A COMPARATIVE STUDY OF BUSINESS STRATEGIES BETWEEN KOREA AND JAPAN: A CASE OF ELECTRONICS ITEMS BETWEEN SAMSUNG AND SONY CHOONG Y. LEE * *Daniel Froes Batata, Ha Sook Kim, Gladys A. Kelce College of Business, Pittsburg State University, Pittsburg, KS 66762, U.S.A. ABSTRACT Sony, one of the world‟s most prominent companies in the electronics industry from Japan, has dominated the markets from all over the world for a long time since 1970s. Over the last decade, however, it has faced challenges to maintain its growth. Although sales levels have been relatively steady over the last decade, its profitability has gone from approximately eight to almost zero percent in 2009. Concomitantly, Samsung Electronics from Korea has successfully overcome the challenges presented in the global market. During the same period, its sales have increased over 600 percent and its profitability in 2009 was over ten percent. Additionally, the company has gained prestige in the minds of consumers and enjoys a privileged position in the electronics industry from all over the world. This paper discusses the reasons why the companies have had different performances in the markets and examines their challenges for the future. KEYWORDS: Comparative Study, Business Strategies, Electronics Industry, Korea, Japan. ______________________________________________________________________________ INTRODUCTION The electronics industry is one of the most dynamic markets today. New technologies are daily launched into the market and the life cycle of electronic products is extremely short. In order to survive, companies and countries have to be in constant search for improvement and innovation. Two of the major companies in this market, Sony and Samsung Electronics, have adopted different strategies to survive and thrive in this industry. In past decades Sony has developed new products and, thus, has not focused its energies in competing in the highly commoditized segments of the market. Samsung, on the other hand, has developed strong operations capacity and, with a constant and aggressive push for innovation, has succeeded in the highly competitive market. Over the past decade Sony and Samsung Electronics have presented very dissimilar paths of development. While the first had stagnant sales and went from one of the most profitable electronics companies in the world to almost non profitable, the latter had extraordinary growth in both measures. Additionally, Sony‟s market capitalization was once many times bigger than that of Samsung. In the present, however, Samsung Electronics became more valuable than ZENITH
International Journal of Multidisciplinary Research
Vol.2 Issue 3, March 2012, ISSN 2231 5780
Sony. This measure demonstrates that the market is more confident in the future of Samsung Electronics than of its Japanese contender. How was Sony, one of the most prestigious companies in the electronics industry, surpassed by Samsung, which was until recently known as a components producer? Why have they presented such different sales and profitability results in the last decade? Was the difference in performance caused by their strategies in approaching the challenges of the industry? How have both companies reacted to the results and what are their challenges in the future? We are going to analyze the reasons for such discrepancy in performance in the last decade of both companies. We will also attempt to identify if actions are being taken by both companies to correct the problems and face the new challenges of the environment. This paper attempts to identify the reasons for the difference in performance between the electronics segments of Sony and Samsung in the last decade. It also attempts to recognize the competitive strengths and weaknesses of both companies, and the reasons for their success or failure in maintaining market share and profitability growth. The purpose is to identify future challenges for both companies...