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Samsung Electronics Co., Ltd. is a South Korean multinational electronics company headquartered in Suwon, South Korea which is the subsidiary of the Samsung Group. Since 2009, Samsung has been the worlds largest information technology company. Samsungs products and services go through 88 countries over the world with around 370,000 employees. Samsung Electronics displaced Apple Inc. as the worlds largest technology company in 2011 and has been a major part of the Economy of South Korea Samsung has applied Cost Structure strategy in combination with Differentiation strategy in order to maximize profits. Its products are grouped into some Products lines (PL). Every product line could be treated as single business units, among of which there are some strategic business units (SBU). Mobile phones Tablets and PC Laptops are instances of SBU that Samsung has applied effectively cost leadership and differentiation strategies (Jeff Bordes, 2009).
I Introduction Samsung Electronics Co., Ltd is a South Korean multinational electronics company headquartered in Suwon, South Korea which is the subsidiary of the Samsung Group Since 2009, Samsung has been the world's largest information technology company Samsung's products and services go through 88 countries over the world with around 370,000 employees Samsung Electronics displaced Apple Inc as the world's largest technology company in 2011 and has been a major part of the Economy of South Korea Samsung has applied Cost Structure strategy in combination with Differentiation strategy in order to maximize profits Its products are grouped into some Products lines (PL) Every product line could be treated as single business units, among of which there are some strategic business units (SBU) Mobile phones & Tablets and PC/ Laptops are instances of SBU that Samsung has applied effectively cost leadership and differentiation strategies (Jeff Bordes, 2009) II Product Line A: Mobile phones & Tablets Samsung adopted differentiation strategy in developing Mobile phones & Tablets, and this is an appropriate one that brings great profits to Samsung While other mobile makers (e.g Apple Inc.) are trying to attract high-class customers in their mobiles market, Samsung focuses on mid-tier and low-tier market (BBC, 2012; Business Standard, 2013) Samsung mobile & tablet support various operating systems (such as Google Android, Symbian, Windows Phone, etc), use the company own SRAM and chips, support free software and tutorial, and customize products along customers' demands Christina Bonnington (2013) states that there is a over 280 percent increase of the company’s market share since 2012 At the same year, Samsung became the World's largest cellphone maker with $95 million sales of smart phones Mike W Peng and Thomson South-Western (2007 – 08) believed that any business must concern the resources and capabilities In order to sustain the current strategy, Samsung should focus on some resources and capabilities (R&C), especially three ones as physical, technological, and innovation resources and capabilities First, Samsung must focus more on its physical R & C, since its main difference is that the company own materials for mobiles and tablets Meanwhile, BBC (2012) stated that upgrading factories where produce chips, CPU, memory and other elements and opening more plants and research & developments centers are necessary Second, Technological R & C Samsung must ensure that its mobile & tablet technology is unique and avoid violating copyright laws that can harm its image For instance, recently, Samsung has announced the first 5G network helps customers going Internet hundred times (Tomorrow Works, 2013) Third, Innovation R & C Samsung must keep up with new innovative ideals that create more unique for its mobile devices For examples, its new tablet ATIVQ adopt two operating system at the same time, while current tablets can give printing order directly (Daily Times, 2013) III Product Line B: PC/ Laptop While development of Samsung's mobile devices adopt differentiation strategy, its PC/ Laptop product line adopt Cost Leadership strategy Samsung's Vice President Won ParkCostof told that Samsung had been: “Focused on TV, focused on mobile, but the next ten years is going to be focused on PC." (stated in Seth Barton, 2012) The cost leadership strategy has been proved as suitable strategy for Samsung PC/Laptop area The company's worldwide sales has increased from million laptops to 10 million laptops between 2005-2010 Main customers of this line is medium-end people (students, workers, etc.), schools, and offices (Brian Westover, 2011) These are clients with medium "pocket" who want products with best quality with appropriate price According to Youkyung Lee (2012), Samsung's PC/Laptop market share was 10% in 2012 (compared to 7% in 2011 and only 5% in 2010) Moreover, Samsung has relocated it's design and manufacturing factories in countries with lower producing costs like Taiwan or China combined with using its owned raw materials Cost leadership has brought Samsung huge success in PC/ Laptop area (samsung.com, 2011), but the company still need to focus on some R & C to sustain the strategy Samsung is suggested to focus on technological, Human Resource, and reputation R & C With technological R & C, Samsung must give strong attention on its products' secrets, copyrights, especially patents (Seth Barton, 2012) Second R & C is Human Resource In order to maintain current strategy, Samsung should have appropriate ways to find a human resource with high quality (Tarun Khanna et al., 2011) but still maintain low cost Those employees' best characteristics are trustworthy, talented, and knowledgeable Final R & C is Reputation Since this product line of Samsung is still young, while other PC/Laptop sellers are well-known, Samsung must have plans leverage its reputation by providing good products/services, working with communities, and managing structure IV GE matrix Analysis 9-cell GE matrix or GE Business Screen gives business chances to evaluate its product lines/SBU in order to find suitable future project for each PL/SBU After analyze the figures (See Figure & Figure on Figures and References), a suggestion for future movement of the company has been made Apparently, the company’s mobile phones & tablets industry attractiveness (3.68) and competitive strength (3.19) are very high, which means this is the leader-type product in the GE matrix It also shows that this will be a high market share PL in current worldwide market Samsung must invest more on this PL On the other hand, Samsung’s PC/ Laptop is not very successful PL While its industry attractiveness is quite high (2.2.5) the competitive strength is low (only 1.41) Therefore, it is suggested that Samsung should harvest this PL However, Laptop and PC market is an attractive area in the market, so Samsung can consider selling them once the company has a more specific and careful plan V Figures and References 5.1 Figures Figure 1: Mobile phones & Tablets - Industry Attractiveness Industry Attractiveness Significant degree Attractiveness (Weight) (1) (rating) (2) Total score (1x2) Market size 0.25 Market growth rate 0.12 0.36 Market profitability 0.2 Competitive intensity 0.18 0.72 Tech development 0.05 0.15 Pricing trends 0.15 0.3 Demand variability 0.05 0.15 Total - Competitive Strength Competitive Strength Significant degree (Weight) (1) Strength (rating) Total score (1x2) (2) Market share 0.2 0.8 and 0.07 0.14 brand/Marketing 0.13 0.52 Strength of competences Relative strenght assets Quality 0.2 0.6 Customer loyalty 0.07 0.28 Relative profit margins 0.03 0.09 Production capability 0.14 0.28 Access to financial & other 0.06 investment resources 0.18 Management strenght 0.1 0.3 Total Figure 2: PC/ Laptop - Industry Attractiveness Industry Attractiveness Significant degree (Weight) (1) Attractiveness (rating) (2) Total score (1x2) Market size 0.2 0.4 Market growth rate 0.12 0.36 Market profitability 0.2 0.4 Competitive intensity 0.23 0.69 Tech development 0.05 0.1 Pricing trends 0.15 0.15 Demand variability 0.05 0.1 Total - Competitive strenght Competitive Strength Significant Strength degree (rating) (2) (Weight) (1) Total (1x2) Market share 0.1 0.1 Strength of assets and competences 0.1 0.2 Relative brand/ Marketing strength 0.16 0.16 Quality 0.2 0.2 Customer loyalty 0.04 0.08 Relative profit margins 0.05 0.1 Production capability 0.19 0.19 Access to financial & other investment 0.06 resources 0.18 Management strength 0.1 0.2 Total 5.2 References score BBC ( 2012) Samsung Galaxy Note tablet launched mid-patent trial Online source: http://www.bbc.co.uk/news/technology-19272893 BBC (2012) Samsung upgrades Texas mobile device chip factory Online source: http://www.bbc.co.uk/news/technology-19336147 Brian Westover (2011) New Samsung Laptops Target Offices, Classrooms Business Standard (2013) Samsung unveils Galaxy S4 mini phone to target mid-tier market 2013 Online source: http://www.business-standard.com/article/technology/samsung- unveils-galaxy-s4-mini-phone-to-target-mid-tier-market-113053000357_1.html Christina Bonnington (2013) Samsung's scattershot product strategy explained Online source: http://www.wired.co.uk/news/archive/2013-06/26/samsung-product-diversity Daily Times (2013) Innovation in mobile printing by Samsung Online source: http://www.dailytimes.com.pk/default.asp?page=2013\07\13\story_13-7-2013_pg5_14 Mike W Peng and Thomson South-Western (2007 – 08) Global Business Chapter 4: Leveraging Resources and Capabilities samsung.com ( 2011) Samsung Electronics annual report Seth Barton ( 2012) Samsung aims to be no.1 in laptops - we talk to the top men in Seoul Online Source: http://www.expertreviews.co.uk/laptops/1292824/samsung-aims-to-be-no1-in-laptops-we-talk-to-the-top-men-in-seoul/2 10 Tarun Khanna et al ( 2011) The Globe: The Paradox of Samsung’s Rise Harvard Business Review Online Source: http://hbr.org/2011/07/the-globe-the-paradox-of- samsungs-rise/ar/1 11 Tommorow Works ( 2013) Samsung Announces World’s First 5G mmWave Mobile Technology 12 Youkyung Lee (2012) Samsung sees 10 percent growth in PC sales Yahoo Finance