CASE 28 SAMSUNG ELECTRONICS In January 2015, executives from Samsung Electronics

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CASE 28 SAMSUNG ELECTRONICS In January 2015, executives from Samsung Electronics, by lower-priced smartphones the South Korean electronics giant, declared that they was facing stiffer competition from Apple were making a big bet on the so-called Internet of things. matching Galaxy phones, tablets, a This represented a return to the firm's concept of a digi- ducing larger and cheaper versions of its tal home, where all of the firm's gadgets and appliances lar iPhones (see Exhibits 3 and 4. would be connected to the Internet. Samsung was iust one Analysts claimed that the problem lay of many players vying to shape the connected home of the reliance on selling hardware future, and it was far from clear whose vision would vail or even if it would be profitable. At the same time, Samsung which had been d phablets by intro- while other competitors, rang- ing from Apple to Xiaomi, offered exclusive software and Internet services for their devices that set their products/ all others. Some competitors were also The bet seemed to be necessary for Samsung because apart from faced profit pressures and strong competition from price- ning to generate revenues from offering cutting Chinese start-ups such as Xiaomi and Huawei in through thei the smartphone business (see Exhibits these servi own app stores. Although Samsung offered s I and 2). Samsung some customized versions of the Android system that it a leader in sales of mobile phones, but its posi- used, they did not help differentiate its offerings from tion was being challenged in a growing number of markets those of others that also offered Android smartphones. That's really the difficult part for them," said Ben Baja- rin, a consumer technology analyst. Their customers are Case prepared by Jamal Shamsie, Michigan State University, with the assisance of Professor Alan B. Eisner, Pace University. Materiall has beenactually Google's, they're not necessarily theirs." drawn from published sources to be used for purposes of class discussion comright © 201 5 Jamal Shamsie and Alan B. Eisner. Executives at Samsung claimed that the firm's strength lay in the diverse line of its products, which included EXHIBIT 1 Income Statement Gn billions of KRW) Year Ending December 31 2011 136,323,670 154,630,328 165,001,771 201,103,613 228,692 667 41,728,806 51,963,504 52,856,651 74.451,682 90.996,358 2009 2012 2013 Gross profit Operating income 10,309,038 16,352,670 15,861,224 29,049.338 36,785,013 Net income 9.571,598 15,799,035 13,734,067 23,185,.375 29,821,215 Souroe: Samsung EXHIBIT 2 Balance Sheet (in billions of KRW) Year Ending December 31 2009 2010 2012 2013 Total current assets Total assets Total current liabilities Total liabilities 54,211,297 61,402.589 71,502061 87,269017 110,760,271 112.179,788 134,288,743 155.631,251 181,071,570 214,075,018 4,204,424 39,944,721 44,319.014 46,933052 51,315,409 42,734,204 48818,652 58,150.956 63,977518 69,632,402 Total stockholders' equity 72.925.734 89.229,623 101,725852 121,480,206 150,016,010 CASE 28 SAMSUNG ELECTRONICS C209

Explanation / Answer

Identifying problems

Samsung needs improvement in defining the vision ,mission,and strategic corporate objectives

Marketing management improvements in all the facts of marketing

Concentrated on high volume production

Low quality of brand image

Increasing competition from Chinese and other local players in the lower and mid-range segments as well as Apple, which has been pushing into new markets

Needs strong leadership from the top. Managerial issue- to develop a strategy to reposition the brand in the Canadian market

Strategic analysis

Doing SWOT analysis

Strenghths- process excellence,high competency,strong researchers,good organisation structure

Weaknesses- low quality of brand image,international cultural lacking,inter cultural crashing

Opportunities- market being growth,no substitute technology,high demand,government support

Threats - Chinese competitors,social resistance;environmental effects

An Analysis of Samsung Strategy

The Resource-Based Approach

Under the resources-based view of strategic management, effective management upon resources available to a firm, as well as the competency of a firm is responsible in affecting competitive advantage achieved by a firm. The competitive advantage enjoyed by a firm will likely be more sustainable and valuable provided that the firm able to leverage and built valuable, hardly imitable and unique resources to shape the core competencies of the firm to compete .

Positioning

There are three main ways in which a firm may attain competitive advantage in a particular industry, which are: low cost leadership, differentiation and niche

From the analysis presented above, the strategy employed by Samsung is explained below . Overall, the company is pursuing a differentiation strategy, with such characteristics: a focus on excellent, paying attention to quality, emphasizing on product innovation, through continuous improvement process, while not neglecting the need to cut costs. Then, many of such strategies were enabled by the focus/ efforts to build the crucial resources or competencies, such as economies of scale, economies of scope, strong corporate culture and even internal capabilities to manufacture. In a way, Samsung had successfully build valuable, hardly imitable and unique resources; and that successfully allow the company to eventually gain the core competency to penetrate the global smartphone industry.

Recommendations &alternatives

- Continuous product improvement is very important

-Partners for more competitive advantage for survival

-should be opting for Focussed differentiation strategy

-sub branding for penetrating high end customers ,higher positioning as high quality products provider

- building valuable brand ,communicate values to customers

More promotion and selling campaign for DRAM products ,preparing for price wars coming of China competitors

Develops new products with green technologies,less energy consumption and toxic material

Communicating vision mission to employees

Build up business in China for blocking growth of China competitors and gain cost advantage from low cost manufacturing

Keeps investment on R&D to be leader in innovations ,technology and cost advantage production

Clearly formulations of forward vertical integration strategy,what business units should to do .

Prepares organisations that suitable for international business especially in China by recruiting Chinese employees for faster familiar with china’s culture and market behaviour

One strategy could be to offer a discounted price or an extended warranty that covers extensive damages and losses at no additional price. This will allow for many people to have incentives to immediately acquire a top-tier Smartphone that is covered for any potential damages for years to come. Finally, the company has to overhaul their customer service program and use social media and marketing. The current figures are alarmingly poor. Many consumers are turned off by the idea of buying a Samsung product because they do not want to deal with one of the worst rated Customer Service programs in the world. Though the company is worldwide and sells products all over the globe, the customer service representatives should be localized to a country where the consumer buys the product.

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