With over 200 subsidiaries across the continent, Samsung has devised a powerful business model in order to remain profitable (Samsung Global Strategy Group 2015). The firm uses innovative strategies and practices in order to produce new products. The concept of research and development (R&D) is also taken seriously.
Such changes include eye-catching electronic devices and superior smartphones that can address the needs of more consumers. This paper analyses Samsung’s business strategy. The findings are used to recommend the most appropriate strategy that can support the strategic needs of this organisation in Asia.
Current Strategic Position of Samsung
Understanding Samsung’s Strategy
Throughout the 1970s and 1980s, Samsung was manufacturing and marketing cheap television sets and microwaves. According to history, the firm was struggling due to lack of superior products. The level of competition was extremely high thus making it impossible for Samsung to achieve most of its business goals. Many people believed that ‘the firm was also struggling with financial uncertainty’ (Lee & Lee 2014, p. 4).
Experts believe strongly that things have changed significantly for this giant company. The company’s products are superior and admirable. Many people ‘purchase Samsung’s products because they believe that they catch the pulse of the consumer’ (Singh 2012, p. 4). Samsung Group has understood how to focus on the buyer’s emotions. It achieves this goal by offering elegant, superior, and attention-grabbing devices. Such devices are designed in a professional manner in order to remain competitive in the global market.
Within the past two decades, Samsung has been combining various business strategies in an attempt to address the changing expectations of its global customers. It has focused on the power of innovation in order to achieve these goals. The company’s products are designed to meet the needs of every high-end market (Jung, 2014). However, competition has always remained a major challenge for Samsung. That being the case, the firm focuses on powerful approaches in order to deal with the increasing level of competition.
After producing its first Samsung Smartphone, the corporation conducted a thorough market research in order to understand the major issues facing different consumers. The firm realised that ‘most of the existing competitors were using high prices to market their devices’ (Bouman 2014, p. 8).
This observation encouraged the firm to lower the prices of its smartphones by around 20 dollars in various nations. This move was aimed at attracting many potential customers. More people realised that such smartphones were affordable. The move made it easier for Samsung to market more smartphones than ever before. The same business strategy was adopted for every segment and product (Singh 2012). This move improved the company’s business performance within the shortest time possible.
The above discussion gives a summary of Samsung’s business strategy. Samsung therefore continues to use a wide range of strategies and approaches in order to position itself in the global market. To begin with, the firm uses various approaches to change its brand image (Jung 2014).
Samsung uses powerful adverts and innovative strategies in order to become the leading producer of quality devices and services. As well, brand repositioning is undertaken in an attempt to inform more people about the firm’s superior products. This practice has become ‘a long-term investment at the company’ (Lee & Lee 2014, p. 8). It is currently attracting a large number of potential buyers across Asia.
PESTEL Analysis
Political
The political environment has been favourable for Samsung. However, the Asian region is associated with new political changes that can threaten its future performance. The current instability faced in Korea can affect the firm’s future. For example, the conflict between North Korea and South Korea can affect the region’s future political climate. Such political uncertainties can have disastrous implications on Samsung’s future business goals. Samsung considers such uncertainties whenever designing its strategic plans (Xu 2009).
Economic
The company operates in different Asian countries. The economic performances of such nations continue to dictate the firm’s business performance. The current economic vagueness experienced in the world should also be taken seriously. Many customers in different ‘Asian countries have portrayed a reduced purchasing ability’ (Markides 2004, p. 6).
The firm is presently considering new strategies that can support its business objectives. Statistics show that the economies of the nations are rising steadily. South Korea’s current GDP is 1.39 trillion US dollars (Nakagawa 2014, p. 221). The slow economic growth encountered in China has led to reduction in shipments to the country. This issue can affect the region’s economy.
Social Factors
Asia has encountered new social values and practices due to the current wave of globalisation. The changing needs of the targeted customers will affect the corporation’s business model. For example, more people are travelling frequently and engaging in various social activities. Samsung will be required to re-pattern its business strategies in order to address the cultural values and needs of many consumers in Asia.
Technological Factors
The company is very innovative thus making it successful. Samsung has powerful technological abilities and strengths. It uses such technologies to produce innovative and superior mobile devices. The use of modern technologies makes it possible for the Samsung to realise its business objectives.
However, Apple has ‘accused the firm of imitating its product design’ (Tong-hyung 2014, p. 3). The current lawsuit is affecting the trust of many customers in different parts of the world. The firm will also be required to use new technologies in an attempt to deal with competition and succeed in the smartphone industry (Xu 2009). Companies are also working hard to produce faster. Some competitors are also focusing on the superiority and effectiveness of bigger smartphones (Xu 2009).
Environmental Factors
New laws and policies force companies to engage in sustainable business practices. The firm is expected to focus on sustainable business strategies and operations. The company is required to keep the environment clean, manage waste, and support the needs of every surrounding community (Singh 2012). The company will have to ‘face stricter rules regarding the issue of sustainability in the coming years’ (Zafar, Habib & Bilal 2014, p. 72). These environmental issues are critical towards supporting many firms in this industry.
Legal Aspects
Samsung has been forced ‘to pay heavy fines for charges that it imitated Apple’s iPhone and iPad’ (Tong-hyung 2014, p. 3). This legal issue discouraged more customers in different parts of the world from using the company’s devices. As well, the firm has to consider various business laws and regulations in order to achieve its objectives. The current lawsuits affecting the firm can affect its future business performance (Xu 2009).
Analysis
According to the above analysis, Samsung has been facing competition from many companies. Some of these companies include ‘Apple Incorporation, Sony, Toshiba, Ramtoms, and Hewlett Packard’ (Singh 2012, p. 7). It is also notable that the firm operates in different market segments thus attracting more competitors.
The existence of competition is something that forces Samsung Group to focus on the most appropriate business approaches and practices. Such actions are undertaken in order to achieve its business potential. This issue explains why Samsung Group has been undertaking numerous research from the market. Such researches mainly focus ‘on the changing consumer preferences, competitive strengths of different companies, changing demographics, and emerging markets’ (Lee & Lee 2014, p. 3).
The next important step towards having a successful strategy is using reduced prices. Samsung Group ‘renews its pricing strategy frequently’ (Lee & Lee 2007, p. 498). This move is undertaken in order to deal with the increasing level of competition.
The pricing strategies are also dictated by the changing preferences and expectations of many Asian consumers. The prices used by immediate competitors are used to ensure the company’s products are purchased by more customers. The pricing strategy plays a significant role towards increasing the company’s sales and revenues.
The above business model explains why Samsung is currently one of the most profitable companies in the world. Its presence in many emerging Asian nations makes it more competitive. The firm is also playing a major role in its industry. This is the case because it ‘sets the pace for innovation, product improvement, customer support, sustainability practices, and technology use’ (Singh 2012, p. 3).
Samsung has also ‘forced different competitors to come up with superior gadgets that can meet the ever-changing needs of more consumers’ (Sun, Sun & Xu 2014, p. 4). Samsung’s efforts have forced many players in the industry to reduce their prices. This move has made different smartphones available to more customers. Such efforts have made Samsung a recognisable player in the industry.
Nature of the Industry
Consumers of such smartphones have remained loyal than ever before. They ‘purchase new devices whenever they are launched in the market’ (Bouman 2014, p. 8). The leading players in the industry have understood how to focus on this kind of loyalty. The competitors are always convinced that every new product will attract more potential buyers (Kess & Isoherranen 2014).
This massive industry is therefore characterised by numerous companies that market different smartphones to the increasing number of potential consumers. Bouman (2014) argues that the ‘industry is defined by ever-evolving designs and mobile technologies’ (p. 11). The leading competitors in the industry use aggressive pricing methods and continuous imitation in order to achieve the best outcomes. Most of the targeted consumers are very sensitive about prices thus forcing the players to focus on the best business practices.
The major consumers in this industry are usually aged between 18 and 45. As well, many older citizens and politicians have been observed to purchase such mobile devices. Rivalry has also remained extremely high in this industry. This is the case because many competitors use similar pricing strategies, technologies, and R&D processes in order to address the changing needs of more customers (Sun, Sun & Xu 2014). However, some companies have identified their specific competitive advantages in order to remain successful in this industry.
Apple has remained the biggest player in the smartphone industry. The firm is admired by many customers because of its ability to innovate and produce powerful devices. It focuses on a few devices in order to achieve the best outcomes. Apple Incorporation has ‘remained the most profitable, successful, and admirable firm in the industry’ (Singh 2012, p. 13).
It is also ‘identified as one of the biggest technology corporations in the globe today’ (Kess & Isoherranen 2014, p. 1117). The firm uses powerful R&D strategies and numerous resources to produce revolutionary smartphones such as the iPhone 4 and the iPhone 5. The company launched the iPhone 6 thus making it the most successful smartphone in the whole world. This argument shows clearly that Apple is a successful player in the industry.
As mentioned earlier, the smartphone industry focuses on the needs of many customers aged between 18 and 45 years. Majority of these customers have good jobs and opportunities. They are tech-savvy and have good education (Singh 2012). The competitors in the industry also understand how to partner with different software producers in order to deliver powerful apps. Such applications are usually aimed at addressing the needs of these potential customers.
The ‘other important observation is that the customers are global’ (Sun et al. 2014, p. 11). This means that the players in the smartphone industry should use international strategies to market their devices to more customers. Bouman (2014) believes strongly that ‘new markets will continue to emerge for these smartphones’ (p. 5).
More young and old people are embracing the benefits of such smartphones. The availability of 3G and 4G internet services also makes such devices more useful. These developments encourage more competitors in the industry to produce quality products than ever before.
Samsung’s Value Chain
Samsung uses a powerful value chain strategy in order to achieve its goals. The firm’s logistical operations are executed by different companies and subsidiaries. For instance, Samsung Electronics Logitec plays a major role towards supporting the company’s operations (Samsung Global Strategy Group 2015).
The operations make it easier for the company to deliver more goods to different potential customers. Proper marketing strategies are also used to support to support the company’s value chain. Sales promotions, advertisements, competent marketers, and logistical operations support the company’s value chain. The firm also focuses on the best practices in order to deliver quality services to different customers.
The other important consideration is that Apple uses powerful production strategies. It has been outsourcing different services in order to produce its superior devices. This approach has continued to produce the best results. This is the case because the firm has managed to reduce its production costs. The reduction of its production costs makes it possible for the company to market its superior products using reduced prices (Kess & Isoherranen 2014).
The firm’s revolutionary devices have remained successful in different parts of the world. However, Apple can never ignore the presence of powerful competitors such as Samsung, HTC, and Nokia, and Tecno (Kess & Isoherranen 2014). This situation explains why these companies focus on the most appropriate strategies in an attempt to emerge successful in the smartphone industry.
Challenges Facing Samsung
Many companies in this industry continue to face various challenges. Most of these challenges are external in nature. That being the case, the firms must identify and use the most appropriate strategies in order to achieve their business potential. Samsung is currently facing numerous challenges.
It is appropriate for the firm to use powerful strategies and approaches in order to deal with such problems (Bouman 2014). This approach will make it easier for the firm to achieve its business objectives. The PESTEL analysis presented below gives a detailed analysis of the major external factors affecting the corporation
Business Environment
Samsung also faces different strengths and weaknesses. Such strengths have been critical towards supporting its business strategy. The existing weaknesses are monitored and analysed in order to develop better strategies for effective business performance (Zafar, Habib & Bilal 2014).
The existence of opportunities encourages the company to pursue most of its business goals in a specific market such as Asia. Some threats can also affect the company’s future performance. The SWOT Analysis presented below gives a succinct summary of the company’s external and internal environments.
Porter’s Five Forces
The industry’s level of rivalry and attractiveness continue to present new challenges to the company. A proper understanding of the forces faced by Samsung in the industry can encourage the leaders to make appropriate business decisions (Rowley & Paik 2008). Such decisions will eventually support the company’s business practices. The Porter’s Five Forces presented below gives a detailed overview of the major issues facing this company.
Industry Rivalry
The smartphone industry has become very competitive. This is the case because there are many companies such as Nokia, Apple, and LG. Most of these companies ‘are fighting for dominance in the industry thus making it impossible for Samsung to become the leading player’ (Katkyama 2010, p. 24). Competition in emerging Asian markets is also on the rise. These changes continue to affect the company’s performance in the smartphone industry.
Barriers to Entry
This industry has giant corporations with operations in many countries. Every newcomer will be forced to incur numerous expenses in order to have a significant impact (Manchester 2012). As well, the companies incur numerous expenses in order to market their revolutionary devices to more consumers. This situation explains why the threat of new entrants is extremely low (Nedelea & Paun 2009). However, the existing players are making it hard for the firm to achieve most of its business potential.
Bargaining Power of Buyers
Many customers are providential to choose the best smartphones in the market. This is the case because the market has been flooded with different devices (Manchester 2012). The buyers are also ready to purchase specific products that can satisfy their changing expectations.
Producers and marketers of such phones must consider these needs in order to innovate the best smartphones (Nedelea & Paun 2009). Many consumers also want different companies to engage in sustainable practices. The bargaining power of such customers is extremely high thus forcing Samsung to embrace better business practices.
Bargaining Power of Different Suppliers
Many suppliers in the industry are able to offer quality services. They also supply a wide range of raw materials and accessories. Companies such as Samsung should be ready to address the needs of such suppliers in order to achieve their potential. It is appropriate for companies in this sector to analyse the changing behaviours and demands of these suppliers (Hill & Jones 2012). This approach will make such companies more successful.
Substitute Goods
The ‘smartphone industry is associated with a wide range of superior and substandard mobile devices’ (Hill & Jones 2012, p. 18). These smartphones can complete various tasks and satisfy the needs of more customers. Samsung has been forced to use powerful pricing methods in an attempt to deal with this threat.
The existence of such products will make it impossible for companies such as Samsung to become the leading players in the industry (Samsung Electronics: Sustainability Report 2014). The firm should therefore use powerful business tactics in order to attract more customers.
The smartphone industry is characterised by ‘unique trends that are not observed in the other sectors’ (Kess & Isoherranen 2014, p. 1114). To begin with, the level of competition in the industry has led to new changes and improvements. Such improvements are recorded every year in an attempt to deliver the best support to more customers. As well, the industry is ‘fast-paced because the players have the required financial strength’ (Bouman 2014, p. 8).
The companies operating in this industry have been focusing on the power of R&D in an attempt to produce superior products. Such products are aimed at transforming the lifestyles of the targeted customers. This fact explains why smartphones have been constantly changing. The companies have been adding new features that can attract more customers. Every new smartphone is believed to be ‘an improvement of its immediate predecessor’ (Bouman 2014, p. 9).
SWOT Analysis
Internal Analysis
The other important aspect of Samsung’s strategy is its continued focus on research and development (R&D). Samsung uses the concept of R&D to identify the gaps facing the industry. The firm attracts new experts in order to produce new smartphones that can compete successfully in the global market.
The same approach is used to improve different products in order to make them superior (Lee & Lee 2007). Innovation is embraced at this company. The practice makes it easier for Samsung to produce new products that can address various gaps in the market. Consumer feedback and suggestions are considered whenever innovating new products. Samsung has managed to produce powerful products that have the potential to address the needs of its loyal customers.
Tackling the Above Challenges: Implications
The use of Change Theory can produce the best results. For instance, Kurt Lewin’s change theory can produce the best outcomes (Hernaus 2011). The PESTEL and Porter’s Five Forces presented above should be used to address the issues affecting Samsung. The firm uses different strategies in order to deal with the above challenges. Such strategies are aimed at supporting the targeted business objectives.
The first approach focuses on the power of continued research and innovation. Samsung Group has employed advanced technologies and experts in order to produce quality smartphones. Such devices can compete successfully in the global market (Samsung Electronics: Sustainability Report 2014). The ‘firm uses the concept of innovation in order to realise every targeted goal’ (Hernaus 2011, p. 7).
The innovative practices embraced by the company are aimed at addressing various issues. The first issue to consider is the changing expectations of different consumers. The company produces powerful devices and smartphones that can deliver the best promises to such customers. The proposed theory will ensure the firm focuses on the best outcomes.
The completed PESTEL outlines the business strategies and innovations embraced by different competitors. The firm uses the strategy to produce new devices that can deal with the challenge of competition. Unfortunately, the firm has faced numerous lawsuits from Apple Incorporation.
The move has also ‘affected the company’s profitability after paying heavy penalties for alleged mobile design infringement’ (Jung 2014, p. 137). These penalties have affected the company’s image thus discouraging more consumers in different parts of Asia from purchasing its products. This challenge has emerged from the company’s continued efforts to become successful.
The second strategy used by Samsung in order to deal with the above challenges revolves around the concept of pricing. Nakagawa (2014) argues that ‘Samsung’s pricing strategy has been appropriate within the past ten years’ (p. 223). The firm examines the prices used by its rival companies. The firm uses cheaper prices to market its smartphones. This strategy has encouraged more customers to purchase and use the company’s mobile devices.
The emergence of cheaper products in the market has threatened the sustainability of Samsung’s devices. For instance, HTC is currently marketing cheaper smartphones in the market. New players such as Lenovo are making it impossible for Samsung to remain the leading player in the smartphone industry. Many consumers in Asia have also been associating the company’s cheap prices with ineffectiveness. This new problem continues to affect the company’s performance.
The firm is also known to use proactive measures in an attempt to deal with competition. For instance, the company produces numerous devices within a very short time. This prolific approach makes it easier for the firm’s devices to compete directly with other superior products.
Many customers have been ‘purchasing such products because they are superior, elegant, and cheap’ (Hernaus 2011, p. 8). However, this strategy has resulted in new problems. For instance, Samsung’s prolific strategy has discouraged many customers, especially in the developing world. Many Asians are ‘not ready to purchase new devices after every six months’ (Chang 2011, p. 76). That being the case, the targeted customers have decided to focus on superior devices such as the iPhone 6.
Samsung also embraces the power of technological changes in order to deal with competition and address every challenge encountered in the industry. The firm collaborates with different companies such as Google Incorporation in an attempt to produce powerful smartphones.
The company’s devices use Android operating system (Nakagawa 2014). However, many ‘consumers in the developing world believe strongly that the operating system is no match for Apple’s iOS’ (Chang 2011, p. 12). This scenario explains why the company’s products are yet to perform positively in the Asian market (Nakagawa 2014).
The above tools show how the external environment is forcing different companies such as Samsung to engage in sustainable practices. The concept of sustainability focuses on different issues such as ‘waste management, environmental conservation, and focus on the existing regulations’ (Chang 2011, p. 98).
The firm has collaborated with different stakeholders in order to promote the most appropriate sustainability practices. The corporation is therefore required to embrace the best practices in order to deal with these implications. The decision ‘to invest in new countries has encountered numerous challenges such as political instability, economic uncertainty, and reduced revenues’ (Chang 2011, p. 103).
Recommendations to Meet the Company’s Strategic Needs
According to the proposed theory, several changes will be required in order to support Samsung’s strategic needs and objectives. Such changes should be executed in accordance with the internal and external forces affecting the corporation. It is agreeable that Samsung uses some of the best business practices in an attempt to emerge successful (Samsung Global Strategy Group 2015).
However, the challenges identified above have been making it impossible for Samsung to realise most of its business goals (Chen 2015). The SWOT Analysis presented below should be used to support the best strategies.
The first route should focus on the benefits of corporate social responsibility (CSR). This approach makes it easier for many corporations to engage in ethical and sustainable businesses. Samsung’s new CSR should consider every ethical, legal, and environmental issue in order to achieve the best outcomes.
The approach will ensure the company’s innovation and R&D team produces original ideas. Such designs should ‘be competitive, innovative, and revolutionary’ (Chen 2015, p. 3). The firm should involve different stakeholders whenever addressing various sustainability issues.
A powerful ‘market strategy should consider different factors such as the prices of competitors, demographics, consumer needs, and presence of substitute goods’ (Jung 2014, p. 138). The above Porter’s Five Forces model should be used to address the needs of different suppliers and customers. The understanding will ensure the firm identifies ‘new market segments, technological changes, and changing demographics’ (Nakagawa 2014, p. 224).
The targeted customers in the continent will be able to support the company’s business strategy and eventually make the firm successful. Competition is something unavoidable in the smartphone industry. Innovative marketing approaches and customer-focused practices will eventually support the company’s entrepreneurial needs.
TOWS Analysis
This TOWS Analysis shows that Samsung should redesign its strategy. Samsung’s focus on different products affects its competitiveness in the global market environment (Chen 2015). This situation should encourage the company’s leaders to concentrate on a limited number of segments. The smartphone sector should also be given priority because it has the potential to produce the best results (Katkyama 2010). These strategic paths will eventually make Samsung a leading marketer of advanced smartphones in Asia.
Appendix
- Mission
Devoting our technology and talent towards creating superior services and products that can contribute to a sustainable global society. - Vision
Samsung is committed to inspire its stakeholders and communities by leveraging new technology, creative solutions, and innovative products.
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