SWOT And PESTLE Analysis Of Samsung: Internal And External Factors Affecting Its Performance

Question:

Discuss about the Swot Analysis at Samsung for Pestle.

There are factors that affect the performance of a business which could be internal or external and impact the profitability of a company. The external factors are normally outside of the immediate control of the company and may take time to make adjustments accordingly. Internal factors affecting a company can be quickly addressed by making internal changes within. The decision as to which decision to make begins by first using tools of analysis to determine the areas that need change, using SWOT and PESTLE analysis tools.

Strengths - Samsung has developed solid and long-standing business relationships with retail outlets in major markets around the globe where their products can be sold. The company has a strong manufacturing base that is supported by a robust marketing capability. Samsung has developed a research department that is innovative (Shin and Kim 2015) that rolls new products into the market frequently thus keeping it competitive.

Weaknesses- Samsung has had a major problem in launching one flagship product, the Galaxy 7 which had problems with the battery system. This negative publicity has affected its brand image of quality. Some cheaper brands which are generic from the Chinese manufacturers are making inroads into its market by introducing cheaper phones in its market. Samsung relies heavily on the European and American markets for much of its sale, which is a risky proposition.

Opportunities- Samsung has the opportunity to tap into new emerging markets like Africa and India which still have low uptakes of mobile phones and their accessories. There is a growing market for wearable technology which is still untapped in all its markets. There is an opportunity to market its payment service Samsung Pay to compete with other vendors such as Apple Pay. There is an opportunity to leverage more on online marketing using platforms such as Alibaba and Amazon.

Threats- Samsung faces the threat of new Chinese mobile technology manufacturers such as Huawei who are posing a challenge in most phone offerings by making cheaper generic brands. Apple has steadily grown its market presence in traditional Samsung markets and is poised to significantly capture its market share in the top-end phone markets (Gupta and Prinzinger 2013). Apple is also considering entering the home appliances markets to manufacture products to which Samsung traditionally makes such as cameras.

Samsung Telecommunications-SWOT and PESTLE analysis

Definition of SWOT analysis- SWOT analysis can be defined as the comprehensive study that is undertaken by an organization or business entity in order to identify its strengths and weaknesses internally while at the same time also identifying the opportunities and threats that it faces (Fereira 2013).

Strengths- Global brand name that is well know due to the Samsung Corporation name. This gives   Samsung Telecommunications a strong visibility in the market.

Weaknesses- the Company operates mostly in South Korea and this limitation in its market reduces its revenue streams that would have accrued by expanding to other markets.

Opportunities- the Company has the opportunity to expand to markets which are emerging such as Africa where it can market its telecommunication products.

Weaknesses

Threats- The main threat is the Chinese companies that are entering the telecommunication market in South Korea and offering cheaper brands.

Definitions of the terms political, economic, social, technological, legal and environmental. The definition of the term political can refer to the effect on a company by government regulations that regulate the parameters of operation within a country. The main factors that are addressed are the trade regulations, the tax regimen, and the political stability. The economic definition can refer to the factors that will affect the macro-economic determinants of doing business such as interest rates and the unemployment rate within the locality of operation. The social definition refers to the socio-economic factors that can affect its operations such as the cultural differences and the customer demographics of the market.

The technological definition can refer to the impact that new technologies available will impact the performance of a business entity in the market where it operates. This can include the lifecycle of the new technologies as well as the use of the internet. The legal definition refers to the legal risks that are associated with doing business such as litigations and law suits that be filed against a business entity in the locality where it operate (Kwok 2013). The environmental definition refers to the impact that a business will have on the environment in terms of its production facilities. This will include consider how it disposes of waste after manufacturing as well as the consumption of resources such as water.

Political- The political consideration is that the government is favorable to the company as a homegrown company and provides a conducive environment for operation.

Economic- the economic consideration is that the macro-economic indicators where it operates which is mostly in South Korea are strong and the company can forecast to grow within the market (Sriramesh, Rivera-Sanchez and Soriano 2013).

Social- The social factors are favorable to the company in that it taps into the pool of skilled labor that is available locally without using expatriate labor for its operations.

Technological- The technological consideration is that the company is continually adapting new technologies that are available such as shifting from CDMA to GSM platforms in producing its products (SWOT Analysis Reports 2013).

Legal- the Company currently does not have any litigation pending in court due to patent law suits.

Environmental-The Company uses mostly imported raw material for most of its manufacturing such as iron from China and therefore does not negatively affect the environment with its operations.

Samsung Electronics - SWOT and PESTLE analysis

Strengths- Strong brand name that is built on quality and reliability in the home appliances market (Lee, Kim and Hong 2017).

Weaknesses- the Company is facing competition from generic and cheaper brands from China which is reducing its market share in the lower tier market.

Opportunities- the Company has a good opportunity to diversify to new markets such as India and Africa where the market is relatively untapped.

Threats- The threat is from Apple in the high end market and cheaper models from other manufacturers in the low end market.

Opportunities

Political- Most of the markets where it operates, the political environment is conducive for the company to continue to operate (Ali 2016).

Economic- The global economic upheavals affect the local economies of the countries where it operates and affects its revenues, especially in North America and Europe.

Social- the Company is involved in many CSR (corporate social responsibility) activities in most of its markets and this builds social acceptance for the company as a responsible corporate citizen (Hadjkhani, Lee and Park, 2016).

Technological- Samsung electronics is well known for innovation and is has a comparative advantage over most of its competitors in innovativeness.

Legal- Samsung electronics is facing litigation from allegations by Apple that it imitated   Apple’s proprietary designs ( Kim 2016) and could face fines from the court when the case is settled.

Environmental- The Company has adopted a production culture that is eco-friendly in most of its production facilities, including using recycled parts (Moskalev and Park 2010).

Strengths- Being a specialized company manufacturing semi-conductors (Lee 2015) in the US, it taps on the vibrant innovative pool of workers from the US which is critical in driving the company forward.

 Weaknesses- Having only one manufacturing base in the US this is a limitation in moving its products into markets outside of the US with increased transport costs.

Opportunities- the Company can diversify its operations outside of the US by establishing manufacturing bases in other markets so as to reduce transport costs.

Threats- The influx of Chinese manufactures offering similar products at lower prices is a major threat to the continued profitability of the company.

Political- The political environment is conducive within which to operate in the US where there is guaranteed stability.

Economic-The strong American economy is the major driver for the demand of the company which mostly supplies semi-conductors ( Verbeke and Kano 2015) to technology firms within the US.

Social- The social consideration is that it is a wholly owned subsidiary that has taken the American style of operation and has fitted within the social fabric of the US.

Technological- The Company enjoys a strong culture of innovation that is synonymous with the innovation of its parent company and these results in producing quality products.

Legal-The Company is not involved in any litigation due to non-compliance with local regulations or tax-remittances.

Environmental- The Company uses the latest cutting edge technology that minimizes waste so as to have minimum impact on degrading the environment. The companies carbon footprint is also small as it produces using nano technology which has a small environmental footprint.

Definition of the term ‘operating environment”- this can be defined as the totality of the events, conditions and relationships over which an organization has no control but in which it operates. It includes the competitors, the customer, the stakeholders, the markets and the regulatory agencies.

References

Ali, A.J. 2016, "HEGEMONIC STATES AND MNCS", Journal of Competitiveness Studies, vol. 24, no. 4, pp.

Ferreira, J. (2013). Multimethodology in Metaheuristics. The Journal of the Operational Research Society, 64(6), 873-883. Retrieved from https://www.jstor.org/stable/23409366

Gupta, A. & Prinzinger, J. 2013, "Apple, Inc.: Where Is It Going From Here?", Journal of Business Case Studies (Online), vol. 9, no. 3, pp. 215-n/a.

Hadjikhani, A., Lee, J.W. & Park, S. 2016, "Corporate social responsibility as a marketing strategy in foreign markets", International Marketing Review, vol. 33, no. 4, pp. 530-554.

Kim, J.Y. 2016, "Message strategies in smartphone patent battles", Journal of Communication Management, vol. 20, no. 3, pp. 255-267.

Lee, J. 2015, "The Chicken Game and the Amplified Semiconductor Cycle: The Evolution of the DRAM Industry from 2006 to 2014 *", Seoul Journal of Business, vol. 21, no. 1, pp. 1-30. 198-201.

Lee, S.M., Kim, N.R. & Hong, S.G. 2017, "Key success factors for mobile app platform activation", Service Business, vol. 11, no. 1, pp. 207-227.

Moskalev, S. & Park, S.C. 2010, "South Korean Chaebols and Value-Based Management", Journal of Business Ethics, vol. 92, no. 1, pp. 49-62.

Shin, W.S. & Kim, C. 2015, "Samsung's journey to excellence in quality", International Journal of Quality and Service Sciences, vol. 7, no. 2, pp. 312-320.

Sriramesh, K., Rivera-Sánchez, M. & Soriano, C. 2013, "Websites for stakeholder relations by corporations and non-profits", Journal of Communication Management, vol. 17, no. 2, pp. 122-139.

SWOT Analysis Reports: Adobe, Intel, Samsung Market Research 2013, , New York.

Kwok, B. (2013). Macro Corporate Analysis. In Financial Analysis in Hong Kong: Qualitative Examination of Financial Statements (2nd edition) for CEOs and Board Members (pp. 185-204). Hong Kong: Chinese University Press. Retrieved from https://www.jstor.org/stable/j.ctt1p9wqmp.16