External Environment Factors Impact on Business

This assignment explores the influence of external environment factors on businesses, utilizing Porter's five forces model and SWOT analysis. It examines the bargaining power of buyers and suppliers, threats of new entrants and substitute products, and competitive rivalry. Additionally, it discusses pricing strategy and governance structure, highlighting their impact on company operations.

Firm behaviour and strategy

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
1. Strategic planning and analysis of external environment of the Samsung company.........1
2 Strength and weaknesses and core competence and value chain analysis .........................4
3. Concept of competitive pricing strategy and evaluating the pricing strategy adopted by
Samsung. ...............................................................................................................................6
4. Evaluate the relationship between the Asian governance system......................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
INTRODUCTION...........................................................................................................................1

INTRODUCTION
This report is based on the Firm behaviour and strategy. Firm's behaviour and strategy is
important for running operation of the organisation. As these strategies help the organisation in
their operation performance and achieving its overall organisational goal. This project report is
based on the Samsung company which is South Korean multinational company. This report will
include the strategic management planning with the help of the Porter's five force model and the
external environment analysis of the company. This will also evaluate he company's own
strength and weakness as compared with the Apple company. Further more this will explain the
elements of marketing strategies like fixed and variable costs, competition, company's objective
its target group and etc. this will help the company to clear understanding of their objective to
gain the sustainable competitive advantage. And the last this report will explain different market
governance and ownership structure which impact all the affiliates of Samsung company.
MAIN BODY
1. Strategic planning and analysis of external environment of the Samsung company.
For the Strategic planning Samsung company apply the Porter's five force model that
help the company to shape its overall extent of the competition. This is very handy tool to
develop the strategies and to drive the market that impact on the company like Samsung. This
include the five elements which are as follows:
Threats of substitute products – Substitute smartphone products and brand create a high threat to
the Samsung smartphones. That have several competitors like Apple, Sony, LG and may more.
Apart from these there are other local brand which that create a competitive threats to the
Samsung. As the Apple's iPhone which launched in the 2007 was the turning point for the
Samsung as the substitute. That affected the sale of the Samsung smartphones, and beat he
Samsung by selling 74.8 million iPhones ahead of Samsung's 73 million sales in 2015. for this
Samsung applied pricing strategy to attract the more customers by giving them the best
smartphones features as compared to the substitute in the market (Wee, 2017).
Rivalry among existing firms – There are large number and diversity of the competitors in the
smartphone segment market. Samsung's biggest competitor in the market is Apple and other
competitors which have low impact on the sale of the Samsung smartphones such as LG,
Lenovo, Sony, Motorola, Nokia etc. which also -provide he wide range of services to the

customers such as MP3 players, large multi-touch user interfaces, camera and many more. If
Samsung does no provide any of this thing then the business of the Samsung will fall down. To
compete with he Apple, Samsung launched its galaxy series in 2013. as this increase the sale of
the Samsung s7/s7 edge for 16% and the iPhone 6s/6s plus was 14.6% in 2016 and the overall
sale is accounted for Samsung was 37% and and Apple 29% in 2016.
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Bargaining power of suppliers – Operation of the Samsung largely depend on the specific type
of the suppliers,. As it has 579 suppliers globally and the company's supply chain include the
2,700 suppliers. As the Samsung maintain its extensive communication with the suppliers
decrease the bargaining power of the suppliers and also as it have large number of the suppliers
Samsung can switch to any suppliers to supply their smartphones.
Bargaining power of buyers – The power of the buyers for the Samsung is somewhat is mixed,
as the buyers have multitude options to choose the smartphone, same time they have to be stick
with the products and cannot dumped it,k because of its high value. Whereas higher competition,
higher technology use and other features are the reasons are behind the rising influence of the
customers. But as it is the oldest and well developed market brand image and provide the high
quality, so it is somehow difficult for the customers to bargain with the Samsung.
Threats of new entrants – The threats of new entrants for the Samsung smartphones are low.
Building and creating such a large brand is not that easy which require lot of financial
investment and also marketing and need highly skilled people to create smartphones like
Samsung. So the threats of new entrants for Samsung is low.
PESTLE analysis for analysing the external environment of Samsung
Samsung us considered as the best global company that provides quality products and
services to its customers. In order to do strategic planning, Samsung focuses on analysing the
external environment of business by using the Pestle framework, which is explained as follows
in detail:
Political Factors: This factors may lead to bring great impacts and influences on the
company as it deals in international markets. Samsung may get impacted from the political
scenario of the country it is operating in. For example, country having political instability may
become an area having war prone risks and thus it leads to bring impacts on the sale of white
good items. In case of Samsung, it can also be analysed that recent conflicts that happened in
Korea greatly impacted and affected the organisation as a whole.
Economic factors: Every business needs to focus on effectively analysing this factor as it
bring great impacts and influences on the working of business activities and operations. The
economic factors includes inflation situation, consumer's buying behaviour, stability of country,
etc. For example, the GDP rate of country reflects that people has more income that can be used
for buying latest products and technologies produced by the companies. In contrast with this,
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overall economic crisis faced by particular country leads to bring negative and great impacts on
the organisation like Samsung. Thus, global uncertainty leads to make the company for changing
the business strategies every now and then.
Social Factors: This factors includes culture followed by people, their beliefs and
attitude, education level, etc. Company operating in particular country gets influenced and
impacted through the social factors of that country. Therefore, Samsung needs to show and
implement flexibility in the business policies which pertains to the local culture of the country it
is operating in. For Example, Samsung is Korean company but it has effectively changed the
preferences and various relatable policies according to the various local social elements in which
company is operating the business in.
Technological Factors: This includes technological up-gradation or technological
advancement that every business organisation aims for implementing in order to cope up with the
intense competitive markets. Samsung is famous for its innovation in the international markets.
The company has developed the mission for always following the contemporary trends within
the technological sphere. For example, there are many other rivalry companies within the same
industry brings new and innovative update leads to bring great impact on the sales and brand
image of Samsung company. Therefore, Samsung focuses on going one step ahead of up-
gradation and technology. The company is technology driven organisation and thus needs to
focus on implementation of latest trends of technology.
Legal Factors: The company needs to be focus on being much vigilant regarding the
legal issues of copy and various other pirated problems. For example, Apple has already blamed
the company Samsung for copying their features and designs. From this perspectives, it leads to
bring many legal issues for Samsung and company also has to face many penalties. Therefore,
the legal issues leads to bring great impacts on the working of the company.
Environmental Factors: People are becoming more and more ethics oriented and ethical
with the increase in the term globalization. Consumers expects from the companies to become
more ethical and socially responsible. Thus, Samsung needs to focus on making the working
condition good and ethical so that it leads to attract best of individuals for becoming the part of
Samsung family.
2 Strength and weaknesses and core competence and value chain analysis
Value chain analysis of Samsung
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Samsung value chain analysis is a critical framework that help to identify the business
activities and helps to achieve competitive advantages. It is basically divided into Support
activities and Primary activities.
Primary Activity
Samsung Inbound logistics- it include range of activities such as receiving distributing etc. which
makes goods and services for operational as Samsung has 579 suppliers and the company 's
supply chain include over 2700 suppliers in various industries across the world. 1998 Samsung
electronic Logistic was establish.
Samsung operations – Samsung operates 38 production bases in 17 countries and also it
manufactures 90 % of its products in – house. Samsung Electronics maintained 199 worldwide
operation hubs including manufacturing subsidiaries. Advance technology is one of the major
source of value in Samsung operation.
Samsung Marketing and Sales- it is the primary activity as sum sung marketing budget in 2016
amounted to USD 10.2 billion. The approach used is maintaining public relation.
Samsung services- it is the most important thing for the Samsung to maintain a strong
relationship with the customer and also providing highest standards as it conduct customers
satisfaction survey.
Support services
Procurement – Samsung has good quality of services as it include by supplying all the necessary
inputs like material and machinery.
Technology Development – Samsung invest heavy amount on advance technology so to provide
improve and innovative products to the customers.
Human resource Management- Samsung has good quality set of HR who perform the activity in
such as retention ,promotion in an effective manner.
Infrastructure- it include planning ,finance and legal governance by which Samsung has good
command.
Value chain of Apple
Apple Inbound logistics- as apple works with huge number of suppliers and also it maintain
strong relationship with the supplier. And also apple exercise an strong bargaining power with
the supplier as it able to do work in the cost effective manner.
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Apple operation – Apple operation is divided into many segment such as Americas it include
north and south segment accounted for 42% of total net sales in 2018. Further it include Europe
which accounted for 24% of total net sales for 2018.
Apple Outbound Logistics – it involve warehousing and distribution of iPhones ,iPads and other
products. Apple e- commerce sales of USD 12 billion. That comes with 5.1 percent of company's
total sales.
Apple Marketing and sales- the company net sales through its direct and indirect distribution
channel accounted for 29%. Apple has seven channel which helps in marketing and sales of the
products.
Apple services – Apple is very famous for its high quality services and satisfy the customers to
the large extent.
Support services
Procurement – Apple has great quality of inputs like machinery raw material which help the
organisation to the large extent.
Technology Development – Apple invest high amount on advance technology and that the
reason it is the leading company as it updates its store time to time.
Human Resource management – Apple perform the HR function in very efficient manner.
Strength and weakness of Apple
One of the biggest strength of apple is that it has great distribution channel and also it has
effective marketing and sales strategy that makes it effective and unique from other. On the other
hand one of the weakness of Apple is that it has high prices that are not affordable to the middle
class people.
Strength and weakness of Samsung
One of the biggest strength of Samsung is that it uses advance technology and also it has
great innovative products that make sum sung unique. And one of the weakness is that it has
limited distribution network (Savino, Manzini and Mazza, 2015).
3. Concept of competitive pricing strategy and evaluating the pricing strategy adopted by
Samsung.
Competitive pricing strategy mainly involves setting the prices of products or services
considering the changes in level of competition. In other words, competitive pricing strategy
also involves setting the prices of goods or services considering the pricing strategy implemented
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by competitors for attracting the customers. Competitive pricing strategy can be defined as the
procedure of selecting the strategic price points for taking the advantages of goods or services
based on the market. It is the pricing strategy which is utilised by organisations mainly for
selling goods of similar nature (Dess, Eisner and Lee, 2019). Competitive pricing strategy is
generally utilised by firms once when price for goods or services has reached to its equilibrium.
Such types of pricing strategies are also utilised by business entities when there are number of
product substitutes available in the market.
In context of Samsung electronics, an organisation utilises skimming pricing strategy for
setting the prices of products or services. The skimming pricing strategy has been adopted by
Samsung electronics for winning over competitors. In addition to this Samsung also utilises the
competitive pricing strategy. It is basically involves setting of high prices fort goods or services.
The main advantage of skimming pricing strategy which has been gained by Samsung
electronics is that it has assisted an enterprise in building the high quality image. It has assisted
business entity in changing the perception of consumers about the quality of goods or services.
Skimming pricing strategy has assisted Samsung electronics in increasing the profit margin. In
context of Samsung electronics an enterprise implement the skimming pricing strategy for the
newly launched products (Ivory and Brooks, 2018). Skimming pricing is considered to be as
short term strategy which is implemented by Samsung electronics in order to increase its
profitability. The main drawback of skimming pricing strategy is that an enterprise has to
sacrifice high units of sale. Other major drawback of the skimming pricing strategy is that if the
pricers of the goods remain high for a long time they it might be less accepted by customers
which could further have adverse effect on the sales and profitability of organisation. Skimming
pricing strategy is appropriate for gaining a high rate of interest on investment. But Skimming
pricing strategy is not effective for competing in an industry for longer time (Li and McMillan,
2019). Competitive pricing strategy is considered to be as suitable strategy for maintaining the
competitive position in an industry.
The advantage which has gained by the Samsung electronics by implementing the
competitive pricing strategy is that it has aid an enterprise in avoiding the price competition
which can have adverse effect on its financial performance. Main disadvantage of competitive
pricing strategy is that an enterprise has to identify other techniques for attracting customers. In
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addition to this, sometime competitive pricing strategy can lead to the decline in profit margin
which could have adverse effect on financial performance of an enterprise.
4. Evaluate the relationship between the Asian governance system.
A powerful Asian manufacturer company's are Samsung and apple. The Samsung
company is software to create smartphones and tablets. They are start gaining market share,
apply margin and stock prices. The relationship based on the Asian governance system of apple
and Samsung are as follows:
The company is design and manufacture and market of mobile communication and media
devices. The company sells the range of related software. The Asia's specific segment includes
the Australia and the Asian countries not included in the company's other operating system.
Good governance to build economic that are socially inclusive and environmentally vital for
achieving sustainable development (Berardo and Lubell, 2016). This governance system has
develop the relationship between the countries and sets governance body of the model. The
relationship based system and weak corporate governance in Asian countries went hand to hand
with each other until the current crisis light the combination flaws and abuses. This is based need
to develop elaborate governance mechanism. This impact the decision making process of Apple
by elaborate governance system.
This model gives the shifting global political economic landscape and re-emerging. It has
purpose is preliminary analytical framework for an emerging model of Asian governance by
incorporating. This impact to decision making process of the apply company by introducing the
political changes in the company and its body. Political changes are give the negative and
positive impact on company growth because taxes are always increase. By this company have to
pay the extra charges. By this company is affected by the governance system of Asia. Other
hand, Samsung has also lunch the smart phones and this supply the crucial applicants processors
for the iPhone and iPad. This declined to comment on its relationship with a specific customers.
Good governance is critical for development (Emerson and Nabatchi, 2015). This system is
focused on the after effects of separation of ownership from the control. This believes in creating
values for the shareholder. This also impact to company in order to positive and negative
changes as per requirement.
Those are impact to companies structure by governance relationship system and also this
only introducing political changes.
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CONCLUSION
From the above study it had been concluded that the external environment factors has
impact to business and also helped to analysis the factor has impacted to operation of both
company. Porter's five forces have helped to analysis to companies and also helped to know
about the bargaining power of buyer and supplier, threats of new entrance and substitute
products and also competitive relives. SWOT analysis has helped to analysis strength, weakness,
opportunity and threats of company. Pricing strategy has help to understand the market needs
and wants then sets in effective manner. It had been effective and valuable for the company.
There has the various prices strategy to sets the prices of products and goods which has pays by
the customers. Report had been also covered by the different structure of governance and
ownership structure.
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REFERENCES
Books and Journals:
Berardo, R. and Lubell, M., 2016. Understanding what shapes a polycentric governance
system. Public Administration Review. 76(5). pp.738-751.
Dess, G. G., Eisner, A. B. and Lee, S. H., 2019. Strategic Management: Creating Competitive
Advantages. McGraw-Hill Education.
Dess, G. G., Eisner, A. B. and Lee, S. H., 2019. Strategic Management: Creating Competitive
Advantages. McGraw-Hill Education.
Emerson, K. and Nabatchi, T., 2015. Collaborative governance regimes. Georgetown University
Press.
Ivory, S. B. and Brooks, S. B., 2018. Managing corporate sustainability with a paradoxical lens:
Lessons from strategic agility. Journal of business ethics, 148(2), pp.347-361.
Li, X. and McMillan, C., 2019. Corporate strategy and the weather: Towards a corporate
sustainability platform. Management, 12, pp.2-1. Implanting strategic management.
Springer.
Wee, C. H., 2017. Think tank—beyond the five forces model and blue ocean strategy: an
integrative perspective from Sun Zi Bingfa. Global Business and Organizational
Excellence. 36(2). pp.34-45.
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