Samsung
Samsung Electronics Case
A.) Samsung has a competitive advantage, which grew from its focus on the quality of its memory chips. The company’s early insistence on creating quality goods and constantly improving the production process allowed it to gain the largest market share among competitors. Samsung was able to build reliable products because its management fostered a culture that emphasized quality in the production process. The company reinforced this culture with an incentive program that rewards employees with cash bonuses after the successful completion of a project. As a result, Samsung’s was recognized as a company that produces reliable products. Samsung’s advantage of producing quality products increased their customer’s willingness-to-pay and the price of their products, which has allowed the company to profit when nearly all of its competitors are not.
In each quarter of 2003, Samsung’s operating margin on DRAM’s was well above that of its competitors while its average selling price was also higher than competitors’ (Exhibit 3). In addition to increasing the price of its products, Samsung is also able to have consistently lower DRAM production costs than its competitors (Exhibit TBD3a). This is partially due to its concentration of R&D in one facility in South Korea, which saved the company on construction costs and increased the efficiency of the R&D process due to the benefits of collocation of production and R&D engineers. Samsung is creating added-value by widening the wedge between price and cost and is successful at capturing this created value. The company successfully drove down the costs of DRAM production and increased the price at which their products are sold.
A.) Samsung Competitor
WTP
OEMs pay upwards of 1% price premium for a reliable supplier (brand-driven, Samsung advantage).
Samsung has integrated design process, meaning high technology products and higher
A.) Samsung has a competitive advantage, which grew from its focus on the quality of its memory chips. The company’s early insistence on creating quality goods and constantly improving the production process allowed it to gain the largest market share among competitors. Samsung was able to build reliable products because its management fostered a culture that emphasized quality in the production process. The company reinforced this culture with an incentive program that rewards employees with cash bonuses after the successful completion of a project. As a result, Samsung’s was recognized as a company that produces reliable products. Samsung’s advantage of producing quality products increased their customer’s willingness-to-pay and the price of their products, which has allowed the company to profit when nearly all of its competitors are not.
In each quarter of 2003, Samsung’s operating margin on DRAM’s was well above that of its competitors while its average selling price was also higher than competitors’ (Exhibit 3). In addition to increasing the price of its products, Samsung is also able to have consistently lower DRAM production costs than its competitors (Exhibit TBD3a). This is partially due to its concentration of R&D in one facility in South Korea, which saved the company on construction costs and increased the efficiency of the R&D process due to the benefits of collocation of production and R&D engineers. Samsung is creating added-value by widening the wedge between price and cost and is successful at capturing this created value. The company successfully drove down the costs of DRAM production and increased the price at which their products are sold.
A.) Samsung Competitor
WTP
OEMs pay upwards of 1% price premium for a reliable supplier (brand-driven, Samsung advantage).
Samsung has integrated design process, meaning high technology products and higher