Impact of Five Forces and Strategies for Competitive Advantage of Samsung Electronics

This article discusses the impact of five forces on Samsung Electronics, including the bargaining power of suppliers and customers, threat from substitutes, threat of new entrants, and industry rivalry. It also explores strategies for creating sustainable competitive advantage, such as cost leadership, differentiation, defensive strategies, and alliances.

Running Head: Business Marketing
Samsung Electronics
Business Marketing

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1. Impact of five forces on Samsung Electronics
Samsung Electronics is a behemoth player of international consumer electronics industry
and organization has managed to acquire leading position through which the demand for
the consumer electronics has been increased along with the increase in the revenues and
sales of the organization. This has ultimately helped organization to gain competitive edge
over existing players like Sony, Panasonic and other big brands of consumer electronics
industry. Samsung Electronics has expanded its functional area by introducing new
products with the objective of retaining interest of existing and potential customers
segments along with attracting new customer segments towards the organization. In the
competition of IDEA 2006 (Industrial Design Excellence Awards), organization won gold
for touch messenger and two silver awards for digital presenter and portable digital
projector. This helped the organization to move towards the peak position by passing all
the big companies in the industry as this was the biggest achievement for any consumer
electronic company as being rewarded with most IDEAs in last five years (Samsung
Electronics, 2018a).
Samsung Corporation have made their unique identity in the global market by introducing
new and attractive designs regularly in order to satisfy their wide customer base’s
demands and wants. With the help of IDEAs and other awards, Samsung acquired newly
design prowess. In the brand survey of 2005, Samsung was ranked as the fastest growing
brand by Interbrand (leading brand consultancy firm) (Govind & George, 2006).
Impact of external forces has a big impact over organizational performance and with
regards to this, it has been observed that evaluation is necessary of these factors so that
impact of each five forces could be analysed. Competition is also evaluated on the basis of
these five forces and in order to make the organization effective, appropriate strategies will
be framed on the basis of these factors.

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Porter’s five forces
Bargaining power of suppliers
Suppliers deliver raw materials to the organization for making finished goods. They are
crucial part of the organizational production process; thus, the impact of supplier’s
bargaining power is quite high. This power not only impacts organizational performance
but it also creates impact over competitive position of the organization in the industry
(Ottman, 2017). But in the case of Samsung, suppliers’ bargaining power is less due to
certain crucial factors. First factor is that suppliers’ size is relatively small than the
corporation’s size while the next factor is the availability of suppliers. Samsung is a well-
known consumer electronics brand, thus, their approachability and brand image is huge
enough to attract suppliers from different parts of the globe, and thus, they could easily
switch from one supplier to another easily. While, suppliers would not be able to switch
from Samsung as their source of income will be impacted, hence, it could be said that
overall bargaining power of suppliers is weak (Samsung Electronics, 2018b).
Bargaining power of customers
Due to large number of companies and continuous introduction of new entrants in the
consumer electronic industry has led to increase the bargaining power of consumers. In
case of Samsung, the bargaining power of consumers is moderately high due to low
switching cost for the buyers and they could easily move towards any other competing
brand along with this; they have option to compare the products of different brands in
order to get the most appropriate fit for them. Existing customers also posts about the
quality and features of the product which create impact over the demand of the product
and in order to attract new customer segments, organization needs to invest high part of
their earnings towards advertising and promoting their products to showcase their
products upper than their rivals’ products. With regards to this, all these factors also
creates impact over the organizational competitive position, thus, it could be evaluated that
the customers’ bargaining power is high and organization is required to make strategies on
the basis of current trends, audience’s demands and wants for maintaining their acquired
position in the global market (Samsung Electronics, 2018c).

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Threat from substitutes
Availability of substitutes and brands is relatively high in comparison to the other powers
and this is because competition is very intense in the consumer electronics industry.
Samsung has various rivals in the industry and due to which their market share as well as
the demand of their products gets affected. Primary rivals of Samsung are Apple, Sony, LG,
etc. and there are various other local and international brands which create huge impact
over organizational performance. Thus, there are various options available to the
customers which ultimately increase the threat of substitutes for the organization.
Although, company has taken several steps to make as well as to maintain their brand
image unique in the global market like sending their designers to different locations so that
they could think out of the box. But their rivals are also investing regularly to beat the
competition and to acquire the market share of Samsung Electronics as well as gain
competitive edge (Rothaermel, 2015).
Threat of new entrants
In relation to the functionalities of Samsung Electronics, threat of new entrants is quite low
as brand image of the organization is very high, thus, possibilities for setting up brand
image against such as behemoth player for new entrants is bit difficult. If a new company is
entering into consumer electronic industry, huge financial as well as human resources are
required for marketing and advertisement and for providing training to the employees for
making them skilled enough to match up with the level of big companies. Thus, there are
various barriers for the entry to the new entrants which decreases the impact of threat of
new entrants (Gehani, 2016).
Industry Rivalry
Due to large number of competitors, industry rivalry in the consumer electronics market is
very intense. Apple, LG, Samsung, Toshiba, etc. are some of the major players of this
industry and there are lot of international and local brands which are also affecting these
big companies’ market share. With regards to this factor, Samsung believes in innovation
and making their products’ design attractive enough for their target audience through

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which competitive edge could be attained along with desired goals could be attained
(Glowik, 2016).

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2. Strategies for creating sustainable competitive advantage
It has been observed that every organization irrelevance to its size, nature and type of
industry, regular interventions in the existing strategies is very crucial in order to match up
with the latest business trends as well as to accomplish desired goals (Porter &
Heppelmann, 2014). Following are some of the strategies which could be adopted by the
Samsung Electronics in order to attain competitive advantage in the global market along
with the attainment of various other goals and objectives:
Cost leadership
This is one of the most effective strategies in order to attain competitive advantage in the
global market. Although, Samsung Electronics is one of the mammoth players of consumer
electronics goods market and has attained leading position in this industry but still, it is
required for the organization to regularly update their strategies. In cost leadership
strategy, organization requires to lower down the prices of their products by reducing and
controlling the cost of production by minimising the waste and eliminating unnecessary
costs. Price factor plays crucial role in order to attract new customer segments along with
retaining interest of the existing customer segments and it ultimately helps in attainment of
competitive advantage (Lewis, et. al., 2017).
Differentiation
This strategy states making certain relevant changes in the existing products and services
with the objective of make it different from its existing competitors. Samsung always tries
to make their products unique and different from its competitors in order to retain their
existing and potential customers’ interest along with attracting new customer’s interest
(Hakansson, 2015).
Defensive Strategies
With the help of defensive strategy, organization could easily move towards attaining
competitive advantage. This strategy allows business to make distance from its
competitors in some sense in order to gain competitive edge over them. This strategy is
quite similar to the differentiation strategy and cost leadership strategy as the primary

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motive of this strategy is also to retain the acquired position in the market along with
moving forward to attain further goals (West, Ford & Ibrahim, 2015).
Alliances
Samsung Electronics could also focus towards making strategic alliances with some small
or medium scaled companies of the same industry in order to enhance their revenues,
reachability to the customers, etc. Although, companies needs to be careful in strategic
alliances because there is very thin line which does not needs to be crossed for attaining
positive outcomes. Joint ventures and partnership are other effective measures which
could be adopted by the Samsung Electronics to expand its business in the international
market as well as to gain competitive advantage (Kotabe & Kothari, 2016).

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References
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