TABLE OF CONTENTS
I. INTRODUCTION 2
II. STRATEGIC DIRECTION FOR SAMSUNG ELECTRONICS 4
III. RECOMMENDED STRATEGY FOR SAMSUNG ELECTRONICS 5
IV. JUSTIFICATION FOR THE CHOICE OF STRATEGIES 6
Samsung Electronics is a South Korean multinational electronics company headquartered in Suwon, South Korea. It is the flagship subsidiary of the Samsung Group, accounting for the majority of the group’s sales. Since 2009, it has been the world’s largest information technology company by sales.
Samsung has long been a major manufacturer of electronic components such as semiconductors, chips, flash memory and hard drive devices for clients such as Apple, Sony, HTC and Nokia.
The Samsung’s Core Values
The Samsung Electronics believe that living by strong values is the key to good business. That’s why these core values, along with a rigorous code of conduct, are at the heart of every decision it makes.
The Samsung’ vision for the new decade is to “Inspire the World, Create the Future.”
The company are committed to inspiring communities around the world by developing new technologies, innovative products and creative solutions. It is also committed to creating a brighter future by developing new value for its core networks: industry, partners and employees
II. STRATEGIC DIRECTION FOR SAMSUNG ELECTRONICS
Nowadays, Samsung is developing and introducing the market a wide range of electronics products from mobile phones, cameras, PC to semiconductors. Due to its limitation, the report will focus on Samsung’s mobile market to identify a reasonable strategic direction for the company.
In order to achieve the business objectives as well as to take the most of the company’s resources, the appropriate strategic direction for Samsung in the long term is to focus on tapping into the growth of the developing markets to gain the dominant market share in the technology industry.
It is inherent that in the recent years, the developing or emerging markets have been very attractive pies in the eyes of the big companies, especially in the technology industry. The fact is explained in more details by the features of these markets. First of all, the population of the developing is youthful and growing. The young people always love exploring and experiencing new technology and have a higher level of willingness to pay high prices for what they love, which leads to a big demand in consuming high tech products such as mobile phones, personal computers, cameras… Secondly, developing markets are highly fragmented, with few national brands that have a commanding presence. Hence, the big foreign companies with famous brands will not have to face up with high competition pressure from the domestic companies. Also, they are easy to gain the consumers’ belief in quality of products and services due to their own reputation on the global. Thirdly, the emerging or developing markets are featured by abundant labor force of low price. This creates an opportunity for the enterprise to cut down the production cost as well as to gain better control on the pricing issues. Due to above reasons, in the severe competition for market share, wide presence and a big share on such markets will clearly grant the companies enormous revenues as well as profits.
In the case of Samsung Electronics, the capture of the market share on the developing markets is extremely a significant strategic direction for Samsung’s development. The first step is to increase the Samsung’s presence and market share on the surrounding markets in Asia, specifically in China, Vietnam, India, Singapore, Malaysia…
This strategic direction is completely in accordance with the capabilities of Samsung. It is known that high quality and elegant styles are highly appreciated characteristics of Samsung’s products, which make it easier to have close access to the young generation in the developing countries. In addition, as one of the leading electronics companies in the South Korean, Samsung has very strong financial strength enough to make intensive marketing activities as well as expand professional sale systems in other countries in order to stimulate the consumption of its products and gain rapid growth in sales as well as market share. Moreover, it is worth noting that one of the competitive advantages of Samsung when compared with its competitors-Apple is that Samsung is able to bring products to the market more quickly than Apple thanks to controlling the entire manufacturing process for its smart phones. Samsung makes everything from chips to screens at its own factories, allowing it to change designs and pump out new products at a rapid pace. By comparison, Apple relies on many suppliers to make parts for its devices and companies such as Hon Hai Precision Industry Co. and PegatronCorp. in Taiwan to assemble them, requiring timely coordination between all the companies. However, Samsung’s production cost per unit is still higher than Apple’s. Therefore, the cheap labor force of the developing countries, of China and Vietnam as instance, clearly enable for Samsung to reduce cost arising from the production process and generate more profit.
III. RECOMMENDED STRATEGY FOR SAMSUNG ELECTRONICS
In fact, there have been a lot of factors as well as different strategies creating the great success of Samsung as today since its inception. The strategies Samsung undertook include, but are not limited to: product launch strategy, new market strategy, marketing strategy… However, the efficient marketing strategy is considered the main reason for the success of Samsung in recent year.
For the purpose of increasing the market share on the developing market, the new product launch strategy along with the intensive marketing strategy needs to be followed and adjusted to fit with the business environment of such emerging markets.
The new product launch strategy is to flood the market with a myriad of Samsung’s products in a short period of time. It means that Samsung will continue to introduce more and more new products based on development and improvement in the software and designs. It is inherent that a wide range of products provide the consumers with various choices and appeal more customers as well as generate higher level of revenues and market share.
The intensive marketing strategy plays an important role in bringing products of the enterprises to its potential customers, increasing awareness of the brands and stimulating the consumption. This strategy is undertaken not only by investment in advertising on the multimedia such as TV, magazines, newspaper… but also by making use of sale promotions such as rebates, discounts and other incentives promoting the customers’ purchasing power. In addition, because of being performed in the Asia developing countries, the marketing activities should pay attention to the culture of such countries. It is clear that the activities showing the corporate social responsibility will generate positive effects on both the enterprise and its products.
IV. JUSTIFICATION FOR THE CHOICE OF STRATEGIES
Undertaking the strategy of new products is not beyond the capabilities of Samsung. While Apple releases few but highly anticipated high-end products Samsung inundates both low-end and high-end market with a wide variety of products, which is one of the reason for the rapid increase in the number of Samsung’s customers. The continuous efforts of Samsung for change along with experience gained from the development of products in the past creates a strong basis for it to produce high quality items to satisfy demands of its customers.
(Source: Korea Times)
Figure 2: Samsung Smartphone Releases 2009-2010
Additionally, there is a fact that Samsung is not only the biggest adopter of Google’s Android software, but they also have smart phones running the Windows Phone OS as well. While Apple is narrowed to its own IOS, Samsung is not held by these same boundaries. This strategy of Samsung can work well because they are able to not only diversify their hardware, but the software that runs on their smart phones as well.
Furthermore, in the context of fast-spaced global economy, change is constant and innovation is one of the survival factors for all technological companies. A strategy for the purpose of releasing products of higher quality requires Samsung’s people to work harder to find out the smarter technological solutions so as to improve the functions of the products and to meet higher demands of its customers. Therefore, thanks to this strategy, Samsung will remain the leading position in its industry and fulfill its mission to enrich the people’s lives, look forward to a sustainable future.
The marketing strategy is in accordance with recommended strategic direction in the next years. Firstly, Samsung has completely a strong financial basis to carry out the strategy. It is clear that Samsung has spent more on marketing than research and development for the first time in at least recent four years.
(Source: Korea Times)
Figure 3: Estimates of Samsung marketing spending
Secondly, in the emerging markets, the consumers’ awareness of the brands of Samsung is not high. The investment in marketing activities is a very efficient solution to this issue.
The appropriate choice of strategies and strategic direction play a significant role in the existence and development of the enterprises in the long term. To my mind, tapping into the growth of developing markets is a suitable strategic direction for Samsung. The combination of the intensive marketing strategy and the new product launch strategy will not only grant Samsung big opportunities to capture the market share on the emerging markets but also reinforce its leading position in the information technology industry.
Brad Reed (2013), One key to Samsung’s success: ‘They’re not stopping to think. They’re just making more phones’. Available at <www.bgr.com/2013/03/28/samsung-success-analysis-401977/> accessed on 15th August 2014
Forbes Magazine (2012), Samsung’s Market-Flooding Strategy May Not Work Much Longer. Available at <http://www.forbes.com/sites/greatspeculations/2012/09/06/samsungs-market-flooding-strategy-may-not-work-much-longer/> accessed on 15th August 2014
Samsung Business Strategy. Available at <http://faculty.ist.psu.edu/bagby/432F12/T11/samsung-business-strategy.html> accessed on 15th August 2014
Micheal R. (2013), Samsung changed its marketing strategy in 2013, still spent millions. Available at <www.sammobile.com/2013/12/17/samsung-changed-its-marketing-strategy-in-2013-still-spent-millions/ accessed on 15th August 2014
Samsung Electronics Co., LTD; Samsung Electronics America, INC.; Samsung Telecommunications America, LLC v. Apple Inc. Case5:11-cv-01846-LHK (PSG). United States District Court Northern District of California San Jose Division. 27 Aug. 2012. Available at <http://assets.sbnation.com/assets/1317266/show_temp.pdf> accessed on 15th August 2014
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Sam Grobart (2013), How Samsung became the world No. 1 smartphone maker. Available at <http://www.businessweek.com/articles/2013-03-28/how-samsung-became-the-worlds-no-dot-1-smartphone-maker#p1> accessed on 15th August 2014
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