Samsung Case Study

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Samsung Electronics - A Case Study

I. EXECUTIVE SUMMARY
For over 70 years, Samsung has been dedicated to making a better world through diverse businesses that today span advanced technology, semiconductors, skyscraper and plant construction, petrochemicals, fashion, medicine, finance, hotels, and more. Our flagship company, Samsung Electronics, leads the global market in high-tech electronics manufacturing and digital media. Through innovative, reliable products and services; talented people; a responsible approach to business and global citizenship; and collaboration with our partners and customers, Samsung is taking the world in imaginative new directions. Back in the first quarter of 2007, Samsung Electronics reported a 15% drop in profits. Jong Yong Yun, Samsung Electronics' chief executive officer since December 1996, has restructured Samsung by defying traditional Korean corporate culture of hierarchy and lifetime employment. Yun instilled a sense of ‘perpetual crisis’ among his employees and encouraged them to come up with innovative products that according to him, were necessary for Samsung's survival. His emphasis was on quality products with unique designs and effective brand promotions. In 2004, Samsung surpassed Sony to earn profits of $9.4 billion over revenues of $72 billion. Still, Yun felt that to compete in the global market, Samsung's products needed to be transformed into brands like that of Apple's iPod or Sony's Walkman. Yun runs the most profitable technology company in the world. But he still has many worries. Yet Yun is not only confident that he can meet those challenges, he is getting ready for new ones in "digital convergence." Jong Yong Yun’s strategy to focus on higher end products has clearly enhanced the firm’s brand image and lead to a sharp increase in its revenues and profits. But accordingly, they have failed to address serious questions about Samsung’s ability to rely exclusively on its hardware to continue to generate high margins. More so, the life cycle of most electronic products are short with prices tending to drop sharply over time. Considering these facts and conducting the SWOT analysis, there comes up the suggested courses of action Samsung Electronics will going to take to address the problem stated above. The courses of action includes: 1) undertaking forward and horizontal integration; 2) product proliferation; 3) cost minimization and 4) increasing sales through market penetration and market development. With this Samsung can surpass and survive and live with its vision "Inspire the World, Create the Future” through “New Technology,” “Innovative Products,” and “Creative Solutions. II. STATEMENT OF THE PROBLEM

Jong Yong Yun’s strategy to focus on higher end products has clearly enhanced the firm’s brand image and lead to a sharp increase in its revenues and profits. But accordingly, they have failed to address serious questions about Samsung’s ability to rely exclusively on its hardware to continue to generate high margins. More so, the life cycle of most electronic products are short with prices tending to drop sharply over time. With this matter and considerations, this study will answer the following questions: 1. What are Samsung’s competitive advantages over its competitors? 2. What are the ways to reduced Samsung’s cost in order to be competitive with lower margin products? 3. How will Samsung deal with the recovery of research and development costs in incurred in producing electronic products with short life cycle and prices that drop sharply over time?

III. STATEMENT OF OBJECTIVES
This study aims:
1. to determine what are the competitive advantage of Samsung over electronic industry and other industry it competes; 2. to identify the ways to reduced Samsung’s cost in order to be competitive with lower margin products; 3. to know the ways on how will Samsung deal with the recovery of research and development costs in incurred in...
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