Samsung Electronics Strategic Analysis

This assignment delves into a comprehensive analysis of Samsung Electronics' strategic management. It examines the company's historical background, product portfolio spanning from smartphones to home appliances, and key challenges faced in maintaining its market dominance. The analysis draws upon relevant academic literature, industry reports, and Samsung's official publications to provide a nuanced understanding of the company's strategic position and future prospects.

Running Head: Strategic Management
Samsung Electronics
Strategic Management

Strategic Management 1
Samsung Electronics is a South Korean multinational brand majorly known for producing
consumer electronic goods. Its headquarters is situated in Seoul and they earned USD $174
billion in 2016 and Lee Kun-hee is the current chairperson of the company. The company was
founded in 1938 by Lee Byung-chul. Initially, company was operating as a trading company but
after three decades, Samsung Group diversified into sub categories such as textile, insurance,
retail and securities. After developing an effective image in these industries, organization
ventured into the electronics industry in 1960s after analysing the scope of emerging electronics
goods in the market. Company is capable enough to build effective and efficient electronic
appliances as per the consumer’s expectations with this; they had developed an effective
goodwill as innovative consumer electronics Goods Company. Samsung Electronics is also
engaged in producing mobile and smart phones. With the help of Android operating system, they
had established a significant place in the market. This led the company to gain the leading
position in the smartphone industry. In past years, big companies like Nokia and Apple Inc. was
feared and to maintain their presence in the mobile phone industry, they amended their
management and certain other crucial strategies. This essay will include the positive as well as
negative aspects of the company. Along with the strategic management practices, this essay will
also focus over three theoretical concepts to strategic management (Samsung Electronics, 2018).

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Samsung Electronics is continuously in news since last 2-3 years and this leads to publicity in the
global market. Sometimes, company stands in the news due to its negative incidents and
sometime due to positive ones. One of the negative incidents which occurred in the company was
blast in their smartphone series. Samsun Galaxy Note 7, one of the popular devices in the smart
phone industry built of advanced features and innovative designs. This was the 7th phone in the
Note series and prior to this, all phones produced by the company were up to the customer’s
expectations. It was launched in August 2016. Specialty of Galaxy Note 7 was Gorilla Glass fifth
series, water and fire resistance and a high definition screen. Along with these features, Note 7
was the most advanced phone of that time which was specially built on the basis of consumer’s
future expectations and with advanced technology. Organization promoted this product in order
to increase the demand amongst the target audience and their anticipations got increased
reviewing the features and design of the phone (Hill, Jones & Schilling, 2014). Competitors of
Samsung also prepared to maintain their image in the industry and for the same; they adopted
aggressive promotional strategies for promoting their products in the market. With these types of
actions, Samsung Electronics’ goodwill could be measured in the mobile phone industry. When
Samsung launched their first Android phone in the market, it affected various mobile

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manufacturing companies. Apple Inc. is one of those feared organizations who amended its
promotional, advertising and management strategies in order to maintain their distinct image in
market along with increasing demand of their smartphones (Keller, Parameswaran & Jacob,
2011).
With the effect of launching of Galaxy Note 7, technological experts gave high ratings and this
led the company towards attaining another milestone. Prior to this, Galaxy S6 was launched and
it proved to be the most crucial device for the organization. This device made various records
such as highest revenues, large number of units sold, etc. This was the appreciable moment for
the Samsung and this lead the company to acquire a big share in the mobile phone industry. With
the introduction of Galaxy Note 7 and due to positive responses from technology experts,
demand for the phone gets increased and it was increasing rapidly. Reviewing the success of this
device, organization announces the launching date of further phones like Note 8, S8, and the like

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(Kapferer, 2012). This lead the company towards a strong position in the market along with this,
organization became capable enough to gain their desired outcomes. Launching of galaxy Note 7
in 2016 was a strong move from the company and this increased the scope of mobile phone. To
match up with the level of technological factors used by Samsung and the features fitted by the
company in their phone, other companies also adopted the trending technological factors to make
their phone compatible with the modern society’s requirements along with fulfilling their
requirements. All was going smooth and in favour for Samsung and company was awarded as
the Prestigious Mashable Choice Award for their qualitative products and services. This leads to
build up extreme level of confidence in the management and amongst its subordinates
(Rothaermel, 2015).
Strategic management is a concept under which all the strategies which need to be applied in the
workplace are decided considering the condition of the organization. Along with the
development of strategies and policies, it is required to manage them in order to attain effective
results. With the help of effective strategic management, organization could easily uplift its
performance in the target market along with gaining desired goals and the objectives. This
concept is used for directing the employees and other subordinates of the organization in the
same direction with the view to reach the desired destination facing all the challenges and the
barriers which will arise in between. This task is generally performed by the top level
management it is done after reviewing all determinant factors which could impact over the
functionalities of the organization (Lasserre, 2012).
Samsung Electronics has made their presence in the global electronics industry and today
Samsung is leading the whole industry with its effective and qualitative products. Its inventory

Strategic Management 5
management system, supply chain system and other processes are treated as the best and most
attractive across the globe. These factors could also be considered as the real determinants of
achieving success (Percy, 2016). While implementing the strategic management, organization
must consider following three concepts which could help the organization to acquire its desired
targets:
 Industry analysis (Porter’s Forces)
 Environmental analysis (PEST/PESTLE)
 SWOT analysis
Industry Forces
Purchasing power of consumers: In the mobile phone industry, consumers have vast number of
choices in order to select the most appropriate mobile on the basis of their requirements. Today,
most of the companies produces Android operating system based smartphones, thus, they share
huge competition. In order to gain the competitive advantage in this competitive business
market, it is required to adopt certain strategies to make their products and services unique and
distinct from competitors. Samsung Electronics analyse its target audience’s buying behaviour in
order to attain the success in the competitive business environment along with producing
products on the basis consumers’ requirements (Al-Aali & Teece, 2013).
Suppliers’ power: Suppliers are the determinant factors of attaining the goals and objectives as
well as suppliers are also responsible for organizational failure. Therefore, it is necessary for the
organization to maintain good and positive relations with suppliers for ensuring the smooth
functionalities of the organization. Samsung have adopted the same sort of strategies through

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effective relationship could be maintained with the suppliers. Suppliers’ power is basically
dependent over certain crucial factors such as standardised raw material used in the production
process, technological factors, and the like. Samsung is known for delivering qualitative and
advanced products, thus, it is required by their management to maintain same sort of
relationships with the suppliers in order to maintain the same level of quality and effectivity
along with their products (Grant, 2016).
Threat of substitutes: Substitutes for Samsung Electronics are few because smart phones are
capable enough to deliver more than the expectations. Smartphones have various features which
satisfy unique needs and requirements of consumers. Thus, there are no such primary substitutes
because Samsung has offered high quality display, camera, sound, and the like features. This
factor has less significant but still it needs to be considered while developing the strategies for
well-being of the organization (Strazdins, Mednis, Kanonirs, Zviedris & Selavo, 2011).
Threat of new entrants: Today mobile phone industry has vast number of new companies and
this is when entry in this industry is bit difficult because without any uniqueness, huge
investment and goodwill. This facto also has less significance but Samsung needs to adopt rapid
new and innovative techniques through which advanced features could be fitted in their mobile
phones. This will increase the reliability, durability as well as customer satisfaction for the
organization which are positive signs of success and growth (Kim & Park, 2011).
Industry Rivalry: Rivalry in the mobile phone industry is bit intense. Samsung has an effective
image in the global electronics goods industry, thus, to avoid the pressure of new comers in the
industry and to maintain their high position in relevance with them, it is required by them to

Strategic Management 7
implement change in their system through which latest and advanced mobile phones will be
provided to the target audience (Vogel, 2014).
Life cycle stage
On the basis of life cycle theory, Samsung Electronics is suffering from the growth stage
amongst the different stages. In order to be in the growth stage, organization needs to adopt
certain advanced level of strategies through which appropriate outcomes could be originated. For
the same, Samsung is continuously improving its products’ effectiveness through applying
crucial features and improving their designs. Apart from the phone, Samsung’s other products
such as TV, washing machine, air conditioner, and the like have developed and occupied an
essential place in the global market (Wati & Koo, 2010).
Environmental Analysis
Political factors such as stability in the politics of the particular country, attitude of government
towards the companies and industries, etc. These factors must be considered while building the
strategies of the organization as these play crucial role in relevance with attaining growth and
success (Jörgens, 2012).
Amongst all economic factors, Korean currency is the real determinant factor which has a major
impact over Samsung’s revenues. Other economic factors such as economic crisis, inflation,
deflation, and the like are certain factors which affect the economic conditions of the company
and the overall industry. Thus, their policies and the strategies must be unique and appropriate
towards these factors through which desired targets could be attained (Leitch, Casman & Lowry,
2012).

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Social factors such as consumer’s preferences, choices, requirements, etc. are major factors
which need to be imposed in the strategies of the organization. With the help of these factors,
organization could attain its success and growth related objectives (Tuttle, 2016).
Technological factors are also crucial factors which have a huge impact over the organizational
performance. Samsung Electronics is a consumer electronic good manufacturing entity whose
major concern is providing better and improvised products in terms of features and technology.
Thus, all the aspects of technology need to be focused in order to maintain their image in the
global consumer electronic goods industry (Shamsi, Ali & Kazmi, 2017).
SWOT analysis
Strengths
 Samsung is known as the most
successful and largest electronic goods
manufacturing unit across the globe.
 Samsung is the leading entity in the
mobile phones’ market across the globe
as their target audience comprises from
various customer segments (Samsung
Electronics, 2018).
 Samsung’s research and development
department is capable enough to gain
the competitive advantage.
 The company has strong and sufficient
Weaknesses
 Samsung has bene able to replicate
Apple Inc.’s various capabilities but
still they are not able to adopt their
marketing capabilities.
 Due to vast number of Chinese
companies’ entry in the mobile phone
industry, demand of Samsung’s phones
has been declined (Apitanawit, 2016).
 Vast number of customer view
Samsung’s phones less dependent over
Apple’s phones.

Strategic Management 9
marketing and manufacturing
capabilities.
 They had developed effective relations
with the retailers in Europe and United
States which provides steady sales to
the company.
Opportunities
 Samsung could obtain positive results
in the developing countries such as
Africa, India, China, etc. by marketing
tablets and mobile devices.
 New and innovative features and
technological factors could be
implemented.
 Launching low range phones will help
the organization to increase their
customer base.
 Selling their phones over digital
platforms such as Amazon, eBay, etc.
in order to attain higher revenues.
Threats
 Apple is dominating various big
markets due to which Samsung is not
able to develop the same sort of image
in those markets.
 Samsung is not able to develop the
reputation, quality and the dependent
ability as of Apple (Yeh & Wang,
2017).
 Android based smartphones are less
secured than iOS.

Strategic Management 10
These analyses should be considered while developing the strategies for the organization and it
helps to mould the strategies on the basis of various factors which could create negative impact
over the business’ performance. Development of strategies irrelevant to these theories and their
factors may decline the organizational performance along with decreasing their performance.
There are certain conditions which occurred after application and consideration of all policies
and theories and the incident with Galaxy Note 7 is one of them. Samsung Company was able to
attain its desired goals until Note 7 did not get blasted while attaching the charging cable. With
the effect of this incident, all departments of the organization got united to work together in order
to extract the best possible way to resolve the issue. This incident was affecting the global
market image and the legacy of the organization and this was the major reason, marketing team,
management, production team, and all other relevant teams were united to resolve the damage in
order to get back onto the track. The first incident of phone is catching fire while connecting to
charger was noticed just after few days after the product’s launching i.e. on 24th August 2016.
Furthermore, various such incidents were noticed regarding the blast of phones when the phone
comes in connection with charging cable. To identify the root cause of this issue, organization
recalls all the sold phones and spread awareness amongst their consumers to aware them
regarding the issue via all possible mediums. Immediate actions were taken to stop the further
manufacturing of phones in order to avoid more incidents and the same information was being
shared to all the manufacturing units in order to hold the manufacturing process (Udoh &
Eluwole, 2017).
After recalling the devices and sharing information to the manufacturing units, it was analysed
that the designing and manufacturing of the batteries were inappropriate as per the description

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and quality standards. Due to low standardised battery, those were catching fire while coming in
contact with the electricity through charging cable. Samsung used to outsource its manufacturing
process from China and other countries in order to reduce the cost of production as well as to
maintain the same sort of profitability. This helps the company to set reasonable prices for the
finished goods in order to increase their customer base. Another reason which was responsible
for failure of the smartphone was the raw material used in manufacturing of batteries. Lithium
ion battery was used which is not compatible as per the design of the product because it was
quite slim according to previous phones of the company. Due to tight fitting, battery was unable
to absorb the heat obtained from charging cable which leads to explosion and fire (Chen, Cho,
Han, Jin & Shin, 2015). This was publicly accepted by the company in their last annual report
and then they apologised for the same. As apology gesture, they also compensate the consumers
who were infected with the explosion in the phone in the form of replacement and refund along
with the expenses incurred for medical treatment. Due to the explosion incident, organization
suffered from various negative phases such as huge losses, negative impact over goodwill, etc.
Some of the philosophers and companies’ financial experts called the launching of Galaxy Note
7 the worst ever dream as this reduces the effectiveness of the organization along with it reduces
the goodwill and their revenues (Kim, Kim, Yoon & Kim, 2012).
Due to this incident, hoardings were put at the airport where the flyers were cautioned from
travelling with this device. As a result of this, a major public relation crisis was presented before
the company. After realisation of the big fault made by its outsourcers, organization recalls all
Note 7 sold in the market in September, 2016 with the view to save further damages which may
have been done. In the next month i.e. October, 2016, company stops the further production of

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this device and gradually, Samsung Galaxy Note 7 was removed complete from the market
within just two months from its launching date. Reviewing the ending of most anticipated phone
of the year, several mobile manufacturing companies were feared for producing and launching
further devices. Samsung Electronics postponed the launching date of Note 8 and S8 in order to
develop an overcome from the nightmare. While evaluating the market, it was observed that
organization overall recalls 2.5 million units amongst 10 markets. In those 2.5 million units, one
million units were from the US market only (Kosta, Perta, Stefa, Hui & Mei, 2013). This
incident affected the reputation of the company along with its other products such as TV,
washing machine, air conditioners, etc. To overcome from this nightmare, organization adopted
several marketing strategies to build up their image in the market along with building confidence
amongst the audience. Software was also launched to analyse the danger in the device. This
software was capable enough to detect the issue in the battery and users could easily evaluate
that their device is fit enough to use or not (Douangphachanh & Oneyama, 2013).
This incident resulted in the company attracting negative media attention for a long period of
time. Further, it also allows its competitors to rise and to acquire the Samsung’s market share.
Company had to bear huge losses in both monetary and in terms of legacy and goodwill. After
this issue, organization evaluated all its strategic management practices in order to detect the root
cause of the issue so that further this cannot be repeated and fresh and effective strategies could
be developed with the view to overcome from negative phase as well as to build positive image
in the customers’ perception.

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