Comprehensive Strategic Management Analysis of Samsung Corporation

This report provides a detailed strategic analysis of Samsung, a leading multinational corporation. It begins with an introduction to Samsung's vision, mission, and market position, followed by a strategic analysis using PESTLE and Five Forces models to assess external factors and competitive dynamics. The report also includes a value chain analysis to evaluate internal activities. Furthermore, it offers strategic recommendations based on the Ansoff Matrix, SWOT analysis, and Porter's generic strategies, providing insights into Samsung's potential future directions and strategic choices. The analysis covers various aspects of the company's operations, market share, and the competitive landscape, concluding with a summary of the key findings and strategic implications for Samsung's continued success in the global market. References are provided at the end.

Strategic management

Strategic management
Table of Contents
Introduction......................................................................................................................................1
Strategic analysis.............................................................................................................................2
Pestle analysis of Samsung..........................................................................................................2
Five forces model of Samsung.....................................................................................................5
Value chain analysis.....................................................................................................................8
Strategic recommendation.............................................................................................................11
Ansoff Matrix.............................................................................................................................11
SWOT ANALYSIS....................................................................................................................12
Porter Generic strategies............................................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................17
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Strategic management
Introduction
Samsung is known as one of the largest South Korean multinational company and headquarter of
the company is in Samsung Town, Seoul. The founder of the company was Lee Byung Chul and
he was one of the South Korea successful businessmen. In 1938, he founded the company as one
of the trading company in the competitive market. The revenue of the company in 2016 was
17,400 Cr USD (Samsung, 2018).
The vision of the company is “Inspire the world, create the future”. Samsung emphasizes on the
core commitment to create better world in context to the digital experiences and it can be done
by considering the factors related to innovation in products and technology. The company aim is
to be one of the beloved brand and also an innovative company in the competitive market.
Therefore, for this Samsung emphasizes on creativity and innovation with shared value with the
partners. The company look forward to explore the area of new business like healthcare and
automotive electronics and also they emphasizes on innovation and also Samsung electronics
consider the challenges and opportunities (Samsung, 2018).
The mission of the company is to inspire the world with the innovative technologies; products
and design that enrich the lives of the individual and it also contribute to the social prosperity by
creating a new future. So, the strategic approach considered by the company is related to
creativity, partnership and great people. It is also necessary for the company to consider the
strategic models or the tools so that it can be easy to minimize the high level of competition in
the market (Samsung, 2018). It can be analyzed that there are various competitors present in the
market like Apple, Xiaomi, Oppo, Vivo, Sony, HTC and Lenovo. It has been observed that due
to effective functioning of the activities, the company attained the large market share. In the
present case, the market share of the company is large as company manages the activities on
international and national platform. In 2016 the market share of the company was 20.9% and in
2017, the company shipped more than 317.3 million smartphones on the global platform.
So, in this paper the discussion will be made on the various strategic concepts and methods
which will be discussed. In the strategic analysis phase, the discussion will be made on the
models like Pestle, Five force analysis and value chain analysis. In the next phase of the report,
strategic recommendations will be made by considering various methods like Ans-off Matrix,
SWOT and generic strategies. In the last phase of the report will reflect the entire analysis made
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in the paper. So, the main emphasis of the paper is on discussing the business strategies in
relation to the entire models and concepts.
Strategic analysis
Pestle analysis of Samsung
Political factor
It has been analyzed that there are various challenges which impacted the overall operations of
the company. Samsung Company also faced various political scandals and due to this the
negative impact can be seen on the operations. In South Korea the company was found to be
involved in the political scandal. Lee Kwang- Jae, Uri party representative working for the
president Roh Moo- Hyun admitted the receipt of 50 to 60 Billion KRW and also the prosecution
analyzed that company funded more in opposition like in Grand National party via 2.47 Billion
KRW before the election (Research methodology, 2018). By considering the illegal method the
impact has been seen on the image of the company in the competitive market. In August 2017,
Jay Y. Lee the former of the company was jailed in terms of bribery and embezzlement. Also,
the company enhanced the overall amount of political lobbying in 2012 which enhanced the
controversial payments. In the figure 1 stated below the overall controversial payment is
showcased (Lee, Lee and Heo, 2015).
Figure 1: Samsung Annual lobbying
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Strategic management
Source: Research methodology, 2018.
Economic factor
The Korean currency is one of the factors that have impacted the overall revenue of the Samsung
Company. The major decline was due to won appreciation and the decline led to second quarter
profits reduction in 2014 from 25% t0 7.2 overall turnovers. The entire profits earned by the
company were impacted by economic crisis as it was the case in relation to the global economic
and financial crisis of 2007-2009. The figure below states the quarterly operating profits halved
in the third quarter of 2008 and the direct consequence is related with global economic and
financial crisis. The range of the economic factors has affected the Samsung Company and it also
includes taxation and interest rates, inflation rates and modification in cost of labor and other
resources. The tax rates have directly impacted the overall financial performance of Samsung.
For instance : It has been noted that just because of the tax regulations in Korea, the domestic
sales have accounted for just 10% over the last three years and the percentage of the tax paid in
Korea by the company also enhanced by 67% in 2016 (Forbes, 2018).
Figure 2: the overall changes in Samsung electronics in relation to the quarterly operating
profits.
Source: Research methodology, 2018.
Social factor
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Strategic management
It has been observed that changing needs and demands of the customers impact the overall
operation of the company in the competitive market. The challenge faced by the company in
context to the social factor is changing demand and preference of the customers. The company
focused on the smartphone technology in which the new features are introduced which helped
the company to enhance the demand in the competitive market. Samsung also introduced the
products by reducing the overall cost of the products and it is done so that the needs and wants of
the customers can be satisfied. The living standard of the people is important to be maintained
for the company and also with the highly competitive market forced the company to reduce the
overall cost so that growth can be attained in the market. So, the challenge is related with
satisfying the needs and wants (Gassmann et al., 2018).
Technological factor
In technological factor it has been noted that it is important to consider latest technology so that
competitive advantage can be attained. The company faced the challenge related to the
investment in research and development and the company faced the issue as the technology keep
on changing which has increased the overall cost of the activities. Latest technology has
enhanced the overall operating cost which boosted challenge for the company. The challenge is
also faced due to imitation in relation to the product design and also because of the legal and
regulatory scrutiny (Barbuto Jr, 2016).
Legal factor
The company faced the challenge due to heavy penalties in relation to the imitation of the
products. Samsung imitated the products of the company like IPAD and IPHONE and it has also
impacted the overall image of the company in the competitive market. Due to imitation of the
products the negative impact has been seen on the image of the company. The South African
government also focused on Protection Act 68 in 2008 and due to this act the impact has been
seen on the overall cost of the company. In this act, the tendency is based on dumping the low
quality products so that it can be easy to maintain the latest stock in the competitive market. The
company has to consider the regulations according to different countries so it also low down the
overall cost of the activities. So, the challenge that is faced by the company is related to change
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Strategic management
in the overall policies and procedures of the government (Johnson, Scholes and Whittington,
2008).
Environmental factor
It can be stated that the company has the responsibility to manage the overall activities of the
company by considering the factor related to environment. If the strategy related to sustainability
is not followed then it can impact the overall functioning of the company. The challenge faced
by the company is related to saving the energy and resources which can help in boosting the
overall growth of the company. Samsung provide the policies of taking back system in Korea in
which the phones are not used are gathered and then it offer the facility of disposable to the
consumers. The recycling facility is also considered by the company in Korea, Japan and Europe
as it can help in maintaining the overall activities in the competitive market (Grant, 2016).
Five forces model of Samsung
Figure 3
Source: Research methodology, 2018.
Threat of substitute products or services
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Strategic management
It has been noted that Samsung visual display business is threatened by the indirect substitution
related with enhancing the popularity of the leading active lifestyle and also with the spending
time outdoors. The major threat faced by the company is related with substitution of products
and services in the competitive market. The representative of company focus on the customer
segment and they emphasizes on time outdoor rather than in front of the television and the
negative implications can also been seen on the volume of the entire sales of the Samsung
television. The enhancement in the popularity of cloud storage is viable alternative in context to
printing and it reduces the sale of the Samsung products. So, the challenge faced by the company
is related with the high rate of substitution prevailing in the market. The threat of rivalries is high
in relation to the products and services offered in the market (E. Dobbs, 2014).
Rivalry among the existing firms
It has been stated that the in context to Samsung Company, the rivalry among the existing
companies is intense. There is less differentiation among the wide range of products and also
there are various competitors who are managing the overall activities in the market. In the
smartphone category, Samsung competes with large number of suppliers like Apple, LG,
Lenovo, ZTE and OPPO. Also, the company maintained the leadership position on the global
scale from the last six years (Chen et al., 2015).
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Strategic management
Figure 4 : The market share of the leading smartphone manufacturer on the global
platform
Source: Research methodology, 2018.
Bargaining power of the suppliers
It has been observed that Samsung has more than 579 suppliers on the global platform and the
supply chain of the company consist of the more than 2700 suppliers in the different industries
and across the global platform (Tsao et al., 2019). The company supplying the general parts does
not yield the bargaining power just because of the significance of the overall sales and
negotiation prices of the company. The company maintains the importance of creating the
strategic cooperation with the suppliers so that it can be simple to boost the entire sales of the
company in the competitive market (Yoo and Seo, 2017). It can be stated that in 2015, 71.4% of
the total economic value is shared with the supplier and also the company maintains proper
communication with suppliers (Research methodology, 2018). There are various initiatives
considered by the company like shared growth day, supplier dialogue fair and informal meetings
with the suppliers (Elmes and Barry, 2017).
Bargaining power of the buyers
It has been seen that bargaining power of the customer can be low and also the customers have
the knowledge about the products available in the market. The customers can easily choose the
brand and can shop easily so the bargaining power of the customers is low to moderate as there
are many options which are available with them. Samsung is considered as one of the well-
known brand and it emphasizes on the technological innovation which can lead to the bargaining
power of the brand if comparison is made with the customers (Koontz and Weihrich, 2015).
Threat of new entrants
It is low as it has been seen that to enter into this market the requirement of investment is high
and also the requirement of investment is more in attracting the talent and building the brand
through marketing. The pressure has been enhanced in context to regulatory pressure as it is one
of new barrier for the new entrants. If any new brand tries to enter into the market then business
can start on the small scale and also they grow into the large brand which will invest in the
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factors related to marketing, human capital and operations (Nagle and Müller, 2017). So, the
barrier will be large for the new brands that are entering into the market.
Value chain analysis
Figure 5
Source: Research methodology, 2018.
Samsung primary activities
 Inbound logistics of Samsung
On the global platform, Samsung has 579 suppliers and also the supply chain of Samsung consist
of over 2,700 suppliers in different industries on the global platform. The suppliers of the
Samsung Company are based in Asia as 79.4% of its entire supply chain expenses take place in
Asia. To manage the inbound logistics of the company, it has been seen that Samsung owns
different logistics companies as its subsidiaries (Research methodology, 2018).
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Strategic management
Figure 6 : Management principles of Samsung supply chain
Source: Research methodology, 2018.
One of the major sources of value creation for the company is strategic relation as it is one of the
challenges for the company. It can be seen that company changed the overall payment cycle from
twice a month to four times a month in 2011 and also they focused on implementing the early
payments which has smoothen the overall activities for the suppliers (Research methodology,
2018).
Samsung operations
The company is one of the global companies that manage the activities with 38 production bases
in 17 countries. It has been noted that manufacturing of 90% of the products is done in house.
The company also divides the overall activities in various parts like IT & mobile communication,
consumer electronics and device solutions. In the end of 2015, the company also focused on
managing the operation hubs on the global platform which also consist of manufacturing
subsidiaries, research centers and design centers (Lasserre, 2017).
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Strategic management
Figure 7: Electronic global network of the entire activities of Samsung
Source: Research methodology, 2018.
The company has to face the challenge related to the use of the advanced technologies and also
with the sophisticated system of operations. The global electronics company should also
consider Six Sigma Methodology in the entire activities of the company.
Samsung outbound logistics
It has been noted that Samsung faced the challenge in launching its own products to compete
with Apple. Also, effective outbound logistics system has an essential role in introducing the
products to compete with the Apple Company. Effective outbound logistics system has an
essential role for the company in relation to the overall deliver updates of the famous products to
the customers in a proper manner. Samsung electronics logitec also focused on the facilities
related to outbound logistics activities. Also, Samsung electronics consider the range of logistics
activities consisting negotiation of payment collections and also dealing with claim of insurance.
The company has to face the issue related to effective integration of data and communication
technologies into outbound logistics practice as it is one of the value creation sources of the
company. The company faced the issue related with transportation in which the products of the
company are difficult to be delivered on time and also the issue related with distribution channel
took place in the workplace (Choi and Park, 2016).
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