Samsung Group (Samsung) is a South Korea conglomerate with diversified operations in various industries including electronics, financial services, chemicals and infrastructures. It has operations around the world. Established in 1969, Samsung Electronics Company Ltd (SEC) celebrated its 40th anniversary in 2009. It was ranked number 1 for sales among global information technology companies for the first time. With sales of KRW 165 trillion and operating profits of KRW 16.2 trillion, it showed that the growth rate of SEC and placed SEC as an important player in the global electronics industry.
Why does Samsung trade internationally?
Samsung Electronics operates in a highly competitive business environment and faces intense competition from a growing number of competitors, many of whom have strong consumer brand equity such as LG International, Whirlpool, Motorola, Nokia, and Sony. Competition in the global market is based on a number of factors including performance, innovation, product features, quality, cost, selling price, distribution, and financial incentives. In the past, Samsung’s competitors, especially global competitors with low-cost sources of supply, have aggressively priced their products and introduced new products in order to increase market share. Such an intense competition faced by the group threatens to erode its market share. 1a.To seek higher expected rate of return
Through international portfolio, the managers of Samsung electronics can choose from a larger amount of assets than the domestic-only asset allocations. Therefore, the internationally diversified portfolios can have a higher expected rate of return, and have a lower level of portfolio risks.
Advantages of internationally trade
1b.Growing a new market:
In the early years, SEC realized only internalization could improve its competitive advantage. To earn its place as today, SEC had to take...