Kraljic Portfolio Analysis: Strategic Positioning for Samsung

This report provides an analysis of Samsung's purchasing portfolio using the Kraljic Matrix, a strategic tool developed by Peter Kraljic. It examines Samsung's positioning by applying the four key steps of the Kraljic model: purchase classification, market analysis, strategic positioning, and action plans. The report classifies Samsung's products based on supply risk and profit impact, conducts market analysis to assess supplier and customer power, and then strategically positions items within a purchasing portfolio matrix. The report outlines action plans for each quadrant of the matrix, including strategies for exploiting leverage, balancing diversification, and addressing bottleneck and non-critical items. It also outlines the steps for a successful purchasing process based on Kraljic's recommendations. The conclusion emphasizes the benefits of the Kraljic model for improving purchasing performance, mitigating risks, and achieving better market positioning, ultimately helping Samsung deliver quality products and satisfy customers.

INTRODUCTION:-
This matrix was propounded by Peter Kraljic in 1983, which is known as Kraljic matrix. Kraljic matrix is
used to analyze the portfolio of purchasing of a company. This matrix helps in knowing the working
methods of a department of purchasing of different organizations. This matrix tells us how an
organization spends its time on various products. In this assignment, we will study about the Kraljic
portfolio positioning model in a practical manner. (Bäckstrand, 2015) After reading this anyone can easily
understand the basics of this powerful strategic tool. This matrix firstly used in Review Business of
Harvard in 1983. It is a very famous and very worthy model for worldwide companies. In this
assignment, we will analysis the portfolio of Samsung by using Kraljic matrix. In this we analysis
Samsung positioning by using four tools of Kraljic positioning which are following:-
 Classification of Purchase
 Analysis of Market
 Strategic positioning
 Planning of Action
Step 1:- Purchase classification:-
In this step, we divided all products, components, commodities and services of Samsung organization
that customers buy as per the risk of supply and impact of the potential profit.
 For Samsung, organization risk is high when the dealing item is a scarce product which is not
available easily in the market. Availability of different required items affected by natural disasters
or instability of government, or when there are few suppliers and delivery logistics of the item is
very difficult. (Bäckstrand,2015)
 For Samsung, impact of profit is high because the items of the Samsung adds additional value to
the outcome of the organization. This could be because the organization makes up a large
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proportion of the output or it could be possible because of high impact on the quality of its
products.
Product purchasing classification shows each item of Samsung at the right place on the product
purchasing classification matrix which is shown in below figure:-
Figure 1: Product purchasing classification model:-
This model includes the following approaches of purchasing for every quadrant:-
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 STRATEGIC ITEMS:-
In this approach, those items are included which requires high attention from purchasing
managers. Options include analyzing and managing risks regularly, considering producing goods
in-house rather than purchasing from outside or long-term supply relationships, if all these seems
appropriate. (Dabhilkar,2016)
 LEVERAGE ITEMS:-
It includes using the full potential of purchasing, placing high- volume orders and substituting
products or suppliers.
 BOTTLENECK ITEMS:-
It is a useful approach to purchasing. It is a combination of various useful approaches which are:
ordering in access when the raw material are available or identifying ways to control vendors.
 NON – CRITICAL ITEMS:-
In this approaches following approaches are include monitoring and optimizing order volume,
fully optimize inventory levels and using standardized products.
Step 2:- Market analysis:-
In this step, we will conduct market analysis to investigate the market. In this, we are analyzing potential
powers of our suppliers and different buying powers of the customers. Conducted market analysis for
Samsung organization helps the organization in enhancing their potential customers, build its image in the
market or greater its profit. (Liew, 2014) A market analysis helps the organization in knowing the trend of
the market in current days. Due to this they remain updated, and their products also are in demand
because of the latest technology.
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Step 3:- Strategic positioning:-
In step 1 we classify the different products or available materials which are known as “strategic," in the
step 2 we identify the buying powers of customers or supplying power of suppliers. Enter all these items
in purchasing portfolio matrix is known as strategic positioning. Strategic positioning is shown in the
following figure:- (Dabhilkar,2016)
Figure 2:- Purchasing portfolio matrix:-
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Step 4:- Action plans:-
It is necessary for the Samsung organization to build continuously their action plans for each product and
materials which it requires for performing their functions. (Padhi, 2012) The action plan should be
developed as per the items which are shown in the figure 2.
All these strategies mentioned in figure 2 describe in the following manner:-
 EXPLOIT: - if the Samsung organization wants to secure good prices on its products then it
should develop high buying powers of customers, by doing this it can avoid all supply risk which
is involved in all these items. Organization also able to develop "spot purchases" of different
individual batches of all the items, if any of an individual supplier offers the organization a best
deal for their products.
 BALANCE: - Samsung organization should choose a middle way between the diversification
approach or approach of exploitation.
 DIVERSIFY: - if the Samsung organization wants to continue their functions without any
stoppage than the firm should have multiple suppliers or multiple products. For example-
Samsung organization can export their products by other export methods without depending only
on one method of export.
Steps for purchasing process:-
Peter Kraljic recommends the following steps of purchasing process which should be adopted by every
organization. Samsung should follow all the steps for position effectively itself in the market. These steps
are following:-
 Organization should prepare its portfolio analysis.
 It should determine the criteria for supply risk or for-profit impact.
 It should properly develop the detailed portfolio analysis.
 Organization should fill all steps in the matrix.
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 Measure and discuss the result.
 Developing strategy of purchasing portfolio.
 Implement and monitor all strategy.
CONCLUSION:-
Using Kraljic Portfolio purchasing by the Samsung organization enables it to improve its performance
related to purchasing which can be the source of saving cost for the organization and make the
organization very professionalize. If the Samsung organization wants to avoid unnecessary risks, then it
should spread all its products across all quadrants. A supplier does not have such powers which an
organization has. Kraljic models help the organization in determined which actions should be taken to
achieve a better positioning in the market. For each part of the model, the organization should develop a
different strategy. This strategy concluded whether a product is placed in the right quadrant or not. All
these helps the Samsung in building its good image in the market and can deliver quality products to
satisfy their customers and can easily win their confidence.
REFERENCES:-
Bäckstrand, J., Tiedemann, F. and Hedén, E., 2015. Competitive advantage based purchasing matrix: A
portfolio-approach to differentiated purchasing strategy. In Proceedings of the 24th Annual IPSERA
Conference (pp. 1-10).
Dabhilkar, M., Bengtsson, L. and Lakemond, N., 2016. Sustainable supply management as a purchasing
capability: a power and dependence perspective. International Journal of Operations & Production
Management,36(1), pp.2-22.
Liew, J.G.L., 2014. Classify me!: A Kraljic Portfolio Matrix Exercise.
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Padhi, S.S., Wagner, S.M. and Aggarwal, V., 2012. Positioning of commodities using the Kraljic
Portfolio Matrix. Journal of Purchasing and Supply Management, 18(1), pp.1-8.
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