Vo Thi Le Huyen 295929

Nguyen Doan Doan Hanh 295904

Le Nhat Huy 295896

SAMSUNG ELECTRONICS

CLASS 1 – GROUP 8

I. Executive Summary Samsung is the second biggest mobile phone producer in the world. In 2009, it paid more

attention on the fashion style which attracted a great deal of young person and the shipments got

to 235 million, the market share got to 19.5%. Compared with 2008, it has a big improvement,

because the shipment and market share is only 199 million and 16.3% respectively. The successful

of Samsung electronics is come from the swift and agility, but lack of innovativeness may lead to

the loss of probability. Nowadays Samsung pay more attention on the Smartphone, the Bada

system is a good example. Bada system is a platform of the new smart phone which developed by

Samsung company, the interface of it is more fashion in color and style. So it can be looked as the

cash cow product because the market growth rate is low but the market share is very high, the

characteristic of which is the sale volume is high but the rate of liability is low, it can provide fund

for the company and the product do not need improve the invests. Everything they do at Samsung

is guided by mission: to be the best “digital-εCompany". Samsung grew into a global corporation

by facing challenges directly. In the years ahead, Samsung dedicated people with continue to

embrace many challenges and come up with creative ideas to develop products and services that

lead in their markets. Their ingenuity will continue to chart Samsung's course as a profitable,

responsible global corporation. Samsung is guided by a singular vision: to lead the digital

convergence movement. They believe that through technology innovation today, and they will find

the solutions that need to address the challenges of tomorrow. From technology comes

opportunity-for businesses to grow, for citizens in emerging markets to prosper by tapping into the

digital economy, and for people to invent new possibilities.

It’s our aim to develop innovative technologies and efficient processes that create new markets,

enrich people’s lives and continue to make Samsung a trusted market leader. As part of this vision,

Samsung has mapped out a specific plan of reaching $400 billion in revenue and becoming one of

the world’s top five brands by 2020. Samsung is committed to being a creative leader in new

markets and becoming a truly No. 1 business going forward.

The objectives of Samsung is lead the digital convergence movement, develop innovative

technologies and efficient processes and continue to make Samsung a trusted market leader, look

forward to exploring new territories, including health, medicine, and biotechnology, to identify

eight growth engines for Samsung's business including their Digital Television (DTV) products

and printers, to pursue innovation throughout all six main areas of the company's business

operations, and reaching $400 billion in revenue and becoming one of the world’s top five brands

by 2020. In strategies of Samsung, they want to develop new product to understand new product

development strategy overview in Samsung R&D. Through the interplay of creative, imaginative

people; a global R&D network, an organization that encourages collaboration and cooperation

among business partners all along the supply chain, and a strong commitment to ongoing

investment, Samsung has put R&D at the heart of everything. On the other hand, Samsung Get

feedback from customers based on new product to study effect of Consumer behavior on New

Product Development of Samsung: Customers are seemed to move to those products which have

good balance between style, technology and price of the product. Samsung is one of the leaders

that have sensed the pulse of the mobile phone users.

II. Introduction

Company mission

Everything they do at Samsung is guided by mission: to be the best “digital-εCompany".

To be the best

Digital-εCompany

Digital

To create technology products and services that lead the industry

ε

To put into place the most efficient management and production processes

Company

To maintain a steadfast focus on strengthening our organization, on continuing to be a global technology leader and trusted responsible company

Samsung grew into a global corporation by facing challenges directly. In the years ahead,

Samsung dedicated people with continue to embrace many challenges and come up with creative

ideas to develop products and services that lead in their markets. Their ingenuity will continue to

chart Samsung's course as a profitable, responsible global corporation.

Company vision

Samsung is guided by a singular vision: to lead the digital convergence movement.

They believe that through technology innovation today, and they will find the solutions that need

to address the challenges of tomorrow. From technology comes opportunity-for businesses to

grow, for citizens in emerging markets to prosper by tapping into the digital economy, and for

people to invent new possibilities.

It’s our aim to develop innovative technologies and efficient processes that create new markets,

enrich people’s lives and continue to make Samsung a trusted market leader.

Vision 2020

As stated in its new motto, Samsung Electronics' vision for the new decade is, "Inspire the

World, Create the Future."

This new vision reflects Samsung Electronics’ commitment to inspiring its communities by

leveraging Samsung's three key strengths: “New Technology,” “Innovative Products,” and

“Creative Solutions.” - And to promoting new value for Samsung's core networks - Industry,

Partners, and Employees. Through these efforts, Samsung hopes to contribute to a better world

and a richer experience for all.

Inspire the World, Create the Future

New Technology

Creative

Solutions

Innovative Products Partner

Industry

Employee

As part of this vision, Samsung has mapped out a specific plan of reaching $400 billion in

revenue and becoming one of the world’s top five brands by 2020. To this end, Samsung has also

established three strategic approaches in its management: “Creativity,” “Partnership,” and

“Talent.”

Samsung is excited about the future. As they build on their previous accomplishments, they

look forward to exploring new territories, including health, medicine, and biotechnology. Samsung

is committed to being a creative leader in new markets and becoming a truly No. 1 business going

forward.

Company objectives

o To lead the digital convergence movement.

o To develop innovative technologies and efficient processes and continue to make Samsung

a trusted market leader.

o Look forward to exploring new territories, including health, medicine, and biotechnology.

o To identify eight growth engines for Samsung's business including their Digital Television

(DTV) products and printers.

o To pursue innovation throughout all six main areas of the company's business operations.

Vision

2020 Partner

Vision Employee

Vision

Industry

Vision

o To be one of the top three electronics companies in the world in quantity and in quality by

2010.

o To more than double its 2004 sales revenue by the year 2010.

o To have 20 number one market share products in the world by 2010 (currently the company

has eight number one market share products).

o Reaching $400 billion in revenue and becoming one of the world’s top five brands by 2020.

Enter into the 3D video Gaming Market through a partnership with Microsoft.

In order to capitalize on the growing video gaming market, we intend on entering into a

partnership with Microsoft to develop a virtual gaming product. Short term, we would like to

couple 3D TV technology with a dominant video gaming console like the XBOX 360. By the year

2020 we intend on launching a virtual gaming product.

Launch a comprehensive and campaign that focuses on Samsung Electronic competitive

advantage in 3D technology.

An ad campaign focusing on our competitive advantage in technology would be highly

effective in selling more 3D TV’s to developing market. They want to make it known that Samsung

was the first to pioneer this technology. Therefore, they are getting the most advanced product in

the market.

Maintain market dominance throughout the “Glasses “ and prepare the market for a 3D TV

Samsung already established a firm hole on the 3D market, we would like to maintain our

position as market leaders in 3D technology with the use of 3D glasses. As the market evolves

closer to glasses free technology, they would like to prepare the market for our product release in

2014. They objective is to see them market share remain at 88% until the release of our glasses-

free product in 2014.

Company strategies

Samsung is a company that markets and market share of companies manufacturing technology.

Market Strategy of Samsung is flooding the market with a multitude of products in a short time,

Samsung produces many product lines and launched continuously. In addition, Samsung appeal to

more markets by providing more facilities on mobile phones, smartphones, tablets ... Samsung

market research for market classification to low market and high levels are able to use their

products. They were very good in the low end market, but Samsung only in recent years become

a strong company with many achievements and increase their sales in the smartphone market and

has gained a good amount. Specific example: "Last year saw Samsung achieved a lot of success,

they gain more market share. Samsung's market share has doubled to more than 36% in Q2 2011

from approximately 18% in the same period last year. "Increase market share rapidly, Samsung

achieved great success because they are willing to spend large sums of money to invest in different

devices than Apple. Samsung Galaxy SIII is considered the success of Samsung products with

sales of over 10 million units in 2 months. Many people believe that SIII is Samsung's answer for

Apple's iPhone products, as well as a reason for a huge growth in the market share of Samsung

cave. Finally, Samsung succeed when choosing Google's Android operating system for the

products they produce, in addition they also have smart phones using Windows Phone OS. While

Apple only narrow them into IOS software and not much change in the product design, the

Samsung is taking steps to develop more and gain more market share of the company Samsung.

Strategic value of the Samsung case works very well because they cannot only diversify their

hardware, but their software is better evaluate and use very clever.

Develop new product

To understand new product development strategy overview in Samsung R&D: As new

technologies are being constantly introduced to the market, speed is essential for remaining

competitive in today's digital era, and new markets have to be pioneered continuously. Through

the interplay of creative, imaginative people; a global R&D network, an organization that

encourages collaboration and cooperation among business partners all along the supply chain, and

a strong commitment to ongoing investment, Samsung has put R&D at the heart of everything

To understand methodology followed by Samsung R&D in New Product Development phase:

The popularity graph of the Samsung mobile phones shows an ascending curve. The reason for

such a rise obviously directs to the dedication of the makers in offering a state-of-the-art

technology that is cost-effective, stylish, and most importantly user friendly. Being the owner of a

wide range of service support centers throughout the globe, the popularity of the Samsung models

of this make stems from the reason of cost-effectiveness of the phone models.

Get feedback from customers based on new product

To study effect of Consumer behavior on New Product Development of Samsung: Customers

are seemed to move to those products which have good balance between style, technology and

price of the product. Samsung is one of the leaders that have sensed the pulse of the mobile phone

users. Mobile phones from this technological giant are a rare admixture of style and functionality.

To challenges and problems faced by the organization in the process.

III. Performance Review & Strategic/Financial

Goals

A. SWOT MATRIX

Samsung Group is one of the largest industrial groups in South Korea, operating through a

network of subsidiaries world. The company interested in more than 20 affiliates, and focuses on

electronics, finance and service activities. Samsung electronics is one of the world’s largest

manufacturers of random-access memory chip. 1. Strengths

Customers are loyal and appreciating the brand. Samsung is enjoying very good position

against its competitors. The company is maintaining very good relationship with its suppliers. The

company is also maintaining with laborers. Samsung is a financial strong and Stable. The

production processes and procedures of inventory management are consistent with industrial

standards.

Hardware integration with many open source OS and software. Samsung is focused on

producing devices which can be integrated with most of the software and OS. This gives

Samsung products an edge over Apple’s (its arch rival) devices, especially as Android and

other OS are gaining market share when is and OS X are losing it.

Excellence in engineering and producing hardware parts and consumer electronics.

Samsung is the number 1 by market share in televisions and mobile phones sales and some

of the hardware parts (processors, memory chips, etc.). This was largely achieved due to

excellence in engineering and both efficient and effective production.

Innovation and design. In 2011, Samsung ranked second on the list of US top patent

assignees. More patents strengthen Samsung position among its competitors. The firm also

won many awards for the design of its products, proving the superior advantage over the

competitors.

Focus on environment. Samsung focuses on producing environment friendly products that

are free from PVC and BFRs (currently only MP3 and mobile phones). It also develops

various recycling programs that are awarded for their success. Thus, Samsung’s focus on

environment gives it an edge over its competitors in the eyes of its customers.

Low production costs. The company has set up its production facilities in low cost

countries. This allows producing goods with low production cost and benefit Samsung as

it can offer lower price and earn higher margins.

Largest share in mobile phones and 2 place in smartphones sales in the world. Samsung

Electronics have achieved large market share in many products they sell, especially in

mobile phones, smartphones, semiconductors and television sets. Large market share has

its advantage, bargaining power that Samsung can use to further reduce costs and demand

for better contract conditions.

Ability to market the brand. Samsung is named as top rising brand by Interbrains and is the

9th most valuable brand with value nearly $33 billion. It has risen by 40% from 2011 to

2012. This was mainly achieved due to company’s ability to market the brand in sporting

events and social contributions.

2. Weaknesses

Samsung is facing hard competition. South Korea’s labor unions are strategically linked for

collective bargaining and negotiation. Samsung need improvements in defining the vision, mission

and strategic corporate objectives. Marketing management needs improvement in all the facts of

marketing. HRM also needs improvement in all the facts of human resources management.

Patent infringement. Samsung is infringing Apple’s and some other firms’ patents, thus,

damaging its reputation and having to pay a huge amount of money in damages.

Too low profit margin. Samsung Electronics is the largest technology business in the world

in terms of revenues but it has a low gross profit and net profit margins. Although its

smartphones business is quite profitable, Samsung’s profit margin is low due to its

semiconductors sales and aggressive price cuts.

Main competitors are also largest buyers. Apple, Sony, Dell, HP are the main buyers of

Samsung Electronics products as well as the firm’s main competitors. Such situation would

be favorable to Samsung (if competitors could not find complementary products and would

form a relatively low share Samsung’s revenues) because it could use its bargaining power

over competitors. Due to reverse conditions (competitors can find complements and they

form a relatively high share of firm’s revenues) Samsung cannot use its bargaining power

over competitors as it can easily lose its customers and sales.

Lack its own OS and software. Software and OS production has a high profit margin, can

increase integration of company’s products and brand loyalty. Without strong software and

OS Samsung is at disadvantage over its competitors.

Focus on too many products. Samsung Electronics serves 4 different industries with many

different products in them. Samsung is at disadvantage over its competitors because it loses

a focus when competing in too many industries and too many products.

3. Opportunities

The economic condition of South Korea seems favorable. Samsung is interiorizing the social

shifts. It is having constant policy given by the government. Samsung is reasonable equipped to

take care of technological changes. Samsung is maintaining good international relationship with

other.

Growing India’s smartphone market. India’s smartphone market is one of the least

penetrated among Asia/Pacific countries. Samsung has a strong presence in India’s market

and could use this opportunity to expand its sales.

Growing mobile advertising industry. The company could develop advertising platform for

its mobile devices and significantly benefit from this lucrative market.

Growing demand for quality application processors. Samsung is one of the key

manufacturers of application processors for smartphones and tablets. The growing demand

for these products requires best quality application processors that only Samsung provide.

Growth of tablets market. Tablets market is expected to grow in double digits over the next

few years. Samsung business has a strong position in tablets market and could expand it

by introducing newer, better quality tablet models, such as its current galaxy line.

Obtaining patents through acquisitions. The key to Samsung’s competitive advantage is

the large portfolio of patents. Patents can be discovered by engaging in costly R&D or

through acquisitions of other firms. Tries and the local.

4. Threats

The legislation has been passed frequently related to industry. Technological transformation

takes place in the industry was very high. Regulatory issues and safeguarding of property rights

was main threats in legislations.

Saturated smartphone markets in developed countries. Smartphones market in the

developed economies is saturated and the sales will not be growing at a high rate.

Rapid technological change. The serious threat that Samsung and the other tech companies

are facing is a rapid technological change. Companies are under the pressure to release the

new products faster and faster. The one that cannot keep up with the competition soon fails.

This is especially hard when the business wants to introduce something new, innovative

and successful.

Declining margins on hardware production. Samsung is the second largest semiconductors

producer where the profit margins are very thin, thus weakening the whole company's

figures.

Breached patents. Samsung Electronics has many patents which are often used by its many

competitors. Such situation makes it hard to find out which companies benefit from

Samsung’s technology but do not pay for the rights to use it.

Price wars. Samsung has a very low gross margin on many of its products and is already

selling some of them with significant price cuts. Competitors could follow price cutting

strategy too and induce price wars, which would erode Samsung’s profit margin to 0%.

B. Competitive Profile Matrix (CPM)

Since the rise of the smartphone in the past few years, there have been a major changes and

shifting position between many organizations in the mobile phone industries and if we observe the

result in the Competitive Profile Matrix, we can Cleary see that Samsung are now on the top of

the industries.

Samsung Apple Nokia Microsoft

Critical Success

factors Weight Rating Score Rating Score Rating Score Rating Score

Store Locations 0.10 4 0.40 4 0.4 3 0.30 3 0.30

Market Share

0.12 4 0.48 2 0.24 2 0.24 4 0.48

Consumer loyalty 0.10 4 0.40 3 0.30 3 0.30 2 0.20

Market

penetration 0.11 3 0.33 4 0.44 3 0.33 4 0.44

Advertising 0.07 3 0.21 3 0.21 3 0.21 4 0.28

Product variety 0.09 4 0.36 2 0.18 4 0.36 3 0.27

Brand reputation 0.11 4 0.44 4 0.44 3 0.33 4 0.44

Product quality 0.08 4 0.32 3 0.24 2 0.16 3 0.24

Price

competitiveness 0.10 1 0.10 3 0.30 4 0.40 3 0.30

Successful

product

promotions

0.06 4 0.24 3 0.18 1 0.06 4 0.24

Employee

dedication 0.06 4 0.24 4 0.24 3 0.18 3 0.18

Totals 1.00 3.52 3.17 2.87 3.33

Samsung reputations has increase and build up since the release of their Galaxy smartphone

product lines that are being considered having equal or even better qualities and features compare

to Apple iPhone. This has been prove by the market share of Samsung when compare to other

competitors such as Apple and Nokia when in 2013, Samsung has taken over 30% of the

Worldwide market share. This result is higher almost three times compare with the market share

of Apple in the same years.

This positive outcome also is the direct result of Samsung marketing plan in the past years which

create a very positive brand image and reputation in the market as well as build the customer

loyalty with the high quality products and services before and after the purchase. Samsung using

both the Android Operating System from Google and Microsoft Operating System which allow

user have more freedom and also more user-friendly that make Samsung products suitable for the

vast majority of consumer not to mention the wide range of products that Samsung offer to the

market. For the same generation phone, they can have at least two other type of phone with

different configuration that also have lower price and allow customer can be able to afford

Samsung products.

C. External Factor Evaluation (EFE) Matrix

Key External Factors Weight Rating Weighted

Score

Opportunities

A lot of countries encourage technology innovation and

high-tech industry is really important. 0.03 3 0.09

Countries value the protection of intellectual property 0.04 3 0.12

GDP and national income per capita increasing 0.12 3 0.36

Consumption pattern is changing from subsistence

consumption to well spending pattern 0.07 3 0.21

Samsung’s mobile phones have high attention 0.09 4 0.36

Growing India’s smartphone market 0.05 2 0.10

People more care about brand and quality than price 0.14 3 0.42

Threats

Legal issues with Apple 0.05 3 0.15

Price wars with Chinese phones 0.10 3 0.30

More and more new substitute and potential entrant 0.10 4 0.4

Strong competitors: Apple, Nokia, HTC… 0.12 4 0.48

The user experience is upgrading 0.09 3 0.27

Total 1.00 37 3.26

In the research and analysis of tall the External factors that influence and have effect on

Samsung Electronic business, there are a lot of opportunities for Samsung to depend on and take

advantages to increase their competitive position as well as acquire more competitive advantages

that help Samsung to develop their business and compete with other strong competitors such as

Apple or HTC and Nokia.

The first thing that is really important and also very potential opportunities for Samsung that the

advance and increase in the technology developing of all countries in the World. The benefits and

positive application of the technology has pushed the development of technology in the next level

and create a world full of possibilities for Samsung to exploit.

Most of the countries that have strong economic strength also spend a lot of their GDP only for

technology research and development. Take Japan for example, according to the 2013 Budget list

they spend about 0.4% of their GDP just only for technology development and they also very close

to South-Koran which Samsung can have access or acquire the technologies they need to develop

their new products line. This is very important when Samsung can survive on the market or not

depend on the technology level of their products when compare to their competitors. The

increasing in the world economic also helps to expand the range and variety of Samsung customer.

South-Korea also is one of the fast economic growths which also create the strong financial

resources for Samsung to extend and expand their market as well as their strength to penetrate and

enter new market. The higher standard of living means the increase in spending and expectation

of customer. Now they not care about the lowest price so much but the features and capabilities of

the products they buying. This is the opportunities but also a threat for Samsung now when they

have to develop the high-end product with better qualities and specification to meet and satisfied

the need and demand of the customer.

The threat from less – expensive products from the Chinese manufacturer that using the same

configuration and technologies like Samsung products also leave another huge impact on Samsung

revenue. The qualities of these products many not meet the standard of Samsung products but can

attract a lot of attention with their low prices and wide range of distributor. Now not only Samsung

have to deal with stronger and better competitors but they also have to solve their problem with

counterfeit products and cheap substitute from Chinese manufacturer. If we observe the market

share of these products, they are even higher than strong competitors such as Nokia or even Apple.

The fact that these products still have the strand in the market mean the prices affect still play a

major role in the success of an organization that engage in this industries.

Beside the expectation, the legal issues also create very difficult problems for Samsung, especially

on the North America market. Under the accused of Apple that Samsung stealing intellectual

properties from Apple to apply on their products line, this create the doubt of Samsung capabilities

and damages the brand images and reputation that Samsung has built over the years in the North

America market as well as other region in the world. The final result that Samsung cannot sales

some of their products in the North America market has left a huge impact on Samsung market

penetration and decrease Samsung percentage of market share in the North America market to only

9.6% in 2010 while Apple gain more and reach 16.1% in the same period of time.

In conclusion, Samsung need to overcome and eliminate or minimize the damages and effect of

these threats to protect their completive position in the market. However, to be able to complete

these goals they need to concentrate on their internal strength which is something they can have

total control and manipulated. Otherwise they will not stand a change with the threat from the

competitors in the industries

D. Internal Factor Evaluation (IFE) Matrix

The problems with the sale volumes of Samsung fourth generation smartphones has indicated

that Samsung have problems that is not related to complete to the external environment but is the

result of poor quality management from the inside of Samsung Electronic structure.

Key Internal factors Weights Rating Weighted

Score

Strengths

Brand Recognition and Loyalty 0.07 3 0.21

A large number of products and broad product line 0.05 4 0.20

Strong research and development ability 0.10 3 0.30

Hardware integration with many open source OS and

software 0.04 2 0.08

Innovation and fashion design, especially popular

among younger peoples 0.15 4 0.60

With extensive sales channels and propaganda 0.06 3 0.18

Low production costs 0.03 3 0.09

Largest share in Smartphone industry ( 30% market

share worldwide, extending its lead over Apple and

Nokia)

0.15 4 0.60

Weaknesses

Not high lighting Price/Performance Ratio 0.10 4 0.40

Lack its own OS and Software 0.07 4 0.28

Patent infringement 0.04 3 0.12

Too low profit margin 0.04 2 0.08

Limited high-end products 0.03 2 0.06

Focus on too many products, with inaccurate

positioning 0.07 3 0.21

Total 1.00 44 3.41

The poor and lack of original technologies will be the most dangerous weakness of Samsung.

In the industries that have the close relationship with the technologies and technologies

development, this is very vital factors that can actually put Samsung out of the games and these

also apply for their accused of Patent Infringement. The threat with all the lawsuit with Apple in

the North America market has also make the consumer question about the abilities and

technological capabilities of Samsung as well as the qualities of their products lines. The

opportunities that have the wide ranges of Products line also the great weakness for Samsung. With

too many products and lack of prioritization which one is the main products that need concentrate

marketing and promotion, the consumer don’t know which model to choose from, especially the

one who not have wide knowledge about.

This also affects the Price/Performance Ratio of Samsung products. If the consumer don’t have

the knowledge about the products and what is it capable of, they will hesitate to choose and spend

a very large sum of money for that products and most likely to choose what they think they know

better. Apple is very good at showing and demonstrate what their products can do under the usage

of average customer, in fact Apple products is very difficult to handle and not user-friendly when

compare to the Android OS based smartphone. However, Samsung is not utilized this factors as

much as they allow and lose the advantages over their competitors.

Although having many serious weakness, Samsung also very strong internally. Low cost

productions also allow Samsung to increase the configuration of the phone without the threat that

their price will be higher than other competitors. While other companies such as Apple or Nokia

have to outsourcing their manufacturing, Samsung have the geographic advantages that allow them

to have low –cost but high productivities labors Their brand images and reputation are very highly

recommended by many customers all over the world and even higher when compare with Apple

or Nokia. This is the direct result of their wide range of products line and high qualities that leave

the satisfaction in the customer.

In 2013 only, Samsung are on the top of brand awareness compare with other smartphone

manufacturer from big such as Apple or Nokia to cheap and low-qualities from China which

occupied over 20% when Apple is only 12% in comparison. These create very strong advantages

of Samsung on the market when the customer will recognize their brand anywhere and increase

the sale volume of Samsung products. Besides the smartphones manufacturing, Samsung also

engage in many other industries that allow them to have stronger and better resources in both

financial and technologies to support the development and competitive position of the smartphone

manufacturing.

E. Strategic Position and Action Evaluation (SPACE)

Matrix

Internal Strategy Position External Strategy Position

Y Financial Strength (FS) +1 to +6 Environmental Stability(ES) -6 to -1

+3 Earnings per share -2 Price of competitive product

+5 Revenue increase -4 Competitive pressure

+4 Return on Assets -4 Global economic

+4 Leverage -2 Technology changes

+3 Liquidity -2 Demand elasticity

+3 Cash flows -2 Inflation rates

Average 3.6 Average -2.6

Total Axis Y score: 1.07

X Competitive Advantage (CA) -6 to -1 Industry Strength (IS) +1 to +6

-1 Product quality +6 Barriers to entry

-2 Market share +5 Growth potential

-1 Brand & image +5 Access to financing

-3 Product life cycle +6 Consolidation

-5 Customer service +6 Profits

-2 Customer loyalty

Average -2.3 Average 5.6

Total Axis X score: 3.26

There is SPACE Matrix below:

Y

X

Conservative Aggressive

(3.26; 1.07)

Financial Strength (FS)

Earnings per share

Earnings per share also reduce from 67,916 in 2004 to 37,684 in 2008, so I give it +3

Revenue increase

Samsung sales are up from 63 million in Q4 2012, Revenues rose 17% to 52.9tn won and operating

profit was up 54%. I give it +5

Return on Assets

Return on capital employed (ROCE) = Operating profit/ (Average shareholders' funds+ Loans)

According to Profitability (Net Income/Sales) and Asset Turnover (Sales/Asset), we can get ROCE

= Profitability*Asset Turnover.

So from 2004 to 2008, the ROCE rates are 15.60%, 10.08%, 9.90%, 9.04% and 7.32%

respectively.

We can see a decline in Return on Assets, but it still has good performance.

So I give it +4.

Leverage

The rates are 2.06, 1.84, 1.74, 1.68 and 1.67 respectively from 2004 to 2008, and Earnings per

share also reduce from 67,916 in 2004 to 37,684 in 2008. Considering it's a great company, this is

a good result, so I give it +4.

Liquidity

Current ratio = Current assets/ Current liabilities

The ratios are 0.722:1.000, 0.709:1.000, 0.767:1.000, 0.826:1.000 and 0.532:1.000 from 2004 to

2008.

The company does not have very good liquidity especially in 2008. I give it +3.

Defensive Competitive

Cash flows

We can see from “Consolidated Cash Flow Statement” that the cash flow from operating activities

keep almost the same level from 2004 to 2008, but the net income decreases heavily in 2008. So I

give it +3

Environmental Stability (ES)

Price of competitive product

Most of Samsung competitor such as HTC, Apple and Blackberry also have the products to

compete directly with Samsung Galaxy S4 that have the same or similar specs and features.

However, fortunate for Samsung that most of these products are having the same price level of

Samsung or even higher such as Apple IPhone 5. Therefore Samsung although don’t have any

threat from other but they don’t have so much advantages in price compare with other manufacture.

So I give it -2

Competitive pressure

Samsung not only faces competition from Apple, but also from Chinese phone manufacturers. I

give it -4

Global economic

The whole world is suffering from a recession from 2008, and has not recovered yet. So I give it -

4.

Technology changes

As for the electronic industry, the rates of obsolescence's are quicker than any other industry. We

can feel that the functions of mobile phone will be out of date after one year. So I give it -2

Demand elasticity

Refrigerator, washing-machine and TV should be necessary for a family, but a mobile phone and

a laptop may not be so necessary. So we can say the overall demand elasticity is not so big. I give

it -2.

Inflation rates

Due to worldwide recession, inflation is not strong nowadays. So I give it -2.

Competitive Advantage (CA) Analysis

Product quality:

According to the customers' comments, the products of Samsung is better than most of its

competitors. So I give it -1.

Market share:

Market share of mobile phone

As companies get larger, it becomes increasingly difficult to deliver organic growth that meets or

exceeds the industry average. Samsung has managed to exceed the industry average growth by

delivering competitively priced handsets with the design features of more expensive handsets. In

the smartphone realm, Samsung has shown great success with its Android based Galaxy series and

its Bada OS.

Market share Second quarter 2012

We can see from the chart that Samsung mobile phones' market share is 21% in 2012, which is the

second place after others. So I give it -2.

Brand & image:

As we all know, almost everybody knows Samsung. So I give it -1.

Product life cycle:

Electronics' technologies innovation speed is very fast, and it still develop and growth in last few

years, so the life cycle score is -3.

Customer service

According to data of a survey website customer service is ranked number 457 out of the 728

companies that have a CustomerServiceScoreboard.com rating with an overall score of 30.07 out

of a possible 200 based upon 1695 ratings. So I give it -5.

Customer loyalty

Follow to bgr.com website, Unsurprisingly Apple fans were the most loyal, as 76% said they

planned to stick with the iPhone. Samsung came in second place, with 58% of Galaxy owners

saying they planned to buy a Samsung phone with their next purchase. So I give it -2

Industry Strength (IS) Analysis

Barriers to entry:

The electronic market is mainly shared between those big companies like Nokia, Apple, Motorola

and Samsung, so it's very difficult for new entrants. I give it +6.

Growth potential:

Due to technology is the main factor in electronic industry, the market can grow as the

development of new technology, so I give it +5.

Access to financing:

As a super company, Samsung has good credit which gives banks confidence to give loan to it, the

same as the shareholders, etc. So I give it +5.

Consolidation:

From the Annual Report of Samsung Electronics, they have a large amount of consolidated

subsidiaries, and value the performance of the subsidiaries every year in order to decide which

ones should be eliminated and which ones can be kept. So I give it +6.

Profits

These are some awfully of Samsung. The company’s Q4 2012 revenue figure is 18.52 percent

larger than it was in Q4 2011, and Samsung’s profit this quarter surged to an impressive 89.3

percent from what it reported last year. The company also released its fiscal 2012 figures — this

past year, Samsung scored a net profit of 23.8 trillion won ($22.25 billion) on revenue of 201

trillion won ($187.9 billion). So I give it +6

F. Grand Strategy Matrix

According to the Grand Strategy Matrix, Samsung is the first quadrant with market penetration

and market development as well as development of existing products have an appropriate strategy.

Diversifying production Samsung products also help reduce the risk associated with narrower

product lines. Samsung also has the resources to take advantage of external opportunities that

expand in the different fields. Samsung staying the quadrant one of the Grand Strategy Matrix is

meant for this firm which are in a strong competitive position and flourishing with rapid market

growth. Samsung located in this quadrant are in excellent strategic position and they need to

concentrate on current markets and products. Concentration on current markets reveals the

RAPID MARKET GROWTH

WEAK

COMPETITIVE

POSITION

STRONG

COMPETITIVE

POSITION

SLOW MARKET GROWTH

CHARATERISTICS OF FIRMS:

Weak competitive position working in rapid

growth market

Market development

Market penetration

Product development

Horizontal integration

Divestiture

Liquidation

CHARATERISTICS OF FIRMS:

Strong competitive position working in rapid

growth market

Market development

Market penetration

Product development

Forward integration

Backward integration

Horizontal integration

Related diversification

CHARATERISTICS OF FIRMS:

Weak competitive position working in slow

growth market

Market development

Market penetration

Product development

Horizontal integration

Divestiture

Liquidation

CHARATERISTICS OF FIRMS:

Strong competitive position working in slow

growth market

Related diversification

Unrelated diversification

Joint ventures

adoption of strategies such as market penetration and market development and likewise

concentration on current products calls for adoption of product development strategy.

Q. Quantitative Strategic Planning Matrix (QSPM)

Quantitative Strategic Planning Matrix for Samsung Electronic– Case Study 27

According to the situations, although the fourth generation smart phone of Samsung content

many innovative and cutting-edge technology features, the sale volume and the market share of

Samsung is still not in the level that can compare with other competitors and Apple is one of them.

If we analyze and observe closely, we can see that many of Samsung technology are similar and

very look-alike to Apple’s technology. We don’t have the evidence or authority to accuse Samsung

stealing Apple technology to use on their products but the similarity make Samsung lose their

Differentiation compare to Apple, especially in the US market.

This issue is the result of the poor management of Samsung Electronic which effect on both

their vision and strategies in the competition with Apple. This is very dangerous when this style

of management make they cannot gain as many Competitive Advantages as they could to compete

directly with Apple in general and to increase the sale as well as gain more market share with their

fourth generation smartphone in particular.

The best solution for Samsung Electronics is to increase their Market Growth as well as their

Competitive Position as much as they can and according to the GRAND Strategy of Samsung, we

can see that three strategies: Market Penetration, Market Development, Product and Service

Development is the best strategies they can use to achieve both the objective they need in order to

compete with Apple and other competitors in the market.

Combine all the analysis and matrix, we have the Quantitative Strategic Planning Matrix for

Samsung Electronic:

Key Factors

Weight

Market

Penetration

Market

Development

Product and

Service

Development

Opportunities AS TAS AS TAS AS TAS

A lot of countries encourage

technology innovation and high-tech

industry is really important.

0.03 3 0.09 4 0.12 3 0.09

Countries value the protection of

intellectual property 0.04 3 0.12 4 0.16 2 0.08

GDP and national income per capita

increasing 0.12 4 0.48 4 0.48 1 0.4

Consumption pattern is changing

from subsistence consumption to

well spending pattern

0.07 3 0.21 3 0.21 3 0.21

Samsung’s mobile phones have high

attention 0.09 4 0.36 4 0.36 4 0.36

Growing India’s smartphone market 0.05 2 0.10 3 0.15 2 0.10

People more care about brand and

quality than price 0.14 3 0.42 4 0.56 4 0.56

Threats

Legal issues with Apple 0.05 2 0.10 3 0.15 4 0.20

Price wars with Chinese phones 0.10 3 0.30 3 0.30 3 0.30

More and more new substitute and

potential entrant 0.10 3 0.30

4

0.40 3 0.30

Strong competitors: Apple, Nokia,

HTC… 0.12 4 0.48 4 0.48 4 0.48

The user experience is upgrading 0.09 3 0.27 3 0.27 4 0.36

Total 1.00 3.23 3.64 3.44

Strengths

Brand Recognition and Loyalty 0.07 3 0.21 4 0.28 4 0.28

A large number of products and

broad product line 0.05 4 0.20 4 0.20 4 0.20

Strong research and development

ability 0.10 3 0.30 4 0.40 4 0.40

Hardware integration with many

open source OS and software 0.04 3 0.12 3 0.12 4 0.16

Innovation and fashion design,

especially popular among younger

peoples

0.15 4 0.60 4 0.60 4 0.60

With extensive sales channels and

propaganda 0.06 3 0.18 3 0.18 3 0.18

Low production costs 0.03 2 0.06 3 0.09 4 0.12

Largest share in Smartphone

industry ( 30% market share

worldwide, extending its lead over

Apple and Nokia)

0.15 3 0.45 4 0.60 4 0.60

Weaknesses

Not high lighting Price/Performance

Ratio 0.10 2 0.20 3 0.30 3 0.30

Lack its own OS and Software 0.07 2 0.14 3 0.21 4 0.28

Patent infringement 0.04 2 0.08 3 0.12 3 0.12

Too low profit margin 0.04 3 0.12 4 0.16 4 0.16

Limited high-end products 0.03 3 0.09 3 0.09 4 0.12

Focus on too many products, with

inaccurate positioning 0.07 2 0.14 3 0.21 3 0.21

Total 1.00 2.89 3.56 3.73

Sum Total Attractive Score 6.12 7.2 7.17

(Attractiveness Score: 1 = not acceptable; 2 = possibly acceptable; 3 = probably acceptable; 4 = most

acceptable; 0 = not relevant)

According to the Sum Total Attractive Score, we can clearly see that Market Development and

Product and Service Development are the two alternatives strategies that Samsung Electronic

needs to concentrate, especially Market Development. The facts that Apple has more influence in

the US Market make market become too dangerous and difficult for Samsung to participate. It will

be easier and provide more opportunities for Samsung to expand their market to other region such

as Asia and Europe, where Apple don’t have much market share as well as the influence will allow

Samsung to have more chance to have more advantages and therefore gain more Market share as

well as create opportunities for Samsung to have more resources in both financial and technology

to support their second alternative strategies – Product and Service Development.

Samsung Electronic needs to realize that they will have more Competitive Advantages if they

invest and develop their own technology to apply on their line of products. This will make

Samsung products and services be more Differentiation and be more unique and attract more

customers. In the modern world where technology can become obsolete in the matter of days, it is

very reasonable for customer to seek and choose the latest and unique technology and features,

especially in their phone, the items they will carry almost 24/7 with them. If Samsung can have

their own technology that provide and satisfied the need and demand of the customer, they will

gain more Market Share than they can ever imagine. Although the Market Penetration is not as

important as other strategies but is also play a very important role in the survival of Samsung

Electronics.

IV. Business Strategy

A. Business Strategy recommendations –both long term

objectives and specific strategies for the company

Since the past 40 years, the development of technology has go with the speed faster than

anyone can imagine they could and the rise and fall of each technology also being shorten

significantly. A new cutting-edge technology can become obsolete in the matter of days. As one

of the organization that have a very close dependence relationship with the development of

technology like Samsung Electronics, it is very important for them to have a proper strategies that

suitable with the unstable environment such as technology industries so that they can survive and

have effective response with any obstacles and problems may occurs in the future. Based on the

result of the analysis in this research, we have identified the problems and issued that hinder the

development of Samsung Electronics in general and the sales of the fourth generations’

smartphone that Samsung just released in particular are the poor and unsuitable strategies and

operation of Samsung management. According to the result of the QSPM matrix, there are two

main strategies that Samsung need to concentrate to overcome their weakness are: Market

Development and Products & Service Development.

The goals of Market Development are to seek and expand Samsung business over new market

and regions such as the Asia market, South-America market and European market. These regions

are content many new potential customer group and may support and increase the sales of the

existed products line of Samsung Electronics. These regions also don't being under strong

influence of Samsung's competitors and Apple is the best example. If in the United States market,

Samsung are having trouble with the all the accused that Samsung steal Apple's ideas and

intellectual properties. We don't confirm that Samsung actually steals those intellectual properties

or not, but it have leave a huge affected on Samsung's reputation and images in the United States

market and also hinder the development of Samsung products sales volumes. The strategies to

expand the business over new market will provide Samsung as many opportunities as they need to

build and develop their business in those markets before their competitors can achieve those goals

and also is a very important and powerful Competitive Advantages that can support and maintain

the Competitive Position of Samsung. These regions also have many potential organizations and

firms that Samsung can create alliance with or take over if they can. These organizations can have

the foundation or finished new technology that Samsung can acquire and apply to their new or

existed product lines as the support Samsung to achieve the strategies of Products & Service

Development.

With many accused from Apple that Samsung actually don't have any original technology on

their products line is a very dangerous accused that no matter they right or not, the images and the

brand name of Samsung has already been damaged. The strategies that concentrate on Products &

Service Development will create the foundation for Samsung's Research & Development

department to have proper research and experience to have their own technology that is unique

and can be apply on their product lines. This will immediately create a very strong Competitive

Advantages for Samsung to compete with their competitors and minimize the influence of the

dependence with the technology of any organizations that doing business in this industries.

However, to completely have the most effective result from these strategies, Samsung need to

wisely use all the potential resources and protect their technology at all cost. The fact that Samsung

are being accused that steals other ideas has showed the important of the secrecy of technology in

this industry. Be able to protect their technology also mean they can protect their Competitive

Advantages and maintain their market shares.

These two strategies in general, not only can help Samsung overcome and solve their existed

issued but also help develop in the matter of long-term. However, the strategies only work if they

have proper and detailed plans to support and process to implement those plans accurate to have

the best possible result.

B. Proposed methods and timetable for the implementation of

the long-term objectives and specific strategies

The result of a strategies are based on the preparation and set up the plans as well as resource

to be able to implement the plan to achieved desire result in the end. In this research we need to

concentrate in two strategies are Market Development and Products & Service Development. Each

of these two strategies needs different approach and preparation.

For the Market Development strategies, Samsung need to sort out their priorities regions they

want to expand their business over and the best method is using geographic factors. With most of

the manufacturing facilities are located in South Korea, it will be easier for Samsung to step-by-

step expand their business from near too far away. The Asia markets have the best environment

for Samsung to expand their business. They will have the advantages of cultural and geographic

as well as the resources and strategic partner they need to help Samsung set up the foundation for

the expansion. These regions also have many countries that have the best technology advantages

and development such as Japan or China. These countries still don’t have any organizations that

are big enough to compete directly with Samsung Electronics. Therefore Samsung will have strong

Competitive Advantages over those competitors and allow them to have the easiest path to acquire

any firms or technology they need. However, the Asia market or South-America market still

content many developing and undeveloped countries which make the customer group of this

market is not very potential for Samsung. To increase the revenue they need to focus on the

European market which have the strong economy status as well as have more potential customer

group that are willing to pay for higher and more modern technologies and products of Samsung.

Although this market already have some strong competitors that can compete with Samsung such

as Nokia, Samsung still have better technologies and competitive advantages with their

diversification. Beside the phone manufacturing, Samsung Electronic also have many other

companies that manufacturing home appliances, laptop or television and make Samsung have more

stable financial resources to compete.

However, to implement the Products & Services Development strategies, Samsung will need

more time and resources than expand their market. The resources in this case is not just financial

resources but also the technology and sciences that requires to do research and experience new

technologies. Therefore, it will be easier and simpler to implement if Samsung acquire the

technologies that already been developed from small but potential company from Japan or China.

This will allow Samsung have install access with new technology that can help them to maintain

the market share or even have more advantages over their competitors. Although this is easier to

implement but this strategies is too easy to imitate by their competitors. To actually have the

technology advantages over their competitors as well as ensure the competitive position of

Samsung, they still need to develop and invest into their Research & Development department to

actually invent and develop origin technology from Samsung that cannot be copy or take over by

their competitors.

These two strategies many have different goal but in general, they supporting each other to

achieve the final goals that is increase the revenue and profit of Samsung Electronics in smartphone

industries and not to mention about the time and the cost these strategies need to implement.

Therefore it is very important that these two strategies have a proper and suitable timetable to

implement that will guarantee the best possible result in the end otherwise this will be the end of

the Samsung Electric.

C. Recommendations for annual objectives and policies for

the company

With the strategies and plans that focus and concentrate in develop market and products.

Samsung also need to have some modification about their objectives as well as policies of the

company to suitable and adapt the new strategies that have been planned. However if the key to

success in implement the plan and strategies is to complete step-by-step expansion in both market

and products, Samsung need to choose what strategies need to be implement first to have the best

outcome they desires. The recommendation from our research and analysis suggest that with the

current situations and combined all the external environment factors, it would be the best if

Samsung Electronic choose to implement the Market Development strategies first. The expansion

of market will also create opportunities for Samsung to seek and acquire more resources in both

financial and technologies that will provide support the requirement to develop the products line

of Samsung. The development of market also increase the variety and diversities of customer that

will also create more opportunities and maximize the acceptant of customer with Samsung

products. In summary, there will be three main annual objectives that Samsung need to complete

include:

Enter and penetrate new market

Building brand images and reputation in new market

Seek and cooperate with potential organization.

Despite of being the easier strategies to implement, Samsung also need more appropriate

policies to support and guide all the strategic actions and tactical actions to achieve the goals of

the selected strategies, especially for the management of Samsung Electronics. The current

problems and issues of Samsung are the direct and indirect result of poor management and

therefore the policies of Samsung need to be modified to change the behaviors as well as support

the company strategies with guideline for employees and employers of Samsung Electronics in

both strategic action and tactical actions to achieve the goals to develop market and products of

Samsung in the designated period of times. These policies can be summary in two mains

objectives:

Identified and orientated tasks, missions, strategies and goals of all departments to

support and contribute to the expansion of Samsung’s markets.

Identified and orientated tasks, missions, strategies and goals of all departments to

support and contribute to research, develop and experience new technology for the

development of new products lines.

It is very important that both the recommended objectives and policies of Samsung need to

involved support each other to achieve the final goals without conflicting each other's interests and

benefits. Otherwise the strategies will have reverse result and have negative affect on Samsung

Electronics.

D. Recommendations on procedures for strategy review and

evaluation

All the plan and strategies will only work if they being supervise and observe to make sure that

no mistakes are occurred that can affect and hinder the development of the strategies in the futures.

It is very essential for Samsung to have a procedures to review and evaluation each steps of the

strategies so they can be able to identify the problems to have proper response as fast as they can

to prevent undesired result can happens, or at least minimize the effect when something goes

wrong. To ensure to have the desire result in the end, it is recommended to apply and follow the

three-step valuation to analyses and check if the strategies and plans are going the desired way or

something already gone wrong to have the response for all the strategic action and tactical action

of Samsung Electronics. The three-step valuations include:

Analyze: observe, collect and analyze all the necessary factors form internal to

external to identified potential threats and problem may occurs of the plans or

strategies.

Modification: adjust and modify the plans or strategies to eliminate or minimize

the effect of the threats and problem may occurs

Implementation: begin to apply and implement the plans or strategies after

modified under supervision to ensure the result. Repeat the whole procedures if

necessary

The evaluation procedures are very important, especially when Samsung Electronic or any

organization in the industries can control or predicts the external environment. The procedures will

allow Samsung to have proper reaction with unexpected situation to minimize all the damages and

affect can happen if something goes wrong during the implementation of the plans or strategies.

E. Conclusion

In conclusion, the recommended strategies for Samsung are based on the current external and

internal factors of Samsung and the industries at the moment. If assume all the factors are

unchanged, it is possible to ensure the positive outcome of Samsung Electronic if they can adopt

and follow the recommendations.

The first outcome will be the large market expansion of Samsung in three important regions:

Asia, South-America and European. These regions will not only provide the new market and

customer for all existed Samsung products but also help and support to build up the Samsung brand

and images which already been damages due to the competition with Apple in the United States

market in the past several years. These regions also the “gold-mine” of technologies for Samsung

to exploit and apply to create new and improve the existed products lines of Samsung to add more

value and create more Competitive Advantages. These new technologies also help Samsung to

develop and create their competitive technologies that they will have absolute control and

monitoring.

The second outcome that Samsung can have is the development of the differentiation of their

Products line. With all the technologies they acquires during the market expansion, they will have

access and foundation to create new technologies to make their products become more advance

and unique thus will increase the advantages of their products in the market in compare with other

competitors.