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Individual assignment

Assignment Submission for FinalFulfillment

For

International Business

By

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4 AUGEST 2014

Contents1.0 Introduction...................................................3

QUESTION 1.........................................................5

2.0 Evaluation on Samsung Electronics’ Global Strategy tools.......5

2.2 Ansoff Matrix..................................................5

2.2.1 Market penetration.......................................52.2.2 Market Development.......................................6

2.2.3 Product Development......................................62.2.4 Diversification..........................................6

Question 2.........................................................7

3.0 Porter five forces.............................................7

3.1 The threat of potential new entrants (Low)...................73.2 The threat of substitutes (High).............................8

3.3 The bargaining power of buyers (High)........................83.4 The bargaining power of suppliers (Low)......................9

3.5 The intensity of competitive rivalry (High)..................94.0 Samsung Global Market Strategy.................................9

Question 3........................................................11

5.0 Hofstede's Cultural Dimensions of Samsung Smartphone’s and SouthKorea.............................................................11

5.1 Power distance..............................................11

5.2 Individualism...............................................115.3 Masculinity.................................................12

5.4 Uncertainty avoidance.......................................12

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5.5 Pragmatism..................................................135.6 Indulgence..................................................13

6.0 Conclusions...................................................14

7.0 References....................................................15

1.0 Introduction Samsung was found in 1938, by Lee Byung-chull as a trading

company based in Su-dong. The small company started as a

grocery, trading goods produced in and around the city as well

as its own noodles. The company grew and soon expanded to

Seoul in 1947 but left once the Korean War broke out. After

the war, Lee expanded in to textiles and built the largest

woollen mill in Korea.

Samsung entered the electronics industry in the 1960's with

the arrangement of several electronics focused divisions. The

primary electronics divisions included Samsung Electronics

Devices, Samsung Electro-Mechanics, Samsung Corning, and

Samsung Semiconductor & Telecommunications. Samsung built

their original facilities in Suwon, South Korea, where they

started producing black and white television sets.

In 1980, Samsung entered the telecommunications hardware

industry with the purchase of Hanguk Jenja Tongsin. Initially

building telephone switchboards, Samsung expanded in to

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telephone and fax systems which eventually shifted to mobile

phone manufacturing. The mobile phone business was grouped

together with Samsung Electronics which began to invest

heavily in research and development throughout the 1980's.

During this time Samsung Electronics expanded in to Portugal,

New York, Tokyo, England and Austin, Texas.

In 1987 with the death of Lee Byung-chull, the Samsung

group was separated in to four business groups leaving the

Samsung Group with electronics, engineering, construction, and

most high-tech products. Retail, food, chemicals, logistics,

entertainment, paper, and telecom were spun out among the

Shinsegae Group, CJ Group, and Hansol Group.

Samsung has also continued to increase in the mobile

phone market, becoming the largest manufacturer of mobile

phones in 2012. To remain a overlook manufacturer, Samsung has

earmarked $3-4 billion to upgrade their Austin Texas

semiconductor manufacturing facility.

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QUESTION 1

2.0 Evaluation on Samsung Electronics’ Global

Strategy toolsIn the latter part of this paper will explain these strategies

in international business related terms. Strategic expansion

of Samsung to achieve and sustain the role as a market leader

in the mobile Smartphone sector by using the appropriate tools

as following below:

2.2 Ansoff Matrix

To describe alternative corporate growth strategies, Igor

Ansoff presented a matrix that focused on the firm's such as

Samsung present and potential products and markets

(customers). By considering ways to grow via existing products

and new products, and in existing markets and new markets,

there are four possible product-market combinations, (Michell,

T., 2010).

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Figure 3: Show different growth strategy.

Source: http://businesscasestudies.co.uk/portakabin/achieving-

growth-through-product-development/ansoffs-

matrix.html#axzz2r8x8tSIk

2.2.1 Market penetration

Samsung seeks to achieve growth with existing products

in their modern market segments, aiming to increase its market

share. The market penetration strategy is the least risky

since it leverages many of Samsung existing resources and

capabilities. In a growing market, simply maintaining market

share will result in growth, and there may exist opportunities

to

increase market share if competitors reach capacity limits.

However, market penetration has limits, and once the market

approaches saturation another strategy must be pursued if

Samsung is to continue to grow.

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2.2.2 Market Development

Samsung seeks growth by targeting its existing products

to new market segments. Market development options include the

pursuit of additional market segments or geographical regions.

The development of new markets for the product may be a good

strategy if Samsung core competencies are related more to the

specific product than to its experience with a specific market

segment. Because Samsung is expanding into a new market, a

market development strategy typically has more risk than a

market penetration strategy.

2.2.3 Product Development

Samsung develops new products targeted to its existing

market segments. A product development strategy may be

appropriate if Samsung strengths are related to its specific

customers rather than to the specific product itself. In this

situation, it can leverage its strengths by developing a new

product targeted to its existing customers. Similar to the

case of new market development, new product development

carries more risk than simply attempting to increase market

share.

2.2.4 Diversification

Samsung grows by diversifying into new businesses by

developing new products for new markets. Diversification is

the most risky of the four growth strategies since it requires

both product and market development and may be outside the

core competencies of the Samsung. However, diversification may

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be a reasonable choice if the high risk is compensated by the

chance of a high rate of return. Other advantages of

diversification include the potential to gain a foothold in an

attractive industry and the reduction of overall business

portfolio risk.

Question 2

3.0 Porter five forces

Figure 2: show porter five forces.

Source:

http://www.ftsmodules.com/public/texts/valuationtutor/VTChp0/t

opic4/topic4.htm

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3.1 The threat of potential new entrants (Low)

High capital is required to enter into the mobile

industry such as Samsung. It is difficult to start up in an

industry where the existing Samsung already operate on cost

and differentiation strategies (Chan et al, 2011, p.12).

However, with the commoditization of parts, finding solutions

for a simple alternative product might be possible. New

entrants such as Samsung electronics would have issues with

overcoming obvious issues if they didn’t plan on investing in

their own R&D to create a unique product such as galaxy IIII.

These things together would require a new entrant to establish

a competitive brand name while achieving economies of scale

via investments in a supply chain process and developing a

distribution infrastructure to remain competitive. The costs

of accomplishing these things make a very strong barrier to

entry.

3.2 The threat of substitutes (High)

For Samsung, almost any phone that performs the same

functions as a Samsung phone could be considered a substitute.

This includes other devices running the Android OS and not

made by Samsung, (Motorola Droid comes to mind) as well as

other devices like the Apple iPhone or Blackberry. All of

these are in high abundance with similar cost and highly

competitive.

The threat of substitute products within Samsung Company,

however, is low. Although there is an increased popularity of

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Tablets such as Galaxy tablet 2.1 , they are generally too

large to be considered as straight substitutes. They don’t

offer a traditional mobile phone capability, which makes them

not enough. Laptops have the same problem. For some time they

had productivity features that the average mobile phone didn’t

have, but now mobile phones have all those capabilities and

more.

3.3 The bargaining power of buyers (High)

Buyers have good power when it comes to bargaining

because of their access to information and how competitive the

mobile phone industry such as Samsung. With so many similar

products from other carriers, buyers have several points on

which they can bargain. Whether it is by OS, price, tech specs

such as camera quality or screen resolution, carrier

availability, or something more.

Buyers easily switch cost with the increased of choices

of mobile companies and furthermore their products are quite

similar to one another; they will switch to those who have

better features or price points.

Usually a phone such as Galaxy II will come at a lower

cost to a buyer if it is purchased with a 2 or 3 year contract

via a service provider such as Samsung. Should this agreement

be ended before the contract is up, really large fees can be

incurred by the customer. Should the customer want a new phone

before the end of the contract, they will need to pay full

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price for it, assuming their carrier even allows a non-

contract purchase.

3.4 The bargaining power of suppliers (Low)

In Samsung’s case, the bargaining power of suppliers is low

because Samsung is its own supplier of most components.

Samsung also happens to be its own supplier for raw materials.

In the industry, however, the bargaining power of suppliers is

high because suppliers’ goods are critical to the buyers’

marketplace success (Huvard et al, 2011, p.8). This means they

are more important to the consumers than the mobile carriers

themselves. A mobile phone manufacturer could always integrate

forward into the industry without the middlemen such as

Rogers, Bell or Telus. (In fact, Samsung has already done this

within Korea).

3.5 The intensity of competitive rivalry (High)

The smart phone industry such as Galaxy IIII has many

competitors that are equally balanced, and thus competition is

high. The market for smart phones has slowed in growth since

its report, so pressure to take customers from competitors is

also high. Differentiation in the smart phone industry is also

at a point where it is very short-lived (Huvard et al, 2011,

p.9). Sustainable competitive advantage through innovation is

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an unknown. While Samsung has been doing great keeping up with

the industry and even leading in some areas, everything is

short-lived due to the extreme level of competition.

4.0 Samsung Global Market Strategy Collaboratively, Samsung global marketing strategy comes

generally in synergy with other strategies of innovation, and

vertical integration. Originally, Samsung had been a

Smartphone-driven company that focused on manufacturing

existing Smartphone’s such as Galaxy IIII at lower cost than

its competitors and thereby built market share by economies of

scales. Because Samsung had to build brand power to win in the

long run, they decided to switch over to value adding high-

quality marketing strategy to succeed in the global market.

now that quality, design and global market penetration are the

cornerstone to which SEC focuses on, SEC’s products themselves

became self-equipped marketing machines that help brand

awareness among the consumers an Smartphone industry. However,

there are still specific marketing tactics that SEC uses to

market their Smartphone. Penetration of the global market is a

critical source for SEC to increase their market share, but

this needs to come carefully with consideration of research of

the local market, (Ferrell, O. & Hartline, M., 2010).

Another critical factor of Samsung global marketing was its

redeployment of its marketing resources to build long term

brand visibility, brand loyalty, and brand awareness.

Initially, there were resistance from regional and product

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managers to major changes, but when Eric Kim, an executive VP

of global marketing operations on Smartphone, brought forth

enhancement of long term benefits such as brand preference,

market share, and operating profits, it showed that marketing

funds can be used more efficiently, (Dahlén, M., Lange, F. &

Smith, T., 2009).

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Question 3

5.0 Hofstede's Cultural Dimensions of Samsung

Smartphone’s and South Korea The recent economic success of South Korea has made the

country a popular destination for businessmen and global

business on Smartphone industry such as Samsung. Those

Americans that make the journey to South Korea must pay

special attention to the cultural that the country observes

the proper cultural practices. This statement is extremely

relevant because the United States contrasts South Korea in

every category of Hofstede’s Value Dimensions. South Korea’s

cultural dimensions on Smartphone industry are most similar to

the East Asian neighbours, especially to Taiwan.

5.1 Power distance This dimension deals with the fact that all individuals

in societies are not equal it expresses the attitude of the

culture towards these inequalities amongst us. Power distance

is defined as the extent to which the less powerful members of

institutions and organisations within a country expect and

accept that power is distributed unequally. South Korea, is a

slightly hierarchical society. This means that people accept a

hierarchical order in which everybody has a place and which

needs no further justification. Hierarchy in an organization

is seen as reflecting inherent inequalities, centralization is

popular, subordinates expect to be told what to do and the

ideal boss is a benevolent autocrat.

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5.2 IndividualismThe fundamental issue addressed by this dimension is the

degree of interdependence a society maintains among its

members. It has to do with whether people´s self-image is

defined in terms of Samsung Smartphone industry. In

Individualist societies people are supposed to look after

themselves and their direct family only. In Collectivist

society’s people belong to in groups that take care of them in

exchange for loyalty.

South Korea is considered a collectivistic society. This is

manifest in a close long-term commitment to the member group,

be that a family, extended family, or extended relationships.

Loyalty in a collectivist culture is paramount, and over-rides

most other societal rules and regulations .The society fosters

strong relationships where everyone takes responsibility for

fellow members of their group. In collectivist societies

offence leads to employer/employee relationships are perceived

in moral terms (like a family link), hiring and promotion

decisions take account of the employee’s in-group, management

is the management of groups.

5.3 MasculinityA high score (masculine) on this dimension indicates that the

society will be driven by competition, achievement and

success, with success being defined by the winner / best in

field a value system that starts in school and continues

throughout organisational behaviour.

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South Korea, on this dimension and is thus considered a

feminine society. In feminine countries the focus is on

“working in order to live”, managers strive for consensus,

people value equality, solidarity and quality in their working

lives. Conflicts are resolved by compromise and negotiation.

Incentives such as free time and flexibility are favoured.

Focus is on well-being, status is not shown. An effective

manager is a supportive one, and decision making is achieved

through involvement.

5.4 Uncertainty avoidance The dimension Uncertainty Avoidance has to do with the

way that a society deals with the fact that the future can

never be known: should we try to control the future or just

let it happen. This ambiguity brings with it anxiety and

different cultures have learnt to deal with this anxiety in

different ways.

South Korea is one of the most uncertainty avoiding countries

in the world. Countries exhibiting high uncertainty avoidance

maintain rigid codes of belief and behaviour and are

intolerant of unorthodox behaviour and ideas. In these

cultures there is an emotional need for rules (even if the

rules never seem to work) time is money, people have an inner

urge to be busy and work hard, precision and punctuality are

the norm, innovation may be resisted, security is an important

element in individual motivation.

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5.5 Pragmatism This dimension describes how every society has to

maintain some links with its own past while dealing with the

challenges of the present and future, and societies prioritise

these two existential goals differently. Normative societies

who score low on this dimension, for example, prefer to

maintain time-honoured traditions and norms while viewing

societal change with suspicion. Those with a culture which

scores high, on the other hand, take a more pragmatic

approach: they encourage thrift and efforts in modern

education as a way to prepare for the future.

5.6 Indulgence One challenge that confronts humanity, now and in the

past, is the degree to which little children are socialized.

Without socialization we do not become “human”. This dimension

is defined as the extent to which people try to control their

desires and impulses, based on the way they were raised.

Relatively weak control is called “indulgence” and relatively

strong control is called “restraint”. Cultures can, therefore,

be described as indulgent or restrained.

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6.0 Conclusions The competitiveness of the global marketplace has

required organizations to become innovative not only in the

Smartphone they create but as well as in their strategies and

approaches. Indeed, Samsung’s success manifests the

substantial returns from innovating within the organization.

This involved the styles of the senior marketers to effect the

innovation by encouraging participation and involvement of the

employees.

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7.0 References Online :

Burris, M. (2014). What You Don't Know About Samsung. [online]

About.com Components. Available at:

http://components.about.com/od/Companies/p/The-History-Of-

Samsung.htm [Accessed 3 Aug. 2014].

Cct424-samsung.wikispaces.com, (2014). cct424-samsung - Five Forces.

[online] Available at: http://cct424-

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samsung.wikispaces.com/Five+Forces [Accessed 3 Aug. 2014].

ChinaAbout.net, (2014). Analysis of Samsung’s strategic management and

business strategy - ChinaAbout.net. [online] Available at:

http://www.chinaabout.net/analysis-of-samsungs-strategic-

management-and-business-strategy/ [Accessed 3 Aug. 2014].

Essays, U. (2014). Management Strategy Of Samsung Electronics

Management Essay. [online] Ukessays.com. Available at:

http://www.ukessays.com/essays/management/management-

strategy-of-samsung-electronics-management-essay.php

[Accessed 3 Aug. 2014].

Kovach, S. (2013). How Samsung Went From A Dried Fish Exporter To One Of

The Top Names In Tech. [online] Business Insider. Available at:

http://www.businessinsider.com/history-of-samsung-2013-2?

IR=T&op=1 [Accessed 3 Aug. 2014].

Samsung, (2014). SAMSUNG. [online] Available at:

http://www.samsung.com/us/aboutsamsung/samsung_group/histor

y/ [Accessed 27 Jul. 2014].

Sites.google.com, (2014). Hofstede's Cultural Dimensions - South Korea VS

Thailand. [online] Available at:

https://sites.google.com/site/southkoreavsthailand/south-

korea/values/hofstede-s-cultural-dimensions [Accessed 3

Aug. 2014].

Slideshare.net, (2014). Samsung Electronics Strategy & Business Model.

[online] Available at:

http://www.slideshare.net/egvozdev/samsung-electronics-

strategy-business-model [Accessed 3 Aug. 2014].

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Stephen Bodine's Culture Blog, (2013). South Korean Culture According

To Hofstede. [online] Available at:

http://sbodine21.wordpress.com/2013/09/19/south-korean-

culture-according-to-hofstede.

Journals:

Chan, Joshua, Zhisui Chen, Irene Cormane, Nou Her, and Renie

Thomas. Cell Phone Industry Analysis. Rep. 12 May 2006. Web. 5 Oct.

2011.

<http://www.csus.edu/indiv/h/hattonl/industryanalysis.doc

Huvard, Sky, Rodrigo Salcedo, Lateshia Tuppince, Matt Wentz,

and Lindsay Zolad. Vodafone Air Touch: The Acquisition of Mannesmann.

Rep. May 2006. Web. 5 Oct. 2011.

<http://www.cybozone.com/vcu/Vodafone_Air_Touch__The_Acquisiti

on_of_Mannesmann.pdf.

Ferrell, O. & Hartline, M., 2010. Marketing Strategy. 5th ed.

London: Cengage Learning.

Dahlén, M., Lange, F. & Smith, T., 2009. Marketing

Communications: A Brand Narrative Approach. London: John Wiley

and Sons.

Michell, T., 2010. Samsung Electronics: And the Struggle For

Leadership of the Electronics  Industry. London: John Wiley

and Sons.

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