Strategic Analysis of Samsung: Innovation and New Technologies

This report provides a strategic analysis of Samsung, focusing on innovation and new technologies. It includes Porter's five forces analysis, stakeholder analysis, value chain analysis, PESTEL analysis, SWOT analysis, technology cycle, Utterback and Abernathy model, and McKinsey's 7s model. The report also discusses the current market condition of Samsung and suggests ways for the company to overcome its challenger, Huawei.

Running head: INNOVATION AND NEW TECHNOLOGIES
INNOVATION AND NEW TECHNOLOGIES
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction....................................................................................................................2
Part 1..............................................................................................................................2
1. Porter’s five forces analysis of Samsung...............................................................2
2. Stakeholder analysis of Samsung...........................................................................3
3. Porter’s value chain analysis of Samsung..............................................................3
4. PESTEL analysis of Samsung................................................................................5
5. SWOT analysis of Samsung...................................................................................5
6. Technology cycle...................................................................................................6
7. The Utterback and Abernathy Model or three phases of innovation model..........6
8. The McKinsey’s 7s model of Samsung.................................................................7
Part 2..............................................................................................................................8
Current market condition of Samsung.......................................................................8
Part 3..............................................................................................................................9
Ways by which Samsung can overcome the challenger Huawei...............................9
Conclusion....................................................................................................................10
References....................................................................................................................11

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Introduction
Samsung is a South Korean multinational organization that operates different types of
businesses under the brand of Samsung. The company includes many different businesses
like, food processing, insurance, textiles, securities, retail. Samsung had entered the
electronics based industry in the 1960s and had also started its business operations in the
shipbuilding and construction industries in 1970s. Samsung had gained the position of 6th
largest global brand based on the value that has been developed in the market. The Samsung
has been able to develop a powerful influence on the economy of South Korea. The revenues
of Samsung are considered to be equal to around 17% of the total GDP of the country that
amounts to 1082 Billion Dollars.
The report will be based on the analysis of the competitive environment in which
Samsung is currently operating. The different strategic analysis frameworks that will be used
for this analysis are Porter’s five forces framework, stakeholder analysis, Porter’s value chain
model, PESTEL analysis, SWOT analysis, technology cycle, The Utterback and Abernathy
model, McKinsey’s 7-S model.
Part 1
1. Porter’s five forces analysis of Samsung
Threats of the new entrants – The economies that are required to be developed in the
technology industry are quite high. This production based activities for the new organizations
becomes quite difficult and cost advantage is provided to the large companies. Product
differentiation is strong in this case and requirements of capital are also high. Distribution
networks that have been developed by large organizations are highly important for Samsung
(Adner and Kapoor 2016).

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Bargaining power of the suppliers – Samsung Group has many suppliers in the
industry in comparison to the buyers. This is able to reduce their power and the impact that
they have on the prices of products and raw materials (Christensen, Raynor and McDonald
2015).
Bargaining power of the buyers – The buyers in the smartphone industry have huge
amounts of choice based on the products that are offered to them by different organizations.
However, it is not always easy for the customers to switch to new products due to the cost
based factor. The power that they exert on the organization is mixed in nature (Biemans
2018).
Threats of the substitutes – The technology or white goods market is filled with
organizations that are able to provide huge number of choices. An organization like Huawei
has been quite successful better feature based substitutes to the consumers (Cui and Wu
2016).
Rivalry among the firms – The different multinational smartphone organizations that
have their operations in the industry are able to provide tough competition to Samsung. The
rivalry levels in the industry are thereby high (King and Baatartogtokh 2015).
2. Stakeholder analysis of Samsung
The major stakeholder groups that have been identified by Samsung include, investors
and shareholders, local communities, customers, business partners, employees, government
and media.
Strategic stakeholder analysis – The investors and the employees are considered to
be strategic stakeholders of Samsung.

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Normative stakeholder analysis – The communities in the countries in which
Samsung operates are the normative stakeholders of the organization.
3. Porter’s value chain analysis of Samsung
Primary activities
Inbound logistics – The inbound logistics of Samsung are mainly based on receiving,
storing as well as disseminating inputs that are required for development of products. This
mainly includes, warehousing of the physical products and material handling.
Operations – The transformation of raw materials to the finished products are based
on the operations of Samsung in the smartphone industry (Kivimaa and Kern 2016).
Outbound logistics – This part of the value chain is based on the proper distribution
of the final products of Samsung to the customers.
Marketing and sales – The sales and marketing are mainly based on the ways by
which the products of Samsung can reach the consumers.
Services – Samsung Electronics has to provide after sales based services to the
customers and is able to maintain the loyal customer base (Lyytinen, Yoo and Boland Jr
2016).
Support activities
Firm infrastructure – The infrastructure that has been developed by Samsung is
mainly based on the activities like, legal services, planning, accounting and finance.
Human resource management – The human resource management activities that are
performed by Samsung include, skill assessment, selection, hiring, people planning,
compensation, training.

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Technology development – Technology development is based on activities like,
technology selection, feature design, process engineering, component design and field testing.
Procurement – Procurement includes activities like inputs which are used by
Samsung in the value chain of the organization (Nambisan et al. 2017).
4. PESTEL analysis of Samsung
Political factors – The political set up of China is supportive for the operations of
Samsung and the company has been able to form its position in the smartphone industry.
Economic factors – The economic factors are mainly related to the performance of
Samsung and the advancements that have been made by the company to gain new markets .
Social factors – Samsung being a multinational company has always aimed at
adjusting its operations with changes that take place in market culture.
Technological factors – Samsung has been leading the market with the help of proper
innovation in its products. The driving of technology and influence is based on support
provided based on business gain (Prajogo 2016).
Legal factors – Samsung has faced many law suits in the course of its operations in
the industry.
Environmental factors – The ethical and environmental standards need to be taken
into consideration by Samsung in order to maintain its operations (Saebi and Foss 2015).
5. SWOT analysis of Samsung
Strengths – The design and research based capabilities of Samsung are quite
impressive and Samsung Pay is an effective service that is provided by the organization. The

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marketing and manufacturing capabilities of the organization are also strong (Kivimaa and
Kern 2016).
Weaknesses – The rise of Chinese competitors is a major concern for Samsung based
on its operations in the industry. Huawei can be considered to be a major competitor of
Samsung that has affected the market share of the organization (Souto 2015).
Opportunities – The increasing demands for the wearable technologies and
enhancement in customer base of smartphones is a major factor that provides growth
opportunities to Samsung.
Threats – The growth of Chinese organizations has led to decline in sales of Samsung
in the last few years (Witell et al. 2015).
6. Technology cycle
The technology cycle mainly consists of four major stages that include the following,
Era of Ferment – This stage is based on the time when Samsung had introduced new
technologies that had been able to substitute the use of outdated technologies by the other
organizations.
Dominant design selected – The Android technologies had started dominating the
Samsung and this helped in the growth of Samsung in the industry (Wu et al. 2015).
Era of incremental change – The smartphone organization had started increasing the
features that were provided in the products. Samsung also implemented various new features
in the new products.

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Technology discontinuity – This stage is based on the time when tough competition
was being faced by Samsung due to introduction of huge number of models by the Chinese
organizations like Huawei (Souto 2015).
7. The Utterback and Abernathy Model or three phases of innovation model
The three phases of innovation model are mainly based on the start of operations of an
organization based on the ways by which it is able to develop the products and services and
capture the market as well.
The fluid phase – This phase of Samsung is related to the start of its production of
smartphones in the market in order to analyse the demands and needs of consumers in an
effective manner.
The transitional phase – This phase is mainly related to the changes that have been
made by Samsung in the products over the years of its operations in the highly competitive
smartphone industry (King and Baatartogtokh 2015).
The specific phase – This phase is being currently faced by Samsung as the company
is aiming at developing improved products that are able to face the levels of competition by
fulfilling needs of consumers(Nylén and Holmström 2015).
8. The McKinsey’s 7s model of Samsung
Hard elements
Strategy – Samsung has implemented cost leadership strategy in order to maintain its
operations in comparison to its competitors in market.
Structure – Samsung has implemented divisional organizational structure in order to
develop its operations in different parts of the world.

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System – The policies and procedures that have been formed by Samsung are based
on the ways by which the organization can provide its services to the customers (Kivimaa and
Kern 2016).
Soft elements
Staff – The staff in retail stores are considered to be an important part of the
operations of Samsung and their reach towards the customers.
Style – The transactional or emperor style leadership is followed in Samsung by the
CEO Lee Kun-hee.
Skills – The skills that have been gained by the employees of Samsung in order to
provide their services to the customers.
Shared values – The shared values are based on the vision that has been developed by
the CEO of Samsung and the collaboration of employees as well (Christensen, Raynor and
McDonald 2015).
The strategic analysis of Samsung has been able to depict that the rise in competition
by the Chinese smartphone organization Huawei and many other companies has shaken its
market in a huge manner.
Part 2
Current market condition of Samsung
The strategic analysis of Samsung has been able to depict that the organization has
been able to develop its operations in the industry in an efficient and successful manner. The
sales of the organization have been hit by the rise of its Chinese competitor Huawei. The
smartphones based sales of Samsung have dipped by around 13% in the last quarter of 2018.

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The major high end devices of Samsung have not been able to provide major competition in
the technology market. Huawei has shown huge growth in the last few years and the products
that are offered to customers are highly competitive in nature (CNBC. 2019).
The growth of the sales of Huawei is mainly based on its flagship product named P20.
This product has pushed the consumers to consider its purchase in comparison that those
which are offered by its competitors. The major struggle that has been faced by Samsung is
based on the ways by which it aims at entering the mid to low end based market. The
earnings guidance of Samsung that is formed by the organization has however depicted that
the condition of the organization can increase soon. The premium features have been
implemented by Xiaomi and Huawei in the products that are offered to the mid-market to low
end consumers (CNBC. 2019).

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Figure 1 – Market condition
Source – (CNBC. 2019)
Part 3
Ways by which Samsung can overcome the challenger Huawei
Samsung needs to change the strategies that have been implemented in its operations
in order to gain the market share that it lost to its Chinese competitor Huawei. The entry of
Chinese organizations in different emerging markets of Samsung like India has been a major
issue that is faced by the organization. China, that is considered to be the most lucrative
mobile market of the world has not been able to provide major growth opportunities to
Samsung. The leading position has been threatened by the growth of Chinese organizations in
the industry (Lyytinen, Yoo and Boland Jr 2016).
The strategy that can be implemented by Samsung in order to develop its position is
related to the ways by which major features can be packed in the mid-range phones of the
organization. The company needs to develop the products in such a manner so that it is able
to reach a larger base of consumers. The consumers who do not purchase flagship products
will be targeted by Samsung with the help of its technology packed products. The gap that
has been created in the market share of Samsung due to decline in sales can be fulfilled
effectively with the changes that can be implemented in the product features that are offered
to the middle market segment (Adner and Kapoor 2016).
Conclusion
The report can be concluded by stating that Samsung has been in a leadership position
in the smartphone industry for many years. However, the entry of a challenger in the industry

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has been able to affect the profitability levels of the organization in a huge manner. The
profitability levels of the organization can be increased with the help of changes in strategies.

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References
Adner, R. and Kapoor, R., 2016. Innovation ecosystems and the pace of substitution: Re‐
examining technology S‐curves. Strategic management journal, 37(4), pp.625-648.
Biemans, W., 2018. Managing innovation within networks. Routledge.
Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. What is disruptive
innovation. Harvard Business Review, 93(12), pp.44-53.
CNBC. 2019. After overtaking Apple in smartphones, Huawei is aiming for No. 1 by 2020.
[online] Available at: https://www.cnbc.com/2018/11/16/huawei-aims-to-overtake-samsung-
as-no-1-smartphone-player-by-2020.html [Accessed 14 Apr. 2019].
Cui, A.S. and Wu, F., 2016. Utilizing customer knowledge in innovation: antecedents and
impact of customer involvement on new product performance. Journal of the academy of
marketing science, 44(4), pp.516-538.
Dodgson, M., 2018. Technological collaboration in industry: strategy, policy and
internationalization in innovation. Routledge.
King, A.A. and Baatartogtokh, B., 2015. How useful is the theory of disruptive
innovation?. MIT Sloan Management Review, 57(1), p.77.
Kivimaa, P. and Kern, F., 2016. Creative destruction or mere niche support? Innovation
policy mixes for sustainability transitions. Research Policy, 45(1), pp.205-217.
Lyytinen, K., Yoo, Y. and Boland Jr, R.J., 2016. Digital product innovation within four
classes of innovation networks. Information Systems Journal, 26(1), pp.47-75.

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Nambisan, S., Lyytinen, K., Majchrzak, A. and Song, M., 2017. Digital innovation
management: Reinventing innovation management research in a digital world. Mis
Quarterly, 41(1).
Nylén, D. and Holmström, J., 2015. Digital innovation strategy: A framework for diagnosing
and improving digital product and service innovation. Business Horizons, 58(1), pp.57-67.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment
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Saebi, T. and Foss, N.J., 2015. Business models for open innovation: Matching
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[Accessed 14 Apr. 2019].
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Witell, L., Anderson, L., Brodie, R.J., Colurcio, M., Edvardsson, B., Kristensson, P., Lervik-
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Wu, D., Rosen, D.W., Wang, L. and Schaefer, D., 2015. Cloud-based design and
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