Recommendation Of business Strategy: Samsung
Sep 24,21Recommendation Of business Strategy: Samsung
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Introduction
Samsung’s strategy and business is a unique one and is based upon four multiple types of growth strategies. The strategy used by the company mainly depends upon penetration within the market, development of the products, market development and innovation. As the company relies upon these four types of strategies on a tremendous note, success always remains alongside the company in every aspect. A business strategy often helps any company succeed in any location in the market where it wishes to start its operations. Future strategies related to Samsung depict heavy investment plans, artificial intelligence, sustainable products, and high-quality automotive electrical chips, which will drive the company to acquire growth and deliver better quality products to make life easier and more comfortable.
Background
Samsung is one of the most reputed conglomerate multinational entities that hails from South Korea. The headquarters of the company is located in a town named Samsung, Seoul. Initially, the company was inaugurated during the year 1938, and owing to its substantial success, the company entered the electronic goods industry during the year 1960. The company secured the ninth position within the top 30 electronic goods companies of the world. The company is developing various equipments, which often includes electronics, home appliances, telecommunication devices and semiconductors.
Furthermore, the company enjoys running the business in approximately 79 countries and is often regarded as the world’s largest dealer in manufacturing smartphones (Haizaret al. 2020). The company holds a record of selling approximately a hundred types of products of different varieties or models scattered among all its branches in different locations. Samsung contributes approximately 16% to the GDP of South Korea. The total number of workers engaged with this company is approximately 287439 as per the latest annual financial documents released by the company. The present CEO of Samsung is Kim Ki Nam and Kim Hyun Suk, who have been in their positions since 2018.
Samsung, in its global business processes, integrates four different growth strategies. The growth strategies implemented by Samsung entail the strategy of market penetration, the strategy of market development, the strategy of product development, and the strategy of innovation. In the context of product development, the company tends to target the same old loyal customers with newer products that meet their needs and requirements. This strategy has remained highly profitable for Samsung since long.
Porter’s Five Forces Analysis
Porter’s Five Forces analysis is helpful to identify the exact degree of influence that the company renders within the markets where it is operating based on five critical driving forces.
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● Samsung has implemented the mixed bag approach concerning buyers, where they can select a multitude of items but also need to stick upon any particular product as the product cannot be consumed being of high value (Tienet al. 2019). ● Buyers need to approach the company for any sort of service required after the sales period. |
Medium |
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● Suppliers are willing to deliver their services at a discounted rate due to the ancillary sectors remaining low. ● Samsung does not enjoy the power to exact heavy force upon the suppliers because of the fear of breakage in the supply chain, rendering heavy losses to the company. |
High |
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● Threat of substitute is high for Samsung. The markets are flooded with many substitutes, making it easier for consumers to switch to other brands. This has compelled Samsung to adopt the approach of differential pricing to attract more customers. |
High |
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● Very high barriers concerning entry are observed. ● Multiple low barriers concerning exit are also observed. ● For start-ups it is difficult to enter the global electronic goods market because of the multiple aspects required to be considered, mostly related to the distribution network and the supply chain. |
High |
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● Within the concerned industry where Samsung is acting as a key player, competition tends to drive in vocational change (Putraet al. 2020). ● The degree of rivalry varies from market to market and strives to gain competitive advantage from the sectors or locations where it executes its business. ● The saturated rivalry may at times become very serious. However, any growing market does not offer such fierce competition, and the product can be quickly launched within such markets. |
High |
SWOT Analysis
The SWOT analysis provides opportunities to the leadership of a company to ascertain the strength, opportunities, weaknesses or threats existing in the market. Based on these types of analyses, the company can quickly develop strategies which will allow them to gain control over the market.
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Strengths ● Dominates the smartphone market. As per various reports during the end of Q4 of the transactional year 2020, the organization obtained the number one spot in a global context with approximately 18.5% market holdings. ● High-quality research and development Due to a strong foundation and high-quality research and development, Samsung can quickly develop products that are better than its competitors. ● Strong brand image The market positioning of Samsung makes them the pioneer in terms of innovation which is often backed by credibility. ● Strong base within the Asian Markets Samsung holds a dominant position within the Asian markets, especially in countries like China and India. |
Weakness ● Primarily dependent on the markets of the USA. Reports show that the company sold approximately 70.8% of its mobile phones within the American markets. As the American economy tends to be unpredictable, the US market concentration strategy might tend to become a muscular weakness for the company (Abrahamet al., 2019). ● Product Failures Several faulty items like exploding Galaxy A 20e turned out to be a major weakness of Samsung, and product recalls continue to remain one of the primary weaknesses of the company.
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Opportunities ● The triple protection Proposition This new invention will create enormous opportunities for the company in terms of market penetration, market expansion, and business growth. ● Acquisitions & Diversification Such strategies can create opportunities for Samsung to enter into new markets in different regions across the globe. |
Threats ● Enhanced competition High competition within the market concerning multiple companies dealing in the same products creates a threat for Samsung (Yunet al. 2018). ● Various regulatory and legal threats Various legal and regulatory factors initiated by different countries often might pose threats to the company’s operations and business processes. |
Business Strategy Recommendation
Based on Porter’s Five Forces Analysis and the SWOT analysis, it is recommended that to ensure its business success run in the long-run, apart from penetration within the market, development of the products, market development and innovation, Samsung should go for the product leadership strategy. Being exclusive in some product categories is going to provide Samsung the competitive edge which is imperative for Samsung’s survival in a highly competitive industry. Samsung must strive for implementing the strategy of enhancing its value proposition and for accomplishing this objective; the company must resort to optimum product leadership strategy. In this respect, Samsung must implement the business strategy of investment focus on a specific department, which, in this regard, is research and development (R&D). Samsung should invest more in R&D in order to integrate innovative technologies in its new telecommunication products in specific. This will allow the company the chance to come up with products that are ingrained with unique features that are not to be found in rival or near-substitute products. This can be a way for Samsung to effectively implement its product leadership strategy. Moreover, investment in R&D will help the company to act specifically on its product leadership strategy because such investment will ensure that Samsung can produce products that are cost-effective yet more technologically advanced than the products of the rival companies. This can pave the way of market expansion thoroughly. Moreover, as product leadership is ingrained with the strategy of comparative pricing, Samsung will be able to sustain its hold in the new markets optimally.
Conclusion
Furthermore, the company enjoys running the business in approximately 79 countries and is often regarded as the world’s largest dealer in manufacturing smartphones. The company holds a record of selling approximately a hundred types of products of different varieties or models scattered among all its branches in different locations. Samsung contributes approximately 16% to the GDP of South Korea. Being one of the key multinational business organizations belonging to the electronic industry, Samsung enjoys prestige and reputation and strives continuously to hold such accolades. Keeping in mind the company’s position within the market, the primary mission related to Samsung is to build the future generation of global managers. They will, in a way, lead the company to grand success. With all its capabilities, the company will be able to sustain itself in a multicultural and dynamic environment. Although the business model followed by Samsung is highly successful and gives the company an added advantage over its competitors, high-quality research and development allows the company to invent more aspiring products or goods and guarantee a better quality of life for the stakeholders.
References
Audi, A., & Putra, A. H. P. K. (2020). The Effect of Marketing Mix (4P) on Buying Decision: Empirical Study on Brand of Samsung Smartphone Product. Point Of View Research Management, 1(4), 121-130.
Haizar, N. F. B. M., Kee, D. M. H., Chong, L. M., & Chong, J. H. (2020). The impact of innovation strategy on organizational success: A study of Samsung. Asia Pacific Journal of Management and Education (APJME), 3(2), 93-104.
Tien, N. H., Long, N. T., & Chi, D. T. P. (2019). Price Policy in International Marketing. Comparative Analysis between Samsung and Apple. International Journal of Research in Marketing Management and Sales, 1(2), 144-147.
Yun, J. J., Jeon, J., Park, K., & Zhao, X. (2018). Benefits and costs of closed innovation strategy: Analysis of Samsung’s Galaxy Note 7 Explosion and withdrawal scandal. Journal of open innovation: Technology, market, and complexity, 4(3), 20.
Shin, B. Y., & Cho, K. T. (2020). The evolutionary model of corporate entrepreneurship: a case study of Samsung creative-lab. Sustainability, 12(21), 9042.
