Samsung Electronics Case
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What are the ingredients of SECs corporate turnaround strategy? What are the implications for marketing?
How strong is the Samsung brand? Can Samsung pass Sony (and others) to remain a top ten global brand?
As Chief Marketing Officer, what are Kims role and responsibilities? How has he built his influence?
Introduction
Samsung is one of the most important brands in the world. According to the business week Samsung ranked as top twenty most important brands in the world. Samsung is valuable because of its superiority and novelty in manufacturing electronic product and for their innovative marketing strategy. It is taking the competitive advantage by taking front place in technology industry. Over the past 39 years, Samsung Electronics Company (SEC) has evolved from a low cost manufacturer of black and white televisions, to one of the most technologically advanced and prestige companies of modern time. Samsung Electronics Company is a Korean based electronics company. In 2000, Samsung was not even ranked among the worlds most valuable brands. After a few years under Eric Kim, the head of Marketing at Samsung, all that changed. In 2003, only three years later, Samsung was ranked 25 at an estimated $10.8 billion dollars. Samsung believe in only one vision to lead the digital world. They believe that they will find all solution through technology innovation for the challenge of tomorrow. So the basic aim of Samsung to create new markets by efficient process and developing modern technology and continue to make themselves trusted market leaders. Everything Samsung done its guided by their mission and its to be the best digital company in world.
History
Samsung Electronics was created in 1969 as a division of the mammoth Korean chaebol Samsung Group. It began its journey in 1938 as a company that primarily produced agriculture products. In the 1970s, the company focused on shipbuilding, chemicals, and textiles. The Samsung Electronic Company was officially founded in 1969, mainly to produce low-cost black and white televisions. From that product, Samsung Electronics gradually developed a diverse line of consumer electronics that it first sold domestically, and later began exporting. The company also began branching out into color televisions, and later into a variety of consumer electronics and appliances. In the 1980s, Samsung was the producer of that eras technological inventions: televisions, VCRs, and microwave ovens. During that era, Samsung focused on quality and technical leadership. Samsung believes that the success of their contributions to society and to the mutual prosperity of people across national boundaries truly depends on how they manage their company. KunHee Lee, current chairman of the Samsung Group always teaches his employees, always demands superiority in product design and process efficiency. Under Lees leadership, Samsung Corporation has become one of the worlds primary memory producers in all types of PCs, digital cameras, game players, and other electronics products. The Samsung Group in 2005, which included Samsung Electronics Company, was the largest conglomerate in South Korea. The total net sales of the Samsung Group had reached $135 billion in 2004. In that same year, the Group had 337 overseas operations in 58 countries and employed approximately212,000 people worldwide. The three core business sectors within the Group are electronics, finance, and trade and services.
Micro and Macro Factor Analysis
Porters Five Forces Analysis:
Rivalry: Samsung was engaging in a highly competitive business environment. For electronic product, Samsung faced known rivalry in the industry, such as Sony, LG, Sharp, Hitachi. In semiconductor segment , Samsung had potential rivals from young Chinese manufacturers.
Supplier Power: Semiconductor suppliers were mainly from China, and all the hardware manufacturers were able to access to these raw material resources so the power of supplier was low.
Buyer Power: Semiconductor and electronic industry was mainly competing on margin. The powerful buyers, who demanded lower prices, would hurt the companys profit. For the semiconductor products, due to the nature of PC industry, the price could decrease dramatically (up to 50%-75%) for every cycle (1-2 years depends on product). In electronic segment, the life cycle of a product was also short. For this reason buyer power was high.
Threat of Substitutes: DRAM could not be replaced in computer memory, so substitutes for semiconductor segment was low. For the electronics segment, substitute products were interchangeable.
Threat of New Entrant: New Chinese manufacturing Companies were growing fast. Even though, they were still young, they could be a big threat in the future. Hence the threat of new entrant was medium for now.
SWOT Analysis
Focusing on Samsung in 2003, as it main rivals were from Japan.
Strength
i. Product: SEC had a wide range of products (TV, LCD, Ram ) with great quality.
ii. Market position: Samsung had a great market share. SEC was the number on global manufacturer of DRAM, as well as, big screen TV, LCD display, and microwave oven.
iii. Revenue share: because Samsung had a high market share, it also had a higher revenue share.
iv. Knowledge: Samsungs main rival was Sony. Samsung also has knowledge about its target market. These knowledge enable Samsung with competitive advantages.
v. Brand acknowledgement: Samsung brand a very good reputation.
Weakness
i. Price: Samsung was known for a higher price than its competitors such as LG. In 2003, Samsung offers its laptop product, which has higher price than Dell, HP.
ii. Promotion: Before 2000, Samsung focused on its manufacturing side, rather than marketing. Hence, it was lacked of marketing strategy, and direction. Marketing section had poor techniques to increase Samsung brands awareness. After Eric Kim joined the company as executive vice president for marketing, things began to turn around.
iii. Samsung was slow to response to the change of the competitors
Opportunity
i. International market expansion: Samsung would have a lot of opportunity in international markets.