Samsung Electronics
Table of Contents
Company Achievements
Macro Environment
Samsung Company VRIO analysis
KSF & VRIO are used to assess Samsung’s strength
Porter’s Five Forces Reaction
Porters Diamond Model
SWOT Analysis
Global companies have to deal with many challenges which can affect their global operations. This essay explains how Samsung operates to give a better idea of global company operations. The discussion will be centered on the places where Samsung employs a large number of employees as well as the organization’s profit margins. This essay will discuss the issues mentioned and use certain tools to analyse Samsung’s strengths. The essay will use VRIO, PESTLE and a SWOT analysis to analyze Samsungs operations. The essay will also provide a macro- and micro-environment analysis in which Samsung operates.
Highlights from the companySamsung was founded in Daegu in South Korea, in 1969. Samsung’s growth has been phenomenal since its founding. It has expanded to many countries, achieving a multi-national status. The organization’s plants and sales network are located in 61 different countries. Samsung employs approximately 308,745 workers in 61 different countries. Despite operational challenges that Samsung electronics faces, its market capitalization as of October 2017 was $372.0B (Lee, 2006). The amount indicated was a rise in the net income that the firm had earned in 2016. Samsung’s 2006 consolidated revenue was (Korea Republic won) 53.33 billion and its operating profit was 9.22 trillion. Samsung’s performance for 2016 was KRW 201.87 and profit KRW 29.14.
Samsung Electronics, despite its reported profits, has been facing a major operation challenge as a result of the global competitive environment. Samsung Company has been able to reduce the complexity of its challenges by using key performance measures. Samsung can be measured by key performance metrics such as the earning per share ratio, the number or intercompany transactions and finally the number among joint venture partners. It can be shown that using the key indicators above, Samsung has achieved a 24.9 increase in earnings per shares in 2011 as compared to 2010. (Lee, 2006). The organization number is also included in the intercompany transactions within the related parties circles. In the case of the inert Joint Venture Analysis, you can see the company who is involved.
Samsung Electronics has faced a lot of challenges over the years, but its biggest is the high level of competition that it faces from Apple and Sony. Samsung had adopted several trends in order to overcome the current challenges. This has helped it maintain a strong competitive advantage. Samsung’s recent invention of curve TV technology has given it a competitive advantage over other organizations. Samsung still has to fight against the other phone manufacturers such as Apple. Huawei, Lenovo, +Motorola and others despite the innovation.
A change in the economy of electronic products can affect a lot of companies. Samsung electronics can be found in Asia, the United States, Europe, and other parts of world. Macro environment is a factor that affects every organization as it determines the buying power and ability of the consumers to satisfy their desire for material things. Any firm that operates in an industry such as electronics, which uses heavy metals including cadmium, mercury or other heavy metals should be aware of these natural elements. PESTEL analyses all macro-environments that are external to the firm and, in many cases, they cannot be controlled by them.
Macro EnvironmentThe political environment is just one external factor that has a global impact on the electronics industry. Politics can have a significant impact on global firms. In some cases, certain regimes will even promote a particular brand within their own countries. Politics can even force some companies to pull out certain gadgets. As new technology and services change the wants and needs of clients around the world, so does global social trends. The electronics industry has a big problem because people have a hard time using their gadgets properly. This is particularly true with the newer devices like tablets. The industry is still facing a large problem of training many people to use different electronics. Legal issues are also a major factor in the marketing of many products. Samsung electronics is no different from any other organization when it comes to the challenges posed by macroenvironment elements.
A firm’s microenvironment includes all of its close associates that may interfere with an effective product or service delivery. Any firm will benefit from a positive environment as it improves productivity. In most cases, the stakeholders are directly affected by the business. Through voting, stakeholders can also influence the business. Stakeholders are a source of short-term profits for organizations, but their demand for profits, excessive control, and other factors can have an impact on the company’s employees, products and services. The media can either benefit or destroy a firm. In order to reduce the negative impact of a negative event, organizations need to establish a positive relationship with the media. The direction of an organization is largely determined by the suppliers. Therefore, a supplier’s behavior can directly affect the business. Samsung, for instance, may increase the quality or speed of their products if they provide poor service. Only a close working relationship with the supplier can help to ensure your business’s security and competitiveness.
The employees in an organization are the core of that business. An effective employee will keep a company competitive. Important is to employ staff that have appropriate skills and knowledge. It is essential to hire employees with the right skills and experience. This process should continue through their employment and include ongoing training and promotion. Development and training are vital to the competitiveness of Samsung Company in its service marketing. The customer service, and even sales, can be negatively affected by a company that has staff lacking skills, experience or motivation. A business’s customers are also a microenvironment. After all, every business needs customers. It is important that any marketing plan be designed in such a way as to retain and attract customers with products that are tailored to their needs and wants, and by providing excellent customer service. The globalization of people and markets is perhaps the most significant and inevitability economic expansion that occurred during the 20th and 21st Centuries. Globalization can have a negative or positive impact on businesses.
Samsung is in a strong position to compete with this value chain. In this case, customization, quality, technology and brand are the most relevant variables to analyze. Brand equity is affected by the history of a company. The number of years that an organization has been in business is used to calculate the brand value. To measure technical proficiency, design rules are applied. R&D and process engineering improve quality. The amount of R&D invested by the company determines how much quality is valued. Samsung’s V-C is the highest in comparison to the other firms in its industry. It is also the most cost-effective. Samsung presents itself as a leading company in the industry, and this includes cost and quality.
Samsung Company VRIO analysesSamsung is a company with many resources and capabilities that give it a sustainable competitive advantage. This is based on analyzing the VRIO. If China and other competitors are able to catch up with the value drivers of the provisional continuing modest benefits category, then they may pose a greater threat. This is mainly due to factors like product mix, quality/customization capability and fabrication capacity. The analysis highlights intellectual property as well as technological advantages of the edge products. The drivers are important because they stop other companies from copying their products. This prevents customers from switching to competitors’ products.
A VRIO study is an extension of the PESTLE, which examines the macroenvironment. VRIO can be used as a tool to assess the macro-environment of an organization. It examines the resources of the company, its competitive implications and whether it is possible to improve the organizational environment. Samsung electronics is best assessed by using six-force models. Combining the six-force model with VRIO analysis allows for the identification of the company’s threats and opportunities on the market. Samsung is the market leader for electronic products despite the fact that it has many competitors (Australia, 2016). Samsung Electronics VRIO results indicate that they have a competitive edge in the DRAM industry. This is supported by their investment in R&D as well as the leadership that they practice.
Samsung Electronics should be commended for its human relationship-management strategy, which gives employees a chance to contribute to ethical decision-making in the workplace. Human relationship management has had a positive impact on Samsung because high productivity is ensured and employees have the opportunity to participate in ethical decision-making. Samsung Electronic’s VRIO analysis shows that it has a fair resource capacity when compared with other companies.
Samsung Electronics is facing high levels competition from companies such as Apple. Huawei, Lenovo, +Motorola and others. The companies under consideration, although managed differently than Samsung, still show a moderate level of competition. In some cases, the products of these companies are less expensive than Samsung’s. Sanyo or L.G are two examples of companies that are more globally recognized than Samsung. They also have a higher market share than Samsung. This presents a significant competitive disadvantage for Samsung. Samsung’s competitors are weaker than Samsung, despite the fact that they have the same competitive advantages. This has led to Samsung being dominant on the market. Apple products, for example, are expensive in comparison to the products provided by Samsung. Apple’s products are less compatible with Android devices manufactured by Samsung.
KSF and VRIO used to find Samsung’s weak points. Samsung is primarily weak due to its lack in software and operating system. A high-cost software development can result in an organization incurring losses indefinitely. Samsung has another weakness: focusing too much on products. Samsung loses its focus when it competes with too many firms (Australia, 2016). Samsung products cost more than products from Chinese companies.
Porter’s reaction to the five forcesThe five forces of Porters in relation to Samsung revolves around stages in the industry that aim to achieve dominance and control on the global market. Management is also working to improve production and innovation. Samsung must consider the competition in all areas when evaluating the Porter’s Five forces. Samsung manufactures many different brands and, because of this fact, it has competitors in all areas of production. Apple Inc. seems to be the main competitor for Samsung, as they have used their trademarks in violation with property and innovation rights. (Dogl and others, 2915). LG and Sanyo have been around as long Samsung has in the consumer electronics industry. Samsung has a competitive advantage over their competitors due to their ability to adapt their production methods and styles of electronics for different markets and customers around the world. Samsung’s products are used all over the world thanks to the power of their suppliers. Samsung Electronics products are priced at reasonable levels, indicating that they do business well with suppliers. Samsung Electronics has a strong buyer’s power because their products are widely accepted and they have a wide range of products. Fourth, the threat of substitution is a force that can be used to make Samsung Electronics improve its products or lose the global market share it has.
Porters Diamond modelPorter’s Diamond model works for any business and Samsung electronics needs to make sure that they have long-term and continuity goals to ensure their survival. Samsung has received a large amount of support from South Korea’s government due to its reputation as one of the leading innovators and inventors of electronic products. Samsung’s structure, strategy and rivalry has helped it to grow, improve and reach $175billion in revenue for the year 2016. (Porter, 2008). Samsung Electronics still needs to improve their innovation because the demand conditions in the mobile and electronic industry are where the competition is most fierce (Porter 2008). Samsung’s products are designed to meet the needs of consumers from different parts of the world. The Porter’s Diamond model also focuses on supporting industries which are essential to the growth of an industry. These industries are close enough to each other to be able to exchange information and ideas that could prove useful for their respective companies. According to the diamond model, the factors that are required for an industry’s growth are not something you inherit but rather create. Capital, infrastructure, and trained labor are all specialized production factors that have made industries run and function well. Other factors, such as raw material and unskilled labour that any company can obtain, have no significant impact on the sustainability. Samsung electronics should be able manage the porter’s initiatives at departmental levels, as each sector is assigned its own set of goals and objectives over a period of time. In the diamond model, the government is also a key player. Its role is to be able to balance the goals and targets of each department and act as a challenger. There are rules that ensure that companies based anywhere can work within the parameters of their government to avoid any conflict that may arise with their competitors or state.
SWOT analysisA SWOT evaluation that is ethically based in Samsung’s decision-making involves how they dispose of the waste electronic generated by their products. Samsung wants to be compliant with regulations that promote the use of green energy. Samsung, a multinational company, is required to take action against environmental degradation. The firm’s strategy is weak because it is not able to stop the production and sale of electronic devices, but is required to show the relevant authorities how it will combat any eWaste products that may be generated by its products. Samsung’s other SWOT dilemma involves defective products that are a danger to consumers. Samsung has a weakness in their attempt to have products that are tech-savvy and can compete against rivals. Samsung is facing these challenges as it attempts to become a trusted source for authentic electronic devices in different countries. Samsung’s management can exploit a loophole if it is unable fulfill these mandates.
Miles and Snow’s strategic plans reveal that Samsung uses the reactor-based strategy to implement, innovate, and invent its electric and telecom products. Samsung uses the prospector model in its manufacturing industry to gain a larger market share. The company started out as a manufacturer of a particular brand. Now, they have expanded to other areas that are under their umbrella. It also defends its markets, ensuring that loyal customers can still buy the same products they are used to. This shows how Samsung has matured over the years.
