Microeconomics for business
Section: B
Samsung ‘The Galaxy S series
Submitted by: Mohammad Ashar (L1S20BBAM0288)
Shiza Faheem (L1S20BBAM0259)
Mohammad Ali(L1S2OBBAM0122)
Ali Haider(L1F18BBAM0221)
Submitted to:
Kanwal Zahra
1. Introduction:
Samsung, South Korean company that is one of the world’s largest producers of electronic
devices. Samsung specializes in the production of a wide variety of consumer and industry
electronics, including appliances, digital media devices, semiconductors, memory chips, and
integrated systems. It has become one of the most-recognizable names in technology and
produces about a fifth of South Korea’s total exports.
In March of 2010,
Samsung officially unveiled the Samsung Galaxy S, the very first entry in the new “S” line.
Previously, in 2009, the company had launched the Samsung Galaxy, it’s very first phone
powered by Android.
2. Substitutes and complementary goods:
The price of complementary and substitute goods is another important determinant of
demand. Substitutes are goods and services that can be used to fulfill a similar need or desire
with a different product. On the other hand, goods and services that become more desirable
when consumed together are called complements
The substitutes and complementary goods of Samsung galaxy has been stated under:
Samsung Galaxy S
SUBSTITUTES COMPLEMENTARY GOODS
ONE PLUS Bluetooth headsets
APPLE IPHONE Wired headsets
GOOGLE PIXEL Cases
HUAWEI P SERIES Batteries
LG G SERIES Covers
3. Variation in demand and supply:
Variation in demand:
In 2017, Samsung Galaxy note 7 disaster caused a huge decline in demand costing a loss
of $5.3 billion.
When the price of Galaxy S changes from $950 to $1,050, its quantity demanded falls
from 330 million per annum to a little more than 290 million.
Even as the COVID-19 pandemic continues around the world, reopening of key
economies led to significant increase in consumer demand.
Variation in supply:
After galaxy note7 incident, Samsung aggressively told the media its goal was a 100%
recall. Less than three months later, the company has reached a 96 percent return rate
globally with over 2 million recalls.
Samsung Electronics ranked first in the 2012 world smart-phone market, and in 2013 it
sold over 300 million devices for the first time in history.
Samsung boosted its share in global smart phone market from 8% in 2010, to 19.9% in
2011, 30.4% in 2012, and 32.3% in 2013
4. Cost structure:
A list of major fixed and variable costs of Samsung galaxy series are stated below:
Fixed costs Variable costs
Warehousing costs Raw materials
This
Advertising
enables
Samsung
to boost
its share
in global
smart
phone
market
from 8% in
2010, to
19.9% in
2011,
30.4% in
2012, and
32.3% in
2013
Annual taxes
Cost of staff Shipping charges
Assembly units Sales commission
Providers Sales box
5. Market structure:
Firms such as Samsung belong to a market. There are four markets; perfect competition,
monopolistic competition, oligopoly, and monopoly. A company such as Samsung belongs to
the oligopoly market. "A market structure in which there are few firms and firms explicitly take
other firms' likely response into account". In the smartphone and tablet market, only a few
firms exist including Samsung and Apple. When one of the firms introduce a new feature to one
of their devices, the other company likely follows suit on their next device release to compete.
In 2014, Apple introduced Apple Pay for their smartphone devices allowing consumers to pay
for everyday purchases with their smartphone utilizing NFC technology. "Not even a year after
the launch of Apple Pay, Samsung revealed its mobile payment solution, starting Samsung Pay
at Mobile World Congress in Barcelona". Each firm interdependent of each other making
decisions based on the actions of the other business in the oligopoly market.
6. Conclusion:
In conclusion, as we are witnessing the ongoing global economic crisis and the sluggish
recovery, it may be prudent for Samsung to go back to the basics to search for the right strategy
for both, the entrance on the new undeveloped markets and to survive the crisis and overcome
conflicts. Recently, the company had faced several conflicts and scandals and therefore today
more than ever, it should be very careful in every step undertaken in order to maintain its
current position and keep its customers. It may be time for the new management to re-invent
Samsung and what better time to do this than now with a paradigm shifts and trends that are
happening in the business and economic worlds.