Business Strategy and Stakeholder Analysis for Cesim Simulation Report

This report provides a comprehensive analysis of a Cesim business simulation, focusing on Samsung's strategic decisions and performance within the mobile phone manufacturing industry. The report begins with an introduction to the Cesim company and a critical analysis of the industry, examining factors such as technology, buyer preferences, phone features, and market share. It then delves into Samsung's competitive advantages, evaluating its financial performance and market position. The report also includes an external environment analysis using PESTLE and Porter's Five Forces models. Furthermore, it explores stakeholder analysis and management, providing recommendations for improving the company's performance. The report highlights the impact of various factors, including political stability, economic rates, social trends, technological advancements, legal regulations, and environmental considerations, on Samsung's operations and strategic decisions. The analysis provides insights into market dynamics and offers recommendations for strategic improvements.

Business Strategy

Contents
Contents...........................................................................................................................................2
PART 1: Cesim Business Report.....................................................................................................1
Introduction to the Cesim company.............................................................................................1
Critical analysis of mobile phone manufacturing industry..........................................................1
A critical evaluation of sources of competitive advantage..........................................................7
Detailed critical analysis of Cesim company’s activity...............................................................8
RECOMMENDATIONS TO CEO FOR THE IMPROVEMENT OF COMPANY’S
PERFORMANCE............................................................................................................................9
PART 2: Stakeholder Report.........................................................................................................10
Stakeholder Analysis.................................................................................................................10
Stakeholder Management..........................................................................................................12
REFERENCES..............................................................................................................................13

PART 1: Cesim Business Report
Introduction to the Cesim company
Business strategy can be defined as a set of different types of moves and actions which are
taken by business entities for the purpose of sustaining in market, attracting large number of
customers, attaining long term business goals and enhancing performance. It guides
organisations to form strategic decisions which can help to reach the predetermined goals. This
report is based upon Cesim Simulation for which Samsung Company is selected by team red
(Brennan, 2014). It is one of the largest manufacturers of mobile phones. It was founded in year
1938 by Lee Byong Chul and mainly established in Suwon, South Korea. Different types of
products such as laptops, mobile phones, telecom and network equipment are sold by it all
around the world. Currently it is generating revenues of more than 95 billion dollars from its
operational activities. It human resource strength is around 325000 employees.
With the help of Cesim Simulation it has been analysed that competitive position of the
company is good because it is the second highest revenue generators as compare to other
organisations. Total profits of it are resulting in its 3rd rank in creating large amount of profits. It
is offering good returns to the shareholders which is around 11.53% per annum. Return on equity
of the Cesim company is also very high. Market growth of the enterprise is being levelled up off
to 3 – 7% which has resulted in enhanced competitive position in the market. It has been
estimated that market growth of the enterprise may rise by 22%, 30% and 20% in USA, Asia and
Europe respectively. Demand of the company has been increased in 8th round as compare to last
round which shows that it has gained a higher level of competitive advantage rather than other
companies in the simulation. The major factors which are resulting in good position of Samsung
are equities, short term and long term debts. All the liabilities which are required to be paid by
entity in less than one year are paid off and other long term debts are being reduced. Total
shareholder’s equities are being increased in current round. All these elements and their changes
are resulting in the good position of the company (Brewster, 2017).
Critical analysis of mobile phone manufacturing industry
Industry analysis: It can be defined as main function which is performed by owners of a
company to analyse existing environment of market. In order to analyse an industry, it is very
important to assess different factors which are related to it. There are four different types of
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elements which are considered as the part of it and discussed in context of mobile manufacturing
industry and Samsung are discussed below:
 Technology: Telecommunication industry generate revenues with the help of technology
because a slight change in it may result in decreased profits or incomes. As a part of this
sector Samsung focuses on latest trends regarding technology so that new and innovative
products could be offered to clients. It has helped to transfer voiced and non-voiced data
from one place to another. With the help of new and innovative technologies the industry
has started to form plans for identification of new data optimised techniques (Cortimiglia,
Ghezzi and Frank, 2016). Currently 4G technology is in trend for all the mobile phone
which could be replaced by 5G in future which will facilitate to communicate in more
quick manner. In next three to five years there will be high demand of mobile phones
with 5G technology so all the manufacturers are required to make investment in research
and development activities. It can help to analyse the ways in which technological
advancement could be made.
 Buyer preference: For all the business entities in telecommunication sector it is very
important to take buyer’s preferences in to consideration while manufacturing new
mobile phones so that large market share could be captured. There are various companies
such as Samsung which are operating business under this industry. If the entities are not
able to focus on preferences of customers, then it may result in decreased profits and
market share. The factors which may result in changes in choices of buyer are market
trends and innovations. In upcoming three to five year their preferences may get changed
due to high level of competition and revolutions within the industry. In order to reach
long term business objectives such as profit maximisation it is very important for
companies in telecommunication sector to focus on likings of patronages (Galbraith,
2014).
 Phone features: While planning for enhancement in sales all the companies in mobile
manufacturing sector are required to incorporate new and innovative features in phones.
These are high quality camera, rear flash, touch screen, 4G, 5G, AMOLED screen, front
focus, dual camera etc. All of them may get changes with the launch of a highly
innovative feature. For organisations such as Samsung it is very important to make sure
that the mobiles which are manufactured by them are having such qualities which are
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currently in trend. For example, Samsung is manufacturing different types of mobile
phones and all of them having separate features. These are design, screen, cover,
applications, size, processor speed etc. From the simulation report it has been analysed
that in order to add new feature to Tech 1 to Tech 4 Samsung requires additional money
which is 34033, 24615, 27376 and 33243 respectively (Ghemawat, 2016).
 Market share: Telecommunication sector contributes higher amount in GDP and
national income of the regions where organisations are operating business. Samsung is
one of the biggest companies of mobile manufacturing companies. It is covering a large
market area of USA, Asia and Europe as all these regions are the areas where its
product’s demand is very high. In USA market share of Samsung for product one was
1.7% and for product 2 it was 0. It has been estimated that in current round it will be
around 20% and 30 % for product 1 and 2. In Asia it was 17.4% and 14.7% for both the
products and the estimated market share for 8th round is 22% and 25% for product 1 and 2
respectively. For Europe the percentage of market share for 1 and 2 were 14.8% and
28.2%. The estimations for upcoming round are 20% for product 1 and 22% for product
2. From the simulation report it has been analysed that in current round market share in
USA and ASIA will be increased for product 1 and 2 (Jeston, 2014). On the other hand,
in Europe the share could be reduced for product 2 in Europe due to changes in demand
of customers.
From the above analysis it has been identified that industry supply capacity is high as a large
area of market is being captured by telecommunication sector. All the factors which are
discussed above may leave impact upon the supply in upcoming three to five years. If Samsung
is not able to focus on latest technology, comply with buyer’s preferences and capture larger
market share then it will result negatively on supply due to reduction in demand.
External environment: It can be defined as the combination of different factors which are
available outside of the organisation and leave impacts upon decision making and objectives. In
order to analyse it different tools could be used. These are PESTLE analysis and Porter’s five
force model. Both of them are discussed below in context of Samsung:
PESTLE analysis: It is one of the effective tools which is used for the purpose of
analysing macro environment of businesses. There are six different elements which are analysed
by companies in detail to determine the forces which may affect organisation positively or
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negatively. These are political, economic, social, technological, legal and environmental.
Analysis of all of them in context of Samsung is as follows:
 Political: It includes different forces such as political stability, labour laws, different
policies like foreign trade, governmental etc. According to Cesim simulation there are
various such types of factors which are affecting Samsung (Kono, 2016). New president
of US smoothed out instability of political situations of USA and created an agreement to
abolish tariffs between USA and China. It has helped the organisation to manage its costs
and attract large number of customers by increasing demand for mobile phones in the
market.
 Economic: Different types of rates such as inflation, exchange, interest and deflation are
considered as the part of economic factors. Market price of EURO and USD are falling
continuously which has resulted in increased interest rated in Europe by 0.75%. It has
affected Samsung because the company is required to pay interest on the debts which are
acquired in Europe with additional 0.75%. Sudden change in such types of rates results in
influences on decision making of the organisation.
 Social: It has various elements such as norms, values, attitudes, demographic
characteristics etc. of the area where an organisation is operating business activities. All
the decision makers in Samsung pay attention towards all such types of factors which
formulating strategies. While planning for selling an item in an area managers make sure
that they take culture, attitude and values in consideration so that it can meet expectations
of customers. For example, standard of living of individuals who are living in Europe is
very high as compare to Asians, so the managers try to form decisions according to their
culture. It helps to attain long term business goals.
 Technological: There are various components of technological factors which are
required to be focused by all the companies to attain long term goals. These are level of
innovation, research and development activities, automation, technology incentives etc.
According to the simulation report, four different types of technologies are used by
Samsung for its two products which helps to manufacture innovative items according to
market trends. In this round featured developments for all four technologies are 7, 5, 6
and 2 respectively. The estimated numbers of them for future are 7, 5, 7 and 2
individually. With the help of it organisation is planning to attract large number of
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customers and increase demand of its products in different areas such as USA, Europe
and Asia. The complex part with technology is that if a mobile phone is manufactured
according to Tech 1 then it cannot be operated with Tech 2.
 Legal: All the rules, regulations and legislation which are imposed by governmental
bodies are considered as the part of legal factors. It includes laws such as discrimination,
business operation, antitrust, consumer protection, patent and copyright. In Europe labour
laws are inflexible which are affecting efficiency of Samsung to operate its business
there. Along with this it is also making the operations expensive in the region due to
highly complicated laws regarding labour (Lechner and Gudmundsson, 2014).
 Environmental: Various environmental and ecological factors such as pollution target,
increasing scarcity of raw material, carbon foot prints, changes in climate or weather etc.
are considered as part of it. Samsung is highly focused with it and all the top level
executives of organisation make sure that operational activities of the company are not
affecting society and environment. As it is one of the largest enterprises executing
business all around the world therefore it is very important for it pay attention towards
them so that a good market image could be established.
Porter’s five forces model: It is a strategic management tool which is mainly used by
business entities for the purpose of analysing level of competition within the market. There are
five different elements of it which are assessed by companies to determine their competitive
position within the industry. All these forces are discussed below in context of Samsung:
 Competitive rivalry: It is the main element of this model which is used to determine
profitability and competitiveness of the industry. A sector with higher level of
competition have various companies which are competing with each other to capture
larger market share. Tight competition within the industry results in continuous changes
in demand of customers. Competitive rivalry for Samsung is moderate in the
telecommunication sector because the products which are sold by it are unique and have
some specific features. Only some of the competitors are able to meet the level of its
products so the rivalry within the industry for Samsung is moderate (Lehmann, 2016).
 Bargaining power of buyer: Customers are considered as the king of market and they
have right to bargain regarding price of a product if it is not able to meet their expectation
level. There are end number of buyers in telecommunication sector so the bargaining
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power of them for Samsung is low because high quality mobile phones are sold by it.
Due to end number of customers in telecommunication industry the organisation is
having lower impact of clients on its pricing policies.
 Bargaining power of suppliers: In order to manufacture different products, it is very
important sellers to find such suppliers who can deliver them raw material on lower price.
If there is end number of them then it results in low level of their bargaining power. In
telecommunication sector number of suppliers is less which allows them to sell raw
material on higher prices. It affects Samsung because the organisation has to pay a large
amount to them to buy material to manufacture mobile phones.
 Threat of substitutes: This situation takes place when customers find different products
which are delivering same services. In telecommunication industry there are end number
of substitutes which may replace one product due to different factors such as price,
quality, attractiveness. For Samsung, threat of this force is very high because customers
may switch to products of other brands who are selling mobile phones with same features
but with low price or higher attractiveness.
 Threat of new entrant: This force is based upon analysis of entering in a new market.
Telecommunication industry is highly profitable and there are few barriers to enter so the
threat of new entrant for the companies on this sector is high. When there are end number
of competitors and new sellers of same products then profits may fall massively. For
Samsung this threat is high and it is very important for the company to create barriers for
other organisations so that its competitive advantage get enhanced (Madsen and Walker,
2015).
 Network complement: It is the sixth force of Porter’s five force model which is being
added recently in the model. It helps companies to analyse the industry in detail so that
opportunities and threats within the sector could be determined and strategies could be
formulated accordingly. In telecommunication sector different types of complementary
goods such as charger, ear phone etc. are offered by sellers to the customers. All the
clients prefer to use complements of the brand of mobile phone. For Samsung power of
network complement is high because it has end number of brand loyal customers who
prefers to use complementary goods of it rather than selecting other brand.
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A critical evaluation of sources of competitive advantage
Internal analysis: It can be defied as the process of analysing different internal factors of
an organisation. These are competitive viability within the market, competency and cost position
etc. With the help of it companies will be able to determine their strengths and weaknesses. It has
been conducted by team red to determine sources of competitive advantage of Samsung. For this
purpose, VRIO model is used which is discussed below:
VRIO model: It can be defined as a technique which is used by business entities to
determine its competencies and capabilities which helps it to attain long term growth. Four
different elements of it are analysed in context of Samsung which are discussed below:
Sources Valuable Rare Inimitable Organised
Marketing
activities
✓ X X X
Market demand ✓ ✓ X X
Shareholder’s
return
✓ ✓ ✓ X
Technological
development
✓ ✓ ✓ ✓
Valuable: From the Cesim simulation report it has been analysed that there are four
different sources of Samsung (Cesim Company) which are helping it to attain high level of
competitive advantage. These are marketing activities, demand of its products, shareholder’s
return and technological development. All of them are valuable for the organisation as it helps to
execute all the operational activities in appropriate manner (Ryu, Lee and Choi, 2014).
Rare: Marketing activities of Samsung are not rare because other companies also
conduct them for the purpose of enhancing awareness regarding their products. Market demand,
shareholder’s return and technological development are rare because competitors in the market
do not have same level of them as compare to Samsung.
Inimitable: Market demand of Samsung is not inimitable because any other company in
the sector may generate same requirement of its products in the marketplace. Technological
development and shareholder’s return of the organisation are inimitable because it is difficult for
other entities to copy them or sale same products or provide same returns to shareholders.
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Organised: Shareholder’s return is not organised by Samsung in appropriate manner
because it is continuously fluctuating in each and every round of Cesim Simulation.
Technological development of the company is organised in an effective way as it helps to
generate higher revenues. For competitors it is not easy to maintain their position in the market
by offering such products which are based on latest technology or trends (Sanden, 2014).
From the above analysis it has been determined that main weakness of the organisation is
that the marketing activities are not rare which is affecting marker demand of its products. Main
strength of Samsung is that it is highly involved in technological development which helps it to
attract large number of customers and enhance revenues.
Competing companies creating competitive advantage: There are nine different teams
in Cesim Simulation. All of them are having different companies which are conducting various
activities for the purpose of attaining competitive advantage. Team leaders have started to offer
higher returns to shareholders and the innovators have invested in Tech 1 and 4 for the same
purpose. All these steps which are taken by competitors were better than team red (Samsung). In
order to deal with this challenge, it is very important for Samsung to form new strategies and
attract new investors so that large investment could be generated for technological development.
It will be beneficial for the company to enhance performance in future. Blue team have also
taken a step in which it has invested in Tech 3 but it hasn’t worked well for it and resulted
negatively. Samsung haven’t get affected due to this because it was not the right the right
decision to be taken to achieve competitive advantage for blue team (Sung and Ashton, 2014).
Detailed critical analysis of Cesim company’s activity
The activity which is selected for the critical analysis of Samsung is marketing expenditures.
For all the business entities it is very important to make investment in such types of operations so
that awareness regarding products of the organisation could be spread all around the world.
There are various trends in the market of telecommunication sector which are used by enterprises
such as Samsung. These are use of chatbots, shift in marketing funnel, voice search, IGTV on
Instagram etc. According to Cesim Simulation Samsung is spending $11062 and $12634 in
marketing of Tech 2 and 3 respectively.
Comparison and contrast: There are various trends in the market which are used for
marketing purpose. Some of them are costly and other are not. According to simulation report
Samsung is using sales promotion technique for marketing which results in awareness of its
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products in the market of USA, Asia and Europe. A high amount of money is spent by the
company on it. On the other hand, current trends such as IGTV, Chatbots etc. are not expensive
and help to market all the products and also results in solution of queries of customers.
Benefits of current trends and the ways adopted by the company states contrasting
between them because with the help of them Samsung can spread awareness of its products
among customers.
Advantage and disadvantage of chosen position: Use of sales promotion have a major
advantage for the company which is it helps to aware customers in target market regarding its
products in different areas such as USA, Asia and Europe. Disadvantage of it is that the method
which is used for marketing purpose is very expensive which may create issue of lack of
monetary resources in future (Whittle and Myrick, 2016).
Learning map:
The above map shows that with the enhancement of experience learning gets increased
and after a certain period of time it becomes stable with high level of experience.
RECOMMENDATIONS TO CEO FOR THE IMPROVEMENT OF
COMPANY’S PERFORMANCE
There are various recommendations which are made to CEO of Samsung for the
improvement of performance of company. All of them are based upon internal, external and
industry analysis. Along with this organisation’s activity is also critically analysed for the
purpose of making following recommendations:
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 Make investment in research and development activities: As there is high level of
competition in the telecommunication sector so it has been recommended to CEO to
spend monetary resources on R & D activities so that market changes could be analyzed.
With the help of it, highly effective strategies could be formulated which may result
positively for the business.
 Focus on instability of political environment: Samsung is operating its business mainly
in USA, Asia and Europe so it has been recommended to the CEO to pay attention
towards instability of political forces. It can help to reduce negative impacts of them on
operational activities. With the help of it challenges such as instable labor laws in Europe
could be dealt properly (Yoffie and Cusumano, 2015).
 Attract investors to launch new mobiles with 5G technology: Technology in
telecommunication sector is changing due to modifications in preferences of customers.
In upcoming three to five years 5G technology will be in trend which requires high
monetary resources. In order to launch mobile phones with it is very important for
Samsung to attract new investors so that funds could be arranged for the purpose of
launching new phones.
PART 2: Stakeholder Report
Stakeholder Analysis
For an organisation like Samsung, it gets very important to ensure inclusion of all the
stakeholders that could influence steps taken by the company with respect to its future direction.
Several stakeholders are presented as under using the Power/Interest Matrix that reflect the
degree of power they hold in respect with influencing its decisions and interest they hold within
the company. The stakeholder matrix is as under:
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Illustration 1: Power/Interest Matrix
 CEO: As far as this stakeholder is concerned, CEO of Samsung has both high interest as
well as exercise high power. Thus, no strategic step could be followed by the organisation
if not authorised by the CEO of this firm. Thus, it is essential that they are included
within this list. Suppliers: They are the ones which supply the firm with all the necessities that are
required by the firm to develop their offerings. They are included in this analysis as they
will be providing the firm with all the required resources, which would be supporting its
new strategic option. Employees: These individuals work in the organisation which lead to profitability and
revenue. Every strategy adopted within Samsung impacts the employees directly. This
makes it prominent to include them in the analysis and analyse impact on this group
appropriately (Lai, Melloni and Stacchezzini, 2016).
 Government: This is the highest authority which formulate certain laws which are very
important for Samsung to abide by. Furthermore, every strategy formulated by this firm
must be supported by the legislation prevailing within the government. In addition, any
changes in government related to its stability affects the firm directly, making it
necessary for including this stakeholder group in the analysis.
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Stakeholder Management
Out of all these stakeholders, the firm must prioritise certain stakeholders on basis of the
impact which they likely face after the recommendations made by the company are adopted.
Thus, to attain that, there are certain stakeholders that are prioritised and mentioned below: CEO: It was recommended before that the firm must focus on instability of the political
environment of countries its operating in. For instance, its operations in UK are being
affected due to the political instability in the nation. Thus, it would have major impact on
the CEO of this firm as now they would be required to draft strategies which helps the
company in combating the unstable changes in the government. The method through
which the CEO would be engaged is through formal business letters and conferences
(Leischnig, Wölfl and Ivens, 2016).
 Suppliers: As per the above recommendation, the firm requires to make investment in
R&D activities, moreover, it needs to attract investors to launch new phones supporting
5G technologies. Both these recommendations would directly be impacting suppliers, as
the firm must now involve these entities in its decision making process. Moreover, the
firm also require to build a wider supply chain and invest more in that area to acquire
better and technologically advanced resources. Thus, this would positively impact these
stakeholders. To communicate suppliers, the firm could use meetings as an option to keep
them engaged.
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Whittle, R. and Myrick, C. B., 2016. Enterprise business architecture: The formal link between
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Online
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