Strategy Analysis Report for Samsung – Smartphones Division
Our report on strategy analysis for the subject of Business Policy and Strategy is based on the Samsung Galaxy line of Smartphones. We visited the head office of Samsung located in the Mall of ahore along !ith a "uestionnaire "u estionnaire !hich had "uestions related to different aspects of Samsungs strategy. #urrently Samsung is the number one brand in terms of mar$et share in the smartphone mar$et. %heir Galaxy line of Smartphones coupled !ith Google&s 'ndroid 'ndroid operating system and the plethora of apps available on the 'ndroid Mar$etplace Mar$etplace are the real reasons behind Samsungs runa!ay success in the smartphone mar$et. Samsungs main competitor in the smartphone mar$et is 'pple (nc) but !ith 'pple 'pple !ith its focus on premium pricing and a very limited product base has lost its edge in the ever changing smartphone mar$et. Samsung !ith its variety of smartphone variants and innovative features has captured much of the mar$et. Samsungs current mar$et share of the smartphone mar$et is increasing and this mar$et share is sho!ing no signs of decreasing any time soon !ith the launch laun ch of the Samsung Galaxy S ((( smartphone. Samsung has an immense variety of smartphones available in the mar$et !hich are suitable for people !ith varying budget si*es. #urrently their lo!est priced smartphone is available for +s. ,-) !hile the higher priced variants go up to +s. /). We sat do!n !ith Mr. Mr. 0uhaib !ho is Samsung Pa$istan&s #ountry +etail Manager to discuss different aspects of Sa msungs strategy. S.W.O.T S.W.O.T Analysis:
Samsung is a rapidly developing company compan y and is currently engaged in activities ranging from ship building to semiconductors chip ma$ing. Samsung 1lectronics strength in general !ould have to be its innovativeness and adaptability to change. %he mar$et for electronics is rapidly developing and almost every day !e tend to see a ne! product entering a mar$et !hich increases the competition that a company has to face and Samsung is ta$ing the bull of change by the horns and introducing innovative and sometimes unorthodox products to $eep increasing its already big mar$et share. Mr. 0uhaib said that product development is the biggest core competency that Samsung possesses. %he mar$et for smartphone is ever2changing and continuously ne!er brands and handsets are entering the mar$et also the competition bet!een smartphone manufacturers is increasing day by day so to counter this competition and to maintain its mar$et leader status Samsung has to bring about abou t products that have the latest features and technologies so as to assuage the customer&s demands.
%he major !ea$ness that !e can comprehend about Samsung is that its products some!hat lac$ the finesse and opulence that 'pple products have. 1verything abo ut an 'pple product is opulent3 there is an air of grandiose about them. %al$ing about the Pa$istani mar$et) Mr. 0uhaib said that 'pple has no retail outlet in Pa$istan and the current 'pple products available in the Pa$istani mar$et are either ones !hich !ere brought in via hand carry or !ere imported by some retailer to be sold here. So there isn&t any direct competition !ith 'pple in Pa$istan. 'lthough he said that the previous mar$et leader in the Pa$istani mar$et !as 4o$ia but due to its lag in bringing ne!er more innovative smartphones in the mar$et it has lost a considerable part of its mar$et share and the current percentage of 4o$ia&s mar$et share stands at about 567 from a high of 897 a fe! years bac$. While Samsung !ith its innovative product portfolio and pricing for smartphones for all poc$ets has captured a substantial part of the mar$et and its mar$et share has gro!n to be about 69.-7 from ,87 a fe! years bac$. 'lso tal$ing about 'pple and the threat it posed to Samsung he said that it !as a very minimum threat at present. :e mentioned the impending launch of the Samsung S ((( and ho! it had 'pple !orried as it had not moved "uic$ly enough to launch the iPhone ;. :e also said that the current flagship phone of 'pple the iPhone 6S has no competition technically !ith the S (((. Opportunities that Samsung has in the Pa$istani mar$et are of further expanding its mar$et share and introducing some cheaper priced smartphones so that they can fill the gap bet!een the current demand for lo!er priced smartphones and their non2availability in the national mar$et. Samsung currently is targeting multiple areas or facets of the mar$et. (t is targeting students) upper class) middle class and teenagers as !ell as !or$ing !omen. Samsung shipped about 9 million smartphones last year and spea$ing in layman terms it is a cash co! and the o!ners and management are mil$ing it for all its !orth. 'lso there are over -) apps available on the 'ndroid Mar$etplace for the Galaxy line of smartphones. 'lso Mr. 0uhaib told us that Samsung !ill be coming up !ith lo!er priced smartphones starting at about +s. ,) !hich !ill further open another niche that they can target !ith the lo!er end mar$et. %al$ing about any edge that 'pple might have on Samsung Mr. 0uhaib said that 'pple only had a premium pricing edge !ith all the hype that they create of their products. :e said that Samsung had the technological edge on 'pple and he mentioned an ironic aspect of this !hole deal that most of the electrical and physical components of 'pples iPhone&s are manufactured by Samsung. %he threat that Samsung has to face is the unchec$ed flo! of #hinese non branded phones coming into the mar$et. %hese phones are not only dangerous for the health of the user but also in financial terms they are a source of loss for companies li$e Samsung because the non2branded phones infringe many a patents and copyright designs held by them. 'nd the funny thing is that these companies !or$ unchec$ed in #hina and because of the supposed price advantage that they have in the eyes of a normal Pa$istani consumer they sell "uic$ly.
department to chec$ and manage the ongoing legal battles against Samsung) also Samsung !or$s alongside Google for solving patent feuds.
%he political problem that Samsung is facing in Pa$istan is the unchec$ed piracy and copyrights infringements and the lac$ of any agency or courts to address these problems. #hinese products are flooding the mar$et and are selling unchec$ed even !hen they have the serious side effects of increased radiation emissions. (n reference to the current mar$et situation of an economic do!nturn Samsung is !or$ing to!ards ma$ing ne! lo!er priced handsets as !ell) !ith its current lo!est cost smartphone selling at +s. ,-) in the open mar$et. %he ne! lo!er priced smartphone !ill be targeted to!ards students and ne! job holders so as to generate more sales !hilst providing a good "uality product to the people. %he social aspects that effect Samsung are the supposed class differences that are so very prominent in the Pa$istani culture. Samsung had placed itself !rongly at the time of its introduction in the Pa$istani mar$et. (t had placed itself as a second grade brand and no! it has been !or$ing to remove this misconception from the minds of the masses. %his is !here 4o$ia had positioned itself beautifully. (t had captured a position !here the people had thought of it as the [email protected]
reno!ned brand in the country. %his is !here the people at Samsung have to !or$ hard to nullify this misconstrued notion of Samsung being second rate. 'lso due to the ever changing social structure of the mar$et Samsung has been !or$ing on developing ne! features !ith the changes in trends of the mar$et. %he current trend in the mar$et is 'pps that go along !ith the smartphone of the consumer&s choice. Some years ago the trend !as inbuilt cameras. But this trend has died do!n no! and just to give you an example 4o$ia has recently made a 6, megapixel camera phone but due to the change in the social structure and !ants of the people it !ill not fare !ell in the mar$et. %he upcoming trend !ill be voice controls !hich !ill include navigation and address searches being done by voice commands. %echnologically Samsung is second to none. Samsung is one of the most innovative companies out in the mar$et. 'nd this can be !itnessed at mega events li$e #1S A#onsumer 1lectronics Sho! and MW# AMobile World #ongress !here Samsung brings out a host of innovative and mind blo!ing products every year li$e the recent Samsung Smart Windo! !hich is a transparent touchscreen device !hich can be used as a display panel and also as a !indo! as the name mentions. Most recently Samsung has introduced the Samsung Galaxy S ((( smartphone in a live internet telecast ceremony. We can&t say that Samsung has actually bro$en ne! ground !ith the launch of the S ((( as it carries technologies that have already been made available in different
smartphones recently. So this is one avenue !hich might cause some discomfort to Samsung in the very near future. Samsung is also focusing on the environmental side and has numerous #S+ projects in the !or$s. Samsung has developed an environment friendly phone by the name of Samsung 1arth in the past. Samsung follo!s all the (SO standards and there are no harmful !astes being generated in the manufacture of their products. %he lo! radiation leve ls emanating from Samsungs phones are second only to Sony 1ricsson&s. %he current lo! priced #hinese phones available in the mar$et are very dangerous to a person health as they have uncontrolled radiation emissions. Samsung has also !or$ed on creating social villages) schools and nurseries. 'lso Samsung has been active in plantations. Samsung Grammar Schools are operating in Casur and evice Solutions. %he reorgani*ation today replaces the t!o2 business structure !ith seven independent companies under a single corporate entity and unified #2suite. While creating greater autonomy at the operating level) the benefits of the ne! structure also include reducing the companyIs decision2ma$ing hierarchy from three to t!o stages) and supporting stronger focus and speed of execution in business and investment strategy. #ustomers !ill gain from increased independence in decision2ma$ing and faster speed to mar$et.
A &isual Representation of Samsungs Organi+ational Structure:
Systems and rocesses:
%here are several online centrali*ed >BM having all the information pertaining to the company. >ata suites for strategic planning) information systems) capital budgeting systems) "uality control) and performance measurement are !idely used all over the organi*ation. Hnfortunately due to confidentiality issues and corporate espionage issues the management did not provide us !ith much information regarding the tools being used to implement these policies. What you see belo! is the data that !e gathered through poring over the internet and tal$ing to experienced people. %he Six Sigma approach is !idely used at Samsung) the six sigma approach is a business management strategy) originally developed by Motorola in ,98/. Six Sigma became !ell $no!n after ac$ Welch made it a central focus of his business strategy at General 1lectric in ,99;) and today it is !idely used in many sectors of industry. 't Samsung the Six Sigma see$s to improve the "uality of process outputs by identifying and removing the causes of defects Aerrors and minimi*ing variability in manufacturing and business processes. (t uses a set of "uality management methods) including statistical methods) and creates a special infrastructure of people !ithin the organi*ation !ho are e xperts in these methods. Samsung also uses Supply #hain Management soft!are&s !hich provide a major advantage for Samsung. (n general) the supply chain of Samsung is much globali*ed. %hey have mar$et share in both the industriali*ed and the developing !orlds) !hich helps expand their customer base for all their products. %his comes in part from an Jimprove the !orldJ strategy) !hich includes a reducing costs of lo!2carbon2emissions po!er and b providing medical e"uip ment and drugs to poor countries and rural areas. %hey use a Jfast follo!erJ strategy) entering ne! businesses "uic$ly after these have been launched by the pioneers of the field. %hey enter ne! businesses often via ac"uisition rather than by inventing the technology3 and once in the business) they invest very heavily in manufacturing capacity) to ta$e advantage of ec onomies of scale. %heir manufacturing costs are therefore lo!er) as is their cost of capital A%he latter is also helped by guarantees from the Corean government. %hey also scale up production "uic$ly in ne! businesses) to produce high volumes !ith lo!er costs. Because of their lo! manufacturing costs) they can entice more customers) even competitors) to buy their parts.