Discuss about the Strategic Management of Samsung Electronics.
The managing of value chain indicates the procedure of managing the connected group of activities that generates value by producing commodities as well as services. The major purpose of employing value chain management in a trade is to incorporate communication as well as augment cooperation among members of production chain in order to diminish delivery times. Mobile telephony technology has reallocated through current decades from a plethora of nation-based technologies commercialized by perpendicularly incorporated firms to a few worldwide standards sustained by globe-spanning supply chain (Mudambi and Puck 2016).
The report provides a brief overview regarding value chain analysis that describes a procedure where a firm distinguishes its primary and support actions that puts value to its completed commodity. Value chain analysis is a procedure with the help of which a firm recognizes its primary activities that in adds value to its final commodities. It also represents the interior activities in which a firm gets engaged while transforming inputs into outputs. It is also regarded as a strategy tool that helps to analyze internal firm activities.
It deals with the general information about the characteristics features of the mobile telephony industry as well as about Apple, Samsung and LG. it shows that how a firm competes with the help of differentiation strategy that will help to perform activities as compared to its competitors. If the companies compete with the cost advantage, they will try to perform internal behavior at lower cost as compared to their customers (Soosay, Fearne and Dent 2012).
Mobile telephony indicates the prerequisite of telephone services to phones that may change around liberally rather than stay constant. Mostly terrestrial cellular network of base station are connected with the help of mobile phones. On the other hand, satellite phones connect to orbiting satellites. This industry comprises of new products that are designed and launched in such a way that they are packaged optimally as well as priced gainfully. In this highly expanding industry, there is always a requirement of high technological skills. Mobile telephony had transformed the method in which customers and trades operate in developing markets. As a result, mobile services have become the worldwide providers of communication services. Availability of mobile services also creates several economic advantages to the economy of the country. The supply side of the economy is affected positively by the mobile telephony industry. The positive impacts of basic mobile voice as well as text services on development and productivity are accomplished with the help of mobile telephony markets. With the advancement of the mobile telephony industry, there has been increase in 3G penetration (Kirui et al. 2013).
Key Strategic Differences
Apple Inc. is an international corporation that generates electronics, personal computers as well as computer software and is considered as the digital distributor of media content. The first version of iPhone became obtainable in the year 2007 in few selected countries and markets. On the other hand, in the year 2008, iPhone 3G became obtainable to general individuals. The history of iPhone started with a request from Steve Jobs, the inventor of Apple. He asked the engineers to examine the use of touch screen devices as well as tablet computers (Palan 2016).
Samsung is a multinational business company in South Korea that is headquartered in Samsung Town of Seoul. The organization comprises of several subsidiaries as well as united trades, most of which are united under Samsung brand. The history of Samsung mobile phones stretches back to over 10 years. In the year 1993, Samsung developed the lightest mobile phone. Towards the end of 20th century, the organization developed Smartphone that was combined with MP3 players. As a result, Samsung has made stable expansion in the mobile telephony industry (Hsu 2014).
The abbreviation of LG brand indicates Lucky Goldstar that is a group of enterprise, which originated from South Korea. In the year 1947, the history of LG commenced when Lucky Chemical Industry that was one of the first Korean chemical company was established. In the year 1958, the company expanded its industry to manufacture home appliances. The company started the manufacture of mobile phones in the year 2000. Initially, the mobile phone company did not receive a good response. However, in the year 2002, LG mobile company proclaimed the debut of the very first WCDMA technology that led to the expansion of the LG mobile phones (Arora, Kalro and Sharma 2015).
The major strategic differences that have the impacted the relative success of Apple Inc. is as follows:
Rethink the requirement for advertising: In order to increase sales revenue, the company had always made a huge investment on PPC ads with Google or Facebook. There are mostly two diverse strategies, on which Apple completely relies. The first strategy deals with product placement as well as the buzz generated positive reviews in the media (Ward and Peppard 2016).
Avoidance of Price wars by highlighting unique value proposition: According to the organization, competing with prices leads to loss in business. Apple mostly focuses on unique value proposition that acts as a beautiful design that works right outside the box with ever-smaller packaging. According to the organization, contending on price leads to a race to the bottom.
Value Chain Analysis
Keeping marketing and products simple: It is acknowledged by Apple that technology customers often get plagued. As a result, Apple diminishes confusion of the customers by making their web and sales copy simple. In other words, the organization completely avoids jargon or industrial terms. As a result, Apple makes use of simple and direct words and they frequently stress the advantages that customers completely require and will be delighted by (Heracleous 2013).
Knowing the Audience and speaking to them in their language: Apple has a very good understanding about their customers. As a result, their customers do not find words that comprise megabytes and gigabytes. They find words that they know as well as understand.
There are several key tactical differences that have the impacted the relative success of Samsung. The company revolves and manufactures quickly as they comes out with several devices. The company views the response of the market as well as pushes success and kills failure. Rather than supplying a cheaper iPhone, Samsung differentiates its products with larger screen as well as differentiated characteristics. The company makes use of different chips and displays as compared to Apple. It is more than just a Smartphone maker is as it is considered as a conglomerate. Samsung makes the use of skimming price in order to gain upper hand among its competitors (Hasan 2015).
LG makes use of fast innovation strategy as a competitive advantage. LG has the motive to let their customers have a richer, better and easier life. The company made the use of Smart Technology that enables customers to perform things more easily. Most of the individuals expect to have advanced technologies in their LG mobiles. LG also depends on Research and Development capabilities as well as product innovation in order to collaborate with global engineers from IBM (Thompson et al. 2013).
Value Chain Analysis of Apple: One of the analytical frameworks that assist in recognizing trade activities generates value as well as competitive advantage to the business.
Inbound Logistics: Apple works with hundreds of suppliers all over the world as well as upholds an extremely complicated supply-chain management. Purchase commitments of Apple normally cover its necessities for periods up to 150 days. The CEO of Apple, Tim Cook, is popular for his strategies of receiving suppliers to contend with each other (Gereffi 2013).
Operation: More than 93,000 full-time equivalent workers conduct the operation of Apple along with 4,400 full-time equivalent temporary workers. Apple manufactures most of the products by outsourcing partners that are located mostly in Asia. A small number of outsourcing partners presently performs a noteworthy concentration of this manufacturing.
Outbound Logistics: The net sales of Apple with the help of direct and indirect distribution channels accounted for 72 percent of the total sales. Apple endeavors to reduce the volume of its inventory due to consideration of cost (Bergvall-Kåreborn and Howcroft 2013).
Marketing and Sales: Apple sells most of its mobile phones with the help of four channels of distribution. The advertising budget of Apple is almost USD 1.1 billion that is invested for exploitation of marketing communication mix. This in turn incorporates advertising, events as well as direct selling. The company had also increased its focus on enterprise sales during the last few years.
Service: Apple is popular for its outstanding quality of customer service that it provides the individuals. The experience of Apple around the globe makes use of its product to make them more convinced about the quality (Kassoff 2014).
Value Proposition: The value proposition of Apple is to avoid unwanted advertisements as well as to brand itself. It has also made its phone more secure and more faster.
Supply Chain Analysis: The major aspect of the supply chain analysis of Apple is to make the use of multiple suppliers for the similar component. It also examines the role of boards and directors that plays an imperative role to enhance the supply chain analysis of the Company.
Enterprise Value: The valuation metric alternative to reflection of conventional market is termed as enterprise value.
Enterprise Value of Apple
Inbound Logistics: Most of the suppliers of Samsung are based in Asia that is followed by America and Europe. Samsung has a number of logistics firms in order to control inbound logistics aspect of the trade. As a result, Samsung electronics is recognized as an integrated enterprise logistics management agent. Samsung uses logistics in a very exclusive way in order to cover most of the administrative procedures. It is used in a more complicated procedure as compared to a general value chain model (Jung 2014).
Operation: The Company is known to maintain global operation hubs that include subsidiaries, research centers as well as design centers. The manufacturing operation of Samsung comprises of general manufacturing such as semiconductors as well as system manufacturing such as application and software. The manufacturing operation of Samsung has been mostly localized to South Korea as well as Seoul. The scheduling and inventory control are ensured with the help of logistics. Due to abroad shipping as well as unpredictable delays, this potentiality becomes less streamlined that can in turn reduce value. A probable solution to this problem would be to reposition the operation of AuthenTec closer to that of the facilities of Samsung. This will in turn lead to considerable labor cost with the movement. Samsung would require to conclude if the reimbursement period for value they put on in their operations counterbalance the costs rapidly enough to be worth making the move (Caplan, Dutta and Lawson 2013).
Outbound Logistics: Samsung is a concentrated company that handles an extensive range of trade support function as well as logistics. The company had demonstrated to be remarkably rapid in launching its individual commodities to contend with Apple. Effectual outbound logistics system plays an imperative role in the case of Samsung in terms of being able to convey updates. The attainment of AuthenTec will not have an impact on the outbound logistics procedures.
Marketing and Sales: It is considered as the major activity that is aimed to channel the attention of the target customer segment. The budget of the company is mostly spent on media advertisement s well as public related programs. Sales promotion has been adapted by Samsung as one of the core elements of its marketing techniques. Each key market of Samsung has a DM&C sales as well as marketing subsidiary that works with partner sales organization.
Service: The Company endeavors to deliver the customer services of the budget standards. It provides minimal training that is required by the workers as they already have workers since before attainment (Lee, Kim and Park 2015).
Value Proposition: The value proposition of Samsung is focus on the brand, whether it is a corporate brand that they supply or it is a product brand.
Supply Chain Analysis: With a huge push in the technology to roll out improvements, the Company had increased its sale by involving rush in manufacture as well as innovation.
Enterprise Value: The present enterprise value of Samsung is a total of $157,824 Mil. The EV/Revenue ratio of Samsung is 0.91.
Inbound Logistics: A lot of effort has been put by LG in order to increase their efficiency of supply chain management. The activities that come under inbound logistics for LG are warehousing, material building as well as inventory control. LG has made all of its operation technologically enhanced in order to improve its inbound logistics.
Operation: The operation under the company mostly includes all the activities that are accountable for converting the inbound raw materials to the finished product. LG has been putting its best effort to increase its operational efficiency in their present production. The key operational benefit is that LG have their own production units. This in turn makes LG different from its competitors (Creveling, Hambleton and McCarthy 2014).
Outbound Logistics: The company had established a good dealer network and it also have rationalized its packaging by packing as compact as possible. This in turn creates an appeal for the customers as they find the mobile phones to very effective.
Service: There are several exclusive showrooms as well as service centers where LG mobiles are sold. The company had always put emphasis on the satisfaction of the customers. They leads to customer satisfaction with their products by making the use of effective design innovative strategies. The industrial design of LG integrates a balance between creation of concept as well as lifestyle. This is mainly to prominently feature the dreams and desires of the customers and lead to overall value innovation procedure (Lim, Tuli and Grewal 2016).
Supply Chain Analysis: LG mostly focus on customer satisfaction to increase its sales. The extremely has close association with its suppliers and it involves the supply technically successful products.
Enterprise Value: The enterprise value of Lucky Goldstar is a total of US$143 billion.
Value Proposition: The value proposition of LG is to provide a mobile phone that will support both portrait and landscape design as well as diminish cost of energy.
It can be concluded that in order to deliver individual competitive advantage, Apple made the use of vertical integration where it acquired NeXtstep. With the help of this, Apple accomplished multi-tasking operating system. It also made partnership with Intel with the help of which it reaped rewards not just for profits but also to deliver the goods. Intel reduced its transition period as expected that made the products of Apple are delivered before the due date. The company is among the top ten major mobile companies in the world. It is riding on its philosophy that deals with helping individuals as well as connecting thousands of customers the company has globally.
On the other hand, Samsung respects the choice of its customers and as a result, they are able to efficiently sustain product lines. Samsung also establishes geographically discrete base of direct dealers as well as indirect channel partners. The company also strives to acknowledge what customers desire ahead of its competitors. The engineers who are associated with the company develop original as well as innovative products that will be able to meet the requirements of the individuals. This in turn leads to competitive advantages. The company also makes investment in research and development so as to meet their commitment related to leading technology consistency.
The major root of competitive advantage for LG is technical resources as LG mostly depends on research and development capabilities. It also introduces its product with the help of contemporary communication tools such as radio and internet as well as television. It also keeps hold of its customers by providing them with long-term warranties. Its innovative technologies lead to competitive advantages that create harmony among individuals.
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