Samsungs Business Strategy Report - Essay Example

? Samsung’s Business Strategy Report Task: Samsung’s Business Strategy Report The global industries and corporate businesses are on a continuous dynamic phase where each industry player is seeking ways and means through which it can lead the pack. This is as occasioned by the ever-changing environments in which businesses operate. As each business entity is devising innovative ways of increasing their turnover and market base, the overall competitiveness of the industry is increased, thereby causing the rest of the entities in each specific industry to up the game in order to be at par with the industry (Hoskisson et al 2009, p. 178). Given that there are various industries and business entities all partaking in different business operations, each entity must come up with a strategy that will ensure it thrives in its line of business else it risks being knocked off the competition (Moreton et al 2012, p. 176). In order to achieve and maintain their niche or improve even further, the businesses must consider a variety of aspects including the internal and external factors, in order to ensure their continued success and dominance. Despite this, coming up with the right business strategy is not always an easy task. Various considerations have to be made to identify the best path forward since a wrong move could send a firm on a downward trend (Sekhar 2009, p. 87). In light of the above, the analysis of Samsung Electronics Company Ltd. in relation to existing and probable business strategy modules would suffice a business strategy report. Samsung Electronics is a transnational electronics corporation based in South Korea. It is the main auxiliary of Samsung Group of companies and has been on a steady rise over the recent couple of years. It operates on the global market platform, with branches in most major cities of the world. Samsung has considerably grown over the last couple of years, thereby increasing its global employee base to upwards of 200000 (Sekhar 2009, p. 187). The company is involved in the manufacture of end user electronic products. On the broad platform, it operates mainly in two expansive business units. These are the end product faction and the module division. The product division is involved in the fabrication of user products especially home appliances such as video and audio equipment, kitchen electronics, computers, air conditioners, cameras, printers and communication equipment such as mobile phones and tablet computers. On the other hand, the module division is involved in the business of manufacturing product components such as semiconductors, display products such as LCD’s, TFT’s, AMOLED’s and storage devices such as SD and microSD cards (Russ 2010, p. 231). Moreover, they partake in electronic consumables such as toners and cartridges for printers apart from the aforementioned products. Given the nature of their businesses, the industry is often tumultuous especially due to the constant innovative technologies that grace the electronics and telecommunications industry (Cant et al 2008, p. 121). Samsung Electronics prides itself with the vision to inspire the world and create the future. Their company profile identifies three strengths in relation to their vision. These are new technology, innovative products and creative solutions, all in a bid to realize the stated vision. Moreover, their main focus is on the industry, the employees and their business partners, and they identify these as the keys to their growth and overall success (Moreton et al 2012, p. 88). Their focus on the industry is aimed at assessing the industry trends to enable them map the best strategy to be the market leader. Meanwhile, the partnership vision is aimed at considering their business associates and generating a correlation targeting success for both partners and the company itself (Cant et al 2008, p. 322). On the other hand, the employee vision has the objective to empower the employees and create a sense in them that lets them diligently partake in their duties towards a common goal. The company regards employees as key to their overall success, and to this end, the employees are held highly within the company with their welfare at the heart of the management. Furthermore, Samsung prides itself in environmental and communal welfare at the core (Hoskisson et al 2009, p. 78). This is enhanced through the consideration of their production processes impacts on the environment, apart from the implications their products have on the socio-cultural norms of communities. Indeed, some of their product designs are inspired by such aspects as cultural attributes of given communities. Apart from the above, Samsung has set up a blueprint aptly dubbed Vision 2020, by which it aims to reach a $400 billion mark in their revenue. In order to achieve this, the company has laid out three tactical approaches that it hopes will guide it in achieving the outline for 2020. These include the incorporation of such tactical ideas as creativity, talent and partnership in the course of their operations. The company hopes that, through the identification of talented personnel, it will enjoy creativity, which when integrated with similar-minded partnership associations, would propel the company towards achieving its vision 2020. The above stated organizational purpose in the company profile is subject to a variety of factors that affect their overall attainment. Such factors include the internal and external environments in which the business is operating. These internal and external factors have an impact on the company and could enable it either to achieve its mission or hinder it. Internal aspects such as the management of Samsung have to play a vital role in coordinating the functions of the company, as well as formulating strategies that guide the company in achieving its objectives (Cant et al 2008, p. 221). Furthermore, such internal aspects the company employees require the right working environment to ensure their maximum potential is realized. Samsung as a company states in their profile that the employees are one of their significant pillars in their operations. Such factors as employee motivation, empowerment and constant appraisals are supreme in the quest to realize true employee potential (Russ 2010, p. 233). Apart from the internal factors that could affect Samsung other factors beyond their control also have an impact on their operations. Such include the economic environment in which it is operating. Being a multinational company, and given its size by virtue of its classification, it is not easily affected by minor economic turmoil, with the exception of global economic recessions that can put a strain on it coffers (Hoskisson et al 2009, p. 223). Nonetheless, Samsung’s strengths lie in its internal management system, which enjoys a stronger connection courtesy of the firm being a business entity with a background of family leadership. This is in addition to its highly efficient research and development facilities that have continually aided in its continuous growth (Russ 2010, p. 178). However, the company’s weakness lies in its relative inability to venture in new market as its products are often dwarfed by those from the firms the consumers are used to within the market. Nevertheless, the company is a technological powerhouse, and due to this, it is a leader in technological trends and this rarely forms a harsh environment for Samsung. Despite this, such legal and political aspects as patent infringement as witnessed by Samsung’s recent legal battles with Apple Inc form the core of factors that threatens the company’s growth, especially when it ventures into sales ban for some of Samsung’s products in specific markets. The technology industry is highly competitive, with various companies located in different parts of the world composing the industry. This high level of concentration increases the level of competition for the industry, creating an environment of constant upheaval. Being both a component and product manufacturer, Samsung enjoys the rare combination as it is its own supplier for most components, thereby eliminating any possible unfavorable environment in relation to supplier behavior as experienced by most companies. Despite this, threat of substitutes to their products is still a considerable factor to reflect on. This is further enhanced by the slim but feasible threat of the entrance of other companies that could possibly reduce Samsung’s market share. Moreover, the customers are at the core of Samsung’s focus, and the pricing of Samsung’s products keeps this in mind. Furthermore, their relatively moderate pricing is aided by the fact that their production costs are lower as the act as their own suppliers in most fronts. In addition, Samsung prides itself in diversification of products, and this assists the company a lot, as at times it forms the basis of competition. Moreover, this is also Samsung’s key success factor as its competitors are only involved in a limited number of products. From the aforementioned, the highlighted factors form the center of Samsung’s hard-hitting competitive stance against its competitors, and have continually guided the company in its gradual rise. In formulating a viable business strategy, all factors have to be considered in light of their implications on the company’s interests. Samsung’s strategy development criterion has to take a variety of factors into consideration. These include a look at the company’s pre-existing strategies being evaluated against their vision, with special consideration of the modifications and subtle changes all aimed at the overall success of the company. Currently Samsung has outlaid the following strategies in its attempt to enhance its business grounding. Corporate strategies: Enhance creativity for the company through innovative and cutting edge designs for most of its products. Through this, Samsung aims to create designs that appeal to its customer at the same time conforming to the socio-cultural and demographic expectations of most societies as it is a transnational company. Samsung is also laying down an elaborate plan that will enable it form partnerships that could further ease its operations in relation to the technology industry. Furthermore, this partnership is to aid in extending its grasp of the industry, as it will be at a better position to view current trends given its wider grounding. In addition to both creativity and partnerships, Samsung is in the process of integrating talent into its management structure to enable more original and innovative ideas to be incorporated into the running of the company. This talent based management system is to assist it attain its vision 2020, the blueprint they have laid down for the decade. The above are the main corporate strategies laid down by Samsung to cater for all its strategic business units, ranging from the communications and computing technology division to its home appliances faction. A scrutiny of the strategies reveals that they are applicable for most of Samsung’s business units, as all the units require levels of creativity, talent and the feasible idea of partnerships (Wall & Griffiths 2006, p. 322). In relation to Samsung’s weaknesses such as lack of eye-catching designs in their products, which the company acknowledges, Samsung hopes to overcome this huddle through creativity, as already witnessed by its flagship devices that enjoy unprecedented success courtesy of their plans for vision 2020. In addition, Samsung’s relatively prodigious growth in the turn of the century has sparked a new wave of optimism for the company, and the company holds its strategies in high light (Morden 2007, p. 177). Moreover, all of Samsung’s strategic business units are on the technology front, and as such, they all fit together and make the formulating of corporate strategies undemanding as a result of how they complement each other (Wall & Griffiths 2006, p. 167). In addition, Samsung is venturing further into markets that it previously held low market presence such as Africa (Jansson 2008, p. 287). This is as highlighted by its research academy together with regional headquarters in South Africa. This is in a bid to increase its market share to enhance its market and business grounding further. In effect, the existing strategies coupled with the outlaid programmes have propelled the company to new heights, as it currently is the largest technology company, apart from overtaking Nokia in terms of overall sales units for smart phones (Moreton et al 2012, p. 123). Despite all this, the following strategies could be integrated into the business to lead to further growth on all aspects, both from the corporate level to strategic business unit level: To increase its market share and enhance its business further, Samsung could consider increasing its penetration into new markets such as Africa. Though it has a regional headquarter in South Africa, this alone cannot cater for the whole continent, especially considering that Africa is the fastest growing technology market. Therefore, Samsung’s penetration to Africa should be their first consideration in a bid to enhance their hold of the industry and augment market share. Furthermore, once they gain ground, their focus could shift to other business variables. The company could consider further diversification of its products to cover a wider range. This should be applied to all strategic business units, and the product base be enhanced through the unveiling of products across the board. Furthermore, the products should be made available to as most markets as possible; as opposed to the norm, whereby Samsung avails products for given markets while leaving others out. Furthermore, Samsung could consider the possibility of venturing into new strategic business units. In order to achieve this, it can study the market and identify a niche that is yet to be exploited. Through doing this, the company will further expands its business interest thereby leading to a wider range of products that it deals in. Given that Samsung puts more emphasis on creativity and innovation, the company could invest more in research and innovation centers to enable it churn out more innovations and innovative designs. In addition to improving the company’s product strength in terms of the level of technology and design, it could probably lead to Samsung having patents for the technological breakthroughs that may arise, and as a result enabling it to obtain remittances from companies that could adopt such technologies. Samsung could improve the connectivity among its business units to enable sharing of ideas and further the unity among the managements of the business units. This could lead to strengthened connections in the products of the business units, and the result is that products that enjoy the dominance of certain markets could easily open the way for products from other different units, all attributed to the management connections among the business units. Given that Samsung’s products generally take considerable time to be identified by a given market, the company could consider repositioning its advertising and awareness creation ideas. This could be achieved through the company sending operatives to study a given market and consider the setting of the society. Through this, it will be in a position to come up with products that fall within the expectations of the market, and as such, awareness measures need not be as intense. In consideration of the effect that suppliers have on its operations, Samsung can increase its control of its component manufacture through the incorporation of more of it products components in its module business unit. This will result in reduced production costs for its commodities and further aid the company in generating more revenue for other operations. The company could also consider more investments in engaging analysts who can critically assess the industry in a bid to providing the company with an insightful point of view that ultimately assist in the formulating of business ideas. This includes analyses in all aspects of the industry including the current and precedential trends that could place the company in a better position for a review of the viability of various business plans. The above strategies are subject to various conditions that influence their feasibility. However, given that most strategies are on the corporate platform, most of Samsung’s strategic business units feel their implications. The viability of such strategies as those reliant on research and industry analysis is related to long-term goals as an insightful assessment of the industry takes considerable time, though gives a crucial point for enhancing the strategies further and gauging their impact levels. Due to this, Samsung should prioritize the establishment of research, development and engineering centers to ensure the critical industry information is availed in the right time for further considerations regarding the other strategies (Wall & Griffiths 2006, p. 256). However, such strategies as increasing penetration in other markets such as Africa are minimally reliant upon industry information, and the company should reflect on this as it considerably enhances its market base regardless of which business unit is given priority in the venture. However, since the company has a variety of business units under its watch, a viable matrix for considering the weight of each strategy in relation to each business unit could provide an upshot for further prioritization of the strategies (Culp 2002, p. 178). Given that the telecommunications and computing unit of Samsung is its most profitable faction, such strategies as investing heavily in newer markets should focus first on this unit as opposed to other units as of component manufacture (Kourdi 2009, p. 200). This is because the investments such as in DRAMs take a long time to gain ground on a new market. On the other hand, the components unit of Samsung has a highly dynamic market as occasioned by the vibrant industry of computing and information technology. Despite this, its feasibility in a new market is not guaranteed. On the BCG matrix, the cash cow could be connected to the telecommunication industry, especially the mobile handset sector as it relatively requires little investment to yield much. It is the most rapidly growing industry especially in view of new markets (Goudvis & Harvey 2007, p. 99). On the other hand, the smart phone industry can be viewed as Samsung’s star as it grows extremely fast and is highly dynamic (Hossenlopp 2010, p. 199). Due to this constant dynamism, more financial investment should be allocated towards this faction to ensure Samsung maintains its stature and keeps off any threats such as the entrant of new companies into the industry (Kourdi 2009, p. 278). Conversely, Samsung’s home appliances business unit, especially the kitchen appliances division, is yet to venture fully into any market, with its home market being controlled by its rival LG. This acts as the Problem Child for Samsung, and such measures as research into consumer needs and industry analysis would best work for this strategic business unit (Hart & London 2010, p. 156). With a constant market and industry analysis, especially in regards to consumer needs and preferences, the kitchen appliances unit of Samsung could easily turn around and lie within the same stature as the other business units. Samsung as a company is yet to exhibit a business unit that warrants being under the dog category in the BCG matrix (Gershon 2009, p. 187). However, this does not mean that all of the companies units are successful, as some lag behind in terms of market share. As such, the company’s business units fall above a threshold that keeps them above the dog category courtesy of respectable market share (Hitt 2011, p. 311). From the above, the recommended strategies that Samsung could prioritize include expanding its market share especially in emerging markets such as Africa. Moreover, such strategies as investing in research centers to enhance its grounding also play a vital role in its enhancement strategy (Thompson 2001, p. 111). Furthermore, in relation to the company’s stated vision 2020, the company must incorporate creativity and talent in its management in the course of the next five years. This is especially with the view that research centers are not only gainful to particular business units, but could also assist the company in viewing the other units not targeted by the research and analysis (Hart & London 2010, p. 211). In the implementation of these strategies, a couple of issues could easily rise. Such strategies as the entrance into a new market may not be as easy, and the socio-cultural, economic and demographic aspects of the market should be considered (Kangas 2003, p. 211). In the event that the company fails to consider these implications, there is the risk of massive losses, and an insightful analysis of the anticipated markets should be made to curb these effects. In addition, the setting up of research centers can be a finance drainer, but given its importance in the long run, it is worth the investment (Goudvis & Harvey 2007, p. 234). Besides, the organisational culture at Samsung, especially the management and general employee customs is a highly effective factor that could easily determine the implementation of the strategies. On one hand, a culture of dynamism easily enables change, hence proper implementation of the strategies (Peng 1999, p. 87). However, a conservative culture could easily hinder the implementation of the strategies thereby hindering change (Evans 2002, p. 99). In order to deal effectively with the possibility of such a challenge, Samsung top management should consider the nature of the organization, and effect the required attitude to enable proper and seamless implementation of the strategies (Hart & London 2010, p. 121). Moreover, inadequate resources required to implement the strategies could be a challenge, and in the event that there are limited finances, Samsung could prioritize the strategies as broken down through BCG matrix above. In the business world, dynamics constantly change the factors that form the interplay within each industry. In order to enable a competitive stand within the industry, each participating firm must consider its position and reflect on the ways through which this position could be improved (Goudvis & Harvey 2007, p. 156). This generally involves the formulating of feasible strategies in relation to the industry in which the given company is dealing in or participating. The formulation of such strategies is subject to a range of factors, which have an impact as they guide in the practicability of each formulated strategy (Ulwick 2005, p. 287). For a successful and the right strategy to be formulated, all the factors have to be scrutinized analytically. Such an analysis results in highly successful, rewarding, easy-to-implement and feasible strategies that thrust a company forward (Evans 2002, p. 178). References Cant, M et al 2008, Business Management: A Contemporary Approach, Juta and Company Ltd, Cape Town. Culp, C 2002, the Risk Management Process: Business Strategy and Tactics, John Wiley & Sons, Burlington. Evans, N 2002, Business Agility: Mobile Business Strategies for 21st Century and Markets, FT Press, New Jersey. Gershon, R 2009, Telecommunications and Business Strategy: Industry Structures and Planning Strategies, Taylor & Francis, Texas. Goudvis, A & Harvey, S 2007, Strategies That Work, Stenhouse Publishers, Massachusetts. 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