Case Study on Samsung
About Samsung
Samsung is a South Korean multinational company headquartered in Samsung Town, Seoul. It is the largest South Korean brand based on the chaebol business structure. Samsung was founded by Lee Byung-chul in 1938 as a small trading company. After that, management diversified its business into several areas including electronics, aerospace, surveillance and etc. There are several subsidiaries companies are controlled by Samsung group that includes Samsung Electronics, Samsung Heavy Industries, Samsung Engineering and Samsung C&T,Samsung Life Insurance and etc.
Strategic positioning of Samsung-For strategic positioning, Samsung has adopted distinct kinds of strategies in order to achieve mission and vision of company: –
By using innovative technology
–
By reducing production cost
–
By reducing price of products
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By using innovative and social marketing tools
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By providing best after sales services
Key Performance Indicators Key performance indicator present several aspects and evaluates financial performance business. It also shows organizational capabilities. Some KPI's of Samsung are mentioned below:
Increment in demand of company
Growth in market share of company
Positive feedback from consumers
Growth in sales and profit
Competitive edge over other companies
Increase satisfaction level of consumers
Increment in brand value
Chaebol and Keiretsu Business Structure Cheabol
This business conglomerate structure was developed in South Korea in the 1960s.
In this, owners create global multinationals business corporation having huge international operations.
The word "chaebol" means "business family" or "monopoly" in Korean.
The chaebol business structure can be considered as a single large company or several groups of companies. It is managed by single family and founder group. For example Samsung, Hyundai and LG.
Keiretsu
A keiretsu is group of companies which is controlled by interlocking business relationships along with shareholdings. It is an informal business group that plays most important role in economy of Japan.
The member companies of this group is having some portions of the shares of other firm. This set is centered on a core bank.
With the help of this system, management can easily manage each company from stock market fluctuations along with takeover attempts.
This approach is very useful in long term planning in development of new innovations.
PESTLE analysis Political: In most of the markets where Samsung operates, so business entity has to consider government rules. Economic: This dimension is especially critical for Samsung, as the opening up of many markets in the developing world has meant that the company can expand its global footprint
Socio-Cultural: Samsung is primarily a South Korean Chaebol or a family owned multinational. This means that despite its global footprint it still operates from the core as a Korean company. Technological: Samsung can be considered as being among the world’s leading innovative companies. Environmental:
The management of Samsung all environmental and ethical issues in production of several kind of products and services. Legal: Labor laws, environmental protection laws and service standards that influence business decision
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Comparison of Korean Samsung Cheabol with Japanese Keietsu Cheabol
Ownership of single family
Big corporation is divided into several other subsidiaries firm
Greatly influenced by stock market Fast decision making process Formal business structure High merger and acquisition rate
Keietsu
Group ownership
A single group is developed by grouping small firm through relationship and shareholding
Saves organization form fluctuations of stack market
Informal business structure
Avoid mergers and acquisition
Competitors of Samsung Sony
A very well known Japanese brand.
Facilitating high quality electronic goods and other services.
Good brand reputation in world wide for:
Gaming consoles
HD television
Sound and music system
LG
LG Corporation is the fourth-largest chaebol in South Korea.
Business entity is managing business in more than 80 nations.
It is dealing in chemical, electronics and telecom products
LG Electronics Inc is one of the leading company for its consumer or household products:
Refrigerator
TV, Washing machines and etc.
Competitor Analysis Samsung ,2013
Sony ,2013
LG,2013
Revenue,
206978.30
56773.10
1,017
Net Profit
25,893,396
(1071.62)
85
Total assets
193748.60
118593.27
3,125
Gross Margin %
39.79
34.0
40.0
Net Margin %
11.32
0.63
5.19
Return on Equity %
19.09
2.04
6.40
Variables
SWOT analysis of Samsung Strengths
Hardware integration with many open source OS and software
Innovation and design
Focus on environment
Low production costs
Weaknesses
Too low profit margin
Lack its own OS and software
Focus on too many products
Opportunities
Growth in demand for quality application processors
Growth of tablets market
Threats
Rapid technological change
Declining margins on hardware production
Breached patents
Business Strategies of Samsung
The company has an experience of pursuing both, cost leadership along with differentiation strategies during its lifetime. With Eric Kim becoming chief marketing officer of the company, there are several changes are implemented in marketing and promotional activities and management practices of business entity.
Samsung has created a unique ecosystem.
It assists management successfully in order to spread its product line across both of these dimensions
The future
In order to get good position in market and management of competition with several competitor, Samsung has adopted different kinds of strategic and long term plans. In this process, business entity is aggressively investing in Silicon Valley with several big campuses to help it start to lead in software as it already does with hardware. Ability to offer customized memory chips that no other manufacturer could offer allowed them to command premium pricing on these products
Samsung Projects
Samsung C&T Awarded EPC Contract for Power Plant Projects in Algeria Samsung C&T achieved a 630 billion KRW Private Gas Combined Cycle Plant order in Turkey. Samsung SDS is selected as the primary contractor for the "Digital Suwon" project that plays very important role in construction of electronic community. Company is working in development of new standards for UHD Televisions.
Reference
About Samsung. 2015. [Online]. Available through: <http://www.samsung.com/in/aboutsamsung/samsungelectronics/res earchdevelopment.html>. [Accessed on 7th February 2015]. Chaebol. 2015. [Online]. Available through: <http://www.businessdictionary.com/definition/chaebol.html>. [Accessed on 7th February 2015]. The Keiretsu of Japan. [Online]. Available through: <http://www.sjsu.edu/faculty/watkins/keiretsu.htm>. [Accessed on 7th February 2015].
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