Samsung Case Study

Strategy Presentation on Countering flagellum from Chinese Company BBackground ackground Samsung founded in 1938 by Byung-Chull Lee. 1950s Economic stabilization Korean War Samsung lost all assets aimed to help rebuild Korean economy entered the manufacturing industry (sugar, fabrics) became a leader in modern transmission decipher practices (recruiting from outside) 1960s Expansion of Key Industries entered electronics and chemical industries 1969 realised Samsung Electronics Co. as a division of the Samsung group. In 1970s, Samsungs entry into the semiconductors business was pivotal for the company, to that end, creation of Samsungs semiconductors and telecommunication Co. in 1978. laid the groundwork for electronics in Korea helped the domestic economy stand up paved the way for exports 1980s Samsung was manufacturing, shipping, and selling a wide set forth of appliances and electronic products throughout the world. A more comprehensive electronics company established Semiconductor and Communication corporation began memory chip business earlier 90s Integration and Globalization Sales at Samsung Group grew more than 2. times between 1987 and 1992. Mid-Late 90s Implementing revolutionary way strategies Samsung harvest Range Some of Samsung products Home multimedia system Mobile Multimedia Personal Multimedia Core Comp superstarnts Core-Competencies Samsung- Core Competencies High Quality Standards choice Efficiency Innovation Drive Customer Responsiveness true Products Reliable Products Work with design firms Located main R&D schooling new design Employee welfare facility and fabs at rules and application progressive Recruitment a single site A common design of foreign Talent Performance platform with Global Strategy ased forwarding customization as per Group Reward but exigency Employees global no Firing business skills Policy Ability to customize product to regional Specialist Debate based customer demands program agreements Increasing contender Rank Company Market Share 1 Samsung 34% 2 Hynix 22% 3 Micron Technology 15% 4 Elpida reminiscence 14% 5 Qimoda 5% Industry Analysis Porters Five Forces Fierce contestation due to increase in ability & cyclical blueturn Industry Entry of new Chinese companies Rivalry Suppliers are likely to becomes more concentrated and offer about 5% discount on bulk purchaseSupplier Buyers are largely OEM with no one controlling more than 20% of the food food market. Buyers Buyers are likely to negotiate lumbering for prices. Entry Barrier Substitute High entry barriers due to requirement of capital investment and complex Chinese firms going for joint ventures and approach to foreign investment. Memory chips did not have any substitutes but experienced technology is likely to be replaced by more advanced technology. plodding Analysis Strength Weakness Opportunity Threats Diversified product line to cover all customer needs High market c omponent in Mobiles, Memory Chips and LCD High Brand value from aggregate sponsorships High investment on research and sustainment Customers place doubtfulness on durability of products Lack of focus on niche market Low Average salary in the market Strong and growing customer demand for high-end products Young population gives a chance to develop customer base for future Intensifying competition Low make up Chinese products whitethorn lose advantage of DRAM technology to new Nana Tech Competitive Advantages of Chinese Firms Access to cheap labour and local anesthetic engineering talent Government subsidies Easy access to local & multinational monetary capital Lower cost structure Willing to drop dead years of losses to gain market share Competitive Advantages of Samsung devote workforce of manual labourers and engineers Strong product portfolio SDRAM, DDR SDRAM, DDR2 SDRAM, RDRAM, other DRAMs Early public mover advantage in increasing wafer-size Sustained levels of high operating margins betrothal of stacking method for imposition Competitive Advantages of Samsung Strategic co-location of R&D and fabrication facilities Enabling an efficient cost-structure Favourable environmental conditions In-house competitions for new product developments active voice involvement of junior staff and engineers in discussions regarding new products leading to instauration Competitive Advantages of Samsung Strong HR Policies rankment in employees higher breeding Active recruitment of foreign talent Goodwill towards employees 3 levels of Performance-based inducings Project-based incentive Productivity-based incentive Profit-based incentive Strong Financials Samsung Micron Infineon Hynix SMIC COGS/Sales 23% 44% 33% 44% 32% SG&A/Sales 12% 26% 9% 16% 8% R&D/Sales 11% 13% 14% 13% 18% Labor/Sales 11% 21% 16% 11% 8% Sales 5. 08 4. 48 4. 73 4. 58 4. 3 COGS 1. 19 1. 98 1. 57 2. 01 1. 84 SG&A 0. 59 1. 18 0. 44 0. 74 0. 34 R&D 0. 56 0. 56 0. 67 0. 61 0. 8 Labor 0. 54 0. 94 0. 75 0. 51 0. 34 Lower Raw material, Labour, Depreciation, R&D costs. Higher Selling Price Resulting in better financial indicators Lower COGS/Sales Lower SG&A/Sales Lower R&D/Sales (Exhibit 7d) The Big Question Can Samsung weather the Chinese Threat? Yes, Samsung continues to retain and gain market share. Samsung has a high marque value- Can leverage on Brand Equity. Wide Range of Product Offerings for sustenance. Deterring New Entrants Strategies to deter new entrants Strategy turning point Products Price Cut Cut down on price and Innovate on niche force a price war and products and drive competitors out explore new of the market markets Excess Capacity Acquisition Increase output and Acquire itsy-bitsy force down prices to entrants with good make market entry voltage to perform unprofitable Way Forward Keep Innovating and Invest heavy in R&D Focus on New Niche Products Maintain Reliability and Quality of Product Focus on much Foreign tale nt including talent from China as well Invest in lower end chip factories in china May look towards increasing the average salary Thank You