BA Business Assignment: Samsung's Business Environment Analysis Report

This report provides a comprehensive analysis of Samsung's business environment, focusing on both external and microeconomic factors. It begins with an introduction to Samsung, outlining its history and evolution. The report then delves into an external audit, examining the political, economic, social, technological, ecological, and legal (PESTLE) factors impacting Samsung's operations in the UK. An internal audit is conducted using a SWOT analysis to assess Samsung's strengths, weaknesses, opportunities, and threats. The report further explores microeconomic concepts such as supply and demand, elasticity, and market competition, providing insights into Samsung's market dynamics. The analysis includes real-world examples and data to support the findings. The report concludes by summarizing the key insights and implications for Samsung's strategic decision-making. References are provided for further research.

Running head: CONTEXT OF BUSINESS
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Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction.................................................................................................................................................4
External Audit.............................................................................................................................................5
PESTLE Analysis of Samsung................................................................................................................5
Political Factors.......................................................................................................................................5
Economic Factors....................................................................................................................................6
Social Factors..........................................................................................................................................6
Technological Factors..............................................................................................................................6
Ecological Factors...................................................................................................................................7
Legal Factors...........................................................................................................................................7
Internal Audit..............................................................................................................................................8
SWOT Analysis.......................................................................................................................................8
Micro Economic Factors.............................................................................................................................9
Supply and Demand................................................................................................................................9
Elasticity................................................................................................................................................10
Price Elasticity.......................................................................................................................................10
Fg Represents the price elasticity of smartphone...................................................................................11
Cross Elasticity......................................................................................................................................11
Fg Represents the cross elasticity of demand.........................................................................................12
Income Elasticity...................................................................................................................................12
Oligopoly Market or Competition.............................................................................................................13

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Limitations of microeconomics.................................................................................................................13
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

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Introduction
Samsung is a multinational Korean Company which is headquartered in Samsung Town, Seoul.
The company is known for comprising numerous types of business which are mostly united under the
Samsung brand itself. The company Samsung was founded in the year of 1938 by Lee Byung Chul as a
mere trading company, which in a period of not more than three to four years diversified into groups of
organization operating in the sectors of food processing, textiles, insurance securities as well as retail
industries. But however in the year of 1960 the company made its most valuable decision in entering into
the electronic industry. The company after accomplishing the electronic industry leaped up by joining the
construction and shipping industries by the year 1970. These were the areas which led the company to
acquire a subsequent growth in the business operations. In the year 1987 the founder of the company died
and then Samsung was divided in to four major sectors or business groups which were namely – Samsung
Group, Shinsegae Group, CJ Group and Hansol Group. Therefore since the year of 1990 the Samsung
Group has increased its conglomerate in the electronic industry by providing the customers and
consumers with few of the latest electronic gadgets at a very cheap and reasonable price. As of the year
2018 the company is known for owning the rank of 6th highest global brand value. Notable that the
Samsung industries are affiliated under the Samsung Electronics Information Technology which is known
for only producing and manufacturing the consumer electronic gadgets and chip makers.
However the Samsung Mobile division is one of those five divisions working and operating under
the Samsung Group. The group is known to comprise of various diverse operations like the mobile
communication division, Telecommunication system, computer divisions, MP3 business teams, Mobile
solution center and the telecommunication research and development center. As of the year 2010 the
company was reported to have more than 40% growth in the mobile market sectors and thus became the
second largest mobile manufacturing company in the world. In the year of 2015 the company sold more
than 400 million devices globally all around the world and thus became the largest manufacturer of

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devices running under Google’s Android with the market share of more than 52% (Boubezari,
Ghassemlooy and Bouridane 2016).
External Audit
Regarding the operation of the Samsung smartphone company in UK, it can be said that the
company has been working in the geographical area for more than over 20 years. The vision for 2020 is
inspiring the world and creating a future for the customers. The vision of 2020 is the core commitment of
the company in UK. It will help the consumers to create a better world for tomorrow by enriching the
customers with digital experience through the way of using innovative technology and manufacturing
diverse products. The company is thus aligned with the delivery of providing the customers with world’s
best products also at a very attractive price through passion and innovation which is the optimal operation
of company. The company has huge competitors in the smartphone market like the Apple, Nokia, Xiomi,
Motorola, Huawei, Honor and many other small brans in small business area locations. With the huge
amount in the growth of competition in the market of UK, the company has decided and looking forward
to explore new business areas such as the healthcare business and automotive electric vehicles. Therefore
it will help the company in order to make its way forward and continue their service through the history
of innovation. According to the author Aswani, (2016) as always the Samsung Electronics will welcome
new challenges and opportunities with joy and pleasure.
PESTLE Analysis of Samsung
Political Factors
In most of the market of UK where the company is known to operate the political environment is
favorable to its operation although present is minor irritant in few of the market worldwide but however it
can be said that the company is known to operate in those markets where the political functions are less.
But however the company in the present date is facing few of the political factors with its operation in
UK, the company not only had to face the political instability but also it has to face the threats of war

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breaking out in few of the political regions of the country. According to the author ( Chen and Ann 2016)
the company has to face various political like in its operations in UK like the unstable government which
is prone to frequent changes in the structure of the government.
Economic Factors
According to the author (Chu, 2017) the economic dimension of the market is really very critical
for the company as the company is facing challenges from new companies opening up their business in
the market. The main point which is to be highlighted over here is the macro environmental factors and
environment which is forcing the company to reorient and adjust the strategies accordingly. Therefore it
can be said that the company has well oriented as well as adjusted itself well without tapering the income
of the customers, this has led the company to emerge and expand in to the developing markets of UK.
Social Factors
It can be seen that the social trends in the market of UK are constantly changing as new
innovation and technological services are creating an impact to the needs and wants of the communities.
There has been an increase in the attraction to the technology which is known to be the primary means of
communication in the present date. Therefore it can be said that the company should make use of the gap
in improving the life of the people living I the community. Few of the older section of people living in the
community needs to understand how to use the Samsung tablet and few other latest devices manufactured
by the company.
Technological Factors
Also from further research work initiated by the author Dissanayake and Amarasuriya (2015) it
can be said that technology in UK has advanced over the number of years. The impact of technology can
be seen in area of the country. It has also in the present date changed the way of business as well it has
affected the social media which used to function years before. In the present date it can be said that social
media is a very crucial medium in building the sustainable strategies of the business. Therefore with all

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these factors in mind the company has to design and take its business in a new way. The company with
the strategies of including new products had officially launched the Note 6 series smartphone in UK. This
has helped the people over there to work in transport in a very hassle-free manner with their new tablet.
Ecological Factors
The ecological factors includes the overall operation of the company in the geographical region.
The company is known for working voluntarily using a network coverage area of more than 130 service
centers and 150 retail outlets. According to the author Djatmiko and Pradana (2016) if the life of any
smartphone has achieved its last stage or are not working then the customer can return back those phones
to the company in exchange of few amount of money or either by availing discount cards. Those returned
mobile phones are then sorted and transported to the recycling facilities owned by the company for
scrapping purposes. Therefore it can assumed that the company is thriving its way in minimizing the
impact of the environment through the whole process of getting the raw material, transportation,
manufacturing, production and till the delivery of the product to the end customers.
Legal Factors
As of the Consumer Protection Act 68 of 2008 the government of the country has imposed
various typea s of operational laws which might have a negative impact upon the Samsung Company.
With this the company also has a very clear tendency in dumping out the low quality products and smart
phones in the third world war countries all over the world. But however the company has a very strong
labor laws in the country, which might also negatively impact the company as because it is deciding to
open up a new plant in Sydney. Therefore it will be a challenge for the company if they thing they will be
exploiting people after taking them for work.

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Internal Audit
SWOT Analysis
Strength Analysis – Samsung is world’s largest and winning electronic manufacturers. The company is
also the world’s largest manufacturer of the television sets, liquid crystal display panels as well as the
manufacturer of smart phones and mobile phones. Samsung is also known as the world’s largest mobile
phone maker with more than 45% share in the second quarter and Apple with only 16% shares. The
company is also known for having an impressive research and design capabilities, in the recent date the
company has also created the Samsung Pay which is a payment application that has similar capabilities
like the Apple Pay and Google Pay. The company also has a very strong manufacturing and marketing
facilities in almost all the countries present globally.
Weakness Analysis – Along with the strengths the company gains few weakness in terms of marketing,
the company still cannot match the marketing abilities of Apple regarding the smartphone industries. In
the US market the share of Samsung fell by more than 2.5% in the year 2015, whereas the market share of
Apple had seen a rise in the market with more than 15%. Also few of the Chinese smartphone
manufacturing companies are trying to catch up with Samsung in terms of manufacturing and
development of cheap premium phones. Between the years of 2015 till 2018 the market share of these
Chinese phones maker like Xiomi and Huawei grew by 39%. With this the company is also heavily
dependent upon the consumer electronics sales in the market which is of a very limited growth in the
market of US and Europe. Samsung is known for using the Google Android open source operating
system. Most of the consumers are known for seeing Android as an inferior product to Apple’s i OS. Few
of the consumer from all around the world view the product of Apple more superior than the products
offered by Samsung.
Opportunity Analysis – Regarding the opportunities of the company it can be claimed that the company
will face a growing number in smart phone market. The company can thus increase its marketing and

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operation regarding the manufacturing of tablets, smart phones and other electronic gadgets, which can be
then transported to developing countries like India and Africa. The company has seen a demand in the
tablets over the smart phones in the year 2018, therefore it boost up the manufacturing of tablets to
capture the market. In the present date there has been a rise in the electronic gadgets like wearable tech.
The company can thus respond the rivals by making beautiful watches which will be connected to the
smart phone indeed. The person wearing it will get all sorts of notifications in the watch itself rather than
taking out the smart phones. However in many countries there has been a noticeable growth in middle
class developing countries which will in a way increase the market for consumer electronic goods. The
company also has various opportunities in the online market sales such as the Amazon.com.
Threats Analysis – Apple has emerge as a dominating smartphone and tablet company in some of tye
market like US. For this reason the company have not be able to conquer Apple’s standing over the
reliability of the products. Apple’s reputation for the quality, reliability, sophistication has seen to be
growing in the market of smartphone where Samsung is lagging far behind. Whereas on the other hand
the operating system of Google Android which the Samsung’s Galaxy brand is depended upon is not as
popular with the average people using the iOs. The decline in the middle class income of America people
and the United States can also result in reducing the customer base for the company, because here the
consumer buying power in the markets of Samsung. Also the Chinese manufacturer like Xiomi and
Huawei are emerging to be famous rivals for the company. The Chinese mobile manufacturing companies
are sharing a very critical way in the smart phone market. Also in the present date Apple Company is also
working in order to enter into more consumer product area such as home appliances and camera. This will
be a direct competition as well as threat to Samsung Company.

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Micro Economic Factors
Supply and Demand
Regarding the supply and demand of the smartphones of Samsung it can be said that the
company’s net profit dropped by 53% during the second quarter of the year 2018. This had led to a
decrease in the appetite of smartphones as well as other gadgets lowered down for the demand in the
company. According to the author Pratiwi, (2015) the world’s largest smartphone and memory chip
maker in the present date has been affected by the global spending pullback by the proctors in US – China
trade fight. Also regarding the production and manufacturing units in UK, the company has been facing
lower supply rates of the initial materials or the smartphones, after Japan’s new trade restrictions that
slow shipments of essential materials needed for the semiconductors and flexible display for the amoled
smartphones. But however the company had arrangements of the initial requirements from other countries
and had anticipated a net profit of 5.1 trillion won over the revenue of 5.6 trillion in the year 2018. As per
the financial result posted by Samsung Electronics it has been found out that for the second quarter in the
year 2018 the company had a consolidated a quarterly revenue of KRW 58.48 trillion which was an
increase by 6% from the previous year. With this the company had then decided to have a clear focus in
developing more premium products after seeing the demand in the market of UK. The company therefore
decided to solidify its competitive position in the market by focusing more on the value oriented products
including the Note 10 which has 1X nanometer technology coupled with 256GB of storage and much
higher ranges perspectival.
Elasticity
Regarding the fact of elasticity it can be said that the company is known for providing the smartphones in
all price category for different types of customers in the diverse market. The company is known for
producing and manufacturing smartphones from a very reasonable price to high end premium
smartphones.

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Price Elasticity
Price elasticity of demand is something which is known to measure the association among a transform in
the number demanded of a exacting good as well as a alter in the cost of the product. The Samsung
smartphones are known to be elastic as because the customers are very much sensitive to the change in
the price. Customer will be known to shift their demand if the prices of the smartphones are changed or if
the company decides to change the price (Sheppard 2016).
Fg Represents the price elasticity of smartphone
Source : Sheppard, J., 2016
Cross Elasticity
According to the author Djatmiko and Pradana (2016) the cross elasticity of demand is known to
measure the responsiveness of the quality demanded for the good to change in the price of another good.
Regarding the cross elasticity of demand or the cross price elasticity of demand it can be said that
Samsung company takes well care of the price of the microchips, battery and many more objects which

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are required for the manufacturing of smartphones. But however the company has a good price
competition from the competitors in the market.
Fg Represents the cross elasticity of demand
Source : (Wulff, Kee and Pakarinen, 2019)
Income Elasticity
The income elasticity of demand is something which is known for measuring the responsiveness
of the quantity of good and services ordered in response to the change in income of the customers. The
income elasticity of demand is calculated on the ratio of percentage change in quantity demanded to the
percentage change in the income of the customers. Whereas in the case of Samsung smartphones it can be
often found out that the customers tend to buy the higher ranged smartphones rather than shifting the
brand.

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Oligopoly Market or Competition
Oligopoly is a market structure which is known to have a very small market structure which is
known to consist a small number of firms, none of which can keep the other from having a very
significant influence in the market. Overall it can be sad that the oligopoly market is often consisted of a
small number of firms which collude, either explicit or tacitly, it therefore in a sense restricts the output of
the company to have an achievement above the market returns. Samsung smartphones is known to
constitute of an oligopoly market, where the products of the company are known for dominating the
market but has a very limited amount of competition from competitors.
Limitations of microeconomics
Regarding the limitation of the micro economic factors of the company it can be said that the
company is known to face huge amount of competition from the competitors in the business. The
company should take care about its production and manufacturing units to stay in a cost competitive
position over the compete tors. The company will have to market its products in the lower developed
countries s that it can attract the products in the market.
Conclusion
In order to conclude the above research paper it can be said that it has well discussed the internal
factors affecting the company as well as the external factors affecting the company. The paper has
discussed the SWOT analysis of the company as well as the PESTLE analysis of the company. Regarding
the demand and supply the paper has discussed the demand and supply of the products into the market of
UK. The key advantage of the company is the huge amount of product portfolio which has led the
company to achieve the competitive advantage of the company.

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