samsung electronics

7/21/2019 Samsung Electronics

http://slidepdf.com/reader/full/samsung-electronics-56d9d367961ff 1/7

1

CASE WAC SAMSUNG ELECTRONICS

HAISUM KHAN #11208027

SAMSUNG ELECTRONICS

Kun Hun Lee, Chairman of the Samsung group, Samsung electronics became the world‘s

leading memory producer of all type of Pc’s, digital cameras, game players and other electronic

products under his leadership.

1. ISSUES

he ma!or issue in this case Samsung faced was the entrants of Chinese manufacturers in

memory chip industry. "ainly S"#C $Semiconductor "anufacturing #nternational Corporation%,

Chinas largest foundry manufacturing logic and memory products was the emerging industry in

producing &'("s. Samsung was facing a cyclical downturn due to Chinese entrants.

(nother threat that was faced by the Samsung electronics was that these Chinese companies

were collaborating with each other and were manufacturing dram chips at lower cost than

Samsung electronics e)en at their e*pense of profit. Chinese go)ernment also facilitated these

Chinese companies to help them sustain growth. Samsung was facing a decline in their mar+et

share due to the Chinese firms as they could afford to sell their products at lower prices and grow

mar+et share of profitability.

2. ANALYSIS OF ISSUES

SMIC (Semiconductor Manufacturing International Cororation! an emerging

cometitor.

S"#C $semiconductor manufacturing #nternational Corporation% is China’s largest foundry

manufacturing logic and memory products including &ram production. S"#C strategy was not to

design chips but rather ta+e blue prints of chips from other manufacturing firms such as in --,

S"#C and #nfineon signed an agreement that authori/ed #nfineon to license technology to S"#C.

Similarly they purchased production facility of worth 01 billion from "otorola in 2ct --.



2



S"#C re)enue increased from 3-.0 million in -- to 43.5 million in --.the company was

getting international success, as in march --6 the company completed a dual listing on the 7ew

8or+ and Hong Kong stoc+ e*changes. See (e"#i$it 1!.

C%INESE COLLA&O'AION

he Chinese companies were collaborating with each other drastically to learn from the industry

sitting companies li+e #nfineon and 9lpida, and they were attracting billions of dollars in outside

financing to build state of the art production facilities.

Chinese companies despite being forbid from attaining e:uipment from us and aiwan they

simply went to other countries for their production. #n this process Chinese go)ernment played a

)ital role in the de)elopment of semi conductor industries as they pro)ided the necessary

infrastructure needs around Shanghai and ;ei!ing. he go)ernment pro)ided cheap credit,

abundant land, cheap utilities, engineering talent, ta* incenti)es and other essential resources to

anyone who wanted to build a cutting edge semiconductor facility with Chinese partner. ;y -1-

china was e*pected to become the world’s second largest purchaser of semiconductors, after <S.

See (e"#i$it 2!.

). *ECISION C'IE'IA

he decision criteria of Samsung electronics will be based on the S=2 (nalysis of

Samsung electronics. See (E"#i$it )!

Samsung ha)e competiti)e ad)antage had come from creating a uni:ue culture of inno)ation

due to its huge in)estment on research and de)elopment $' > &%. (nother ad)antage they

ha)e is that there research and de)elopment center is located in one single site. ? @ of total

re)enues are due to the hea)y in)estment in research and de)elopment.

Samsung can produce products for niche mar+et segments and de)elop products that match

the needs of that mar+et.



3



Samsung ha)e an ad)antage as he has multiple product segments $mobile phones, LC&

de)elopment%. Samsung can in)est in its multiple products segment de)elopment rather than

focusing on memory chip production.

(nother option Samsung ha)e is to collaborate with a Chinese partner to remo)e the threat of

losing mar+et share. ;ut this can bac+fire Samsung in the long run as the partners can

become competitors in the future and can copy the infrastructure of Samsung which is the

core competency of Samsung.

Samsung can remo)e the threat of Chinese entrants by not focusing on their competitors

itself rather focus on their internal affairs such as in)esting more on their employee training

and de)elopment, hiring new talent, creating entrepreneurial en)ironment which encourages

inno)ation.

+. *ECISION

Samsung should in)est in 'esearch and &e)elopment and should stic+ to their competencies

which ha)e gained them success.

,. 'ECOMMEN*AIONS (e"#i$it +!

Samsung should focus on in)esting on research and de)elopment and continue

manufacturing cutting edge inno)ati)e products.

Samsung should de)elop multiple product segments and don not focus on a single

segment de)elopment rather de)elop their segments collecti)ely.

Samsung should not worry about the entrants of Chinese manufacturers as he is a high

)alue brand and its competiti)e ad)antage is being a customer responsi)e brand.

Samsung should focus on de)eloping a customi/ed product de)elopment for indi)idual

needs.

Samsung should hire foreign talent and renew its recruitment strategy to de)elop a

competiti)e wor+force.



4



E"#i$it 1

Competiti)e ad)antage Chinese companies are see+ing.

• Lower cost structure

• 9asy access to large pool of engineering talent.

• Ao)ernment subsidies

• Ao)ernment relations



5



E"#i$it 2

Comparison of #ndustries

SAMSUN- INFINEON SMIC

AE'A-E SELLIN-

/'ICE

03.45 03.-3 06.6

FULLY LOA*E* COS 06.1 03.- 06.56

'A0 MEE'IALS 1.15 1.35 1.56

LA&O' -.36 -.?4 -.

*E/'ECIAION 1.3 1.3- 1.4

' * -.4- -.?1 -.5-

E"#i$it )

S0O ANALYSIS OF SAMSUN- ELEC'ONICS



W E A K N E S SW E A K N E S S

T H R E A TT H R E A T

O P P U R T U N I T Y O P P U R T U N I T Y

S

W

OT

6



E"#i$it +



7



Competencies Samsung en!oys at the moment.

Samsung competiti)e ad)antages and opportunities it has

in future.

• Lower cost infrastructure $research and

de)elopment in one single site %

• High in)estment in ' > &.

• "ultiple product segments.

• Binancial stability

• High )alue brand

• (ll the applications shared a common core design.

• Customi/ed products for indi)idual needs.

• #n)esting more on employees.

samsung electronics

Documents