Samsung Case Study

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Strategy Presentation on Countering Threat from Chinese Company

BBackground
ackground
• Samsung founded in 1938 by Byung-Chull Lee.
• 1950’s Economic Stabilization
– Korean War - Samsung lost all assets
– aimed to help rebuild Korean economy; entered the manufacturing industry (sugar, fabrics)
– became a leader in modern business practices (recruiting from outside)

• 1960’s Expansion of Key Industries
– entered electronics and chemical industries
– 1969 established Samsung Electronics Co. as a division of the Samsung Group.

• In 1970s, Samsung's entry into the semiconductors business was pivotal for the company, to that end, creation of Samsung's semiconductors and telecommunication Co. in 1978.




laid the groundwork for electronics in Korea
helped the domestic economy grow
paved the way for exports

• 1980’s: Samsung was manufacturing, shipping, and selling a wide range of appliances and electronic products throughout the world.




A more comprehensive electronics company
established Semiconductor and Communication corporation
began memory chip business

• Early 90’s: Integration and Globalization



Sales at Samsung Group grew more than 2.5 times between 1987 and 1992. Mid-Late 90’s: Implementing new management strategies

Samsung Product Range
Some of Samsung products
Home Multimedia

Mobile Multimedia

Personal Multimedia

Core Components

Core-Competencies
Samsung- Core Competencies
High Quality
Standards

Superior
Efficiency

Innovation
Drive

Customer
Responsiveness

Reliable Products
• Reliable Products • Work with design firms
• Located main R&D • Learning new design
• Employee welfare
facility and fabs at
rules and application
• Active Recruitment
a single site
• A common design
of foreign Talent
• Performance
platform with
• Global Strategy
based promotion
customization as per
Group
• Reward but
requirement
• Employees global
no Firing
business skills
Policy
Ability to customize product to
• Regional Specialist • Debate based
customer demands
program
agreements

Increasing Competition
Rank

Company

Market Share

1

Samsung

34%

2

Hynix

22%

3

Micron Technology

15%

4

Elpida Memory

14%

5

Qimoda

5%

Industry Analysis: Porter’s Five Forces
• Fierce Rivalry due to increase in capacity & cyclical downturn Industry • Entry of new Chinese companies
Rivalry

• Suppliers are likely to becomes more concentrated and offer about 5% discount on bulk purchase
Supplier
• Buyers are largely OEM with no one controlling more than 20% of the market. Buyers • Buyers are likely to negotiate hard for prices.

Entry
Barrier

Substitute

• High entry barriers due to requirement of capital investment and complex • Chinese firms going for joint ventures and access to foreign investment. • Memory chips did not have any substitutes but old technology is likely to be replaced by more advanced technology.

SWOT Analysis

Strength
Weakness
Opportunity
Threats

• Diversified product line to cover all customer needs
• High market share in Mobiles, Memory Chips and LCD
• High Brand value from multiple sponsorships
• High investment on research and development
• Customers place question on durability of products
• Lack of focus on niche market
• Low Average salary in the market

• Strong and growing customer demand for high-end products • Young population gives a chance to develop customer base for future

• Intensifying competition
• Low cost Chinese products
• May lose advantage of DRAM technology to new Nana Tech

Competitive Advantages of Chinese Firms

• Access to cheap labour and
local engineering talent
• Government subsidies
• Easy access to local &
international financial capital
• Lower cost structure
• Willing to endure years of
losses to gain market share

Competitive Advantages of Samsung
• Dedicated workforce of manual...
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