The Rise of Samsung Electronics

Case study

Sjoerd van EerdenburgEvgenii GvozdevRoelof van Laar

Content

Company profileSWOT analysisMarket analysisPorters five forces analysisStrategy recommendations

Samsung company profile

South Korean company, founded in 1938Largest chaebolTotal revenue € 185.1 bn (2012) Samsung Electronics largest SBU, revenu € 140.5 bn (2012) CEO is Dr. Oh-Hyun Kwon72 Countries206,000 employees

Samsung smart phones

First SE mobile phone in 1988Apple introduces smartphone in 2007SE smartphones unsuccesful at first3.7% market share at the end of 2009Google Android launched in 2010Samsung Galaxy S in June 2010Market leader in 2012, with 215 m units

SWOT analysis

Strengths Weaknesses

Patent infringement

Main competitors are largest customers

Product cannibalization

Own OS and software are unpopular

High market share

Innovation and design

Diversified product line

Strong brand value

Opportunities Threats

Low cost Chinese products

Rapid technological change

Price wars

Advertising revenue goes to/through Google

Unrelated profile diversification

Increasing demand for SE quality application

processors

Strong partnerships that can be enhanched

Growing Indian market

Market analysisKey Issues:

Samsung performs as flanker, not as leader

Looses market share in emerging smartphone markets to cheaper brands (China -6% 2011-2012)

Needs to develop further software of its own, vulnerable to Google’s power

Market Overview

Porters five forces analysisThreat of new entrantsHigh, mainy Chinese competitors

Threat of substitutesHigh, many similar products on the market

Customer powerHigh, low threshold for switching

Supplier powerLow, Samsung market leader

Competitive rivalryHigh, fierce competion with Apple, Sony, SK Hynix, etc.

Complementors (sixth force)Open Handset Alliance (OHA): Android OSApple, market creator, large customer

Strategy recommendationsSamsung must position itself as market leader and resume its current strategy concerning product innovation and market divided segments in Western Market (including their power in the supply of smartphone components and marketing to revenue ratio), because

Samsung must research and develop its own software platform, because

Samsung must attack and enter the growing segment of cheaper smartphones and especially conquer China and be heavily invested in India (long term growth), because both countries will enlarge the smartphone market as a whole and have the need for a cheaper smartphone

SourcesCase study: The Rise of Samsung ElectronicsSamsung Electronics annual report 2012http://www.samsung.com/us/aboutsamsung/investor_relations/financial_information/downloads/2013/SECAR2012_Eng_Final.pdf

Hong, Y. S. (2012). Modes of Combinative Innovation: Case of Samsung Electronics. Asian Journal of Innovation and Policy, 1, 219-239.Hsin, C. (2010). The Innovation Strategy of Core Competence and Enterprise Growth–The Case Study of Samsung.Vergara, R. (2012). Samsung Electronics and Apple, Inc.: A Study in Contrast in Vertical Integration in the 21 st Century. American International Journal of Contemporary Research, 2(9).