Business Strategy And Operating Position Of Samsung In Canada

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Overview of the chosen company and its current operating position

Canada is one of the mixed developed nation that has been growing at substantial rate and possess good amount of purchasing power that has provided boost to the commodity market. Since 1990, it can be seen that the foreign multinationals are opening up their business in this country and they are effectively boosting the standard of living of the country. Among many foreign multinationals that has been aiding in shaping of the Canadian economy is the Samsung Canada (Ceh et al. 2018). Since its initiation in the country back in 1969, Samsung has been enhancing the standard of living, employment and the Gross Domestic Product (GDP) of South Korea and through its constant endeavor to grow across the domestic border has been aiding the brand to become one of the largest organization around the world  (Gopalakrishna et al. 2016). Under this context, this report is aimed to discuss the various business strategy and the operating position of the Samsung to trace how the firm has evolved to become where it is now. Through this analysis, this report will provide brief overview regarding the strategic policies to enter new market, supply chain management and human resource management policies of the firm at different places to showcase the insight details of the selected organization. To conclude it will provide summarized overview of the report and recommendations to enhance the performance of the management.

Samsung is one of the market giant in electronic industry in the South Korea accounting for the 70% of the revenue of the Samsung group. Initially Samsung introduced its business in the Canadian market with the DRAM; however, presently it has supercenters, dedicated stores and other subsidiary firms in order to serve demand of the different customers (Munoz et al. 2018). Back in 1994, Samsung entered into the Canadian market with the li-on batteries, semiconductors and others; since then it has evolved as one of the largest mobile and electronic device seller in the Canadian market.  According to the former CEO of the Samsung Canada, their management team considered a limping chain and transformed it into the Samsung powerhouse that has become the fame changer to the Canadian retail industry. During the initial days it has only 16 employees, when the brand was initiated during the first time and presently the employee strength is as high as 4, 89,000 people that showcase the outstanding growth of the firm (Images.Samsung.com 2016). Additionally, apart from the mobiles it sells verities of electronic goods like LED display, RAMs and computer hardware that has enhanced the customer’s standard of living of the Canada too.

Figure 1: Samsung sales by product type

Source: (Images.Samsung.com 2016)

Considering the figure 1, it can be seen that Samsung sales mobile devices in largest number around the world and the same trend is followed by the Canadian market too. Next to this, memory is the second highest selling product among all the goods and services produced by the Samsung Canada.

Figure 1: Samsung revenue by product type

Review of company’s international competitive strategy

Source: (Images.Samsung.com 2016)

Considering the strategic merchandise unit growth rate, it can be seen that the firm gains most of its revenue mainly from the product sales. Over the years, revenue of the firm has been enhancing as depicted by the figure 2 (S2.q4cdn.com 2018). According to the same source, 6% of its revenue is generated through the allied services and other sales making Samsung a diverse operator in the Canadian market.

Figure 3: Samsung sales region wise

Source: (Images.Samsung.com 2016)

Figure 3 highlights that Samsung has different market prospect in different region. Considering the total sales figure of the brand it can be seen that there has been reduction in the sales figure of the firm, however, it has gained substantial amount of boost in the Chinese market due to their superior product and low cost. Contrary to this, there has been fall in the sales figure in the America and Canada region for the Samsung due to the rise in the brands like Google and Motorola. As the figure 3 depicts, there has been fall in the sales figure in the American region during 2015 compared to the 2014; however, it increased marginally during 2016 depicting the growth of the business in the American and the Canadian region by the Samsung Canada.

Figure 4: Samsung financial performance

Source: (Images.Samsung.com 2016)

Figure 4, showcase that the total revenue of the firm has enhanced substantially for the firm year-on-year. During the 2016 financial year to 2015 financial year, revenue of the firm has been increased by 19% and net sales has also enhanced showcasing strong financial performance of the firm. According to the same source, considering the financial status of the firm, it can also been seen that the gross revenue has increased by 5.72% and the operating profit has been enhance by 10.70% that showcase strong financial performance of the firm over the last five years (Corporate.Samsung.com 2018).

As the mechanism of winning the battle both the foreign and domestic market, Samsung utilize the following competitive strategies:

Local adaptation:

It is highly important for a firm to adapt local business and the political environment as soon as possible post its initiation. Samsung did the same in the Canada too. Through its experimental approach to entice the market demand for the firm, Samsung introduced different type of stores at different strategic locations (Brea-Solis et al. 2015). Next to this, they maintained a close connection with the top tier of political leaders to enhance their business in the different part of the country.

Fore frontal attack on the existing market players:

The firm operates aggressively and dominantly in its domestic region as well as the foreign countries too. Initially when it enhance its business to the foreign nation, it absorb the leading market leader through acquisition. Post this, the brand diminish the supply chain of the local business organizations leading to fall in the revenue and ultimate drying up their business (Laszlo and Zhexembayeva 2017).

In bound logistics:

According to the Samsung 85% of their merchandise is shipped through distribution system and it utilize saturation strategy for the expansion of the store. With strategic positioning of the distribution center it can serve 150 to 200 stores on regular basis leading to higher performance of the firm. Utilizing the huge number of trucks and trailers it manage the supply chain and logistics that has aided the firm to provide substantial amount competitive advantage.

With dedicated wing of human resource and higher employee productivity the firm has managed well their human capitals. Growing share and bonuses time to time helps the firm to keep their worker energized and achieve the firm organizational goal with fulfilling the personal goal (Wagner and Hoolenbeck 2014). All the stores are connected with the different department of the Samsung and the real time information sharing has aided the firm to leap bound their growth compared to other organization that lags in the information flow.  

Analyzing the Samsung’s business structure, it can be seen that the firm has hierarchical functional organizational structure. It has two distinct feature in its organizational structure, which are hierarchy and function based definition (Bolman and Terrence 2017). The primary one affects to the vertical line of command and authority all over the directorial structure. For instance, it can be seen that other than CEO of the firm, every employee within the business of the Samsung has their superior and the mandates as well as the directives come through the top level management of the firm and it is passed to the lower section of the employee through their immediate supervisors. Function based definition of the firm include that the group of employees performing specific set of job. For instance, there is human resource management, IT department and other to look after different set of job within the Samsung to keep it going smoothly.

Figure 5: Organizational structure of Samsung

Source: (Lombardo 2017)

From the figure 5 the hierarchical structure of the Samsung can clearly be observed, where the firm is differentiated according to their type and there is supervisors under whom all the employees work. Considering the organizational structure of the Samsung, it can be seen that the lower section of the organizational structure has the lowest amount of support and work flexibility is minimal leading to polarity among the worker and managers (Lombardo 2017).

Speed of expansion:

Expansion speed is one of the crucial strategy for the growth of the Samsung on foreign lands. Comparing the performance of the firm on the foreign lands with the brand like J.C.Penny, Sears and Kmart it can be seen that the Samsung leap forwarded its revenue at a lightning speed. During the 1995 to 1998 Sears was accounted for generating only 8% of its revenue through the business in Canada and compared to this, Samsung was generating 15% of its revenue from the business in the Canada (Barney and Ray 2015). Number of stored has also been enhanced by the Samsung by a large extent that highlights the lightning growth path of the Samsung on foreign land.

Strategic location of the stores:

Positioning the stores at predetermined place that are suitable for the growth of the business of the firm is another strategy of the Samsung to expand its business on the foreign lands. Initially it used to place the large discount stores in small rural towns that allows the large competitor of the market to overlook the presence of the new entrant (Chekwa et al. 2014). Utilizing the loophole they expand their customer base in the foreign base and expand the business.

Marketing:

This is essential for a brand to expand their business on foreign land and so does in the case of the Samsung. They utilized the advertisement like ‘Do bigger things’ that enhanced their wellbeing and the sales as well (Yoder et al. 2016). Enhanced sales with greater discount on the foreign market utilizing the oligopoly market structure, the firm earns higher revenue on the foreign land and expand their business.

Over the last one decade Samsung has become one of the largest retailer in the world and according to the market share it is considered as the dominant market player around the globe. Main reason for this astonishing rise in the performance of the brand lies within the supply chain management of the firm. As the core of this successful supply chain management of the firm it utilizes the following four simple rule:

Strategic vendor partnership:

The Samsung purchase only from those suppliers who promise to meet the demand of the brand without any error. By the means of well-constructed relationship network and communication with the suppliers, the brand has streamlined supply chain for the firm (Christopher 2016).

Fewer links in the supply chain and inventory docking:

During initial days, the firm used to buy their commodities from the wholesaler, however in its relentless pursuit to reduce the cost of purchasing for the customer, it purchase products directly from the producer that has reduce their cost of operation. Under the Vendor Managed Inventory (VMI) the firm has appointed managers with the duty to 100% order fulfillment on merchandise (Natto 2014).

Technological growth:

The brand’s relentless pursuit to provide good quality product at relatively cheaper price is highly driven by the brand’s technological renovation. Its state of the art Track and Predict Inventory Level application provides appropriate information to the logistics regarding the stock at real time and help them to reduce the burden of immediate service cost (Hugos 2018). Universal Product Code Bar Codes has been utilized by the firm to allocate information and analyses the same and store it at Retail Link database for further study to analyses the market trend and avail all the service with immediate effect (Gilling and Ulmer 2016).

The firm has well established human resource management structure and it looks after the labor resource of the firm. The firm works closely with their employees to enhance the ability of the workers and additionally it incorporates newer employees with varied amount of skills. Depending upon the skill level human resource department of the firm trains the human resources so as to make them useful for the firm (Brewster et al. 2016). Though the firm looks after the personal goal of its employees, often there is issue that entails the firm looks after the demand of their employee and level of the flexibility at the lower group is almost nil that makes the working condition hard for survival.

Major issues faced by the Samsung management are as follows:

• Lack of efficiency in the logistics and with the rise in the gap among the performance of the suppliers lead many stores of the Samsung to become unable for restocking.
• Though there is digital service available from the farm’s end, most of the people do not use it because they are not synchronized with the physical stores.
• Price of the firm is not always low as compared to its competitors. This is due to the utilization of its oligopoly power and price discrimination based on the same.
• The firm is lacking in product differentiation and they are moving away from the dedicated store to merchandise store at a large scale that has been hampering the performance of the firm.

Recommendations for the Samsung is as follows:

• Though the Samsung is well known for its well established management system, yet often it is criticized that the firm fails to address the requirement of their employees and the case of human right violation is also present there. Thus the firm need to revamp their human resource management and incorporate the human rights factors into it in larger amount.
• As there is lack in the product differentiation and the share of the merchandise output is becoming higher with the marginal rise in the revenue, the brand need to focus on its basic business again.
• Price discrimination can lead to better profit, however, in the retail market brand value is a major factor that the firm can lose due to its pricing policy. Thus, it need to set competitive price so as to allow more buyers to visit their store.
• There need to be efficiency measurement of the suppliers so as to ensure ideal performance by all the suppliers.

Conclusion:

Well, the report has analyzed the case of the Samsung and it has been found there the firm has been growing at steady rate through its business strategy. As the mechanism of expansion, the firm has taken expansion on the foreign lands and it has made them famous worldwide. With the sustainable amount of the revenue and reserve the brand is presently in a tolerable situation, however the report has found various loopholes in its business the need to be gauged with the recommendations mentioned above as soon as possible. Otherwise it will deteriorate the operation and the revenue of the firm as well in the coming years. To conclude it can be stated that the firm is in suitable situation and it can become the market leader with its dominating and ever evolving supply chain and the human resource management programs.

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