Samsung Internal Analysis - Paper Example

Samsung is a multinational firm located in South Korea and comprising of several related businesses. Initially, it was established as a trading company dealing in areas such as textile, insurance, and food processing, but ventured into electronics in the 1960s. From 1990, the company increasingly globalized its products. Its major sources of income are the mobile phones and the semiconductors which are sold in most parts of the world (Conti, 2006). This paper aims to analyze the companys internal processes and the value provided in their products and services.

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SWOT Analysis

Strengths

Samsung is known to produce a wider range of product portfolio than any other electronics company. They include cameras, printers, home appliances, mobile phones and tablets, audio-visual devices, and other accessories. Additionally, the products in these categories have a significant appeal to the consumers leading to high demand. According to Song and Khanna (2016), Samsung phones command about twenty percent of the market share, the largest for a single company. Another source of strength for this firm is its high allocation to the Research and Development expenditure leading to impressive demands and features in its gadgets (Haroun, 2016). For instance, it was the first to come up with dual-screen phones, polyphonic ringtones in mobile phones, and the smallest MP3 player in the world. Additionally, Samsung has strong capabilities in production and marketing. Song and Khanna (2016) indicate that it has maintained a good relationship with dealers in the US and Europe who provide a steady market. Also, it established a manufacturing plant in Asia to utilize the growing economy of the market which greatly reduced the costs of supply and logistics.

Weaknesses

The companys phones are facing a huge competition from Apple Inclusive, and it has not been able to match its marketing capabilities. Therefore, its share of the market for smartphones in the US fell by about two percent while that of Apple Inc. rose by over thirty percent. Additionally, according to Haroun (2016), upcoming Chinese companies such as Huawei and Xiaomi are also taking up a significant percentage of smartphones customers due to their lower prices. The use of an Android operating system is viewed as inferior in comparison to the apples' IOS system. Samsung's software is too dependent on third parties making it less reliable.

Opportunities

There is a chance to expand its market to the developing countries such as Africa and Asia for mobile phones and other devices. According to Conti (2006), increased demand for smartphones and tablets has overtaken the sales of personal computers in these countries.The company also have an opportunity to develop wearable products such as the watches. The increasing number of middle-class citizens in many parts of the world will increase the demand for Samsung electronic devices.

Threats

The main threat facing Samsung is the huge competition for mobile phones from Apple Inclusive. Despite the company dominating the market for smartphones in the US, it has not been able to prove its reliability, quality, and security as the Apple phones. Its operating system, Android, is not as popular as the IOS to the average citizens in parts of the world such as the US. Additionally, according to Haroun (2016), the stagnating incomes for the middle class in the developed world may reduce the demand for its primary products. Another significant threat is the entry of Chinese mobile firms into the developing world's market which may cut down the demand for the Samsung phones.

Competitive Advantage

Over the years, Samsung Company has continued to dominate the electronics market to emerge as the worlds top three companies in this sector (Song & Khanna, 2016). The firm has emerged to become a trendsetter regarding innovation in mobile phones, home appliances, and other consumer products. Additionally, it provides a broad range of products in same categories from which the customers can choose. It has set itself from other competing products in its dedication to product innovation.

Haroun (2016) indicates that Samsung has established six laboratories for a design that deal in technological advancements to make new products. Also, the company has an annual expenditure for product research of up to six billion dollars. An additional advantage is its marketing strategies and capabilities.Its commitment to remain a leading brand has enabled the firm to maintain a sustainable competitive advantage. Through its brand campaign in various media channels, it has created a mutual relationship with its customers (Song & Khanna, 2016). The marketing team has made sure that the consumers of their products, especially the smart phones, are always in anticipation of new and improved gadgets. The good relationship with its dealers in various parts of the world such as the United States and Europe has also given it a competitive advantage over other brands.

The manufacturing strategy of Samsung has also given them an advantage over other competing companies. To enhance logistics in controlling stocks and booking, it has established a subsidiary industry in India to satisfy the Asian market. Also, on smartphones, the company has adopted a systematic way of releasing flagship phones alongside its main competitors such as Apple Inclusive. In such products, they always ensure they develop a new design or technology to compete fairly with those of the other companies. For instance, as Apple released iPhone 7, Samsung released S7 edge with a unique design on its screen.

Company Capabilities

In the year 2007, when the Apple Inclusive hit the streets with its iPhone, Samsung was not known as a leading for high-end mobile phones. However, in about three years Samsung developed its first smartphone, the Galaxy S1. In a period of three years, the company had grown to have as many sales as the Apples phones. By 2013, according to Song and Khanna (2016), it was controlling over 30% of the smartphones market share in the world. The reason why Samsung rebounded that fast is its dynamic capabilities.

Of significance is the capability by Samsung produce highly diversified products. Conti (2006) indicates that Samsung is among the few firms globally that have the ability to handle home appliances, digital products, communication devices, and other components under one roof. These categories work together and support each other. The collaboration between these divisions enables the company to incorporate high technology in its smartphones to their other products. For instance, the OLED display for smartphones and the high-level semiconductors were also used in its other appliances. To enhance this kind of cooperation, the company frequently holds internal conferences and forums to discuss the technological advancements across their products. The Research and Development personnel are also regularly meet with the head of various affiliates to discuss ways of improving the products.

The company also has the capability to produce high-quality products in all its categories of electronics. To enhance this ability, the management has adopted the philosophy of internal competition in which the affiliate components apply market principles to their transactions. Haroun (2016) indicates that the heads of different divisions are encouraged to adopt strong performance-based policies to have the upper hand in their competitiveness. Additionally, the best performing departments are rewarded while the personnel is promoted. Also, the remuneration and accrued benefits for the employees are based on the performance evaluation of the various business units within the company. These measures have created the desire to excel among all employees, and, in turn, led to high-quality products from all departments.

Distinctive Competencies

Samsung Company has built its foundation on four core competencies. They include innovative culture, technology leadership, customer value creation, and creative people ("Electronic Industries-affiliated companies-SAMSUNG Group- SAMSUNG," 2017). In this era of globalization, for any organization to survive, creativity is critical. For this reason, Samsung SDI has mastered the art of nurturing creative people to achieve sustainable growth. Additionally, it has secured technology leadership and internalized creative elements in the organizational culture to serve their clients in a better way. Samsung SDI also became the first company in Korea to utilize the six sigma in 1996 as an initiative for innovation ("Electronic Industries-affiliated companies-SAMSUNG Group- SAMSUNG," 2017). It has since been deployed in all departments, suppliers, and customers. The core competencies are geared towards the sustainability of the business and increasing the lifecycle of its products. For instance, it is in the course of eliminating toxic substances, even those within the regulations, such as lead from its products to promote environment conservation. It is the company's position that sustainability management would help to achieve economic growth and promote trust with the stakeholders by conserving the environment. Also, as part of its core competency, the firm takes part in various community projects such as free eye surgeries to the patients who are visually challenged.

References

Conti, J. (2006). Samsung Where are you Going? [Consumer electronics]. Communications Engineer, 4(1), 38-43. Doi:10.1049/ce:20060106

Electronic Industries-affiliated companies-SAMSUNG Group- SAMSUNG. (2017). Samsung,com. Retrieved 16 February 2017, from http://www.samsung.com/us/aboutsamsung/old%20about%20samsung/samsunggroup/affiliatedcompanies/SAM.

Haroun, I. (2016). Exploring Corporate Strategic Management and Global Expansion on the Case Study of Samsung Electronics. Archives of Business Research, 4(1). Doi:10.14738/abr.41.1814

Song, J., Lee, K., & Khanna, T. (2016). Dynamic capabilities at Samsung: Optimizing Internal Co-Opetition. California Management Review, 58(4), 118-140. Doi:10.1525/cmr.2016.58.4.118