Samsung Group of Strategic Management - Essay Example

Strategic Management Table of Contents Table of Contents 2 Introduction3 Analysis of the current internal environment for Samsung Company 4 Strengths 5 Weaknesses 6 Analysis of the Current Competitive environment for Samsung Company 6 Existence of Rivalry among the Competitors of Samsung 7 Threats of Entrants 8 Threats of the Substitute 8 Bargaining Power of the suppliers 9 The Bargaining power of Buyers 9 Description of the potential scenario in the future competitive environment of Samsung Company 9 Outline of Potential strategies to be considered by Samsung Company 11 Description of the three strategies for implementation by Samsung Company 13 References 14 Introduction The study provides a comprehensive analysis of the Samsung Group. The analysis is objectively created to enhance an insightful focus on the internal environment, competitive environment and recommendations for the strategy. The current internal environment is evaluated in the research through significant evaluation of the strengths and weaknesses that are exhibited in the operations of Samsung Company. The current competitive environment is facilitated through evaluation of the porter’s five forces that provide sources of the competition in a particular business. The analysis provides a detailed description of the potential events for the future competitive environment as it is facilitated by the intensive innovation in the industries that Samsung Company operates. The analysis is concluded through outline the potential strategies that should be considered by Samsung and providing a detailed description of the three major strategies that should be implemented (Michel, 2011, p. 4). Samsung is a multinational company from South Korea that comprises of dozens of subsidiaries business that operate under the brand. Samsung was established in the year 1938 and its current operations are experienced globally. The most notable Samsung subsidiaries include Samsung Electronics and are considered the leading brand in the information technology. Samsung Company operates in a very competitive environment making it an ideal company to enhance the analysis for the project (Samsung, 2015). Analysis of the current internal environment for Samsung Company The internal environment represents the events and factors that are within a company, which create an influence in the operations. The internal environment can also be referred as the micro-environment for a given company. The analysis of the internal environment focuses on the weaknesses and strengths that are exhibited within the domain of a company. The evaluation of the internal environment helps in understanding the competitive factor within the industry through analysis of the weaknesses. Also, it helps in understanding the improvement that can be facilitated by the strengths of the company. The other major factors that are considered in the analysis of the internal environment are the leadership style, the company’s culture, and the company’s mission statement (Bohm, 2009, p. 19). The analysis of the current internal environment of the Samsung Company can be evaluated by the understanding of the strengths and weaknesses within the company’s domain. The factors evaluated in the strengths and weaknesses of Samsung Company are outlined in the table below (Jurevicius, 2013). Strengths Weaknesses High innovation and exemplary design. Focus om very many products. Minimization of the production cost It accrues a small profit margin. Recognizable brand that is easy to market. High patent infringement in the industry. Insightful focus on the environment. Lack specialty of its own software and OS. Recommendable in production of consumer electronics and engineering of hardware parts. The major competitors are also the largest buyer of the products. Dominance of the market share in Electronics and mobile phone markets. High-tech hardware integration that is inclusive of many open source software and OS High budget of advertisement and marketing Strengths Samsung Company is recognized globally as leading electronic innovator that provides the market with new products. The products generate by Samsung Company changes with time providing a series of advanced and innovative products. The innovations and designs that are established by Samsung are governed by comprehensive patents. These innovation patents help in strengthening the market position of the company among other competitors. Samsung Company provides their global market with admirable designs for their innovative products. The company has won dozens of awards as a result of the designs. This proved the company with superior advantages in the market as compared with the competitors (Michel, 2011). The company enhances minimization of cost through establishment of their production facilities in countries with minimum costs. One of the major countries, which reduce the cost of Samsung significantly is China. The low production cost of Samsung Company allows them to provide the customers with discounted prices and at the same time accrue high-profit margins. Samsung Company is among the top valuable brand globally. The company operates under a recognizable brand that enhances marketing of the products. Samsung brand is intensified through their diversified social contributions and endorsement in sporting events (Nisen , 2013). Samsung Company has experience high recommendation in producing consumer electronics and in engineering of hardware. This factor has allowed the company to be the leading producer of mobile phones, television and hardware parts in the high competitive electronic industry. The excellence of their production and engineering has allowed the company to dominate a market share worldwide. Samsung Company has also received high acceptance in the market because of their insightful focus on the environment. This is facilitated by producing environmentally friendly products that are appealing to consumers. Also, the company gains a bigger market share than the competitors through production of devices that are integrated with most OS and software. Weaknesses Samsung Company has a diversified portfolio that focuses on production of many products. The company serves several industries with many products in all of them. This makes it obtain disadvantage in competition since it loses focus on concentrating in each products that is competing in different industries. Samsung Company accrues a small profit margin in their operations. This is exhibited in their low gross profit and net profit margin even though it obtains high revenue. The low-profit margin is experienced by the company as a result of aggressive price cuts, advertisement expenditure, and semiconductors sales (Rui, 2009). Samsung Company is also faced with patent infringement issues. This makes the company be forced to pay huge sum of money for damages to their competitors and it also damage the company reputation. The company relies on some of their major competitors to buy their products. This factor limits the company since they are unable to utilize the bargaining power over the competitors hence loosing sales. Also, the company lacks their own software and OS forcing them to pay loyalties to other companies. This makes the company obtain great disadvantage over their competitors. Analysis of the Current Competitive environment for Samsung Company The competitive environment can be explained as the market structure where the dynamic systems of a given company facilitate competition. The competitive environment can be divided into two and they include direct competition and indirect competition. The direct competition is exacted to Samsung companies through competitors that are producing similar products with those from the company. The indirect competition is facilitated to Samsung Company through competitors that provide the market with dissimilar products (Mack, 2014). The competitive environment evaluates the state of the systems that creates limitation of the flexibility in a business. In order to effectively examine the competitive environment of Samsung, the study has evaluated the porter’s five forces framework. This framework is effective in enhancing that competitive and industry analysis of a given company. When undertaking the porter’s five forces, there is numerous significance understanding created from the company. First, it provides with the company’s fundamentals attractiveness that enhance its competitiveness in the market. Second, it creates an exposure of the components that drives the industry profitability. Third, it provides an insightful prediction on how the competition and profitability of the company will evolve in the future. The evaluation of the porter’s five forces of Samsung Company proved a consideration of the rivalry among existing competitors, bargaining power of suppliers, bargaining power of buyers, threats of new entrants and the threat of substitute (Porter, 2008, p. 8). Existence of Rivalry among the Competitors of Samsung Samsung Company operates in numerous industry that have are saturated with the technological boom among competitors. The company experience high competition from dozens of small companies and also multinational companies that exist in different industries. The company operates in industries where there is a high rate of technology innovations, which greatly slowed the opportunities in the market. These companies produce similar products making it difficult to enhance competition on the basis of differentiation. Samsung Company has over the years enhancing their strategic innovation to provide a competitive edge in the market, but they have constantly been receiving a high competition (Hamel Gary, 2014). There are numerous reasons that intensify rivalry among the competitors of Samsung Company. First, the architecture of building many products produced by the company is open and can be easily created in the open market. This makes many companies enhance production of similar products and exacts great pressure to Samsung Company. Second, the cost of production in diversified products produced by Samsung decrease gradually making it reasonable for other companies to invest in similar products. Third, there is high competition among the major brands in different industries that Samsung operates. Some of the major brands that have been posting rivalry to Samsung Company include Sony, LG, Toshiba, Dell, Hewlett-Packard and Apple products. Threats of Entrants Samsung Company operates in a market where there is a great threat of new entrants. The company relies heavily on the outsourcing of their research and products. The company major strength is initiated with a significant focus on distribution channel and marketing. In most cases, the companies that provide Samsung with platform of outsourcing, and it provide a threat of entrants to the market. In most regions, companies, that has been solely focusing on the manufacturing, and is currently ready to establish their own brand and pose threat to established brand like Samsung Company ( Heisler, 2014). Threats of the Substitute Samsung Company deals with distribution of diversified consumer products that have a number of substitutes. The substitutes, that have greatly affected the companys products, and come in different forms. Some are manufactured with more appealing futures that provide consumers with high quality and value than Samsung’s products. Other substitutes are appealing to the consumers because of their favorable prices in relation to then quality. All competitors of Samsung undertake extensive research in order to develop products that will substitute the company products in the market (Nisen , 2013). Bargaining Power of the suppliers Samsung Company operates in industries that have many suppliers supplementing their production in different forms. The suppliers that proved the company with non-core components experience minimum power. This is because they undertake competition on components that are standardized. However, Samsung experience high bargaining power from suppliers of the key items in some of their industry. The bargaining power of suppliers makes Samsung Company to source supply from countries that promote minimum cost such as China (Michel, 2011, p. 29). The Bargaining power of Buyers Samsung Company operates in industries where there are hundreds of dozens of competitors. This factor allows the bargaining power of their buyers to be very high. The buyers are provided with enough alternatives to identify their favorite brand and pick their suitable product. Description of the potential scenario in the future competitive environment of Samsung Company The description of the future potential scenario in a competitive environment enhances an understanding of the possible events to be experienced by Samsung Company. This can be evaluated by evaluating different abilities of Samsung Company that are trending currently in relation to the potential future competitive environment. Also, in this case, the future competitive environment is also expected to be facilitated by the porter’s five forces (Hamel Gary, 2014). The rivalry among competition is the first major force that is evaluated in the competitive environment of Samsung Company. The potential scenario is that Samsung will be able to stabilize and manage the rivalry from their competitors. The factor will be facilitated through two elements that have been highly enhanced by the company. Samsung has been highly concentrating on the quality of their products and marketing mix. The demand of products in different industries that Samsung operates is expected to increase. The insightful focus on quality will allow Samsung Company to generate a great differentiation in the future hence obtaining advantage over their competitors. The concentration of the marketing mix of Samsung Company will reduce the forces of rivalry since it will be the preferred brand in the future for many market segments globally. The threats enacted by the new entrants are another major force evaluated in the competitive environment of Samsung Company. Samsung poses unique ability that should enable them to minimize the possibility of new entrants in the future. First, the company enhances low cost in production allowing them to maintain a reasonable pricing of their products. Second, Samsung undertakes significant research in order to provide the market with differentiated products. These unique abilities should help the company in enhancing a considerable management of the new entrants in the future (Porter, 2008). The threats of substitutes are facilitated by innovation and development making it very unpredictable in the future. Samsung Company operates in sales of products that have an immediate substitute in the market and this is expected to be constant in the future. In order to manage the threat of substitute in the future, Samsung Company should continue facilitating their innovation endeavors. Samsung Company relies heavily on outsourcing function making them vulnerable to high bargaining power of suppliers. In the future, Samsung Company can only manage the bargaining power of the supplier through enhancing a concentration on the manufacturing component. The bargaining power of buyers is perceived to persist in the future due to high numbers of competitors in different industries that Samsung Company operates. Buyers pose unique characteristic that associate them with the leading brand in the market. Samsung Company has undertaken an aggressive marketing to become one of the valuable brands globally. This factor will enable them to direct into their favor the bargaining power of the buyers in the future (Porter, 2008, p. 14). Outline of Potential strategies to be considered by Samsung Company There are a number of potential strategies that should be considered by Samsung Company in order to continue enhancing and maintain their effective operation across different industries globally. First, Samsung Company should consider concentration in pursuing cost leadership strategy in their global operations. This should be facilitated by reducing their expenditure in labor cost and marketing activities. The reduction of cost will enable the company to raise their profit margin in relation to the high revenue that is experienced yearly (Sylvia, 2014). Second, the company should consider utilization of the product differentiation strategies. Samsung Company operates in numerous industries where there are many competitors. The competition rivalry can be managed through innovation that is facilitated by the differentiation of products (Trefis, 2014). Third, the company should maintain the strategy of targeting the broad market. Samsung Company operates in the multinational platform making it target broad market region. The company should concentrate on making their operations target all the market segments in the world in order to become the desired brand. Fourth, the company should have an insightful focus on the niche market. The niche market strategy should enable them maintain accruing of high revenue (Nisen , 2013). Fifth, Samsung Company should consider enacting customization of the products in relation to innovative designs in the market. The consumer behavior shows that most of the customers in the current market prefer customized products as compared to generalized products. Sixth, the company should consider extending their diversification strategy in order to maintain a large product portfolio. Seventh, the company should facilitate the strategy of intensifying their operations through the use of research and development. This can be initiated through increasing of their research and development facilities in different market segments (Sang-Hun, 2012). Eighth, Samsung Company should consider facilitating talent pool strategy in order to maintain an intellectual invention and innovation. This factor can be facilitated by tapping the local talents in different regions and also sponsoring advancement of their employees. Ninth, the company should capitalize on the availability of capital and enhance their marketing strategies. This should be considered in order to maintain their already tapped market and also to pose a competitive advantage in the market (Charles & Jones , 2009). Tenth, the company should enhance concentration on producing products that are similar to other company, but at faster, better and lower cost. This should be considered in order to maintain and diversify their valuable brand. Description of the three strategies for implementation by Samsung Company The first major strategy that should be implemented by Samsung Company is the product differentiation strategy. The product differentiation strategy is a significant marketing process that should receive a comprehensive focus from Samsung Company. The differentiation strategy is a key component that should allow the company to build a competitive advantage in their global operations. The differentiation strategy allows customers to receive an appealing face of a particular product as compared with other competitors. The process of differentiation strategy can be initiated by Samsung Company through advancement of technology that facilitate to invention and innovations. This can be implemented through incorporation of another strategy that include talent pull strategy and equipment of research and development facilities in different regions (Trefis, 2014). The second major strategy that should be implemented by Samsung Company is the Cost leadership strategy. Samsung Company is considered the number one technology brand in accumulation of annual revenue. At the same time, the company poses a weakness of obtaining a lower profit margin in their annual financial statements. This factor can be highly reduced through consideration of the cost reduction strategy. The cost leadership can be initiated through by Samsung Company through two significant approaches. First, it can be facilitated through sourcing cheap labor supply from developing countries. The company should stop relying only on China but should advance to other developing countries that have cheap labor force. Second, Samsung Company should reduce their high expenditure on marketing programs that takes a high portion of their revenue (Sylvia, 2014). The third major strategy that should be implemented by Samsung Company is management strategy for the company’s product portfolio. The company operates in different industries that have many products making it vulnerable to competition. The management strategy of the product portfolio is very important since it should help the company to cope with high competition faced in their global market. The management should be implemented in a way that the products in a similar industry have a specific focus of marketing their products (Nisen, 2013). References Bohm, A., 2009. The SWOT Analysis. Norderstedt: Grin Verlg. Charles, H. & Jones , G., 2009. Strategic Management Theory: An Integrated Approach. 9th ed. Ohio: Cengage Learning. Hamel Gary, 2014. PORTER’S FIVE FORCES MODEL OF INDUSTRY COMPETITIVE ADVANTAGE. [Online] Available at: http://zimmer.csufresno.edu/~sasanr/Teaching-Material/MIS/SIS/Porters%20Five%20Forces%20Model.pdf [Accessed 19 January 2014]. Heisler, Y., 2014. Samsungs business strategy detailed: Copy, counter-sue, and delay. [Online] Available at: http://www.tuaw.com/2014/05/08/samsungs-business-strategy-detailed-copy-counter-sue-and-del/ [Accessed 20 December 2015]. Jurevicius, O., 2013. SWOT analysis of Samsung. [Online] Available at: http://www.strategicmanagementinsight.com/swot-analyses/samsung-swot-analysis.html [Accessed 19 January 2014]. Mack, S., 2014. 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