Samsung: Transformation from Follower to Innovator

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Field course Strategy & Innovation

Transformation from follower to innovator

Final Paper

Name: Frank Molema
Supervisor: Dr. H. Snijders

Table of Contents
1. Introduction3
2. Industry analysis4
2.1 General environment4
2.2 Market Factors7
2.3 Porter’s Five Forces11
2.4 Conclusion Industry Analysis13
3. Company Analysis14

3.1 Business Model14
3.2 Company Strategy15
3.3 Competitive advantage16
3.4 Vertical Integration17
3.5 Conclusion company analysis18
4. Conclusion micro- and macroanalysis19
5. References21
6. Appendix22

1. Introduction

In the early 80’s Samsung was regarded as a follower in the consumer electronics industry. They delivered average quality products and were not regarded as a serious threat by most mainstream consumer electronics producers. Nowadays Samsung is widely regarded as one of the most innovative companies in the world, in which it competes for top market positions in several electronics segments ranging from semiconductors and flash memory to LCD-televisions and mobile phones. How did this change come about? Well, this is one of the main questions I am trying to answer in this paper. It focuses on the non-technical aspects of the innovation that Samsung has created and implemented in its firm in the last decade. Since Samsung is such a huge multidivisional corporation, I decided to focus on the consumer’s electronics division and specifically the consumer mobile phones. This division is renowned for its innovative products and Samsung competes for market share against fierce competitors like Nokia, Sony Ericsson and Motorola.

The mobile phone industry nowadays is swamped with manufacturers who all try to push their product on the market. So it is necessary to differentiate your product from the rest of the manufacturers. Samsung’s idea on this is that you have to recognize the phone as a Samsung even if it doesn’t say Samsung on it. This type of brand identification is all related to the design of the phone. The following main research question was :

How is Samsung competing on the basis of non-technical innovation in the global mobile phone industry? Sub-questions:
What is the general environment the mobile phone manufacturers compete in? •Who are the main competitors in the market?
What are the opportunities and threats facing the market? •How is Samsung’s strategy important for the success?
What advantages does vertical integration bring Samsung?

2. Industry Analysis

This chapter will focus on the industry Samsung operates in. For this paper I focused on the global mobile phone industry. The definition of an industry is a group of firms whose products have so many of the same attributes that they compete for the same buyers. I will analyze the attractiveness of the market and try to point out threats or opportunities Samsung has to deal with.

2.1. General environment

The general environment is a given in an industry. Companies cannot exert their influence on the environment, so they have to find ways to work in this environment.

2.1.1. Demography

The mobile phone market target group has focused at people in the age range from 18-35. This is the largest group of users. According to research by comScore (2007) these users can be categorized in three groups: •The Cellular Generation – Ages 18 to 24, these young adults grew up with mobile phone awareness, experiencing mobile phones as a part of their everyday lives.

Transitioners – Ages 25 to 34, these people fall in between two distinct groups: those who grew up with mobile phone knowledge and those who did not. Mobile phones began to infiltrate everyday life during their teen years and early adulthood. •Adult Adopters – Age 35 or older, this group was not...
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