Samsung's Innovation and Capabilities: A Business Report and Analysis

This report provides a comprehensive analysis of Samsung's innovation management, starting with an introduction defining innovation and its significance. It offers an overview of Samsung, including its history and diverse product portfolio. The report employs PESTLE analysis to assess the impact of political, economic, social, technological, environmental, and legal factors on Samsung's innovation capabilities. Furthermore, it examines Samsung's current innovation capabilities and presents a SWOT analysis to identify the company's strengths, weaknesses, opportunities, and threats. Porter's five forces model is applied to analyze the industry dynamics, including industry rivalry, the threat of new entrants, supplier and buyer power, and the threat of substitutes. The report concludes with an evaluation of the consumer electronics industry in 2018, providing insights into market competition and Samsung's strategic position within it. This analysis aims to offer a thorough understanding of Samsung's innovation strategies and its competitive environment.

Managing Innovation in
Business

Table of Contents
INTRODUCTION ..........................................................................................................................1
Organisation and industry overview ..............................................................................................1
Organisation and innovation history...........................................................................................1
Samsung' s existing innovation and capabilities.........................................................................2
The industry in 2018...................................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Innovation is determined as the practical application of improved solutions that fulfil new
requirements, existing market needs, unarticulated needs, etc. It refers to something first and
much effective or result, which creates value into the market (Andersson, Forsgren and Holm,
2015). Samsung which is a South Korean company deals in consumer electronics, semi
conductors, smartphones, apparel and home, appliances, etc. has been taken in this report for
study. Organisation history is described in this project with PESTLE analysis. Further, SWOT
analysis of company to identify external factors is also explained. Along with this, Porter's five
forces of model to identify market threats is also mentioned.
Organisation and industry overview
Samsung which is a South Korean company established on 1 March 1938 and its head office is
in Samsung Town Seoul. It deals in apparel, electric components, semi conductors, DRAM,
automotive chemicals, telecommunications equipments, consumer electronics and home
appliances.
Organisation and innovation history
Innovation can be merely defined as inventive thoughts, new ideas, imaginations in device form
or method. It refers to the process of converting an idea or creativity into a product or service
which creates worth or for which consumers pay. Innovation create large opportunities and are
instant for the aliveness, economic growth and prosperity of company.
PESTLE analysis of Samsung:- PESTLE is a strategical logical tool which is used to
evaluate the impact of extrinsic factors on business organisation (Carlborg, Kindström and
Kowalkowski, 2014). In other words, it is used by the organisations to determine macro factors
in the environment which affects a business in both positive and negative way. SAMSUNG used
critical analytic thinking of political, technological, economic, environmental, legal and social
factors to innovate and launch new products in their history.
Political:- Political factors involves – government policies, power centralization, political
violence, powerful foreign relationships, etc. As it is a South Korean company then it should
have appropriate measures for confidence building with North Korea. Having good foreign
relations and political intent for economical reforms in past years helped Samsung in launching
new products. As , it established electronics and its semiconductors in 1970's.
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Economical:- Economic factors involves powerful export department, imports low level,
competitive tax policy, implementing free trade agreements, liberalized service sector, nuclear
crisis, etc. The company had created and launched new products as it has successful economic
reforms. Further, decreasing foreign direct investment level was one of the challenge for the
Samsung.
Social:- Social factors includes various strengths and challenges for the company
(Cheng, Yang and Sheu, 2014). Some strengths for the company were – highly educated
employees, high wages, fast urbanisation, etc. And some challenges are – ageing society, low
social well-being spending, etc. having effective and qualified workforce Samsung had improved
its performance and increased its brand image in the past years. With the help of talented
employees as an example it had created an aerospace division in 1978.
Technological:- Technological factors involves presence of high world and domestic
players, robust telecom sector, government policies encouraging R&D, innovative ideas
commercialisation, etc. With the assistance of policies provided by government in research and
development Samsung had invented new products in the industry. Further utilising new ideas and
thoughts it introduced its Galaxy smartphones in 2000.
Environmental:- Environment factors includes – government involvement to protect
environment, surroundings technology development, emission levels, etc. Considering various
environmental factors and safety of people Samsung had discovered its products. It used
different measures to invent eco friendly products.
Legal:- Legal factors involves – tax policies, custom operations, judicial system,
regulatory incentives, tax abatements, etc. Having favourable tax policies is one of the strength
for Samsung as, it was strong policy for encouragement of innovation (Gawer and Cusumano,
2014). The company had opportunities of great innovation with a pleasing tax regime.
Samsung' s existing innovation and capabilities
Samsung electronics as an international IT company has attained quicker growth during the
modern years. The brand is functional globally with its 217 operation centres running all over the
world. Various of its products involving displays and Galaxy smartphones have been extremely
prominent. There are different leading objections in front of the brand in the near time period. In
comparison to Apple it is static lagging down in the innovation area. Its financial perspective is
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stabilised and that can assist it to increase new channels of income in the future. It has 320,671
employees in ending of 2017 in 73 countries.
SWOT analysis of Samsung:- The SWOT analysis bring out how the the company used
its combative points to turn into a leader in semiconductors, consumer electronics, home
appliances, etc. It determines all the fundamental strengths, opportunities, weaknesses and
threats which impact the company to the highest degree.
Strengths
Brand image:- One of the important strengths of Samsung is its brand value and only
because of this reason it is one of the famous IT and electronics brands worldwide (Kindström
and Kowalkowski, 2014). Separated from being an initiate brand which has invent various
market directing products such as high definition screens, Galaxy smartphones, it is also famous
as a socially accountable brand. Having powerful brand image is a symbol of quality and
Samsung is among the topmost brands in the Asian markets.
Global presence:- It is also essential strength of Samsung. It has 217 operating centres
all over the world. It has around 3,20,671 employees in offices in 73 countries. It has skilled and
talented employees to perform its operations effectively.
Governing position in smartphone market:- Use and sales of smartphones are
increasing globally. A very big portion of the world people uses smartphones and this market is
anticipated to develop quicker in size in coming days. Samsung smartphones are extremely
famous in the worldwide industry and its ascendant position is primarily because of galaxy
smartphones. Having dominant position has important role in increasing company's revenue.
Large product portfolio:- It has astronomic products portfolio involving displays,
consumer electronics, semi conductors, smartphones, etc. It also Launch other products such as
laptops, printer, desktop, etc.
Weaknesses
Weak perspective in the PC market:- Spell the PC market has decreased in the modern
years, still it is a leading market with large prospective (Malhotra and Majchrzak, 2014). Lenovo,
Apple, HP, and Dell are major performer in this business and Samsung's market percentage is
much tiny in comparison of others.
High dependency on the American markets:- Samsung rely on the American markets
for a big portion of its income and this is a weak point. Its profits and revenue can be influenced
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through American markets fluctuations. Samsung is required to get into the European and Asian
markets completely. High dependence on American industry can occur excess force which can
be deflected by having a more pursuant performance.
Low profit margin:- Samsung always support low-level profit market. It has many other
competitors in this market (Rothaermel, 2015). To maintain a lot customers they should offer
their products at cheap rates.
Opportunities
HR management:- In the technology business enterprise human resource management is
the leading source of combative benefits. The major technology brands are investing in this field,
in order to hire and continue the foremost employees and provide effective training to them for
best performance. By making investment in human resource management Samsung can modify
its performance and total productivity.
Acquisitions and diversifications:- Samsung must make efforts to increase its customer
base and market share via diversification and acquisitions. There are many related areas in
technology business where variegation can simply open new approach of growth and revenue.
Samsung has great financial form, it will be simple for the brand to create new revenue sources
by getting other tiny businesses which modify its midpoint offerings.
Digital marketing:- Digital technology is growing fast day by day and introduced new
opportunities for HR, marketing and supply chain management for the commercial enterprise
brands (Tidd and Bessant, 2014). For technology brands supply chain administration and
marketing are very essential domain. To pursue its supplier and customers worse Samsung can
utilise digital techniques.
Threats
Competitive pressure:- Combative pressures in the computing products, user
electronics, and smartphone business has grown. From Apple to Xiaomi and Huawei – these
brands are creating a hard situations before Samsung. This results in high persuasion affiliated to
product selling and innovation.
High research and development expenses:- Marketing and research & development
expenses has kept increasing at Samsung. It is facing high competition in the worldwide markets
which is a big reason for increasing expenses in this area.
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Regulatory legal and threats:- Some regulatory and legal problems in front of world
technology brands has fully grown devising it more challenging to run internationally for them.
From environment to working class and product security, there are solid legislations in each area
that need to be follow with (Van Lancker, Wauters and Van Huylenbroeck, 2016).
The industry in 2018
Consumer electronics are equipments premeditated for daily use, generally in private
homes. It involves devices used for communications, entertainment, and interior office activities.
Samsung electronics is one of the world's lowest- acting technology frames this year with
billions pass of its worth as components from expanded smartphone competition.
Porter's five forces analysis of industry:- This instrument is a handy method to
evaluate how each of the industry drivers affect the Samsung company and then supported on the
synthesis, appropriate business schemes can be advised.
Industry rivalry:- Having large number of competitors in the consumer electronics the
competition is increasing. This component is especially significant for Samsung as the other
White Goods international such as – Nokia, LG, Motorola, not to involve Apple are involved in
furious combative rivalry. It is the contest of being the prototypic in bringing creation and cut
throat technology to the industry.
New entrants threats:- the technology being utilised in the consumer electronics
business is constantly developing making it hard for new entrants. Other debut barriers involves
brand equity, more capital investment, economies of scale, intense competition, and access to
distribution channels. Other factor for consumer electronics is powerful security and government
regulations. Even having all these barriers many companies have entered in industry and cover
all small markets. Therefore it is medium level threat.
Suppliers bargaining power:- Consumer electronics has get into cooperate relations
with providers by becoming their share owners. The company suppliers involves provider of
equipment parts which is required for the products manufacturing. Many companies supply these
parts and components and the company purchases in majority.
Buyers bargaining power:- There are large number of companies which makes the same
products like Samsung. Therefore, the buyers have many options to purchase these products
while selecting consumer electronics. For purchasers, the switching price is low. Product
distinction lack is also a benefit for the purchasers. Existing brand loyalty in customers is an
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outcome of great experience with products or brand. The recent action on offering products with
large number of attributes and the extended warranty has also crimp the power of buyer.
Threat of substitutes:- There are many consumer electronics which are used by
customers such as – laptops, televisions, home appliances etc. Some of the goods of LG like
plasma screens and televisions can be exchanged by computers having internet accession to gaze
television channels. However, large number of its products are not replaceable or exchangeable
such as – air conditioners, washing machines, sound systems etc. They do not have options in the
market devising the danger of substitutes reduced for LG. The company should not have any fear
of product substitution (Winterhalter, Zeschky and Gassmann, 2016).
Therefore these are the five points of porters five forces model which determines the
industry information of current year. It describes all those factors which affects particular
companies products from competitive companies and provides advice to overcome from these
threats. It gives appropriate advices about business strategies and provides measures to being
uppermost in the industry. To expand the structure of consumer electronics market these five
forces of Michael Porter can be used.
CONCLUSION
From the above project report it is concluded that innovation is the method of changing
an idea or thoughts into service or product. PESTEL analysis is a tool or method used for
analysing or evaluating external factors in the business environment before innovation of new
products. It involves all legal, political, social, technological, environmental and economical
factors. Further, SWOT analysis helps in identifying internal strengths and weaknesses of
company to create or launch new products or services. Along with this Porter's five forces of
model assist the company in expanding particular structure of different products. It gives
suggestion to perform best in the industry.
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REFERENCES
Books and Journals:
Andersson, U., Forsgren, M. and Holm, U., 2015. Balancing subsidiary influence in the
federative MNC: A business network view. In Knowledge, Networks and Power (pp.
393-420). Palgrave Macmillan, London.
Carlborg, P., Kindström, D. and Kowalkowski, C., 2014. The evolution of service innovation
research: a critical review and synthesis. The Service Industries Journal. 34(5). pp.373-
398.
Cheng, C. C., Yang, C. L. and Sheu, C., 2014. The link between eco-innovation and business
performance: a Taiwanese industry context. Journal of Cleaner Production. 64. pp.81-
90.
Gawer, A. and Cusumano, M. A., 2014. Industry platforms and ecosystem innovation. Journal of
Product Innovation Management. 31(3). pp.417-433.
Kindström, D. and Kowalkowski, C., 2014. Service innovation in product-centric firms: A
multidimensional business model perspective. Journal of Business & Industrial
Marketing. 29(2). pp.96-111.
Malhotra, A. and Majchrzak, A., 2014. Managing crowds in innovation challenges. California
Management Review. 56(4). pp.103-123.
Rothaermel, F. T., 2015. Strategic management. McGraw-Hill Education,.
Tidd, J. and Bessant, J., 2014. Strategic innovation management. John Wiley & Sons.
Van Lancker, J., Wauters, E. and Van Huylenbroeck, G., 2016. Managing innovation in the
bioeconomy: An open innovation perspective. Biomass and Bioenergy. 90. pp.60-69.
Winterhalter, S., Zeschky, M. B. and Gassmann, O., 2016. Managing dual business models in
emerging markets: an ambidexterity perspective. R&D Management. 46(3). pp.464-479.
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