Samsung Case Study
- Length: 1790 words (5.1 double-spaced pages)
- Rating: Excellent
I. Summary of the Facts
This case study analysis is on Samsung Electronics Company (SEC) and how it has climbed up the ranks in the past decade via calculated marketing strategies, extensive market research and analysis, and a risky bet on how the market will evolve. Samsung’s principle outlook took time and education from within and thereafter the general market.
Samsung Electronics Company (SEC) began doing business in 1969 as a low-cost manufacturer of black and white televisions. In 1970, “Samsung acquired a semiconductor business” which would be a milestone that initiated the future for SEC. Entering the semiconductor industry would also be the beginning of the turnaround phase for SEC. In 1980, SEC showed the market its ability to mass produce. SEC became a major supplier of commodity products (televisions, microwave ovens and VCRs) in massive quantities to well known original equipment manufacturers (OEMs). For this reason, Samsung was able to easily transition into a major player in the electronic products and home appliances market (Quelch & Harrington, 2008).
SEC was mainly focused in manufacturing; therefore, it’s no surprise that the executives themselves were also focused on their manufacturing plants. Profits that SEC received were soon reinvested into Research & Development, manufacturing, and supply chain activities. Unexpectedly, in 1997, a financial crisis hit the Asian market. Even though SEC’s sales were $16 billion, they still had a negative net profit. SEC executives exercised major restructuring efforts that resulted in the dismissal of 29,000 workers and the sale of billions in corporate assets. SEC was able to ride the Asian Financial Crisis and was able to reduce its debt dramatically to $4.6 billion, from $15 billion, over a 5 year period. Furthermore, SEC was able to increase its net margins from -3% to 13% (Quelch & Harrington, 2008).
In 2002, SEC posted net profits of $5.9 billion, on $44.6 billion in sales, and as a result in 2003 became “the most widely held stock among all emerging market companies”. Unlike other companies who chose to outsource their manufacturing process, SEC remained committed to its core competence, manufacturing (Quelch & Harrington, 2008).
During 1998-2003, SEC invested $19 billion into chip factories and $17 billion into manufacturing facilities for TFT-LCDs, which would be a major component for flat screen TVs and computer screens. Even though SEC was focused in the manufacturing process, it didn’t make SEC a rigid company.
How to Cite this Page
| Essay on Samsung Smartphone Service Innovation - 1. INTRODUCTION The entire companies always endeavor to get large amount of profit, this is achieved by conducting large-scale production, marketing management, and certainly on product innovation (Sundbo,1997). Providing new services for existing customers can create value, and magnetize new customers, are basic to enlarge the competitiveness of successful the organizations (Edvardsson et al,2010). Product innovation can attract the customer that implicated to companies benefits. In S-D logic perspective the firm cannot make value but only offer the value through value proposition (Vargo & Lusch, 2008).... [tags: Company, Products, Global Economy]|
:: 12 Works Cited
|Essay about Samsung Competitive Analysis - 1. Sources of Samsung’s cost advantage in DRAMs Samsung’s cost advantage is clearly visible from the comparison of costs (and their elements) that were borne by the company and its competitors in 2003 (Tab. 3): Samsung’s overall cost was 24 per cent lower than the weighted average cost of the other four producers; two most significant elements of the cost structure, i.e. raw materials and labour, were 36 and 27 per cent lower respectively. When expressed by means of a relation of average selling price to costs (“productivity” of cost elements), the differences are even more visible (comp.... [tags: Business Analysis Market ]||1373 words|
| Samsung's Marketing-Mix Strategies from the 1980's to 2003 Essay examples - ... This market segmentation is for the smaller gadget sales like the MP3 players which are of low to mid- range prices. Thirdly, the decision making attributes behavior observed in by the business level purchases is the basis of “business user “segment. The hi-tech brand image to be showcased by the Canadian firm, customer support and quality services criteria for purchases are the indicators to target this segment by Samsung (Song & Noh, 2006). Fourthly, the “hobbyists” could be defined as niche market segmentation with limited members.... [tags: redifining the brand globally]|
:: 10 Works Cited
|Case Study Of Nokia Essay examples - It was 22nd April 2008. Two and a half years into Apple’s iTune Music Store dominating the global market, Nokia is finally challenging its status quo. This day saw Nokia Music Store opening its door to music lovers in Australia – the eighth media store after Britain, Ireland, Germany, Italy, Finland, The Netherlands and Singapore. The Nokia Music Store contains millions of tracks from both global and local artists and users will be able to download songs to their computer supported by Windows XP or Vistas PC and transfer them to their mobile phones be it Nokia or other brands7.... [tags: Case Study, Music, Market, Analysis, solution]||1929 words|
|Recommendations To Atlas Electrica - Case Essay - Atlas Eléctrica recommendation: External strategy: 1) Buy La Indeca and the store chain La Curacao: - Why: To keep market shares and leadership in Central America, deeper market coverage. - How: Take long-term loans - Alternative: It will kill the company if other competitors buy La Indeca (Mabe, Whirlpool, LG, Samsung in Mexico)they would take market shares from Atlas Eléctrica and by the time wipe out the company from Central America where Atlas Eléctrica has the biggest market shares.... [tags: Business Case Study]||1736 words|
|Essay about Marketing Case Study - Marketing Case Study Introduction Brief History of the Company Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 267.93 Million in 2007. With activities in the three interlocking domains of healthcare, lifestyle and technology and 161,500 employees in more than 60 countries, it has market leadership positions in medical diagnostic imaging and patient monitoring, colour television sets, electric shavers, lighting and silicon system solutions.... [tags: Business Management Strategy Analysis]||1938 words|
| Assessed Case Study: Sony Essay - Introduction Sony is a world-renowned electronic manufacturer originated in Japan, having led the electronic industry for a long time in its 67 year history. However, with technological ad-vancement and emerging companies’ development, the position of Sony in the market was greatly threatened. Sony has faced unprecedented challenges since the late 1990s. This deteriorating situation forced Sony to an organizational reconstruction. The ineffi-ciency of the first reconstruction led to another one and the replacement of its CEO.... [tags: electronic industry, role-base-culture]|
:: 13 Works Cited
| Essay on Case Study: Effective Managerial Leadership - Case Study: Effective Managerial Leadership The successful implementation of a public policy to solve a social problem will greatly depend on the abilities of a public administrator. Furthermore, numerous case studies can show examples of how a successful public agency administrator can achieve goals through dedication and commitment. The following discussion will present a thorough analysis of main political, social, and economic forces that affected Dr. Gayle in establishing legislation to fight the AIDS epidemic as is presented in the case study Managing Across Boundaries: A Case Study of Dr.... [tags: Case Study]|
:: 2 Works Cited
| Amyotrophic Lateral Sclerosis Case Study Essay - Case Study: A thirty six year old male has developed severe muscle weakness throughout the body. The condition began fifteen months ago with a left foot drop and within a year, he described difficulty with speech and swallowing, muscle twitching and cramping, and muscular atrophy throughout the upper and lower limbs. Within the last two months, his breathing has become more difficult, and there has been a noticeable difference in his voice. Prior to the fifteen months, he presented little to no symptoms.... [tags: Case Study]|
:: 4 Works Cited
| Essay on Principal Miller Case Study - Leaders in the school have hard decisions to help make on a daily basis. They need to evaluate their decisions to make sure they are ethical and effective. Administrators need to listen to all sides of a situation and evaluate all options before they make a decision. This process is difficult because administrators need to make sure that all parties involved are satisfied with the decision that was formed. The Requested Change case study In the case study with Principal Miller, he had to make a decision to change the instruction program or to keep it.... [tags: Decision Making Case Study]|
:: 3 Works Cited
To cope with supply-chain demands, the company remained flexible by building 12 manufacturing plants in China during 2003 and setting up R&D facilities in India (Quelch & Harrington, 2008).
With 17,000 scientists, engineers and designers, SEC was able to create an endless amount of digital products. Due to its fast decision-making process and focus on a digital future, SEC was able to move a new product from the drawing board to its commercialization phase in only five months. This ability was almost 3 times faster than its competition (Quelch & Harrington, 2008).
II. Statement of the Problem
A major external challenge SEC had to overcome was brand recognition since it was selling its products mainly to OEMs; therefore, the company had very little interest in working on the Samsung brand. Another internal challenge was with SECs managers’ concept of marketing. The managers perceived marketing as nothing more than selling and as a result, their concept of selling was that it was only needed when the product was weak.
III. Causes of the Problem
SEC began doing business as a major manufacturer for basic electronics and home appliances for well known OEMs. As stated in the case study, Samsung’s branding was focused in neither the message nor the logo that was used. The marketing budget was focused more on short-term results versus long term branding creation. Since the marketing was focused on “cheap OEM”, Samsung was not able to develop effective branding. Branding is essentially creating a difference from one product to another. A lack of brand knowledge was also a factor in Samsung’s weak brand name since the message or the logo was not the same everywhere Samsung was sold. Since there were no campaigns related to brand knowledge, Samsung was not able to create a “unique brand association with customers” (Kotler & Keller, 2008).
Another problem was the manager’s ability to appreciate the value of marketing or in the current case branding. The root of this problem was that managers perceived marketing as being equal to selling. Again, Samsung’s top executives were on a mission to change from “cheap OEM” manufacturer to a top of the line product manufacturer (Quelch & Harrington, 2008). This change came after a decade (1980s to 1993) of being an OEM provider without much regard to their brand. SEC managers did not grasp the concept that SEC was trying to develop a global brand on high quality products that Samsung’s R&D centers were creating. The asset in the managers’ eyes was the strong product. This point of view is stated in the case study when Mr. Kim, the executive VP of global marketing, explained that managers:
“believed that good products sell themselves, that marketing was nothing more than selling, and that selling was only needed when you have a me-too or weak product” (Kotler & Keller, 2008)
IV. Possible Solutions
A solution to the weak brand is to outsource the development of the brand to an expert in the advertising field. The pros to outsourcing advertising are:
• Ability to perform a complex local, regional and global market research
• Create a logo that will be accepted and recognized globally
• Send out a strong message that will create brand knowledge among current and future customers.
The cons to outsourcing advertising would be to relinquish control of the most important asset Samsung was trying to create, it’s brand, and place it in another companies hands.
A solution to the manager’s perception of marketing was simple, education. The pro would be that Samsung would now have the total support of the entire company and the focus would now lie on branding and R&D. The con is that it will take time to have all the managers buy into the concept.
V. Solution and its Implementation
In order to resolve the manager’s lack of understanding the value of marketing, they should all be sent to a value added seminar that is focused on the scope of branding. Some of the concepts that should be covered are brand equity and brand knowledge. Regarding the development of a weak brand, the VP of Global marketing should create an effective marketing team that is composed of a:
• Marketing Strategy team whose main task is to develop global marketing strategy. This team should control the global budget, control the global brand campaign and oversee global CRM.
• Regional Strategy team that has the same focus as the Marketing Strategy team, but at a regional scale.
• Product Strategy team who will be the worker bees of the entire group and focus on conducting market research (globally and regionally), gathering the information and analyzing information (Quelch & Harrington, 2008).
The challenge behind the development of these teams would be the ability to recruit qualified personnel who are either ready to take on the challenge or have the experience to take on this important task. If the personnel fall short then micro-managing may occur or the teams may have problems sticking to a budget.
As stated in the case study, Samsung Electronics Company via its new branding strategy campaign was able to rank No. 1 in many digital/electronic categories at a Global scale. These categories included Big-Screen TVs, LCD Displays, DRAM chips, and Microwave Ovens. Under their DigitAll brand campaigns and partnerships with chains like Best Buy, SEC has instilled its brand equity and brand knowledge on consumers at a global scale. Additionally, via its marketing strategic team, SEC has continued to reinforce its brand by associating it with popular media (e.g., the movie “Matrix Reloaded”). As to educating the managers on the importance of branding, I think that the fact Samsung has climbed up the ranks in the electronic sector speaks for itself (Quelch & Harrington, 2008).
VII. End of Case Questions
1) What are the ingredients of SEC’s corporate turnaround strategy? What are the implications for marketing?
There were two major ingredients to SECs corporate turnaround strategy. The first was when the top management decided “to transform Samsung from a ‘cheap OEM’ to a ‘high value-added products provider’” in 1993. The second was when Samsung transitioned into a digital technology manufacturer and focused its 17,000 scientists, engineers and designers who worked in Samsung’s R&D centers. The implications for marketing were that it needed to put together a powerful and decisive marketing strategy team whose sole purpose was to make the Samsung brand competitive at a global scale. Additionally, Samsung needed to know where it stood regionally all over the globe in order to determine a marketing strategy in any global region (Quelch & Harrington, 2008).
2) How strong is the Samsung brand? Can Samsung pass Sony and become a top ten global brand?
According to the editor in www.brandchannel.com, SECs has climbed from 42 in 2001 to 25 in 2003. Samsung’s position, at 25, shows that its brand has gathered momentum against its major competitors. It is currently the third largest electronics maker in the world, behind Sony and Matsushita. The article also states that “consumers appear to take Samsung seriously as a quality brand of VCRs and TVs, and even consider it a superior brand in areas like mobile phones where it competes with Nokia, Motorola and Sony-Ericsson” (Rusch, 2003).
Samsung may eventually become a top ten global brand if it can do at least two things. It should continue to focus on quality and introduce cutting edge technology. Additionally, it should move its product from price-driven stores like Wal-Mart to more focused retailers like Best Buy.
3) As Chief Marketing Officer, what are Kim’s role and responsibilities? How has he built his influence?
As CMO, Kim’s main role and responsibilities has been to educate Samsung internally to believe that branding is just as important as the quality of the product. Additionally, he is the vital conductor within Samsung’s powerful marketing orchestra that must be in sync with the global market. Essentially, if the music is not heard, it will not be appreciated or valued. He controls the very essence of what Samsung is and wants to be, it brand name. He has been able to build his influence by demonstrating proper management of marketing resources that have been put in his charge; as a result, he helped to quickly elevate the brand to the level it is today.
Kotler, P., & Keller, K. L. (2008). Marketing Management (13th Edition ed.). Upper Saddle River: Pearson Education.
Quelch, J., & Harrington, A. (2008). Samsung Electronics Company: Global Marketing Operations. Harvard Business School , 32.
Rusch, R. (2003, July 28). brandchannel.com. Retrieved July 30, 2008 from http://www.brandchannel.com/features_effect.asp?pf_id=168
HBS case analysis: Samsung Electronics
Semiconductor industry has seen average growth rates of 16% per year since 1960.Semiconductors were classified into two broad categories, memory chips and logic chips. Memory chips would be further classified into DRAM, SRAM, flash memory.
DRAM represent approx 55 % of memory market and SRAM and flash memory represent 10% and 32 % respectively. Share of DRAM has reduced from 80% to 67% due to saturation I computer. Flash memory and SRAM market was expanding by extensive use of memories in telecommunication and consumer electronics.
Rivalry within industry: Industry was experiencing fierce rivalry by increase in industry capacity and normal cyclical downturn. Many Chinese firms were ready to enter the market. Chinese competitors were willing to sacrifice profits for market share.
Suppliers: With the growth of industry, supplier become more concentrated and would offer 5% discount on bulk purchases.
Substitute: There was no effective substitute for memory chips.
Buyers: Buyers were largely OEM, with no one controlling more than 20% of global PC market. OEM would negotiate hard for price as memory represented 4-12% of PC cost and 4-7% of mobile phone cost. Buyers would pay 1% premium for reliability of product. Buyers were highly fragmented.
Entry Barrier: Entry barriers were high. It involves high capital investment and complex technology. Chinese firm with help of joint venture and agreements were in position to get license and technology for manufacturing. Finance was now available for foreign partners to rip the benefit of low cost access to manufacturing resources and talented local engineers.
Samsung offered over 1200 different variations of DRAM. Unlike competitors, Samsung tried to create new uses for DRAMs. Samsung had launched new DRAM products with product-specific applications in laptops and personal game players. It enabled Samsung in creating new markets that were unavailable to its competitors.
Samsung was market leader in memory chip technology and constantly remained ahead of its competitors. Samsung was able to create new market was developing new applications of memory and latest better technology. This had provided Samsung dual advantage of cost and value over its competitors. It was like crating in every few years. The Chinese counterparts were sinking the profitability of market as they has easy access to raw materials.
Samsung had two options one is to actively collaborate with Chinese partners. Collaboration would provide access to local Chinese market which was growing rapidly and access to cheap resources and local talented engineers. Risk was to loose its unique culture and intellectual rights were not fully protected.
Alternative option is to invest heaily in cutting edge memory products and niche markets and leave low end of the market for Chinese.