POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
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Firm Analysis of Samsung Company
(MARKET STRUCTURE ANALYSIS)
Prof. Maria Vicenta C. Magpantay
Members:
Day-yo, Rafael David C.
Tumala, Billie Lee R.
Vasquez, Jan Maui A.
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I. Samsung Company
II. Vision Mission, Goals and Core values
Mission and Vision of Samsung
Samsung follows a simple business philosophy: to devote its talent and technology to
creating superior products and services that contribute to a better global society. The
mission of Samsung is:
· Supporting people to be their best [On the basis of human resources &
technologies
· Create the best products and services
· And contribute to society
Core Values and Principles of Samsung
People
Quite simply, a company is its people. At Samsung, we’re dedicated to giving our
people a wealth of opportunities to reach their full potential.
Excellence
Everything we do at Samsung is driven by an unyielding passion for excellence and an
unfaltering commitment to develop the best products and services on the market
Change
As we have done since our foundation, we set our sights on the future, anticipating
market needs and demands so we can steer our company toward long-term success.
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Integrity
Operating in an ethical way is the foundation of our business. Everything we do is
guided by a moral compass that ensures fairness, respect for all stakeholders and
complete transparency.
Co-prosperity
Samsung is committed to becoming a socially and environmentally responsible
corporate citizen in all of its communities worldwide.
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III. Brief History
Samsung is a South Korean firm that ranks among the top manufacturers of electrical
goods. Samsung focuses on producing a wide range of consumer and business
electronics, including integrated systems, digital media players, semiconductors, and
appliances. It now ranks among the most famous names in technology and contributes
to nearly one-fifth of all exports from South Korea.
On March 1st, 1938, Lee Byung-Chull established Samsung as a grocery trade store.
He began his enterprise in Taegu, Korea, trading noodles and other products made in
the area and shipping them to China and its outlying provinces. After the Korean War,
Lee expanded his company into textiles and established the country's largest woolen
mill (the name Samsung is Korean for "three stars"). To aid in his nation's post-war
development, he placed a strong emphasis on industrialisation. During that time, the
Korean government's new protectionist policies, which aimed to aid major domestic
conglomerates (chaebol) by sheltering them from competition and facilitating easy
financing, helped his company. The company bought three of Korea's biggest
commercial banks in the late 1950s, along with an insurance provider, a cement
manufacturer, and a fertilizer manufacturer. In the 1960s, Samsung bought other
insurance firms, an oil refinery, a nylon manufacturer, and a department store.
To increase its ability to compete in the textile market, the company expanded its textile
manufacturing methods during the 1970s to include the entire production chain, from
raw materials to finished goods. A number of new subsidiaries were created, including
Samsung Heavy Industries, Samsung Shipbuilding, and Samsung Precision Company
(Samsung Techwin). Additionally, the corporation began investing in the heavy,
chemical, and petrochemical industries during this time, giving them a strong growth
path.
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IV. SWOT-PESTLE Analysis
SWOT ANALYSIS OF SAMSUNG COMPANY
Strengths
● · The most successful producer of electronics worldwide is Samsung. The
company is the biggest producer of LCD panels, mobile phones, and
smartphones in the world. It also produces television sets.
● · With a market share of 21.4% in the second quarter of 2015, Samsung is
the world's top manufacturer of mobile phones. Apple is in second place
with 13.9 percent [2].
● ·Samsung has tremendous talents in both research and design. In less
than a year, it was able to develop and launch Samsung Pay, a payment
software with features akin to those of Apple Pay. Many of the features of
both Apple Inc.'s smartphones and Google Inc.'s Android mobile operating
system have been successfully imitated by Samsung.
● Samsung has tremendous capabilities in both manufacturing and
marketing.
● · With its established connections to merchants in the US and Europe,
Samsung has a reliable sales channel for its goods.
Weaknesses
● · Samsung has not been able to match Apple Inc.’s marketing capabilities
for smartphones. Its share of the U.S. smartphone market fell by 2.3%
between 2014 and 2015. In contrast, Apple’s share price grew by 34.9%.
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● · In the smartphone market, several Chinese rivals are overtaking
Samsung. Huawei's market share increased by 48.1% between 2014 and
2015, while Xiaomi's share increased by 29.4%.
● ·For a large portion of its revenue, Samsung is reliant on sales of
consumer electronics in regions with constrained room for expansion,
such the United States and Europe.
● · The open-source Google Android operating system is used on Samsung
devices. The general public has not been as welcoming of Android as the
tech industry has been, and many customers appear to view Android as a
lesser product than Apple's iOS.
● ·A few customers believe Apple products to be more reliable and
cutting-edge than Samsung items.
● · The marketing strategies employed by Samsung fall short of those used
by Apple.
Opportunities
● · An expanding market exists for smartphones, tablets, and other mobile
devices, particularly in emerging markets like India and Africa where
customers are less accustomed with PCs. In 2015, sales of tablets
ultimately surpassed those of conventional personal PCs .[3]
● ·greater interest in tablet- and smartphone-based services like Samsung
Pay
● ·modern innovations like wearable technology
● · The middle class is expanding in developing nations, which will expand
the market for consumer electronics.
● · expanding internet market from retailers like [Link]
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Threats:
● · In other places, including the US, Apple has become the industry
standard for tablets and smartphones. Apple's reputation for dependability
has proven to be too strong for Samsung to overcome.
● · Apple appears to be building on its reputation for superiority,
dependability, and elegance.
● ·Galaxy devices run on the Google Android operating system, which is
less well-liked by the general public than iOS.
● · Middle-class salaries in North America and the US may be stagnating or
declining, which could lower consumer purchasing power in those crucial
areas for Samsung..
● · Chinese producers like Huawei and Xiaomi may start to pose a major
threat to Samsung. While Samsung's market share of essential mobile
devices is declining, it is increasing for these companies.
● · Apple might expand into new consumer product categories, such as
cameras and home appliances, and compete against Samsung there.
PESTLE ANALYSIS OF SAMSUNG COMPANY
Introduction
A multinational corporation, Samsung competes in the "White Goods" market, or the
market for consumer electronics and appliances. The South Korean family-owned
corporation has goals to operate globally, and as its recent forays into more recent
markets have demonstrated, Samsung is not content to just operate in a few regions
around the world but instead wants to reach as many as it can. As a result, this article
concentrates on the external environmental factors that influence Samsung's strategy.
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Political
Although there are small annoyances in some of the international markets, like India,
Samsung may be regarded to be operating in places where the political considerations
are favorable for its operations in the majority of the markets where it is present.
However, due of the tensions between South Korea and North Korea in recent months,
it has had considerable political challenges in its home nation. As a result, the
corporation has had to consider both the political unrest and the possibility of war
breaking out on the Korean Peninsula. In addition to this, Samsung is subject to political
pressure in a number of unstable African and Latin American nations with frequent
changes to the ruling structures. Of all, given that the business has mostly taken the
political unrest into account in its strategic planning, there is currently little reason for
alarm.
Economic
This aspect is particularly important for Samsung because it may now increase its
worldwide footprint thanks to the opening of numerous markets in the developing world.
However, this aspect also raises concerns because the current global economic crisis
has significantly reduced consumer spending power in many established economies,
prompting Samsung to look for lucrative business opportunities in emerging markets.
The important thing to keep in mind is that Samsung operates in a volatile and uncertain
macroeconomic climate that has forced the corporation to adjust its business [Link]
company's one saving grace is that it has expanded into emerging and developing
countries, which has allowed it to cope quite well with the decline in consumer
disposable incomes in the developed world. In fact, Samsung has started a bold drive
into emerging nations in the hopes of recouping lost revenue from the developed world.
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Socio-Cultural
Samsung is largely a family-owned multinational or South Korean Chaebol. This
indicates that despite having a global presence, the corporation still functions primarily
as a Korean enterprise. As a result, there are many facets to its global operations, one
of which is adapting to the local circumstances. In other words, Samsung had to behave
locally despite being a global firm, which required them to adopt a global approach in
many growing economies. In addition, Samsung has had to modify its goods to fit
rapidly evolving consumer tastes across the range of markets in which it competes. The
important thing to keep in mind is that Samsung works in a market niche that is heavily
influenced by consumer lifestyle preferences, and given that sociocultural elements vary
by region, it has had to adjust its positioning in each market appropriately.
Technological
Samsung is regarded as one of the most inventive businesses in the world. This
indicates that the business has an advantage when it comes to leveraging technology
and sparking innovation for long-term competitive advantage. This has resulted in the
corporation having an obsession with staying at the forefront of innovation and
technology, as well as a goal to beat its rivals and competitors by being the first to
market with its newest products. However, as we will describe later, this has also led to
the company imitating the venerable Apple's product design while cutting corners, which
has caused in legal and regulatory attention and problems for the [Link]
technology-driven businesses should learn from Samsung's experiences that no matter
how quickly you can reach the market in this age of Big Bang Disruption, performing the
fundamentals correctly is still the key to success.
Legal
As was indicated in the previous section, Samsung had to deal with severe
repercussions for what was allegedly a replica of Apple's iPad and iPhone. As a result,
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the company's reputation and consumer acceptance of its business practices have
suffered. It remains to be seen how the business will navigate the legal minefield in
which it finds itself in developed economies due to the numerous cases.
Environmental
Samsung needs to be conscious of the need to create its products to satisfy the ethical
chic consumer, who is on the increase and demands that brands source and
manufacture their products in a socially and environmentally responsible manner. This
implies that it must take care to avoid compromising on the working conditions or the
remuneration provided to the laborers who produce the final product.
V. MARKET ANALYSIS
A. Product and Major Competing Product(s) and firms
Samsung does business in a market with strong competition. Samsung is a
conglomerate that has expanded into other industries thanks to its fiercely
competitive products that rule the world's markets. A competitive market, in its
most basic sense, is one in which there is no dominant player with the authority
to set product standards and set pricing. Due to fierce competition from rivals like
Apple, Nokia, Techno, Motorola, LG, Dell, HP, and Kodak, the market for
Samsung displays excellent competition. By offering alternatives to Samsung's
products, such as computers, mobile phones, tablets, televisions, cameras, and
other devices, these rivals fiercely compete with Samsung.
Due to its ability to provide high-quality, innovative, and distinctive products at
competitive rates, Samsung is a formidable competitor in the market. Samsung's
goods are marketed to both high-end and low-end consumers in numerous
international countries. According to a study of Samsung's market share, the
company has a sizable global market share, which offers it a competitive
advantage over its rivals. Apple is Samsung's main rival in the computer and
smartphone industries.
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Samsung, however, outcompetes Apple in the electronics sector since it provides
cutting-edge products and holds a sizable global market share. As a result, it is
sufficient to remark that Samsung competes fiercely for market share in a highly
competitive environment.
Samsung mobile devices fall under the category of a shopping product. Due to
the variety of brands and models that are available on the market, consumers will
compare the price, style, functionality, quality, and suitability of the smartphone.
After achieving unparalleled global hardware competitiveness, Samsung has
been concentrating on. improving the software's brand recognition, user
experience, and design capabilities. Samsung must continually produce
high-caliber and cutting-edge smartphones in order to maintain its position as the
market leader.
B. Pricing Strategy
Samsung can raise its profits through a value-creation strategy because it has a
large market share. Analysis of the business tactics Samsung uses to increase
its earnings reveals that it primarily takes use of product differentiation and
business diversification. Samsung specializes on electronics items for product
differentiation, but it has expanded into the computer, smartphone, and
construction industries.
C. Non-Price competition Strategies
Samsung maintains reasonable pricing and offers a wide choice of products to
suit all price points. We compared the recently released Samsung S3
smartphone to its rivals as shown in Appendix 4. We chose close competitors,
primarily the Apple iPhone 4S and HTC One, because the Samsung S3
smartphone is regarded as the premium product series in the smartphone
market. Although the Samsung S3 is the newest product among the three
phones, the price difference with rivals is just about $100, according to the
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comparison. Samsung has an advantage over its rivals since its price is so close
to theirs.
D. Marketing Strategies
d.1 Product Mix Pricing Strategies
According to the goals the company had set for them, the product mix is the
selection of goods and services that a company decides to offer in its market and
pricing methods. The goal of Samsung's product strategy is to produce Android
smartphones at a range of price points and distribute them through as many
carriers as possible worldwide. About 240 different global dealers sold the
original Galaxy S.
The technique Samsung used for smartphones was product-line pricing, which
entails setting prices for several goods within a product range at various price
points. For instance, as illustrated in Appendix 5, Samsung offered a variety of
cellphones with various designs and features at various pricing points. The better
the feature and benefit, the more of a consumer.
d.2 Price Adjustment Strategies
a group of tactics used by businesses to modify their base rates to take into
account different client preferences and evolving circumstances. The most widely
used pricing tactics include psychological pricing, segmented pricing, discount
and allowance pricing, and promotional pricing. Discount and allowance pricing
adjustment strategies are frequently employed in the smartphone market. Using
this tactic, businesses can modify their base price to offer discounts to
consumers who pay their bills on time, buy in bulk, or shop outside of the busy
season. This tactic can take many different shapes.
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An off-season discount is a price cut offered to customers who purchase goods
or services. For instance, the cost of the Samsung Galaxy S2 was lowered when
the Samsung Galaxy S3 was released. Older smartphone models are analogous
to off-season goods in this scenario. Sellers will provide discounts to entice
customers to buy from older models.
Another way to lower the stated price is through allowances. As an illustration,
trade-in allowances are discounts offered for returning an old item while
purchasing a new one. Vendors who sell smartphones are most likely to offer
trade-in allowances.
VI. Corporate Social Responsibility
The Sustainability Management Council, which comprises 14 connected departments
and handles problems from 10 various sectors, including society and the environment,
facilitates Samsung Corporate Social Responsibility (CSR) activities and initiatives.
The following tenets form the foundation of the Samsung Global Code of Conduct:
1. Adherence to legal and moral requirements
2. Upkeep of an organized organizational system
3. Respecting clients, shareholders, and staff
4. Environment, health, and safety considerations
5. becoming a corporate citizen who is socially responsible
The Samsung CSR Committee oversees the company's CSR initiatives. Annually, the
company issues a Supplier Responsibility Progress Report that provides information on
the CSR programs and projects it has undertaken. Samsung Electronics approaches
CSR issues from four angles: social contributions, environmentally friendly
management, health and safety, and sharing growth.
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Samsung Supporting Local Communities
● Through methodical vocational education, Samsung Tech Institute promotes
independence and self-reliance among young adults. By the end of 2015, the
program had 39,659 beneficiaries.
● By enhancing the learning environment for students who live in underprivileged
areas, Samsung SMART School closes a significant gap in global education.
224,753 pupils attended Samsung SMART Schools in just 2015 alone.
● The program Samsung Solve for Tomorrow strives to address significant social
concerns. Students and non-profit organizations are involved in the program to
determine the most important social issues and to create and implement
solutions to these issues.
● With the use of technology, Samsung Care Drive makes a variety of healthcare
programs possible. The company ran 30 active initiatives as of 2014, mostly in
China, Russia, and numerous African nations.
● By giving socially disadvantaged groups of people a functional infrastructure,
Samsung Nanum Village seeks to attack the causes of poverty. Partnerships are
established with national and local governments as part of this program to give
comprehensive support for community center building, medical facilities, clean
water, and educational infrastructure.
● In 2014, Samsung employees volunteered an average of 11.3 hours per week.
● In Korea, Samsung launched the sixth House for Hope in 2015 to upgrade
neighborhood community child care facilities.
Samsung Educating and Empowering Workers
● The entire amount of employee perks offered in Korea and abroad in 2015 was
KRW 3.853 billion.
● In 2015, each employee received 78 hours of training.
● 5,500 people have used the Samsung Career Consulting Center.
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● Every year, Samsung holds STaR Sessions (Samsung Talent Review) in
conjunction with their EDP (Expertise Development Process). It is a process for
developing talent that helps workers create a unique career path and create a
clear vision with their manager. 2000 workers in Korea alone go through STAR
training per year.
Labour and Human Rights at Samsung
● In 2015, the business carried out 235 supplier inspections to prevent child labor
in China.
● In Malaysia, Business for Social Responsibility (BSR) and Guidelines for Migrant
Workers are working together to help end forced labor.
Employee Health and Safety at Samsung
● For Samsung, developing health and safety management systems is a top focus.
In all of its workplaces around the world, the company conforms with the OHSAS
18001 standard for occupational health and safety management systems.
● Samsung makes an effort to provide safe working environments at all times. The
company has implemented a continuous monitoring and improvement program,
and as a result, occasionally plans emergency situations for the occurrences of
hazardous chemical substance spills, fires, explosions, and natural disasters.
● Samsung promotes employee health and safety by implementing ergonomic
practices in the workplace and forbidding business travel to areas where there is
a significant danger of contracting infectious diseases like Ebola and MERS.
Waste Reduction and Recycling by Samsung
● Between 2009 and 2015, Samsung gathered a total of 2.26 million tons of
rubbish, and by 2020, it hopes to have accumulated 3.8 million tons of waste.
● Monitors, printers, washing machines, refrigerators, vacuum cleaners, and
earphone cases all used a combined 34,322 tons of recycled plastic in 2015 (6.3
percent of all plastic used).
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Carbon Emissions by Samsung
● Samsung's Eco-Management 2020 and Planet First programs resulted in a
decrease of greenhouse emissions by 70% and a cumulative reduction of 250
million tons of greenhouse gas since 2008.
● Around the world, open projects that are part of a global green communications
initiative to spread the benefits of Samsung Green Management have been
implemented. These include programs and activities promoting environmental
education and supporting employee participation in such activities.
● By cutting back on greenhouse gas emissions, water use, and trash generation
at its offices, the company runs green workplaces.
● From 2009 to 2015, Samsung reduced greenhouse gas emissions by a total of
156 million tons at the product consumption stage.
Samsung and Sustainable Sourcing
● A team of 100 directors and executives in the areas of manufacturing, product
development, and quality control make up Samsung's Supplier Consulting Team.
● The organization manages a KRW 1 trillion Shared Growth Fund to assist
suppliers who have trouble obtaining financing in growing their businesses.
● An effort to create a win-win cooperation with suppliers was made in 2010 with
the introduction of the Seven Shared Growth Implementation Plan. Samsung
established the Win-Win Partnership Academy with the goal of helping its
suppliers grow their companies.
Samsung other CSR Initiatives and Charitable Donations
● In order to lessen its influence on the environment, the corporation adopted the
development of green technology and goods as one of its guiding principles. As
of the end of 2014, Samsung had obtained certifications from 11 countries,
including Korea, the US, China, and Europe, for a total of 3,027 product models.
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VII. Conclusion & Learnings
Samsung's analysis shows that the company is a company with a strong vision and
mission in the digital industry. Since its founding in 1938, Samsung has grown and
expanded in multiple industries, becoming one of the world's largest conglomerates.
Operating in a perfectly competitive environment, its products exhibit price elastic
demand and high-income elasticity. Samsung recruits and trains top talent to increase
profits and reduce costs. Clearly, Samsung's products are in high demand and generate
huge profits. Large market share and industry diversity make Samsung's profitability
sustainable. Ultimately, Samsung's strength lies in its large market share, affordable
products, diverse business, and talented employees, and its opportunity lies in its brand
reputation and emerging economy. Samsung is a leading mobile phone brand with
high-end specs. Users are average consumers and businesses.
An assessment of the company's business environment found the threat of substitute
products and industry competition to be two of the biggest threats. Bargaining power of
suppliers, bargaining power of consumers, and barriers to entry all have a moderate
impact on company operations. The business and enterprise-level strategies highlighted
in this report target the two most powerful forces in that operating environment: intense
competition and the threat of substitute products. It is intended to combat the threat of
substitute products, as poor product quality threatens a company's brand image.
In particular, it shows that Samsung was able to effectively outperform its competitors.
In particular, the recommendation to shift the company's strategy to making
breakthrough products aims to enhance its business profile beyond its main competitor,
Apple. But Samsung is getting the attention of its competitors through its mobile
capabilities.
Many customers love his Samsung mobile phones and will continue to build
relationships with the brand. Implementing the corporate and business-level strategies
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highlighted in this report could improve the success of Korean companies over the next
decade. After all, the customer's decision to buy a Samsung mobile phone is based on
its attractive features and is a strong motivation. Furthermore, as a world-renowned
mobile phone company, Samsung has established a foothold in various markets around
the world.
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VIII. References:
Samsung Overview (About, Mission, Vision, Values, Principles) (work [Link])
Samsung - Samsung as a global company | Britannica
SWOT analysis of Samsung ([Link])
PESTLE Analysis of Samsung ([Link])
[Link]
[Link]
[Link]
0LBLIV4WUqHeUHhmuyK72ftdfY54uOL4X5Kqw6rIlV0nkptP6qSbQsopk
Danova, T. (2013). Samsung is now a more profitable company than Apple. Business
Insider. Web.
Prakashan, N. (2008). Managerial Economics. New York: Cengage Learning. Samsung:
Values and Philosophy. Web.
Sodhi, M., & Lee, S. (2007). An analysis of sources of risk in the consumer electronics
industry. Journal of the Operational Research Society, 58(1), 1430-1439. Web.
Campbell-Kelly, M & Garcia-Swartz, D 2015, From mainframes to smartphones,
Harvard University Press, Cambridge, MA.
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Cecere, G, Corrocher, N & Battaglia, R 2014, ‘Innovation and competition in the
smartphone industry: is there a dominant design’, Telecommunications Policy, vol. 34,
no. 5, pp. 1-10.
Ethical Consumer 2017, Samsung electronics – supply chain management, Web.
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