Management Economics of Samsung: Demand, Market Equilibrium, and Price Elasticity

MANAGEMENT
ECONOMICS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Description of business................................................................................................................3
Demand and market equilibrium.................................................................................................5
Price elasticity and demand.........................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Management economics refers to the application of micro and macro economical theories
and concepts like Demand and price elastic and Market equilibrium to solve practical problems
in the managerial levels and helps in decision-making. The project will highlight the
management economics of a specific company, Samsung. Samsung electronics is a multinational
electronics company headquartered in Suwon, South Korea which is a part of the Samsung
multinational conglomerate. It deals in handsets, tablets, LCDs, ACs, Washing Machines,
refrigerators and other electronic items. The project will focus upon the Smartphone product line
of the company. The project will highlight the business profile of Samsung Electronics with a
brief of company history, markets, product lines etc. The demand and market equilibrium will be
evaluated to access the effects on the chosen product. All the factors that influence the price
elasticity of demand will be analysed including substitution effect, income effects etc, to
determine a pricing policy for the company.
MAIN BODY
Description of business
Samsung is a multinational conglomerate and is founded and headquartered in Seoul,
South Korea. It was founded by Lee Byung-Chul in 1938 and was listed as a trading company.
Lee focussed upon redeveloping the country after the war through industrialisation. The
company diversified into areas like textiles, food processing, retail, securities and insurance.
During 1960s, Samsung entered into the electronics industry. The 1970s and 80s were focussed
on rapid expansion in the technology business with products like Samsung data systems. As of
1990, Samsung group has focussed highly upon globalisation of electronics and activities,
specifically its mobile phones and semiconductors which are now its main source of revenue.
During 2000s, Samsung developed smartphone range, galaxy range in particular which gained
popularity over the decade as they topped the best smartphones lists. Samsung has the 6th highest
worldwide brand value as of 2017 (Hartley, 2017).
Currently, Samsung electronics operates globally and has a sales network, assembly
facilities and plants in 74 countries with employee strength being 290,000 people. By revenue, it
is a leading manufacturer of consumer electronics and second largest technology company in
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terms of revenue and high market capitalisation. The company is a major manufacturer of
batteries, camera modules, image sensors, displays etc. and world’s leading producer of handsets
including smart phones and mobile phones (Rahaman, 2020).
Figure 1: Top smartphone brands in UK
Source: Pavel Naiya, 2019, Counterpoint consumer lens study
Samsung is a popular choice among UK customers as it provides a wide range of
smartphone collections across different budgets. The UK smartphone market is driven by various
operator channels where Samsung and Apple dominate the market. Although competition is
intensifying with Google ad Huawei in the premium segment (Djatmiko and Pradana, 2016). The
choice of Samsung for the project was influenced by its brand equity and wide price range and
product segments and also because the company is a clear leader in the industry and the most
preferred brand choice. Future spending reasons and intentions of the consumers can determine a
lot about the marketing needs and product development. Samsung’s strong brand portfolio in this
mid-tier price range has captured the minds of British consumers. The main product selected is
of the premium segment of Galaxy range of smartphones- Samsung Galaxy Note 20. The further
project would focus upon the premium smartphone range of the company and elaborate the
market equilibrium and demand and price elasticity accordingly.
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