Strategic Analysis of Samsung: Innovation and Market Strategy Report

This report presents a strategic analysis of Samsung, examining its external and internal environments to assess its innovation and market strategies. The analysis includes a critical evaluation of Samsung's approach to the external environment, considering political, economic, social, and technological factors, as well as an application of Porter's Five Forces. The internal environment is assessed through SWOT analysis and value chain analysis, identifying strengths, weaknesses, and opportunities. The report further explores the implications for stakeholders and provides recommendations for strategic adjustments to enhance productivity, profitability, and sustainability. Key aspects include stakeholder management, innovation, and the importance of adapting to market dynamics. The report concludes with actionable insights for Samsung to maintain its competitive edge in the IT sector. The report utilizes PESTLE and Porter Five Forces models to analyze the external environment and SWOT analysis to analyze the internal environment. The analysis also provides insights into human resource management, specifically motivational tools and stakeholder needs.

STRATEGY

EXECUTIVE SUMMARY
The report has determined about a brief information about the innovative approaches and
implication of new strategies adopted by the management and working aspects of Samsung
which allows them to gain proper form of benefits and overall business achievements. It includes
the functioning of Samsung which is highly focused on utilising the entire available resources to
create the most innovative and advance form of products and services by reducing the level of
wastage made by their workforces. Along with this, the recommendation for Samsung are highly
aimed in increasing their overall productivity and profitability from their concerned market
sector. It is vital for them to gain high rate of return in order to maintain their sustainability. It
has been determined that the stakeholders of the company are their most effective assets that
helps them in growing and establishing the company in their concerned sector. In that context,
Samsung holds a tight control on valuable stakeholders for gaining the successive growth and
development of the business. Further, management of human resource is also must for which
motivational tools can be employed and through this business can enhance its overall
performance in the market. On the other hand, for better management of stakeholders it is
required for Samsung to know their actual need and requirement.

Table of Contents
INTRODUCTION...........................................................................................................................4
1. Critical analysis of organisation’s external environment and their impact while
implementing a strategy.........................................................................................................4
2. Critical analysis of internal environment of firm and their impacts on the strategic position
and in particular its strategy of innovation.............................................................................7
3. Evaluating the information gained from the factors addressed in the analysis................10
4. Summary on the implications for stakeholders based on the analysis of above information
..............................................................................................................................................12
5. Recommendations that would allow the organisation to adjust/re-invent or develop a new
strategy that takes advantage of innovation opportunities...................................................14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Strategy is termed as the set of action plan which are to be effectively placed and
executed that allows the organisation to address every single desired objective. The process of
defining a strategy involves analysing business situation and assessing the elements of
formulating a set of action plans which helps the firm and their aspects to determine the
dimensions of strategies (Flor and Oltra, 2010). It is necessary that organisation should properly
attain the future possible results and accordingly ascertain the structure of a strategy.
In this respect, report is providing information in relation to the significance of
structuring a strategy and factors which are to be involved while implementing a set of action
plan in context of Samsung. Implementing better plans and strategies for sustaining in the
market is useful for the cited company which is one of the leading firms in IT sector.
1. Critical analysis of organisation’s external environment and their impact while implementing a
strategy
According to the study of (Fisher, 2004),an organisation needs to analyse their market
situation while designing a strategy and implementing it in their concerned sector. It has been
evidenced that the managerial aspect of an enterprise is highly focused on attaining the best form
of results which were proposed by them while creating a strategy. With an aim of achieving
greater form of results, it is crucial for organisation to ascertain the list of external factors and
their impact on the firm in order to formulate the action plan. On the contrary, research made by
Hagel and Brown, (2005) stated that the process of assessing factors enables an enterprise in

addressing the market requirements, available resources, present innovation, adaptability of
techniques, etc. that eventually helps them in making the strategies.
Similar to this, it was examined by the study of Grant (2010) that Samsung is also
required to formulate a specific and clear strategy that benefits them with greater form of
achievements and overall success. Samsung's purpose is to offer innovative and unique
innovation and technological advancement in their products which includes mobile phones,
laptops, desktop, smart watches and other related accessories. It is necessary for them to provide
better, creative and developed innovations in their products (Pehrsson, 2007). For this, research
team of organisation should focus their attention on assessing number of external factors which
are highly responsible to impact the market and business characteristics of Samsung. In that
context, following are factors which are present in the aimed market of Samsung and need to be
considered by them:
 Political factors – Samsung already considers political policy while formulating their
marketing plan as per the stated factor are very important for the betterment and progress
of company. Moreover, Samsung needs to follow all rules and regulations which are
generally imposed by the government or any political party of UK or any other country.
In that respect, Samsung also has to pay attention a funding the government in form of
large amount of income tax. However, it has been evidenced that government stability
and strong relations with other country's regulatory authorities help company in acquiring
larger part of markets and helps in accomplishing the targets (John, 2005).
 Economic factors – It has been evaluated that the economic stability and rising growth
of a region in which Samsung operates has a direct and significant impact on their
capabilities of earning profits from the business. Thus, economic stability among
concerned regions helps their residents to build high standards of living and address high
employment rates which results in increase in their disposable income. This eventually
helps them in growing their abilities and capabilities to spend more which creates a new
market trends and a great business for Samsung (Allio, 2006). However, rising
implications and upliftment in tax rate can be the reason of affecting market and business
situation for Samsung (Kourdi, 2010). Along with this, impact of inflation and alteration
in the rate of foreign exchange is also regarded as influential elements for the company.

 Social factors – This factors includes increasing development and improvement in the
lifestyle of an individual, the present demographic influences, likes and dislikes of
customers, etc. These are determined as social factors that impacts the business of
Samsung in a positive as well as in negative sense. For instance, being a Korean
company, Samsung is highly preferred by the Chinese and Korean buyers. But, in
Europe, Apple is generally preferred by people. It is because they have a trust on their
home based businesses. In addition to this, Samsung strategy to launch budgetary
products and gadgets in the developing countries has gained them in increasing their
overall output and ability to earn more revenue (Li and Solis, 2013).
 Technological factors – Samsung is engaged in IT sector where company has to
implement new techniques and bring creative innovation in their products and services
offered to their customers. It is crucial that regular advancement, changes and up-
gradation must be in their product line so that it will be easy for company to differentiate
it with other firm’s products (Lindelöf, Dettwiler and Löfsten, 2006). It has become the
challenge for company and their aspects for addressing opportunities of gaining more
attraction and maintaining it for long time period. However, Samsung has maintained
Illustration 1: Samsung takes lead in China's smartphone market in 2012
(Source:Richards, 2014)

their approaches of giving creative and unique products like smartphones, smart-watches
and digital gadgets.
In addition to this, the use of Porter's five forces model is also most effective and crucial
method to analysis the situation and implement effective measures that can support the business
in leading the sector. In that context, Porter's tool is helpful for Samsung in addressing critical
aspects which are:
 Industry rivalry: It is compulsory for Samsung to build up a strong position in the
market and in the concerned sector for gaining equal and appropriate form of benefits.
Industry rivalry factor is particularly important for Samsung as the other White Goods
multinationals like LG, Nokia, and Motorola not to mention Apple are engaged in fierce
competitive rivalry.
 Barriers to entry and exit: The White Goods industry in the sector is defined by high
barriers to entry and low barriers to exit for the business of Samsung. However, it has
entered many emerging markets through a step-by-step approach and has also exited the
markets that have been found to be unprofitable for their business
 Powers of suppliers and buyers: It has ascertained that the power level among the
suppliers of the business is higher than the potentiality of the buyers. Samsung needs to
assess more number of suppliers in order to create links to acquire materials for
manufacturing the offered products.
 Threat of substitutes: Samsung needs to strategical and relational while implementing
the marketing strategy in order to gain appropriate forms of results from their business
approaches. The number of substitutes is quite high in the market which eventually
increases their marketing issues and related implications.
Through applicability of different models it has been found that external environment of
Samsung is challenging where large number of issues are being present which may prevent
company from accomplishing its desired goals and objectives. Further, porter five forces has
highlighted that bargaining power of buyer is high as substitute of product is easily present in the
market and due to this reason they hold power to dominate the market. Apart from this, PESTLE
analysis has shown that barriers such as political, economical, social, technological etc are
preventing business to focus on its long term objectives and in turn it has acted as development
tool for the business. Innovation is one of the main issues in entire industry where new products

are launched in the market rapidly. Therefore, to deal with this issue Samsung has to invest large
in research and development activities so that unique type of products can be offered to
customers in the market.
2. Critical analysis of internal environment of firm and their impacts on the strategic position and
in particular its strategy of innovation
In the current era of globalisation, a company is facing indirect impact of internal factors
present in their business environment. It is crucial for them to identify the factors so as to lead
business to greater heights. This would assist them in allocating the elements that are required to
be considered while implementing the strategy and defining list of organisational objectives. As
per the stated information of Aaltonen and Ikavalko (2002), he has specified that these internal
factors can be easily assessed by following techniques or analysing through processes like Swot
analysis, stakeholder analysis, value chain method, etc.
According to the research conducted by Chiware (2010), analysing these factors would
be beneficial for the firm to determine the ability of competing with companies that are offering
similar products. In this respect, Samsung also needs to conduct analysis which is appropriate
and suitable for allocating internal factors present in their business environment. This would
help the managerial team of Samsung in defining the set of abilities and overall capacity of the
business to accomplish better targets achieve greater success (De Giovanni, 2012). For this, it is
essential that the cited organisation should effectively regulate and conduct the analysis which
are useful for them in attaining information about the existing internal factors. Moreover, the
company should adopt the Swot analysis and value chain method for ascertaining the number of
internal factors and their impact on the business strategy while placing actions on acquiring the
market attention.
In that context, the following aspects can be considered as the internal factors of
Samsung which are determining their initial ability of formulating the strategy: Strengths – It has been examined that Samsung is one among the largest companies of
manufacturing innovative gadgets in worldwide sector. Samsung is also in the list of top
rated companies of UK and all over the world. 'Business week' ranked Samsung as 20th
position among the top 100 world brands and 2nd in electronic industry (Flor and Oltra,
2010). Moreover, Samsung Electronics has the largest unit of manufacturing memory
chips and the second largest company of manufacturing semiconductors in worldwide

aspects. Thus, having such a strong position in the market, Samsung admits having a
high potentiality and competency level. The main resources that are present with
Samsung are its major strengths which involve financial, physical and human resource.
All these resources provide competitive edge to the business and in turn desired
objectives can be accomplished easily. Apart from this, Samsung holds capability to
manage all these resources efficiently so that business performance can be well
maintained with the help of this. Due to this basic reason, all these resources have
become main strength in case of Samsung. Moreover, main competencies of Samsung
involve product development, high technological advancement, strong financial base etc.
Innovation within the business activities is taking place due to presence of technology
and skilled workforce. In short, resources present within the business is allowing
organization in gaining competitive advantage where overall results associated with the
business is also favourable. Weaknesses – Samsung is facing a great challenge of maintaining a hold on offering new
range of products and services that are to be innovative and unique. Lacking in product
differentiation impact the business and market situation of the company (Ireland,
Hoskisson and Hitt, 2008). Along with this, unclear market position and diverse focus of
the business is also determined as the weakness of Samsung.
 Opportunities – It has been examined that the main area in the enterprise are the LCD
Digital Media Semiconductor which has benefited the company in various ways. In
2009, Samsung constituted as a separate entity to aim their focus on B2B sales and has
developed a broad range of Multi-Functional gadgets like computers and printers (Hagel
and Brown, 2005). Samsung have developed and launched supporting management
software and utilities for all major print equipments manufacturers which works as a set
of new opportunities for Samsung. Other than this, following are some more
opportunities for Samsung:
◦ In Digital Media, attaining better position in IT sector.
◦ Strong industry of manufacturing semiconductor, telecommunication network,
◦ LCD Digital Appliance
 Threats – The rising number and market of Samsung's competitors is becoming threat
for them which includes Apple, Sony, HTC, etc. Samsung faces an indirect impact of

increasing reputation and brand image of their competitors (Massingham, 2004). In
addition to this, decreasing demand for the LCD's has reduced the business of the
company.
Along with this, the cited company could also conduct the analysis of Value chain
assessment which is also a most effective method of addressing the factors that are responsible
for formulating a strategy. In that respect, Samsung must consider the following aspects which
helps them to link the primary activities with their secondary processes that are productive and
profitable for implementing a strategy: Inbound logistics – Samsung's suppliers are generally present in Asia which gives them
80% of their total supplies that helps them to build better market and establish their
Illustration 2: SWOT analysis of Samsung
(Source:Kourdi, 2010)

business in the Asian countries. By this, the secondary objective of creating a strong
infrastructure and the market can be developed in various countries (Marren, 2007). Operations – The cited company has 213 operational units in all over the world which
included subsidiaries, sales subsidiaries, design centres and research centres. It is all due
the effective human resources present in these unit the company is able to overcome the
demands specified by the customers. Outbound logistics – It is ascertained that cited company has an effective outbound
logistics system which plays an important role for Samsung in a systematic manner that
enables them to deliver updates of their popular products to customers within a time
period (Nieuwenhuizen and Koch, 2007).
 Service – The relational services that includes providing and delivering high quality
customer services in the offered products and services by maintaining the standards are
stated as the most productive strategy of addressing new market and attaining higher
profits from the business.
It is vital for the cited company to attain knowledge and information about the present set
of available resources. This would support them to assess higher forms of benefits in their
research and overall marketing activities. In that context, Samsung has the following resources
which are helpful for them in achieving their targets:
 Human resources: It is ascertained that Samsung has nearly 128,000 employees and
32,000 researchers in their research and development department which are directly
involved in creating and developing tomorrow’s products. Their are 16 R&D centres on
nearly every continent. These centres make up an inspired, efficient network that drives
their efforts to develop leading technologies in digital media, telecommunications, digital
appliances and semiconductors.
 Financial resources: Samsung is economical strong than compare to any other company
in the concerned sector. This helps them in overcoming all their targets and accomplish
all the desired set of objectives. They annual report of Samsung is convincing the
capabilities of investing and generating capital.
 Competencies: Samsung is facing high amount of competitiveness that influences the
company in generating better profits from their approaches. Apple, Nokia and Motorola
are their major competitors but still due to the effectiveness of Samsung in creating

innovative products and gadgets support them to gain high level of attraction from the
aimed market.
3. Evaluating the information gained from the factors addressed in the analysis
After the analysis of internal and external environment of Samsung, it is easy to identify
their overall performance in the international market. By this analysis, it has been evaluated that
the cited company is able to overcome the business issues and market problems which helps the
business in addressing new sources of attaining high level of profits and establishing stronger
position in the market (Roumboutsos and Chiara, 2010). The analysis results contributed that the
Samsung faces a great form of competition from the other similar organisations like Apple. LG,
HTC, etc. However, the ability of offering innovations in their products and launching range of
new gadgets on regular basis allows them to gain competitive advantage for their concerned
sector.