Samsung Group is a multinational conglomerate from South Korea founded by Lee Byung-Chul on 1st March 1938. The company’s headquarters are in Seoul, South Korea. Samsung has many affiliated businesses and subsidiaries, majority united under the Samsung brand with the largest in South Korean Chaebol. Some of the Samsung subsidiaries include Samsung Techwin (manufactures of optoelectronics and weapons technology), Samsung C&T and Samsung Engineering (72nd and 35th largest construction company respectively), Samsung Heavy Industries (second largest shipbuilder In the world as per 2010 revenues), and Samsung Electronics (as largest information Technology Company) (Bonderonko, 2019). The company is well-known for its consumer electronics, which in this analysis indicates business competitive strengths. Therefore, this essay conducts a SWOT analysis of Samsung to illustrate its relevant strengths, weaknesses, strengths, and opportunities, which maintains the company as a major player in the international market.
Micro Analysis of Samsung
This section will explore the internal environment of Samsung. This will comprise the internal environment of Samsung, which are the elements it has control on.
One of the strengths is that the company shares the widest range of product portfolio including memory cards, printers, peripherals, pc, Home appliances, camcorders, cameras, TV/audio/ video, tablets, and mobile phones. In many of the product categories, the company holds a significant market share. In terms of design features and technology, Samsung is ranked as the best as it was the first phone with polyphonic ringtones, 65k TFT/LCD color phone, first to introduce dual screen mobiles, thinnest and lightest note pad, and phones with rotating lens. In terms of market share, as per May 2019, Samsung was leading with a 30.92% market share followed by Apple 22.74%, Huawei 8.98%, Xiaomi 7.54%, Oppo 4.49%, and others at 4.39% (Stat Counter, 2019) as illustrated below.
Figure 1: Global Market Share of Smartphones
Samsung introduced its manufacturing company in Asia, a country with a high growth economy, which reduced their supply chain costs and logistics. In the past four years, Samsung has greatly increased its brand value thus, increasing their competitive advantage. The company also manufactures stylish and attractive designs, which increase their sales and profits in turn. Lastly, the company has impressive research and design capabilities where, for example, the company was able to introduce Samsung Pay an app that is similar to Apple Pay, which helps in making payments.
A couple of years back, Samsung Mobile introduced a series of Smartphones, which resulted in cannibalization. Chang, Zhang, and Xiong (2019) explain that there is a likelihood of the LCD demand for Samsung to reduce. The rise of Chinese products in the market has reduced the market share of Samsung and continues to threaten the company. This is because the Chinese products are cheaper as they focus on economies of scale. Another weakness facing the company is that although it is leading in hardware production it relies on other companies for software products. Samsung is at risk of emerging markets, which, for example, uses online platforms to distribute their products. Samsung continues to rely on traditional distribution platforms where they incur additional costs for transportation.
In terms of revenue, Samsung potential growth is at risk as it greatly relies on consumer electronics, which in Europe and the U.S. have a low potential. In comparison to Apple, which is known for high-end products, the majority of consumers prefer Apple products, which they view as dependable and advanced than Samsung products. Besides, Apple uses sophisticated marketing strategies in comparison to Samsung. Lastly, Samsung sells its products at a lower price, which makes the majority of its products to lose value easily in the market.
This section will explore some of the external factors influencing Samsung. The section will include an exploration of the opportunities and threats affecting Samsung.
One strategy that Samsung can introduce is introducing a no-name brand like Vodafone and MTN where they remove the outdated old model, change external features and sell at a cheaper price. Rather than relying largely on Europe and the U.S. on their consumer products, Samsung should increase its market for smartphones and tablets in developing countries like India and Africa where these products are highly marketable. The third opportunity is increasing its services like the introduction of the smartphone and tablet-based solutions like Samsung Pay. Samsung is largely known for the production of their hardware, rather than relying on software from other companies, they should venture in the industry too.
Another strategy is growing its online market rather than relying on old channels. They can, for example, use channels such as Amazon.com. The growth of the middle class in developing countries like India and Africa opens a stronger market for consumer Samsung products. The advancement in technology in health opens an opportunity to introduce more devices like wearable tech. The company needs to expand its geographies as they continue to face stiff competition from Vivo and OPPO in Indian and Chinese markets, and tough competition from Apple in the U.S. and European markets. This calls for a need to expand to unchartered geographies. Lastly, the financial position of Samsung will help the company to enter unrelated diversification.
One of the biggest threats of Samsung is Chinese products, which have high specs and selling at lower prices. Secondly, Apple is dominating the smartphone and tablet brand in markets like Europe and the U.S. Samsung has failed to overcome the reliability and reputation of Apple. The Galaxy devices rely on the Google Android operating system, which is not highly known by average people who rely on iOS (Lee, 2019). If Apple enters the consumer products like cameras and home appliances, Samsung’s market on these products would be a threat.
There is an increase in the market share of Chinese companies like Xiaomi and Huawei, which is a strong threat to the Samsung market, which is likely to reduce in the future. Chang, Zhang, and Xiong (2019) explain that the middle-class incomes in the U.S. and North America are stagnating or declining, which reduces the consumer buying power of the group. On consumer electronics, retail chains like Bigbazaar sell their products using low-cost strategy threatening consumer electronics and home appliances. In India, this is a potential market for foreign players where for example Haier have entered the market and is attaining a market share in India of home appliances an added threat to Samsung.
Bonderonko, P. (2019). Samsung SOUTH KOREAN COMPANY. Encyclopædia Britannica, Inc. Retrieved from https://www.britannica.com/topic/Samsung-Electronics
Chang, V., Zhang, W., & Xiong, C. (2019). The Strategic View and Development of Corporate Social Responsibility: The Case Study of Samsung. International Journal of Strategic Decision Sciences (IJSDS), 10(1), 105-130.
Lee, Y. W. (2019). Enhancing shared value and sustainability practices of global firms: The case of Samsung electronics. Strategic Change, 28(2), 139-145.Stat Counter. (2019). Mobile Vendor Market Share Worldwide May 2018 – May 2019. Stat Counter. Retrieved from http://gs.statcounter.com/vendor-market-share/mobile
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