|Categories:||Samsung Strategic management|
Samsung is an electronic company that is based in South Korea with its headquarters in Suwon. It is owned by the Samsung group who holds about 70% shareholding. Samsung Company traces its foundation back in 1938 when Lee Byung-hul founded it. It is in the 1980s that the company diversified into electronics by merging with the Samsung Semiconductors and Telecommunications making it a leading technology company in Korea (Dess, Lumpkin & Eisner, 2014). Currently, Samsung has established its sales network in about 80 countries in the world and therefore, it is the second largest information technology company in the world.
Currently, the company employs about 370,000 workers. To date, the Chief Executive Officer of the company has been Kwon Oh-hyun, who has held that position since 2012(Dess, Lumpkin & Eisner, 2014).For a long time, the company has been manufacturing electronic components such as semiconductors, lithium ion batteries, hard drives, chips and flashed memories for its clients who include Nokia, HTC, Sony and Apple companies. However, recently the company has pursued into consumer electronics. It is now one of the largest manufacturers if smartphones and the mobile phones with Samsung Galaxy being one of the most popular product in the market.
PORTERS FIVE FORCES TOOL (MICRO-ENVIRONMENT ANALYSIS OF SAMSUNG ELECTRONICS LTD)
This section analyses the internal environment of the company in which the company is operating. In entails evaluation of the components that the company has control over.
Samsung has an advantage of being the second largest information technology company in the world which means that it enjoys a big market share (Lunden, 2013). It has innovative smartphones and mobile phones that can meet the prescriptions and desires of the customers. Its tablets and electronic televisions are also doing well in the market, being able to meet higher demands from customers. This wide range of products such as televisions, cameras, laptops and Cell phones is what makes the company remain to be one of the major players in the market. It can thus diversify one product for another when one of the products cannot perform well in the market.
Samsung also has also been in a position to increase its brand value in the recent past particularly in the last three years. As a result, it has superseded Apple, its competitor in the information technology market. It has become a leading company in designing features of its products. For example, Samsung was the first company that produced dual screen phones that have lightest and thinnest notepads ever. The designs are usually stylish and also attractive and as a result, the sales of the company have been moving up.
The prices by Samsung are in many cases low as compared to that of Apple. Therefore, the products of Samsung lose value more easily in the market which affects the overall performance of the company. The other weakness of the company is that it has been launching new phones after others which pose great confusion among the customers. Frequent launching of phones has been a major weakness of the company as launching is executed immediately even before the previously launched products have stemmed the ground (Lunden, 2013). They also have a major weakness in software ideas. It is claimed that most of their software ideas are not original and are copied from Apple. Though they lead in hardware, their weakness is in designing software and their products are viewed as less safe as compared to the products from Nokia.
MACRO (EXTERNAL ENVIRONMENT ANALYSIS OF SAMSUNG COMPANY)
This focuses on the Macro environment of the company, and it explains how external factors impacts on the company by evaluating the opportunities and the threats.
Samsung faces a major threat from low costs that its competitors in China charges for similar products. Most of its competitors products parts are bought in China, and this threatens fall of Samsung in future. There is a cut-throat competition between Samsung and Apple and Apple products have in the recent past been gaining ground in an unprecedented way. Again Apple has been able to dominate its market in South America and North America denying Samsung a major market share in those continents. This threatens to cripple the market for the products from Samsung in future unless Samsung can go an extra mile and make its products more unique. Samsung has also been banned from selling its products in the Euro Zone which has impacted negatively on the image of the company in those zones. It cannot import its products to this zone which impacts negatively too on its revenue. There are plans b y Apple and Nokia to emerge, and this poses a great threat to Samsung. Nokia has been able to penetrate in Africa more than any other information technology company which means that if they merge it would be too difficult to challenge them in these continents that they have firmly made stemmed their ground.
Samsung requires only to introduce products that are user-friendly and also to educate the customers about the product they manufacture since most customers lack information concerning these products. In Africa, there is the need to educate the market as a potential market since most customers lack clear information concerning the products of Samsung (Lunden, 2013).In South Africa for example, Samsung can open the store from where they go to promote their products. They have an opportunity to change their old models and launch new models by making slight changes such changes on the cover and by charging lower prices for its products. This will secure a large share of the market, especially in Africa.
PESTEL ANALYSIS (MACRO)
This analyses the external macro environment in which Samsung Company is operating in.
Samsung has been banned to operate in the Euro-zone despite the fact that the company is competitive. In Germany Samsung had to withdraw its tablet the Galaxy tablet. Samsung also stopped operating in Japan after political differences between South Korea and Japan. These political factors have been affecting Samsung market negatively.
Samsung has been expanding its business in more than 8o countries by investing mostly in infrastructure. In South Africa, for example, they have bought land to build a plant that will manufacture its products for the African continent. This plant is estimated to employ more than three thousand workers.
Samsung faces the challenge of improving the lives of people, especially in Africa. Many people are not in a position to use Samsung products in a better manner especially the new tablets. People still need some education on the usage of these tablets which is a challenge almost in all societies. This problem, Samsung is yet to solve it completely.
Technology has been growing rapidly and has been affecting how people operate or carry out their activities. By introducing a more advanced tablet, the Galaxy Note 2, Samsung is making advances regarding technology and going with the current technological pace (Lunden, 2013).
In 2011, the South African Government decided that Consumer Protection Act should come into operation. This would result in a negative effect on the company as it tends to dump its low-quality products mostly in the third world countries. There have also been strong laws on labour in South Africa which will be a challenge to Samsung as they open the third factory.
Strength in the SWOT analysis of Samsung
Samsung has a broad variety of goods and products which range from cameras, televisions, smartphones, home appliances, printer memory and mobile phones. The company has a significant share in the market. Regarding mobile phones, Samsung is rated as the second largest producer of mobile phones. Its products are also in stylish and attractive design features. It was the first company to introduce the dual screen mobiles which had polyphonic rings. In the past three years, its brand value has increased by more than 80% as it offers high-quality products. Samsung also enjoys first-mover advantages by introducing advanced features in Air Conditioners and LCD refrigerators.
Weakness in the SWOT analysis of Samsung
Korean culture of management focuses on the hierarchy which may lead to retardation for any innovative and creative ideas in the distribution channel. Samsung has also been blamed on copying the software technology of Apple company.This has impacted negatively on the image of the company with many customers viewing it as incompetent. In India, Nokia is still a leading company for electronic products and is still considered the most competent company. There is also some limitations in managing global company such as Samsung given the fact that Korean corporate culture tends to be inflexible.
Opportunity in the SWOT analysis of Samsung
Samsung plans to make the category of air conditioner more attractive with unique design features. Its current financial performance is strong, and the company has a potential of entering into other markets across the globe. Samsung also plans to launch customised products in the Indian market such as home appliances and the mobile phones. Since the Indian population is still growing especially among the youth, the company expects to increase its sales by lowering the call rates. There is also increased demand for electronic products across the globe, and most of them are becoming part of necessities.
Threats in the SWOT analysis of Samsung
There earlier brands in the markets that have been dominant over time especially those from its competitors such as Nokia. In some countries, it has been difficult to penetrate due to some factors such as political differences and also due to the existence of local electronic products. There is a big threat from the Chinese products which though of low quality are cheap. There is also the threat of new innovative products in the market from the competitors that could lead to the decline in the market shareholding of the company.
Conclusion and Summary
Samsung Electronics Company, as a technology giant has been able to make important improvements that have made its products competitive. It has been focusing mostly on product innovation, brand image, research and development, design improvement and on sponsorship that will reveal good results for the company. By focusing on these key issues the company has been able to make tremendous efforts in dominating the market for information technology. Indeed the company enjoys positive rating and a large pool of customers across the globe.
Dess, G. G., Lumpkin, G. T., & Eisner, A. B. (2014). Strategic Management: Text and Cases.
Lunden, I. (2013). Android, led by Samsung, Continues to storm the Smartphone market, pushinga global 70% market share.
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