Samsung Electronics Case Analysis
Junhui Yan
MGT 499
Ms. Lee
March 5, 2014
Samsung Electronics Case Analysis This case study analysis on Samsung Electronics Company (SEC) and identify its competition advantages and threats. In this case, authors mainly talk about the business of Samsung Company in memory industry market. This paper consists by the following section: external analysis, internal analysis, and problem solution. ⅰExternal Analysis Using the six forces model to analyze this case, we can identify opportunities and threats of Samsung in the memory market. Industry competition is medium to high, because it has many competitors, but Samsung is clear market leader now. Besides the six major competitors, many Chinese firms want into this market. In addition, high differentiation and high fixed cost as exist barriers. Bargaining power of buyers is moderate, since buyers were largely OEM, and Siegel and Chen state: “OEM would negotiate hard for a price as memory represented 4-12% of PC cost and 4-7% of mobile phone cost. Buyers would pay 1% premium for reliable suppliers” (Siegel and Chen 2). Bargaining power of suppliers is high. There are few vendors for memory industry, “supplier become more concentrated and would provide 5% discount for high volume buyers”( Siegel and Chen 2). Threat of substitutes is low, since there is no effective substitute for memory chips. Threat of potential entry is high, because of large capital investment and complicated technology. PC and mobile phone are memory chips’complementors. However, PC and mobile phone market are maturity, customer demand is decline. ⅱInternal Analysis Based on the result of VRIO analysis (table I), Samsung has substantial competitive advantages in DRAM market. According to invest an amount of capital in R&D and strong leadership, Samsung as a leader occupied largest market share in DRAM market over 13 years (Siegel and Chen 8).
Table 1: Samsung’s VRIO Analysis
Valuable
Rare
Hard to imitate
Efficient Organization
MGT 499
Ms. Lee
March 5, 2014
Samsung Electronics Case Analysis This case study analysis on Samsung Electronics Company (SEC) and identify its competition advantages and threats. In this case, authors mainly talk about the business of Samsung Company in memory industry market. This paper consists by the following section: external analysis, internal analysis, and problem solution. ⅰExternal Analysis Using the six forces model to analyze this case, we can identify opportunities and threats of Samsung in the memory market. Industry competition is medium to high, because it has many competitors, but Samsung is clear market leader now. Besides the six major competitors, many Chinese firms want into this market. In addition, high differentiation and high fixed cost as exist barriers. Bargaining power of buyers is moderate, since buyers were largely OEM, and Siegel and Chen state: “OEM would negotiate hard for a price as memory represented 4-12% of PC cost and 4-7% of mobile phone cost. Buyers would pay 1% premium for reliable suppliers” (Siegel and Chen 2). Bargaining power of suppliers is high. There are few vendors for memory industry, “supplier become more concentrated and would provide 5% discount for high volume buyers”( Siegel and Chen 2). Threat of substitutes is low, since there is no effective substitute for memory chips. Threat of potential entry is high, because of large capital investment and complicated technology. PC and mobile phone are memory chips’complementors. However, PC and mobile phone market are maturity, customer demand is decline. ⅱInternal Analysis Based on the result of VRIO analysis (table I), Samsung has substantial competitive advantages in DRAM market. According to invest an amount of capital in R&D and strong leadership, Samsung as a leader occupied largest market share in DRAM market over 13 years (Siegel and Chen 8).
Table 1: Samsung’s VRIO Analysis
Valuable
Rare
Hard to imitate
Efficient Organization
Cited: Siegel, I Jordan and Chang, James Jinho. “Samsung Electronics” Harvard Business School: 1-26. Web. 3 Mar .2014.