Samsung: from Gallop to Run

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I.Situation Analysis

A.Company Philosophy

Samsung Electronics has to be the cutting-edge product leader in consumer electronics producing new sleek, bold, and beautiful products which they called as “lifestyle works of art” intended for the high-end users. Each product has to pass the “WOW” test. If it did not get the “WOW” reaction during market testing, it is scrapped or sent back to the design studio.

B.Current Strategy

The company is focused on the development and production of innovative, stylish, and new consumer electronics product intended for high-end customers. Along with this, the company also changed its distribution system abandoning low-end distributors and choosing to build strong relationship with high-end and specialty retailers.

C.Relevant History

Samsung Group of Companies, the parent company of Samsung Electronics, was founded in 1938 by Lee Byung-Chuil. It is now the world’s largest conglomerate, second largest shipbuilder, a major global construction company and the largest insurance company in South Korea.

In 1969, Samsung Electronics was established. It started as a maker of cheap consumer electronic products like calculators and black and white TV’s through the mid – 1990’s.

In 1993, CEO/Chairman Lee Kun-Hee unveiled his “new management” strategy bringing Samsung Electronics to ambitious new direction. Instead of being a copy cat, the company has to produce new, sleek, bold, beautiful and innovative consumer electronic products. The company hired new crop of fresh, young designers who unleashed a torrent of new products. The goal was to become no. 1 in consumer electronic products.

Beginning 1993 Samsung Electronics also changed its distribution strategy abandoning low-end distributors and choosing specialty retailers for its new, stylish, and innovative products.

Samsung achieved its goal to become number 1 in consumer electronic products in 2005. They’re no.1 up to now.

D.Financial Analysis

Samsung Electronics is backed up by the biggest conglomerate in the world, The Samsung Group, which is so big that it accounts for 25% of all corporate profits in South Korea.

With its new stylish and innovative products and revamped distribution system, it dislodged Sony as No. 1 in 2005. In 2009, Samsung rang up revenues of $117 Billion with profits of $8.3 Billion compared to Sony’s $77 Billion in revenues and a net loss of $1 Billion.

Recently, Samsung unveiled a $23 Billion investment plan intended for new equipment, plants, capital expenditures, and for research and development. This $23 Billion investment plan is bigger than the combined investments budgets of Intel, IBM, and Sony.

E.Marketing Audit

Product Development – Samsung has developed many consumer electronic products with cutting edge technology such as TV’s, cell phones, DVD players, home theatres, digital cameras, camcorders, laser printers, and home appliances. It also produces electronic components like LCD and LED panels, mobile displays and flash memory for other electronic companies.

Market Development – the company altered its distribution system focusing on high-end and specialty retailers for its products. Its products are distributed around the world.

Market Penetration – the company is not competing with low priced consumer electronic products. Its stylish and innovative products are intended for high end users. Despite this strategy, Samsung became the No. 1 TV manufacturer and the 2nd largest cell-phone producer.

F.Management Capabilities

The management style of the company is to be always forward looking moving all of its products towards new styles and innovation. In its “new management strategy” all of its products has to pass the “WOW test”. If it will not get a WOW reaction during market test, it will be sent back to the design studio. Despite being No. 1, its CEO always reminded everybody that their products will be obsolete in the next...
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