Describe about a Report on Corporate Strategy Report?
The branding and marketing strategies of the company have played a key role for Samsung’s success. The strategic approach towards the functioning of the business and analyzing the business strengths and weaknesses and external opportunities and gains, Samsung has faced a remarkable growth in the global market. Samsung is now for creating unique and clever products that focuses on engaging and interacting with the users (Samsung India 2016). The company has recognized the power of branding and brand and has set the example for brand value. The corporate strategy of business is not just related to human resource, marketing, finance and operations but the company’s strategy is concerned with long term growth maximization by launching the new products and by expanding its business in new markets.
The report discusses the company’s core competencies and the internal and external analysis of its operations. The report also explores the future development plans for the company and the strategic issues faced by the company and its analysis.
The Samsung Group has created the history with more than 70 years of its operation. Samsung was founded in 1938 and since then it is the leading company in the consumer electronic industry. It is a South Korean MNC which is headquartered at Seoul, South Korea. The company is dedicated in various operations and engaged in number of businesses with the aim to make the better life for the world(Samsung India 2016). The business captured areas of plant construction, skyscrapers, advanced technology and semi-conductor and more (Gonzalez-Padron and Ferguson 2015)
Business aims and objectives
The aims and objectives of the company are:
To develop a strong customer focus to fulfill the needs, wants of present and future of its customer
To recognize and develop the powerful and well designed products and services
To provide the emotional and functional products to the customers (Pride and Ferrell 2013)
It developed the strong philosophy for the designing of the products, so that the products are intuitive, simple, adaptive and efficient
Create innovation in the products manufactures and build its brand power(Schawel and Billing 2012)
The innovation of products and its design creation that reflects the user’s life style and interact with them
The Samsung Group is one of the largest IT Company that accounted the growth of revenue up to 80 percent in 2014, with total revenue â‚©206.205 trillion(Tradingeconomics.com, 2016). The assembly plants and sales of Samsung networks in 90 countries and employees around 402,000 people (Samsung India 2016).
Business Corporate Strategy
The company strategy focus on the five major aspects-
Hardware, the company emphasis on the hardware production and have not developed its own software proprietary data including the movies, games, music, video and more. The software estimates higher profit margins and a long term cycle economy, but Samsung considers the strategy to develop the innovated and designed hardware devices which is more feasible for the company (Pride and Ferrell 2012).
Vertical Integration, Samsung has the external supplier of to outsource but the focus of the company is on the internal independent manufacturing operations. Samsung is in practice of investing in the Research and Development and the innovation in production and designing of the product (Samsung India 2016). It invests to make the product relate to each of the customer’s lifestyle and needs.
Digital Innovation in Product, the innovation and designing of Samsung is famous and it keeps on implementing the changes in the technology and has incorporated the digital product innovation from analog. This is the reason for the Samsung products to be on the premium class. The selling of the newly launched product on the high prices at the launch day even if it is fresh in the market diminishes dramatically thereafter(Sampath, Solomon and Vallejo 2012).
Production Diversification, Samsung aims at raising its profits margin by selling the high quality of its manufactured products. The use of new technology and designing of the product incorporates the innovation strategy in order to generate the products that fulfill the needs of the customers and produce the user friendly products(Sampath, Solomon and Vallejo 2012).
Digital Convergence Strategy, the company focuses on the play role for the products through digital technology. Samsung aims to become the leaders in the digital production era. The digital convergence strategy adopted by Samsung defines the two trends- combination of the several technologies into one network and the combination of several technologies into one major product. The example that can be coated here is Plan OS combined with a cell phone and on the other hand a cell phone that is combined with camera as SPH-i700. Thus by focusing of the strategy of digital technology it will help to lure the network everywhere.
Focus on sustainable environment
Innovation and design
Low production costs
Wide range of Product
Investment in R&D
Involves leading partnership in developed countries
Focus on too many products
Too low profit margin
Does not Focus on Niche
Lack in its own OS and software
Growing mobile advertising industry
Growth of tablets market
Obtaining patents through acquisitions
Increasing demand in the developing economies
Demand for innovation of product
Intense Competition- locally and globally
South Korea Political Instability
Brand Recognition of other competitors
Price Sensitive Customers
Decreasing demand of the television
Launch of Apple’s iTV
(Source: Rostirolla and Rostirolla 2011)
PESTEL analysis is the strategic analytical tool that is been used as the evaluation of the external forces on the business and its operations. The PESTEL analysis for Samsung is as follows:
Political Factors- The factors associated with political stability of the country, attitude of the government towards the industry and the market lobbying and international pressures comes under the political forces. The political environment where Samsung operates is conducive to operations. In recent time the company has faced the political swings in the home country. Samsung operates as Korean business and has increases the taxes and dues by 11% (Tradingeconomics.com 2016). One of the political factor influenced the corporation is the level of customer taxation and its corporate tax. Another force that influences the company is the political instability due to war break out in Korean Peninsula (Arvand 2012). Though the concern is not much as the company has factored the political instability into its corporate strategy.
Economic Factors- The economic factors are very crucial for the company, as Samsung has its operations in various markets in the developed as well as the developing countries to expand its global footprint. Economic stability provides the company with high employment rates and high productivity (Sampath, Solomon and Vallejo 2012). The macroeconomic environment for Samsung to expand globally, it enhanced the research and development operations to analyze various markets and their needs. The consumer electronic markets experience the growth in individual spending that increased the sales (Burns and Bush 2014). This is expected to rise in the next decade due to steady recovery in the economic downturn. The growing economies are great scope for the company’s growth of operation. The western economies have popular brand name for the company and on the other hand the growing economies of Asia have the scope of Samsung’s expansion of operation (Bosik 2011).
Social Factors- Samsung is Korea based organization owned by Chaebol and family of South Korea. The operations of the company are spread globally and hence the local conditions and socio cultural factors are different for different markets. The company tailors its products and services according to the market. The defeat of the local competitors is possible only when the global retailers understands the local needs and strategize efficiently to target the niche (Elliott, Rundle-Thiele and Waller 2012). The key fact for the social forces of influencing the company is the difference of the culture and lifestyle of its customers.
Technological Factors- Samsung is the world’s leading information technology and innovation companies. The company has benefited the most by incorporating the innovation in the operational processes and designing by using the power of the technology and driving the sustainability of the business advantage through overall innovation (Arvand 2012).
Legal Factors- The diversified markets of the electronic products that offer the tablets and smartphones in the competitive market of retail face fierce competition. The companies have been filing the suits against the imitation of the models and file lawsuits for the patent rights so as to increase the competitive advantage. Samsung faced heavy penalties for the alleged imitation of iPad and iPhones of Apple (Saardchom 2014). The risk taken by the company comes to the legal macro environment and secondly the legal controversies regarding the factory workers and claims by the microchip companies also involve the legal issues for Samsung that influences its brand image.
Environmental Factors- There has been a gradual increase in the importance of the environmental sustainability and the companies are regularly scrutinized in regard to the carbon emission, supplier and recycling behavior. Samsung’s designing of the products are in accordance with the environmental standards and tries to innovate the technology of operations with eco friendly materials. Like for example- the LED televisions are made without mercury or paint spray and the company has recorded the reduction of 47% in the greenhouse emission through innovation production process (Howlett 2013).
Porter’s Five Forces Model
The Porter’s Five Forces is used as the analytical tool for external analysis that is used for determining the potential elements to increase the profitability of the business in relation to the competitors and customers, suppliers and buyers, and overall industry. The five forces include- Competitive Rivalry, Threat of the Substitutes, Threat of the new entrants, Supplier Power, and Buyer Power.
Competitor’s Rivalry- The rivalry in the industry competitors basically revolves around the price competition. The industry of consumer electronics is at saturation in fact it is oversaturated and the consumers have been spoiled out of various choices for any of the product category. This is the biggest threat for the Samsung as its biggest competitors in the market are Panasonic, Sony, and LG that matches their products with the products offered by Samsung (Martin and Schouten 2012).
Threat of Substitutes- The threat of Substitute is relatively high for the company. There has been an increase in the number of the people who use PCs, Laptops, Smartphones or Tablets instead of televisions to access the programs of their choices, or watch television programs on laptops which is more convenient. The company has been diversifying its products that will soon replace the televisions and also working towards evolving the models of televisions more interactive and sophisticated and integrated with the web applications and external devices are recent products launched (Hu, Yao and Qiu 2011).
Threat of New Entrants- The market for Samsung is huge and the threat of new entrants in the industry is low for Samsung Electronics. Since there is oversaturation of the industry business and the existing competitors are the established organizations so there is scope of few barriers to new entrants as it will be difficult to achieve the economies of scale (Hungnes 2010). The market is full of reputed and well established brands.
Bargaining Power ofBuyers- The consumer’s bargaining power is one of the highest threat for the company as there are fierce competition in the market industry and the customers have been spoiled with the various products as well as the buyers are overwhelmed with the various promotional schemes and offer messages directed by the company. This ensures the importance of the customer loyalty towards the brand in the retail sector. The fact of customer being price sensitive has lead to oversaturation of these promotional messages so the focus is on the generalized messages (Litan, Wyckoff and Fealing 2012). The company plans to budget and invest time into researching the target audience to gain potential customers and focus on developing and delivering the relevant and appealing messages which increases the customer awareness about the new offers and will in turn boost the profits of the company.
Bargaining Power of Suppliers- There is a low threat recorded for the Suppliers bargaining power, as the suppliers fail to negotiate the prices due to the high competition in the market (Levens 2014). The preferred suppliers are competing in order to attract the industry leaders, for the guarantee of constant products
Figure 1: Porter’s Five Forces Analysis
(Source: Levens 2014)
Strategic Issues: Samsung and Apple
It has been observed that for the last three years, Apple and Samsung have been clashed on a severe scale that is almost unpredictable in the business history. Reports have declared that the war in between these two giant companies has cost more than a billion dollars in legal case and have expanded its span in four continents. The war was started with a super secret project that created the iPhone and later on, it was explored that Samsung has been using a similar device, which was no doubt one of the shocking news (Chen and Ann 2014).
On 4th August, 2010, the war between Samsung and Apple has been considered as one of the most competitive corporate wars in the history. Since the launch of Samsung S in the Smartphone market, the scenario was becoming complex, as Apple though that it was entirely a piracy. Apple has argued that the phone, the screen, the icons even if the box looked the same as the iPhones. “Rubber banding”, “pinch to zoom” are some of the features that were identical with the features of the iPhones (Eichenwald and McCabe 2014).
It has been found that the mercurial executive of Apple, Steve Jobs was highly furious, as it took several years to create a breakthrough phone and Samsung had stolen the design along with some important features. Steve Jobs had a talk with Jay Y. Lee in July, as he argued that Samsung had copied Apple iPhone to large extent (Lee 2012). Therefore, it can be easily said that the corporate war between Apple and Samsung was the first a series of ongoing lawsuits regarding the design of the Smartphone and the tablet computers. Reports have stated that these two giant mobile companies sold half of their manufactured products worldwide as on July 2012 (Eichenwald and McCabe 2014).
Future Development Strategy
Ansoff is the well know analytical matrix that is being used as the marketing tool for analysis the internal environment and provides the opportunity to the company to target the new market or existing market and new product and existing market. The strategy for Samsung is for the business growth and expansion. The company must focus on the market diversification by introducing the existing products in the new developing economies and the introduction of the new products in already developed markets (Kotler and Keller 2012). The strategy is simply to develop the markets of developed and developing economies and also innovating and designing new products for the existing products.
Developing countries for expanding the existing products
Galaxy S5 t.o.v S4
Use of technology and innovation for the new products
Galaxy Tab 5
New products to be developed with use of innovation and designing
New product- Existing market
Existing Product – New Market
(Source: Hungnes 2010 )
SFA Tool (Suitability, Feasibility and Acceptance)
In this part, it is important to discuss about the SFA tool to analyze the future development strategy of Samsung. Just few years ago, Samsung was highly struggling to catch up the Smartphone market, but presently, the company has left Apple back foot and has become the largest technology company in the whole world (Nisen 2016).
Sustainability: The Company aims to manufacture those products that gain sustainability in the existing market and targets to design the products likewise to reach the sustainability level. To be present in the end, Samsung seems to more willing as well as able to put their money to use (Park 2014).
Feasibility: Samsung targets to produce such products that have the potentiality to fulfill the requirements of the customers. The features of the manufactured products have helped Samsung to achieve the market easily and the company has thus secured the present position in the global smart phone market (Foote and Fox 2009).
Acceptance: It has been observed that Samsung is better than anybody is, as it tends to learn from the competitors (Lee 2012). They are the fast followers as they shed a close observation towards the demands of the customers in the market, products brought to the market by other companies, acceptance of the products in the market etc. This characteristic helps the company to stay different from the other companies in the market. After watching the trends in the market, the company rapidly comes up with their own version of innovation (Nisen 2016).
The strategies of Samsung have been majorly concerned with the hardware designing of the products that use the innovation in technology and designing the user friendly and associated product with the customers. The business units of Samsung have the vision of becoming the most preferred suppliers of the products and services. The methods and corporate strategy used by the company to gain this position and achieve the vision are specific for the specific areas of operation. The use of new technology and designing of the product incorporates the innovation strategy in order to generate the products that fulfill the needs of the customers and produce the user-friendly products. This ensures the importance of the customer loyalty towards the brand in the retail sector. Hence, the market share of the company is likely to expand and achieve target markets.
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