Strategic Management of Samsung: Analysis and Recommendations

Strategic management

Strategic management
Table of Contents
Introduction......................................................................................................................................1
Strategic analysis.............................................................................................................................2
Pestle analysis of Samsung..........................................................................................................2
Five forces model of Samsung.....................................................................................................5
Value chain analysis.....................................................................................................................8
Strategic recommendation.............................................................................................................11
Ansoff Matrix.............................................................................................................................11
SWOT ANALYSIS....................................................................................................................12
Porter Generic strategies............................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................17
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Strategic management
Introduction
Samsung is known as one of the largest South Korean multinational company and headquarter of
the company is in Samsung Town, Seoul. The founder of the company was Lee Byung Chul and
he was one of the South Korea successful businessmen. In 1938, he founded the company as one
of the trading company in the competitive market. The revenue of the company in 2016 was
17,400 Cr USD (Samsung, 2018).
The vision of the company is “Inspire the world, create the future”. Samsung emphasizes on the
core commitment to create better world in context to the digital experiences and it can be done
by considering the factors related to innovation in products and technology. The company aim is
to be one of the beloved brand and also an innovative company in the competitive market.
Therefore, for this Samsung emphasizes on creativity and innovation with shared value with the
partners. The company look forward to explore the area of new business like healthcare and
automotive electronics and also they emphasizes on innovation and also Samsung electronics
consider the challenges and opportunities (Samsung, 2018).
The mission of the company is to inspire the world with the innovative technologies; products
and design that enrich the lives of the individual and it also contribute to the social prosperity by
creating a new future. So, the strategic approach considered by the company is related to
creativity, partnership and great people. It is also necessary for the company to consider the
strategic models or the tools so that it can be easy to minimize the high level of competition in
the market (Samsung, 2018). It can be analyzed that there are various competitors present in the
market like Apple, Xiaomi, Oppo, Vivo, Sony, HTC and Lenovo. It has been observed that due
to effective functioning of the activities, the company attained the large market share. In the
present case, the market share of the company is large as company manages the activities on
international and national platform. In 2016 the market share of the company was 20.9% and in
2017, the company shipped more than 317.3 million smartphones on the global platform.
So, in this paper the discussion will be made on the various strategic concepts and methods
which will be discussed. In the strategic analysis phase, the discussion will be made on the
models like Pestle, Five force analysis and value chain analysis. In the next phase of the report,
strategic recommendations will be made by considering various methods like Ans-off Matrix,
SWOT and generic strategies. In the last phase of the report will reflect the entire analysis made
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Strategic management
in the paper. So, the main emphasis of the paper is on discussing the business strategies in
relation to the entire models and concepts.
Strategic analysis
Pestle analysis of Samsung
Political factor
It has been analyzed that there are various challenges which impacted the overall operations of
the company. Samsung Company also faced various political scandals and due to this the
negative impact can be seen on the operations. In South Korea the company was found to be
involved in the political scandal. Lee Kwang- Jae, Uri party representative working for the
president Roh Moo- Hyun admitted the receipt of 50 to 60 Billion KRW and also the prosecution
analyzed that company funded more in opposition like in Grand National party via 2.47 Billion
KRW before the election (Research methodology, 2018). By considering the illegal method the
impact has been seen on the image of the company in the competitive market. In August 2017,
Jay Y. Lee the former of the company was jailed in terms of bribery and embezzlement. Also,
the company enhanced the overall amount of political lobbying in 2012 which enhanced the
controversial payments. In the figure 1 stated below the overall controversial payment is
showcased (Lee, Lee and Heo, 2015).
Figure 1: Samsung Annual lobbying
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Strategic management
Source: Research methodology, 2018.
Economic factor
The Korean currency is one of the factors that have impacted the overall revenue of the Samsung
Company. The major decline was due to won appreciation and the decline led to second quarter
profits reduction in 2014 from 25% t0 7.2 overall turnovers. The entire profits earned by the
company were impacted by economic crisis as it was the case in relation to the global economic
and financial crisis of 2007-2009. The figure below states the quarterly operating profits halved
in the third quarter of 2008 and the direct consequence is related with global economic and
financial crisis. The range of the economic factors has affected the Samsung Company and it also
includes taxation and interest rates, inflation rates and modification in cost of labor and other
resources. The tax rates have directly impacted the overall financial performance of Samsung.
For instance : It has been noted that just because of the tax regulations in Korea, the domestic
sales have accounted for just 10% over the last three years and the percentage of the tax paid in
Korea by the company also enhanced by 67% in 2016 (Forbes, 2018).
Figure 2: the overall changes in Samsung electronics in relation to the quarterly operating
profits.
Source: Research methodology, 2018.
Social factor
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Strategic management
It has been observed that changing needs and demands of the customers impact the overall
operation of the company in the competitive market. The challenge faced by the company in
context to the social factor is changing demand and preference of the customers. The company
focused on the smartphone technology in which the new features are introduced which helped
the company to enhance the demand in the competitive market. Samsung also introduced the
products by reducing the overall cost of the products and it is done so that the needs and wants of
the customers can be satisfied. The living standard of the people is important to be maintained
for the company and also with the highly competitive market forced the company to reduce the
overall cost so that growth can be attained in the market. So, the challenge is related with
satisfying the needs and wants (Gassmann et al., 2018).
Technological factor
In technological factor it has been noted that it is important to consider latest technology so that
competitive advantage can be attained. The company faced the challenge related to the
investment in research and development and the company faced the issue as the technology keep
on changing which has increased the overall cost of the activities. Latest technology has
enhanced the overall operating cost which boosted challenge for the company. The challenge is
also faced due to imitation in relation to the product design and also because of the legal and
regulatory scrutiny (Barbuto Jr, 2016).
Legal factor
The company faced the challenge due to heavy penalties in relation to the imitation of the
products. Samsung imitated the products of the company like IPAD and IPHONE and it has also
impacted the overall image of the company in the competitive market. Due to imitation of the
products the negative impact has been seen on the image of the company. The South African
government also focused on Protection Act 68 in 2008 and due to this act the impact has been
seen on the overall cost of the company. In this act, the tendency is based on dumping the low
quality products so that it can be easy to maintain the latest stock in the competitive market. The
company has to consider the regulations according to different countries so it also low down the
overall cost of the activities. So, the challenge that is faced by the company is related to change
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