Samsung ElectronicsCase Analysis

October 13, 2010 Group 4: Ben Julian, Samantha Macdonald, Lauren McNamara,

Tom Pojero, & Laura Voisine

1. About Samsung – Tom 2. External environment- Ben3. Internal analysis- Lauren4. Business strategies- Laura5. Problems identified- Samantha6. Our suggestions- Samantha

Overview

Founded in 1938 Headquarters in Samsung town, Seoul, South Korea 276,000 employees worldwide World’s largest electronic company by sales Lee Kun-Hee took over as CEO in 2009 They are also involved in shipbuilding, construction, life

insurance and even have a theme park 20% of Korea’s GDP

Who is Samsung?

Consumer Products Cell Phones and Televisions 21% of global cell phone market share as of Q3, 2009 23% of global television set market share as of Q3, 2009

Technology Products Memory Chips and Displays Over 40% of global market share of memory chips as of 2008 Products include devices such as flash drives, hard disk drives,

and dynamic random access memory cards

Samsung’s Divisions:

o Consumers o Through large retailers like Wal-Mart, Best Buy and otherso Cell phones, televisions, home appliances, and

computers o Business to Businesso Heavy Investment in R&Do Their incredible core technologieso Over 100 design awards

o Business to Government (through other Samsung companies)o Nuclear Power Plants in the United Arab Emirateso Solar Energy in Ontario, Canada

Who are Samsung’s Customers?

Stakeholder Analysis Employees and Communities –

◦ Largest corporation in Korea◦ Major Employer of many Koreans and people worldwide◦ Represent 20% of Korea’s GDP

Government – ◦ Major source of tax revenue

Suppliers and Customers – ◦ Huge consumer of materials and customer to many

Korean companies◦ Produce consumer products, customers look for good

quality at reasonable price Stockholders

Five Forces of Industry Profitability:

Profitability Gained through

market share - Differentiation

Threat of Substitutes- Minimal

Buyers – High Bargaining power, many choices in

products

Suppliers – Low bargaining power,

Samsung is high volume customer

Industry Competition- Television and Smart

Phone market extremely competitive

New Entrants – Threat exists in new product markets not in major

markets

Strategic Group Analysis – Television Market

LED/3D Market

LCD – Samsung, Sony, LG, Vizio,

Philips

Proscan, Memorex, AOC, Sansui, Major Brands Plasma

Price Perceived Quality

Value Chain Analysis: ◦ Technology development is the company’s strongest

activity. ◦ Inbound Logistics is a possible area of improvement. They

need to continue to find ways in which they can continue to cut costs.

◦ Possess a fast market launch, but other activities could further be improved.

Internal Analysis:

Competitive Advantage◦ Samsung’s research and development team is

what differentiates the company from its competitors.

◦ By continuing to utilize this differentiation strategy, the company will see an increase in profits.

◦ The innovation of their research and development team is going to be a key element of their future success.

Internal Analysis:

Previously cost management New products are a result of Samsung’s

desire to differentiate itself Samsung’s position in the marketplace:

Business Strategies:

Samsung LG

Sony Toshiba

*Chart shows revenue of each company

Current revenue generators:◦ Low cost, low priced products like laptops and

basic cell phones Potential growth areas:

◦ High end cell phones and tablets (the Galaxy line)◦ Innovative home appliances◦ Home theaters of the future (3-D technology)

Business Strategies:

*According to manufacturers' estimates

Apple vs. Samsung Product Differentiation

Problems and Issues: Hurt by the worldwide economic recession in 2008 On the brink of bankruptcy in the late 1990’s Previously identified as a “me too” brand Haven’t branched out into music, movies,

or video games (like competitors Apple and Sony)

Inability to acquire The SanDisk Corporation (inventor and largest supplier of storage cards in the world)

Suggested Solutions:• Start taking risks!• Use techniques that have worked in other domains• Suggestion #1: continue building a fund for research and

development to develop a strong competitive advantage over others

• Suggestion #2: develop a more rigorous advertising campaign

Our Recommendations:• Maintain a logical research and development strategy – Don’t play “catch up” – Design and introduce new products to the market that will

likely make a profit– If the product needs improvements or further innovation, re-

visit R & D & invest more money– Don’t waste money in R & D of products that may not

survive in today’s marketplace• Boost advertising and marketing campaign– Learn about consumers – Target the right people – Advertise more aggressively – Market products as innovative but within a reasonable cost

range – Continue to cut down factory costs – Use just-in-time inventory management

Q&A Opportunity