Strategic Management and Business Policy: Samsung Case Study

External Factors
Weight (%)
Rating
Weighted Score
Comments
Opportunities
Introduce a No-Name Brand and sell at a cheaper price
6
3
18
The outdated phones without a name will not increase its brand presence
Increase the smartphone and tablet market in India and Africa
15
4
60
Increased market share and revenue
Increase services e.g. Samsung Pay
1
2
2
Weak in this channel
Produce Software
2
2
1
Software introduction will take time before hitting the market
Grow the online market
8
3
24
Digitalization is the way for any business
Expand its geographies
30
5
150
Unchartered geographies
Threats
Chinese products, which have high specs and selling at lower prices
15
4
60
Well-positioned
The dominance of Apple in the smartphone and tablet brand in the U.S. and Europe
8
4
32
Well-positioned
Increased market share of Chinese companies like Xiaomi and Huawei
7
3
21
Xiaomi and Huawei are taking over the Indian and Chinese market
Stagnation of middle-class incomes
4
2
8
Unlike Apple Inc., which targets high-end customers, Samsung relies on middle-class group
Consumer electronics are sold using a low-cost strategy
1
1
1
This threatens the Samsung brand image
The attractiveness of India to other foreigners like Haier threatens the home appliances industry
3
3
9
India attracts many investors and its market is unreliable to Samsung
Total
100

386 (3.86)

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Performance of Samsung
In comparison to other brands, Samsung is beating Apple in global smartphone sales as Chinese companies like Huawei, Oppo, and Xiomi are closing in. This is according to Stat Counter (2019), which established that Samsung had a market share of 30.92% followed by Apple with 22.74%. The strategy that Samsung applies in its design and sale of products boosts its products as it deals with budget devices that are attractive in developing markets such as India and Africa. Although the path followed by Samsung is attractive, there is stiff competition and a threat from Chinese manufacturers like Oppo, Xiaomi, Huawei, and Vivo who were position #3, #4, #5, and #6, respectively. These Chinese manufacturers are 3rd in the world in terms of active smartphones.
Samsung position in Smartphone and Tablet industry is likely to thrive, as its major competitor Apple focuses on the high profitable upper end where they continue to manufacture more expensive and more sophisticated smartphones. However, Samsung faces stiff competition from Chinese manufacturers, which threatens the market as both deals with low-end smartphones. In its strategy, Samsung targets the population (who are the majority) at the bottom of the pyramid. The populations at the bottom of the pyramid have trillions of disposable income, which provides a market that Apple has overlooked.
Nonetheless, Chinese marketers are producing smartphones with high specs and at low prices. This is challenging and risky to Samsung who provides quality products. The problem is heightened by the low-end market that is more price-sensitive. Due to this, Samsung is at risk of price erosion, which will negatively affect its profit. The impact is that although the Chinese and the Korean market will win the sales race, they will end up losing the profit race.
Currently, Samsung should be more worried about Huawei than Apple. This is illustrated in the figure below where it is evident that in the first quarter of 2019, Samsung is leading in smartphone sales, while Huawei is second after overtaking Apple, which is third (Kingsley-Hughes, 2019).

Nevertheless, arguing from the market share Samsung illustrates its success in the industry, but in terms of revenue, this is a different story that requires to be addressed. For example, the last quarter shown below illustrates the profits and the revenue enjoyed by Apple, Huawei, and Samsung
• Apple – Profits: $11.6 billion | Revenue: $58 billion
• Huawei – Profits: $2.1 billion | Revenue: $26.8 billion
• Samsung: Profits: $5.3 billion | Revenue $44.7 billion (Mourdoukoutas, 2019)
In comparison to Apple, although Samsung is leading in market share, Apple is profit oriented. Kingsley-Hughes (2019) explains that Apple drives its profit by having a bigger and more robust market share where it attracts the most loyal clients. Apple sells to loyal customers their accessories and services, which not only generates more profits but locks the users deeper into their ecosystem. However, if Samsung sells more handset in the market, Apple will face challenges to expand their ecosystem. Samsung may even have a chance to grab the ‘loyal’ clients from Apple.
Apple woes are increasing as Huawei is a major threat to its market in China. Samsung should take the woes to its advantage by diverting geographically to regions like Africa and India. Africa, for example, is a potential market as there are no manufactures situated in the continent to compete with Samsung. Secondly, Africa is a low-end continent with consumers who are price-sensitive. Nevertheless, Chinese companies like Techno and Infinix are hitting the market with their cheaper phones. All in all, Samsung is currently at a point of flourishment, a chance to not only increase its market share but increase its profit, which is currently half that enjoyed by Apple.
References
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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