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Discuss strategic issues that the business is facing, available strategic options and the best strategy the business should follow along with suggested management techniques that are relevant and will assist in their strategic decision-making. 

Samsung - A Brief Overview

Samsung is a South Korean international conglomerate grounded in Samsung Town, Seoul. There are numerous businesses associated under the brand name ‘Samsung’. Lee Byung-Chul was the forefather of Samsung, and the company was founded in 1938 as a trading company, in a few decades company diversified into various fragment such as insurance, retail, textiles and in the late 1960’s Samsung stepped into the electronics industry.  At the present time, Samsung has progressively globalized and it is the most imperative source of revenue. At this time, Samsung holds the 6th position as having the highest brand value universally (Android Authority, 2018).

The competition in the electronics industry is at its peak at the global level, especially the smartphone sector. Technological innovations happening in the smartphone sector is commendable; the level of competition in this industry is at its peak. Companies are coming up with state-of-art technological modernizations in the smartphone with low-end prices (Dawson, 2015).

The report is completely centered on the strategic issues faced by Samsung in the present era; two important issues that are influencing the organization in financial and business effect are highlighted in the report. Strategic decision making is imperative to manage the issues effectively; strategic options for each of the issues are deliberated in the report. Management techniques aid the decision-making process to be competent; therefore, several management techniques are provided in the report for effective decision making. Lastly, recommendations for Samsung are also provided to withstand the current market situations

Strategic issues can be demarcated as a critical challenge or question to the fundamental policy of an organization affecting organization’s mission, vision, values, structure, resources, stakeholders, management, product, mix, services and processes. Some of the prime strategic issues faced by Samsung in these recent years are mentioned below.

Samsung Galaxy Note7 issue

  • The Samsung Galaxy Note 7 Android phablet was released on August 2016, and the device was set to be the best and most advanced phone released ever by Samsung after Note 5.
  • Soon after the release of the device, there were more than 35 battery related issues worldwide; devices were blowing up (Loveridge, et. al., 2018, p. 4).
  • Samsung had to recall all the devices back and provide the replacement device or refund to the customers through US Product Exchange Programme.
  • Samsung’s reputation was profoundly beaten after this issue; the social media platforms were full of posts by angry customers. Apart from these, many of the airlines banned Note 7 in airplanes due to safety concerns.
  • The company had to face huge loss in business as well as the financial aspect; Samsung’s share in the marketplace also faced a huge dip after this issue (Kovach, 2017).

Release of new iPhone models such as iPhone 6 & X

  • The release of iPhone 6 in the market affected Samsung in a huge aspect; the sleek and new design by Apple was a success in the marketplace.
  • The release of iPhone X has affected Samsung in an extensive manner, the incredible design and features presented in iPhone X have been a real challenge to Samsung.
  • With the release of iPhone X, Apple has beaten Samsung in the international flagship smartphone market (Deccan Chronicle, 2019).

Release of low-priced smartphones having similar features of high-end smartphones

  • Companies like Xiaomi, Huawei, and Oppo are introducing new smartphones which have competitive prices and the features are almost similar to the high-end smartphones by Samsung.
  • India and China are the prominent smartphone users in the world; the devices released by the brands like Xiaomi are hitting the markets positively, which is being one of the prime challenges for Samsung (Ovide, 2018).
  • Samsung once had a good share in the Chinese marketplace, but now, Chinese smartphone companies have risen and affected Samsung’s standing.
  • Even though Samsung has been delivering low budget phones, but its features are not competitive compared to phones such as Huawei and Xiaomi (Warren, 2018).

Launch of Samsung Galaxy S9

  • The launch of Samsung Galaxy S9 did not hit the market; as the design was similar to S8 and there were only minimal differences.
  • Most of the devices have infinity screens and curved edges these days, so there was nothing special in Samsung Galaxy S9.
  • There are many low-priced devices in the marketplace that are providing features almost similar to Samsung’s flagship devices.
  • Artificial Intelligence in S9 wasn’t that efficacious (Kelion, 2018).

Two most important strategic issues among the issues mentioned above 

The issue was such severe that Samsung had to issue a global recall for the Note 7 devices, as numerous blasts were reported for the device. The flaw was such severe that it could cause harm to the users by overheating and catching fire. Samsung had to face a loss of $5 billion and serious downfall in sales due to the loss of reputation globally. Galaxy Note 7 has been considered as a catastrophe for Samsung (Kovach, 2017).

Strategic Issues Faced by Samsung

This is also considered as an important strategic issue for Samsung, as the low priced smartphones are providing features which are similar to Samsung’s flagship devices. These days even the low priced devices are providing curved edges and infinity screens with competent designs, therefore people prefer those devices. Due to the release of these devices, Samsung’s sales got deeply affected globally, mainly in China and India. Samsung is coming up with low-priced smartphones these days, but they are not up to the mark (Warren, 2018).

Strategic options can be demarcated as alternative responses to the situations faced by the organization. This section would provide strategic options against the strategic issues faced by Samsung. Each of the options will be measured by the SFA method (Suitability, Feasibility, and Acceptability).

The SFA Method

The strategic options are designed in a way that the strategic issues would be managed competently and the organization does not have to face downfalls due to those issues. The SFA matrix is used to evaluate the suitability, feasibility, and acceptability of the strategic options through which strategic possibilities could be effectively determined (Tools Hero, 2019). The ratings given in the SFA Matrix are out of 5.

Suitability

It is checked whether the strategic option is suitable for achieving the goalmouth. There are several criteria according to which ratings are given to the strategic options, the criteria are given below.

  • Whether the option would meet the anticipated outcome
  • The strengths, weaknesses, and opportunities
  • The consideration of the weaknesses

Feasibility

 It is checked whether the selected option is feasible with the opportunities that the organization has. The criteria through which rating is provided to the strategic options are as follows (Oxford College of Marketing, 2019).

  • The option is ethical or not
  • Legal barriers
  • Whether the prospects are realistic or not
  • Availability of resources
  • Competitors
  • Whether the organization has the required level to accomplish the option

Acceptability

This accounts the impact of external facts on the strategic option. Factors such as ROI, Stakeholders and customer acceptance are included in acceptability. Criteria through which ratings provided to the strategic options are:

  • Monetary risks
  • Stakeholder influences
  • Profitability(Strategic Marketing Plan, 2019).

Option 1:

Samsung should start developing applications that would monitor the battery heat and device performance, and the application should be inbuilt with all the Samsung devices. The uniqueness of this feature should be portrayed in the marketplace, and customers should be ensured that the issue was only with Note 7, rest all other Samsung devices are safe.

Option 2:

Samsung should announce prizes for the customer who perceives any flaws from their devices. Through this step, Samsung could portray that their entire processes are transparent 

Option 3:

Samsung must develop a new method to respond to customer grievances quickly and competently, they should announce their new method of responding to the customer grievance and the fact should also be portrayed that Samsung provides best after sales support (Freeman, 2010, p. 85).

For Note 7 Issues

Option1

Option 2

Option3

Suitability

3

3

4

Feasibility

4

3

3

Acceptability

3

3

4

Total

10

9

11

Strategic Options for Samsung


From the matrix, the fact can be comprehended that option 3 would be a more preferable strategy to overcome the strategic issue, as the total score is greater than the other two strategic options.

Option 1:

Samsung should bring some innovation in their upcoming devices rather than releasing the devices having the same features as the previous models, but only slight differences are given. Rather than releasing new flagship devices Samsung should wait for some time and release a device with exceptional features and design.

Option 2:

Samsung should collaborate with other companies; this step would empower Samsung to take the lead.

Option 3:

Samsung should opt for a new promotional strategy that portrays the experiences and services they have been providing to the customers in recent years. More than focusing on the product launch, Samsung should start defining their relationship with the customers and what customers can expect in recent years (David & David, 2013, p. 103).

Option1

Option 2

Option3

Suitability

4

2

4

Feasibility

4

3

3

Acceptability

3

4

3

Total

11

9

10


From the matrix, the fact can be comprehended that option 2 would be a more preferable strategy to overcome the strategic issue, as the total score is greater than the other two strategic options.

Option 1:

Samsung must now concentrate on low-end smartphones and release new devices with competitive pricing and extraordinary features. Quality of these smartphones should also be decent.

Option 2:

The company should collaborate with some of the prominent service providers in the marketplace; the offers should be provided in a way that, if the customer purchases the device with the specific service provider (collaborated by Samsung), the customer would get amazing offers and benefits.

Option 3:

Samsung should introduce any new feature, gadget or applications that only come along with any Samsung device. The price of the feature should not be too high; it should be affordable by the youngsters (Hitt, et.al., 2012, p. 94).

Option1

Option 2

Option3

Suitability

4

3

4

Feasibility

3

3

3

Acceptability

4

3

3

Total

11

9

10


From the matrix, the fact can be comprehended that option 1 would be a more preferable strategy to overcome the strategic issue, as the total score is greater than the other two strategic options.

Option 1:

Samsung should end the S9 model and from now on they should focus on developing advanced smartphones which have unique features than the other devices in the marketplace.

Option 2:

Samsung should discontinue this model and, promote the latest models such as S10. 

Option 3:

Samsung should improve the AI and then they should promote S9 as a model which has advanced AI. They should also provide attractive offers to the customers (Hill, et. al., 2014, p. 74).

Management Techniques for Effective Decision Making

SFA Matrix

Option1

Option 2

Option3

Suitability

4

3

4

Feasibility

3

3

3

Acceptability

3

3

3

Total

10

9

10

From the matrix, the fact can be comprehended that option 1 & 3 would be preferable strategic options to overcome the strategic issue, as the total score for two of them is 10.

The fact is tacit that Samsung is one of the prime leaders in the electronics industry, they should change their game plan to manage the strategic issues they are they are facing at present. The best combined strategic option for the overall business development of Samsung are, Samsung should focus on innovation in their new devices, rather than continuously releasing new models in order to compete with the adversaries; after this company should come up with state-of-art safety features in their devices which are new in the marketplace (Hanson, et. al., 2004, p. 340).

Samsung should not recurrently come up with new devices; because presently features of all of the devices in the marketplace is nearly same, every device is built with the sleek design, curved edge or infinity screen, therefore, likelihoods of attaining competitive advantage over other companies is very low (MyBroadband, 2018). Samsung should focus more on innovation, providing new features and applications to the customers. Collaborating with the Chinese companies that are influencing in the marketplace would help Samsung to withstand the competition effectively. Through these steps, Samsung could once again lead the Chinese and Indian marketplace (Harrison & St. John, 2010, p. 142).

Some of the prime management techniques that should be upheld in the organization for a better decision-making process are mentioned below.

  1. Proving consistent feedback to the team and making the goal transparent

The company’s mission, vision, and goal should be shared with the employees or specific team assigned for a specific goal so that employees could understand the meaning of the task they are doing every day (Aguinis, et. al., 2012, p. 100).

  1. Providing special training to the employees according to the mission

After identifying the areas where changes have to be made, Samsung must appoint a competent team meant for training the employees according to the required changes. This would portray the future to the employees and there would a mutual care about the goal that has to be achieved (Awang, et. al., 2010, p. 82).

  1. Troubleshooting the areas of trouble

Samsung should identify the areas of concern, and assign the employees to resolve the issue within specific timelines. The company should always try to opt for a solution that is feasible and acceptable by internal as well as the external environment (Squareup, 2019).

  1. Samsung should select a coaching style technique

Coaching style management technique is considered as most effective management technique which focuses the long-term professional development of the employees and the company’s workforce gets more competent (Berg & Kalrsen, 2012, p. 184).

  1. The marginal analysis should be carried out

Recommendations for Samsung

Through this technique, Samsung could analyze what will be the output if more variables are added. The variables include workforce, machines, and so on (Business Dictionary, 2019).

  1. The company should effectively carry out Financial Analysis

Samsung should analyze the profitability of the investment made for a particular goal or desired change. The time taken for profitable return for the investment made should also be evaluated while making the strategic decision (Corporate Financial Institute, 2019)

  • Samsung should now focus more on innovation, rather than coming up with new devices with little changes, as the competition in the marketplace is too high.
  • Samsung should develop an inbuilt application or a feature which is unique and offered with Samsung mobile phones; promotional activities for this features should be carried in a way that, Samsung is the only brand that provides this much safety.
  • Samsung should not come up with new products frequently; they should focus on gadgets and applications as well.
  • Collaborations would also help the company to get diversified and sustain within the competition as well.
  • In Chinese and Indian marketplace, the company should change their game plan; Chinese companies are affecting the company globally.
  • Samsung did not respond to the note 7 issue promptly, so a media spokesperson should be appointed.
  • The company should change its promotional strategy; they should now focus on promoting the experiences and services they have been providing the customers.
  • The company should be more transparent in terms of their processes. 

Conclusion

Samsung’s contribution to the electronics industry is prominent, and the fact is tacit that the research & development, technological updates, and marketing strategies are the significant features of the company’s evolution. Samsung Electronics is one of the main subsidiaries of Samsung Group is the main source of revenue. The technological advancements in smartphones are happening swiftly; there are many smartphone manufacturers in the marketplace that are giving a tough competition to Samsung. Chinese companies are gradually taking a lead in the smartphone segment; for the reason that they are coming up with smartphones with very low prices and features similar to Samsung’s high-end flagship devices.

Samsung is facing tough competition from its rivalries; even though Samsung has created its place in the entertainment products, the company has not been much competitive in the smartphone segment. Even though the company is coming up with low priced smartphones, efficiency and quality are not up to the mark. The Samsung Galaxy Note 7 failure and release of low priced smartphones with extensive features are the prime strategic issues that have led to Samsung’s downfall. The release of iPhone 6 and X is also a prime issue that has impacted Samsung; as the design was attractive and it was new in the marketplace.

Through the report, the fact could be comprehended that from now on Samsung should focus on innovation rather than coming up new products frequently. A change of game plan is necessary for the company to sustain within the competitive market conditions. The company should also focus on new promotional strategy, as their current promotional strategies are not competent 

References

Aguinis, H., Gottfredson, R. K., & Joo, H. (2012). Delivering effective performance feedback: The strengths-based approach. Business Horizons, 55(2), 105-111.

Android Authority. (2018). 12 interesting facts about Samsung. Retrieved from https://www.androidauthority.com/samsung-facts-677550/ 

Awang, A. H., Ismail, R., & Mohd Noor, Z. (2010). Training impact on employee’s job performance: a self evaluation. Economic research-Ekonomska istraživanja, 23(4), 78-90.

Berg, E. M., & Karlsen, A. J. (2012). An evaluation of management training and coaching. Journal of Workplace Learning, 24(3), 177-199.

Business Dictionary. (2019). Marginal Analysis. Retrieved from https://www.businessdictionary.com/definition/marginal-analysis.html 

Corporate Financial Institute. (2019). What is Financial Analysis?. Retrieved from https://corporatefinanceinstitute.com/resources/knowledge/finance/types-of-financial-analysis/ 

David, F. R., & David, F. R. (2013). Strategic management: Concepts and cases: A competitive advantage approach. Pearson.

Dawson, J. (2015). Consumer Electronics Competition  Is Shifting to the High End. Retrieved from https://www.recode.net/2015/12/18/11621592/consumer-electronics-competition-is-shifting-to-the-high-end 

Deccan Chronicle. (2019). Here’s why Apple’s iPhone X sales are affecting Samsung. Retrieved from https://www.deccanchronicle.com/technology/mobiles-and-tabs/200218/here-why-apple-iphone-x-sales-affecting-samsung-slash-oled-production.html 

Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge university press.

Hanson, D., Dowling, P., Hitt, M., Ireland, D., & Hoskisson, R. (2004). Strategic Management: Competitiveness and globalization (Asia-Pacific 4th ed., pp. 313-348). Australia: Thomson

Harrison, J. S., & St. John, C. H. (2010). Foundations in strategic management (5th ed., pp. 132-153). Australia: Thomson.

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.

Kelion, L. (2018). Why is Samsung’s Galaxy S9 flagship struggling?. Retrieved from https://www.bbc.com/news/technology-45018573 

Kovach, S. (2017). Samsung announces what caused the Galaxy Note 7 to overheat and explode. Retrieved from https://www.businessinsider.in/Samsung-announces-what-caused-the-Galaxy-Note-7-to-overheat-and-explode/articleshow/56725602.cms 

Loveridge, M., Remy, G., Kourra, N., Genieser, R., Barai, A., Lain, M., ... & Ellis, M. (2018). Looking deeper into the Galaxy (Note 7). Batteries, 4(1), 3-9.

MyBroadband. (2018). The Chinese smartphone companies taking on Apple and Samsung like never before. Retrieved from https://mybroadband.co.za/news/smartphones/271291-the-chinese-smartphone-companies-taking-on-apple-and-samsung-like-never-before.html 

Ovide, S. (2018). How Huawei can break Apple and Samsung’s smartophone grip. Retrieved from https://www.livemint.com/Opinion/qplRwLak0TUYS6k3wpXggO/How-Huawei-can-break-Apple-and-Samsungs-smartphone-grip.html 

Oxford College of Marketing. (2019). Evaluating Strategic Options Using SAF Strategy Model. Retrieved from https://blog.oxfordcollegeofmarketing.com/2018/02/25/evaluating-strategic-options-using-saf-strategy-model/ 

Squareup. (2019). What are the Top Management Techniques. Retrieved from https://squareup.com/townsquare/7-management-techniques-that-improve-employee-productivity 

Strategic Marketing Plan. (2019). SFA Model. Retrieved from https://www.strategischmarketingplan.com/marketingmodellen/sfa-model/ 

Tools Hero. (2019). SFA Matrix. Retrieved from https://www.toolshero.com/marketing/sfa-matrix/

Warren, T. (2018). Samsung is losing mobile ground to Chinese rivals. Retrieved from https://www.theverge.com/2018/11/2/18055094/samsung-smartphone-sales-decline-2018-report

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