Business Strategy, Planning & Management Report: Samsung Electronics

This report provides a comprehensive analysis of Samsung's business strategy, focusing on strategic management and planning within the highly competitive electronics industry. It begins with an introduction to business strategy and the rationale for analyzing Samsung Electronics, a global leader in the industry. The report then reviews relevant literature, including Porter's Five Forces model, PESTLE analysis, and generic strategies, to understand the external and internal factors influencing Samsung's strategic decisions. The analysis covers Samsung's adopted differentiation leadership strategy, its competitive advantages, and the strategic proposals. The report examines the bargaining power of buyers, the threat of new entrants, and the threat of substitutes. The strategic development process is also discussed, leading to conclusions, recommendations, and limitations of the study, including recommendations for product quality assurance and a premium product range. This analysis aims to provide insights into Samsung's strategic position and offer recommendations for improvement, all based on the assignment brief which requires a 3,500-word management report critically appraising the impact of a major strategic decision.

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BUSINESS STRATEGY, PLANNING & MANAGEMENT
[Type the document subtitle]
7/17/2019
Student name

BUSINESS STRATEGY, PLANNING & MANAGEMENT
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Contents
Introduction, Background, and Rationale........................................................................................2
The Literature Review.....................................................................................................................3
Strategic decision.............................................................................................................................7
The Strategic Proposal.....................................................................................................................8
Competitive advantage strategy...................................................................................................8
Porters five force model...............................................................................................................9
1. The threat of new entrants.............................................................................................9
2. Bargaining power of buyers..........................................................................................9
3. Threat of substitute......................................................................................................10
4. Bargaining power of suppliers....................................................................................10
5. Industry rivalry............................................................................................................10
Pestle analysis............................................................................................................................11
Political factors......................................................................................................................11
Economic factors...................................................................................................................12
Technological factors.............................................................................................................12
Legal factors..........................................................................................................................12
Environmental factors............................................................................................................13
Strategic development process..................................................................................................13
Conclusions, recommendations and limitations............................................................................14
Recommendations......................................................................................................................15
Product quality assurance......................................................................................................15
Premium product range..........................................................................................................15
Limitation..................................................................................................................................16
Limited study scope...............................................................................................................16
Data collection.......................................................................................................................16
References......................................................................................................................................17

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Introduction, Background, and Rationale
Business strategy is action that an organization is utilizing to attract new customers, competing
in the industry successfully, keeping the business performance strong, and attaint the goals of the
organization. Moreover, a plan is the primary step in strategy development, which is the base for
all the activation and action to be conducted in a business. It can be said that the direction is
being provided to the company through appropriate planning. However, since the environment is
dynamic and future perspective is very difficult to measure the planning stage could be one of
the major challenges for the companies (Baker & Bowen, 2015). The purpose of the report is to
identify and assess the strategy and strategic management of the company along with the
understanding of various strategic frameworks. An organizational case will be considered in the
report further.
Samsung is a South Korean company included in the conglomerate industry. In the report, the
discussion will include Samsung electronics considered to be one of the largest electronics
company providing various products to the customer across the globe. The key products of the
company include mobile phones, television, washing appliances, kitchen appliance, air
conditioners and another consumer electronic product range, with quality as one of the key
measures to be included in the product range. The electronic industry is very competitive as the
level of innovation by the companies has increased and technology plays key importance that
changes very rapidly with the advancement of technology in every nation (samsunglife, 2019).
The research problem is to identify and assess the strategic development of Samsung considering
the forces and external environmental factor affecting Samsung strategy. The secondary data will

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be collected and analysed using the implication of various models like the porters five force
model, pestle analysis for macro environment analysis in the report further.
The Literature Review
Company is planning strategies in order to gain competitive advantage especially in the
increasing competitive environment and industries. It can be said that the decision related to the
strategic development of the company largely responsible for success of the company in the
industry and sustainability of the company depends on the strategy, that the company has
developed. One of the models to assess the competitive advantage of the company is photos
generic strategies (Aksoy, 2018). According to the Andersson there are four broad categories or
alternative strategies that a company can adopt in order to gain competitive advantage in the
market. The grid is bifurcated into two aspects that is the source of competitive advantage and
markets in which the company will compete; the four strategies includes cost leadership strategy,
cost focus strategy, differentiation strategy, and differentiation focus strategy. Cost leadership
strategy is the one that depends on the least cost strategy of the company that is to keep the
prices of the products offered to the customer and the lowest aspect while targeting the broad
market in order to compete in the mass. Second strategy that this cost focused strategy focuses
over the cost minimisation while competing in narrow market, this strategy is suitable for the
companies that are conducting small or medium size business (Andersson, 2016). Differentiation
leadership strategy is one of the most common strategies adopted by the company that focuses
over the product or service differentiation which will include the product innovation, new
product development, large number and various variety of products to be offered to the customer
on the market in which the company competes is the broad market. Differentiation Focus

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strategy is similar to that of differentiation leadership, however the key difference is that in case
of differentiation focus strategy, company competes in narrow market along with a high quality,
innovative and various product and service range.
Figure 1: (Source: (Aksoy, 2018)
Porters five force model is used to assess the factors that impact the business of the organization.
The five forces include the first rivalry among the competitors. Many scholars have researched
this framework, as this is one of the relevant frameworks found by the researchers to assist the
competition in the industry. According to the scholars, competition is increasing and it is
important to assess every strategy of the competitors in order to gain competitive advantage and
the strategic change in competitors reflects in the strategy of the organization itself. As per the
researchers, the threat of new entrants is another major factor affecting the business as the new
companies entering into the industry may be a threat to the company, which is assessed through
this factor (Bergin, 2017). The threat of substitute reflects that there are other products or
services that can fulfil similar needs, which the company is targeting for the customers that may
be a threat for the company and it can be assessed through this factor in the model. Buyers are

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the major stakeholders for the company according to the Scholars, it has been researched that the
customer behaviour is the major aspect that is affecting the business of the organization where
the negotiation power of the buyers may largely affect the strategy of the company, which is
assessed through this model while analysing bargaining power of buyers. The last factor includes
bargaining power of suppliers, suppliers and also play a major role Especially if the strategy of
the company is cost leadership or post focus strategy as the cost of the raw material will affect
the overall cost of the company at large extent. In case the suppliers on a monopoly position
Deepak any power of suppliers could be quite high which may impact the company business
strongly (Chari & Feng, 2018).
Figure 2:(Source: (Ogutu & Mathooko, 2015)
Pestle analysis has also been one of the popular strategic models that have been considered by
researchers to consider in their work. According to the scholars, the six forces that affect the
business on the national level include political factors, social factors, economic factors,
technological factors, and environmental factors, legal factors that will affect the success or

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failure of the company in a particular nation. This is one of the relevant macro environmental
analysis frameworks considering various elements under these factors (Doole & Lowe, 2008).
Figure 3:(Source: (Trivedi, 2016)
In order for an organization to identify and develop their goals, objectives and values, the most
relevant strategic development process includes four stages that this strategy analysis, strategy
designing, strategy implementation, and strategy review. This is an ongoing process to develop a
successful strategy for which the goals and values will be assessed and improved regularly (as
presented in the figure below) (Jawoski, 2018).

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Figure 4:(Source: (Bruns, 2013)
Strategic decision
As per the discussion in the literature review, porter’s general strategy that Samsung has found to
be followed is differentiation leadership strategy. The strategy was found to be one of the
competitive advantages for the company as Samsung Electronics have been targeting a broad
market globally, along with various variety and innovative products in order to target maximum
customer segment along with maintenance of the quality of the product and services (Hawkey,
2017). It has been known that Samsung comes up with a new model of phones, other electronic
products repeatedly in order to sustain and be in the competition and provide maximum choices
for the customers. The company has used differentiation leadership strategy in order to keep its
technology, design updated in the industry and compete with other electronic companies and
gain leadership over other brands (Zahay, 2015). For instance, Samsung mobile range has
targeted various income groups due to price differentiation strategy as the company introduces
with various ranges of mobile phones from lower-cost phone to premium phones as well. Not
only the variety but the company is also expanding the business with productive love me that is

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the new product development strategy in order to compete with most of the top technical brands
like Google, Apple, LG and Sony (Muller & Nagle, 2017). The investments of Samsung in new
product development are the base for the broad differentiation strategy and its implication.
Moreover, this strategy is one of the major causes for the Company to have a unique selling
position in the industry related to the number of products and variety of products that the
company is offering to the customer along with the increasing customer satisfaction through
computing technology, consumer electronics and home appliances. Technological innovation is
another key element that has been implemented by the company for years to gain a competitive
advantage and consider being part of this generic strategy as well (Du & Bstieler, 2016).
The Strategic Proposal
Competitive advantage strategy
Considering the literature review and the current strategic decision of the company, the proposed
strategy for Samsung includes combination of cost leadership and differentiation strategy. The
company by now has adopted product and price differentiation strategy, the reason being the
company has provided the lower cost products to be offered to the customer. However this could
have also followed to have cost leadership through economies of scale. This may include
introducing complete range of budget phones that would be lower cost than other brands along
with maximum possible features in order to target lower income group. This will help the
company to gain competitive advantage above Sony, and Samsung with differentiation strategy.
In addition, gain competitive advantage over local brands in every nation through cost leadership
strategy, for example with companies like Xiaomi, and Huawei that are offering budget phones.

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Porters five force model
According to the literature review, the five forces as per the porters five forces model that will
influence Samsung business includes
1. The threat of new entrants
The threat of new entrants for Samsung is medium as the company entering into the business
needs lots of investment in order to compete with large electronics companies like Samsung,
Apple in the industry. Moreover, Samsung has found to be gain economies of scale is by now
due to large business conducting globally which is another reason that the threat of new entrants
can be lowered down. However, the industry of Electronics is very dynamic due to technological
advancement in the nations and updating technology available, which can be used for new
companies to enter into the industry and compete with companies like Samsung that makes the
threat of new entrants at a medium rate for Samsung (Schlegelmilch, 2016).
2. Bargaining power of buyers
The bargaining power of buyers for Samsung is quite high, the reason being the competition has
been increased in electronic market in most of the nation’s due to various companies expanding
globally which has left the Negotiation power is in power in the hands of customers to large
extent. It has been identified that there are various companies coming up with mobile phones and
other electronic appliances with the lower-cost strategy, for example, one of the Chinese brand
that is M I has expanded Asian market considering low-cost product strategy with high-quality
products and unique design, which has been competition for the company considering the budget
phones. Thus, it can be said that with the increase in competition in the industry the bargaining
power of buyers have found to be increased (Robson & Zeriti, 2014).

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3. Threat of substitute
For Samsung substitute will not be relatively high as the company is offering most of the
electronic products like laptops, smartphones, tablets, PCs. However, due to an increase in
substitute for one another the in-house competition in Samsung has found to be increased. For
example, smartphones substitute or tablets and laptops, which have gained some of the
smartphones, shares of Samsung that can be a threat to the company. Therefore it can be said that
due to product differentiation strategy and diversify product offerings by the company has
reduced the threat of substitute to the maximum extent (Schlegelmilch, 2016).
4. Bargaining power of suppliers
Suppliers in electronic markets are generally the software developers, her bills for the product
manufacturing. In some of the divisions, the company is using third party software instead of
their own software for example in smartphones the company is using android software instead of
developing their own software like one of its major competitor that is Apple Inc (Oke & Prajogo,
2016). It has increased the cost to the company and it has increased the dependency of the
company on android developers. This has increased the negotiation power of suppliers for
Samsung. However other than the software the company has, a child supply chain and being the
industry leader it is in the position their suppliers are unable to negotiate prices with Samsung
(Quirke, 2017).
5. Industry rivalry
Competition is one of the major factors that affect the company strategy as discussed in the
literature review, the key competitors of the company include Panasonic, Sony, LG, Apple
incorporation. These are the direct competitors of the company as per the above-mentioned
brands are offering products and services globally with a similar strategy and similar expansion

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patterns (Chu & Liu, 2017). Moreover, customers in today’s scenario with an increase in digital
review availability are becoming smarter and include checking out the ratings and reviews by
other customers online has made the competition increased (Chatzoglou & Chatzoudes, 2018).
The reason being consumers purchase decision includes online review checking which may
easily bifurcate the advantage and disadvantage of the particular product range of a company
which may impact highly on the sale of that particular product. Therefore, it can be said that the
competition is very high in consumer electronics market profits the company needs to be one
step ahead of the competitors and continuously assessing competitors strategy and bringing
change to their own strategies accordingly (apple, 2019).
Pestle analysis
According to the literature review, discussion over one of the external environmental framework
that is PESTLE analysis of Samsung would include various poses impacting Samsung strategy
Political factors
Samsung is a global company, which has made the political factor a challenge for the company
as the company needs to abide by the various political environment across the globe. Due to
technological advancement in some of the nation but political factors may need to opportunity
for the company but at the same time could be great for the company in some of the other
developing nations. Political stability is one of the major factors that will reflect on the strategy
of the company, for example, a war between South Korea North Korea been to pick tension
among the company. South Korea Being the home country, Samsung has found political
instability and increasing the threat of war reflecting political pressure on the company, which
needs to be included in strategy calculation by the company (Puck & Mudambi, 2016).