 22% for those which have more than 20 billion income (Santander Trade, 2017).
This tax rate is quite low compared to Indonesia which has a flat rate corporate tax on 25%,
USA with 40%, Japan with 30%, and others (KPMG, n.d.).
The analysis of the economics condition includes the general economic climate and
other specific factors such as interest expense, economic growth, inflation rate, saving rates,
and many others (Gamble, et al., 2015). Nowadays, the economic condition of South Korea is
not looking good as there is a scandal associating the President influencing the stock prices,
currency exchange rates, and other things relating to the economy situation (Fendos, 2016). For
more than a decade, South Korea has been one of the biggest exporter in the world for
electronics, automobiles, and boats. Yet, recently South Koreas power on the export goods has
been decreasing with the rise of other similar but cheaper goods produced by China (ibid).
Although the macroeconomic stability is well-maintained and openness to global commerce, the
economy has been weakening (The Heritage Foundation, 2017). Moreover, the total corporate
debt of the country is around 171% of its GDP which is $1.8 trillion (ibid). This poses a threat to
its economic stability in the future.
The third analysis is the sociocultural forces which involve the societal values, attitudes,
cultural factors, and lifestyle as well as the population size, growth rate, and age distribution that
affect businesses (Gamble, et al., 2015). South Korea has a population on about 48.6 million of
people, in which their main language is Korean. The country is very famous for the people to be
fashionable, especially the youngsters. They also one of the most users of internet in the world
and deemed to be following the gadget improvement actively. In general, Koreans are very
reserved and well-mannered people where they respect etiquette. They will try their best to
avoid embarrassing situations as they perceived that the concept of face is important. When
they are not closed to the other parties, they always speak formally and are very polite
(Kwintessential, 2016).
The fifth analysis is the environmental forces that consisting of weather, climate, climate
changes, and related factors. These factors can directly impact the industries especially
farming, energy production, tourism, and insurance (Gamble, et al., 2015). The speedy
development of the economic is giving both negative and positive impacts on the countries.
Improving the standard of living and increasing the pollution level at the same time. The
Government had tried to reduce the bad effects of the rapid industrialization by restricting the
emissions and green belts to improve the nations air quality (Smith, 2015). Furthermore, the
household and industrial waste of excessive use of chemicals and fertilizers had endangered
the fish species. Various reclamation projects reduced about 2% of the total 2,313 square
kilometers of tidal flats along the western and southern parts of the countrys peninsula annually
(Nations Online, 2008).
The last factor is legal and regulatory which comprise the regulations and laws binding
the companies such as labor laws, consumer laws, occupational health and safety regulation,
minimum wage regulations, and so on (Gamble, et al., 2015). South Korea implemented the civil
law legal system similar to those applied in European countries (Cho, et al., 2016). In Korea, a
company must have minimum three directors which includes representative director and an in-
house statutory auditor if the total capital is bigger than KRW 1 billion. The Labor Standards Act
(LSA) in Korea requires company to have the employee retirement benefit, equal employment
for both genders and support for compatibility of work and family, employee insurance, and
minimum wage for all employees in Korea no matter what their nationality are. For the
intellectual property matter, the nation had established Korean Intellectual Property Office
(KIPO) which has the authority for issues in intellectual property (ibid).
Market size is the total number of firms operating in the industry, and the best information is to
know whether the company is at the growing, static, or declining stage. The global industry has
been forecast to grow at compound annual growth rate of 5% over the next five years, reaching
a market value of roughly $1,150 billion in the U.S by 2017. It seems that every day a new
technological innovation is being made, the pace of change occurring so quickly and people are
always trying to either upgrade their devices or purchase a new one.
Number of rivals
Organizations should also understand whether their competitor consist of too many small rival
or a few large firms. Similarly they should also know about the various development in the
industry such as merger and acquisitions. There are more than 100.000 technology company in
the U.S alone, with 99% of them being small and medium firms. However large firms have their
places in the industry, controlling large shares of the market in sectors such as electronic
operating system and hardware/software.
Scope of competitive rivalry play a role in a firms level of competitiveness. Industry members
must know about the nature of future competition. For example if a company realize that their
key competence is on the diversification then they will start market expansion and and product
development since the first day. Information technology is a driving factor in the globalization of
industry, so it shouldnt come much with any doubt that company moves in the IT business are
competing globally.
Product differentiation is also one of the most important factors in analyzing the industry
situation. If all the product in the industry are all the same then what would probably happen is
the price of the product in the market relatively low and barrier to entry is high for the new
entrance. In fact, the IT industry requires companies to constantly innovate and differentiate
their product so the industry is constantly evolving. However, it is common for some rival to
mimic those differentiation.
Product innovation
Product differentiation is also used as a measure of the dominant economic features in the
industry. For example if the industry is characterized as rapid product innovation and slow life
cycle then the research and development of a company must be at their maximum effort. In fact
as technology become more and more available globally, its easier to innovate in this industry.
A company whos the first to market their invention gain a crucial advantage, however as i
mentioned before a rival would probably quickly close in that advantage by mimicking the
product.
If the industry is characterized by the rapid pace of technology then the art of the state
technology is imperative for the success of the technology. Taking this into account, upgraded
facilities and strong technological capabilities are an important factor in being a player in this
industry.
Vertical integration
It is important to know whether the industry are partially or fully integrated, vertical integration
can cause a cost of product differentiation. Back in the 70s vertical integration used to be a
common practice, those who adapt the vertical integration are more able to control their
products. Although this comes with a risk, as these companies can experience a higher cost,
other competitor are more feasible to undercut their prices.
Economies of scale
Organizations must also know the difference in the economic scale of purchasing. They should
analyze whether the companies with high scale operations has any cost advantage or not. Any
reduction in the cost of production could lead into a higher competitiveness which ultimately
result in higher competitiveness.
Source: http://i2.wp.com/www.mba-tutorials.com/wp-content/uploads/2009/08/porter-five-forces-
model.png?resize=300%2C207; Accessed on 18. February 2017
The competitive force of Buyers
Buyers bargain power in the field of electronics depends on the considered product. If you take
the Smartphones you have different stages to consider. If you take the flagship - The galaxy
Series, as an example samsung is able to sell these phones to a high price during the launch of
the product as the demand for the new product is high and has to lower the price during their
time on the market to achieve good sales numbers. In lower price categories the bargain power
of the customer is even higher because there are many other competitors with an similar
product which leads that most influential difference becomes the price of an product.
Samsung Electronics is active in a high-tech industry so changes in products and new trends
appear faster than in other industries. This means that it is facing competition from substitute
products but it also emerges this trend. For example the disapearing from station-phones to
smartphones and also the decreasing sales of cameras due to better cameras in phones.
Samsung has outsourced the production of many of its products for example the smartphone
production to taiwanese company Foxconn. Many of the build in components as microchips or
batteries come also from suppliers. This means Samsung is highly dependent on a good
Supplier-Seller Collaboration as the production is part of an global and integrated process with
highly demand of a good Supply-Chain Management. But it also has a good position in
bargaining with Supplier as it is one of the largest electronics producer worldwide
This field especially applies for Samsung Electronics. It is facing many capable competitors and
is also facing the problem that former Supplier decides to compete against Samsung. Especial
in Asian High-Tech Entertainment Industry the threat of facing new competitors is very high
which always has to be considered and surveillanced by Samsung
Samsung started out as a small trading company in 1938, selling noodles and dried seafood.
From that humble beginning Samsung has evolved into a brand that resonates with global
leadership in various industries including IT, shipbuilding, engineering and other numerous field.
So what made Samsung so successful so far? We will write 2 biggest forces that made
Samsung today.
First factor can be foresight of future trends. Lee Byeong Cheol the founder of Samsung has
invested in electronics area since he thought that electronics could be grow into bigger market.
Even though in 1970s there were few electronics company who made television such as Sony
and Goldstar. That is why Lee Byeong Cheol started to instill big investment to electronics
segment. In the result, Samsung succeed in producing 12-inch black-and-white TVs, and just
two months after the production it exported the TV sets to Panama. As time goes, Samsung
realized they need to increase the size of production to have bigger profit. Samsung set up a
Braun-tube bulb factory and after extensive investment and expansion of production lines, it
also established two black-and-white TV lines with a capacity to produce 480 thousand TVs a
year.
As Samsung established its own
production system and accumulated
technology, it pushed to produce its
own TV model which is Maha 506 TV.
Following the success of the Maha
506 TV, Samsung expanded into
other electronics categories such as
refrigerators, air conditioners, washing
machines, fans, electric stoves and
more. In May of 1978, Samsung had
already expanded its black-and-white
TV lines to become the worlds No. 1 manufacturer. Also in December 1978, Samsungs overall
exports reached 100 million dollars. As we can see, Samsung has successfully able to foresee
the market trend and consumer wants through fast responding to trend. Samsung was about to
penetrate more complicated and unfamiliar field of market which is semiconductor.
Second factor that drive Samsung to be success like today is global expansion and product
innovation. Samsung Electronics merged Samsung Semiconductor in January 1980, in a
combination that helped create synergies in production of both electronics and semiconductor
parts. The merger set the foundation for Samsung to become a global leader that it is today in
semiconductors.
So Samsung has been try to find a new way to be the best in certain sector and Samsung
entered in semiconductor area. In October 1984, Samsung introduced the industrys first 256K
DRAM, just three months after it successfully developed the 64K DRAM. Production of the 256K
DRAM a technological breakthrough only a handful of companies globally were able to muster
marked a defining moment for Samsung in its growth as a leading semiconductor
manufacturer. To diversify or disperse the cost of manufacturing, Samsung Electronics America
was established in July 1978 as Samsung Electronics wholly-owned subsidiary and set up its
own service system in the country. Samsung
Electronics first overseas manufacturing
subsidiary was set up in Portugal in 1982.
The global manufacturing network expanded
to include the U.S. in 1984, the U.K. in 1987
and Mexico in 1988. Nowadays, Samsung
has their production plants in most BRIC
country and also in Indonesia. Samsung has
started as semiconductor and if you look
closely, semiconductor is every parts of
electronics. Such small innovation and
breakthrough has made Samsung to make smartphones with waterproof and resistant to break.
Also wearable gadgets with virtual reality to step ahead to future market. Samsungs R&D has
helped Samsung to relentlessly innovate and surprise people by introducing products.
Third factor can be creative marketing . If you see recent Samsung advertisement through
television or social media, it would instantly make people watching the advertisement even
though the person watching advertisement is not Samsung user. Also, Samsung has made
numerous advertisement with strong endorsement from soccer player like Messi and famous
comic or movie like Marvel studios The Avengers. Therefore by cooperate with right
endorsement has made people attractive to Samsung products. Since most people know how
good Samsung does in marketing, we will introduce historical and first step to let world know
about Samsung through sponsoring worlds most anticipated event which is 1988 Seoul
Olympic Games.
Samsung Semiconductor was chosen as the official sponsor for 1986 Asian Games and 1988
Seoul Olympic Games. To ensure that both events would be successful, Samsung devoted an
astonishing amount of time, energy, and resources. Installing communications equipment to
connect 22 different stadiums would cost over 3 million Won. While Samsung provided the
technology and equipment, they were also able to advertise the brand on the world stage. This
promotion opportunity was maximized, and sales made noticeable gains. The greatest benefit
was the fact that Samsungs communications network was used in the worlds biggest sporting
events, showcasing Samsungs advanced technology to the world.
In conclusion, we believe that these forces has made Samsung to be competitive and bring
great amount of profitability. In addition, these forces will continually help Samsung to thrive
globally. These forces make Samsung more competitive in market and it means that other
company will also need to keep up with the positive movements. As overall, the market intensity
became higher and company that can not keep up may end up struggle or in worst condition
bankrupt in same market. Barrier to entry also will rise due to deep-rooted companies such as
Samsung, Apple, Sony, and LG.
What market positions do industry rivals occupywho is strongly
positioned and who is not?
In the strategic group map, the companies are allocated based on the price/quality and
their product-line breadth. As the leading electronic company in the world, Samsung
has the largest area in the map as they are serving many industries such as consumers
electronics, telecommunications, semiconductors, and home appliances. Despite
serving many industries, Samsung has strong position in most of the market served as
they always improve their products and investing in R&D for fulfilling the customers
demand of sophisticated yet high quality electronic goods. Meanwhile, Apple who was
the market leader in electronics was also has strong position due to its well-known high-
end products such as MacBook and iPhone. On the other hand, Sony and LG
Electronics was located in the middle of the map. LG Electronics was actually the
biggest competitor of Samsung Electronics in the origin country, South Korea, but in the
past few years, it lost some of the market share to Samsung who was steadily growing
and becoming major player in several industries. Sony still maintained its position in the
middle although they have been losing market share significantly in the recent years in
the smartphone segment. Last but not least, Kyocera which is known as the new player
in the industry was trying to compete with the electronic giant such as Samsung.
Although Kyocera has been known in the semiconductor industry, their position in the
map is still risky as it does not have large market share and wide range of products.
Therefore, it can be concluded that Samsung has the best position in the market
industry due to its wide-range yet high performance electronic goods and Kyocera is the
least well-positioned in the map as they do not have strong market presence and still
have low market share compared to the others.
Samsung electronics had grown so much from 1969 to present years, and with that its
competition rises incrementally especially those that have the classification of high-technology
industry. Samsung electronics strive for the best especially giving and providing their customer
on their products. Innovation is one of its highly valued understanding that the company wants
to achieve and implied in its product.
Since this company is well-known is some part of the world of course it has many competitors
that has perhaps similar or even look-alike product. With this term, Samsung Electronic has to
be conscientious on looking over the strategy of its rival.
Putting aside the competition for handheld smart phones, Sony is also one of Samsung
dominant competitor over their home entertainment technology. Sony has dominated the market
with its flat-screen TV since it was announced a couple years ago and due to Samsung late
coming for flat-screen TV its sales loses to Sony. Sony strategy is focusing on their market
especially for TV.
The Industry Key Success Factors consist of product attributes, resources, competitive
capabilities and intangible assets, which define the characters of the competitors in an industry.
Samsung takes part in several industries, the company is one of the top leaders especially in
the Electronic Industry. The factors affecting this enormous success in that particular industry
will be showed as followed.
Technology
This technology related factor is the base of all competitors in the Electronic industry. Scientific
research as well as the expertise in digital technology have to be perfectly known and effectively
used. The innovative spirit and force is important to create competitive advantages by
developing new processes and products to challenge the competitors. But also the connection
between this factor and other areas for example advertisement lead the company to a special
performance. Samsung concludes all these aspects and beats its competitors by developing a
stable high level of innovative products and features, which are able to compete with the spirit of
the digitalisation.
Distribution
The distribution pattern in the Electronic Industry is essential for the participants results. Since
the digitalisation the networking process has to be expanded all over the world to stay in
competition with the big leaders of this industry. Especially Samsung developed a structure of
distribution, which leads from store and dealer distribution over to various ways of internet sales
by their own websites and especially by different sales providers. With such a national and
global network Samsung can provide their products nearly to every retailer and therefore to any
customer in the entire world. For that reason the delivery time can be perfectly managed and
fulfil customers expectations.
Developing a brand identity, which represents the values and capability of a company and its
products as well as services is needed to position the products in the market. Samsung
established its name as a well-known and respected brand internationally and intercontinentally.
Therefore is a currently presents of all dimensions of marketing for selected, representative
products needed. Starting from detailed market research, to a conclusive marketing strategy for
each country or product, ending up with the fulfilment of individual customer expectations of the
whole buying and service process. Especially e-commerce has to satisfy a high standard in the
Electronic Industry to guarantee international operation strategies and commercials. Using Viral
Marketing and building outstanding customer experiences in the stores and on the internet
leads to success and a popular brand identity.
Management Capability
The management leads the company to strategic planning and decisions. The structure of an
organisation is really important for a working management. Clear roles and relationships define
bases, responsibilities and authorities for a working human resource management. Supply chain
management has to guarantee a perfect connection between the inside and the outside
structure of the company. Furthermore values, norms, ways how to work and how to treat
customers is evaluated by the management for a concluding concept.
Does the outlook for the industry present the company with
sufficiently attractive prospects for profitability?
The worldwide electrical and electronics industry are experiencing remarkable changes these
days. This industry is successful in fast technological advances and has grown rapidly than
other than over past 30 years. The electrical and electronics sector is highly fragmented, which
can be divided into diverse fields from the things which are relatively close to our lives such as
electronic components, and telecommunications to ones we hardly ever see in our
lives.Voluminous production has been gradually moving towards low cost destination. In todays
age of competition, electronic and electrical products manufacturing companies are under
constant pressure to develop new and innovative products in shorter period reducing cost and
with improved quality.The global electronic industry is driven by demand for the products
durable, lighter and cheaper better than ones before.
Samsung is now facing tough situation especially in smartphone market in which it has
occupied large share. It is expected that the sales are declined. The executives of Samsung
are judging smartphone has already become the commodity and innovations before has
commoditized and that it is more difficult to gain profits continuously than before. Furthermore,
Samusung are facing with a threat of the emergence of new tough competitor such as
latecomer in China and India.The executives regarded the market as saturated.
In 2015, in its human resource development institute, Samsung searched new income sources
for the continuous improvement. We will overcome such new a business environment through
changing and innovation said the executives of Samsung. As one of the new income sources,
Samsung is entering into automobile business utilizing high semiconductor technology, which is
one of Samsungs strength.(Semiconductor sector is one of the sectors Samsung electronics is
engaged in strongly and contributed company to its expansion and saved it from bankruptcy.
Moreover, this sector is said to be the largest and highly profitable.)
In the background, Samsung is showing posture that it will gain steady growth reducing the
number of its smartphone model and focusing on IoT connecting its technology with automobile
and consumer electronics as new income source. Samsung is also engaged in bio-health care
field as future growth power. Samsung has changed the direction of its business according to
the industry paradigm in which companies have to consider climate change and environment.
This company has tried cultivating state-of-the-art business for next generation in accordance
with the business environment changed suddenly.
It will take 5 to 10 years IoT is widely implemented worldwide, so Samsung can not gain its
profit quickly, however, this company is searching other ways to retain its improvement based
on their strength.
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