Business Strategy - Samsung
CASE REPORT: SAMSUNG ELECTRONICS
PROBLEMS
Samsung competitive advantage is under attacks. Their biggest market share product in micro chip was threaten by Chinese manufacturer.
New low-cost competitors: Chinese manufacturer
Samsung didn’t know yet how to respond to Chinese invasion:
Low-cost, differentiation or both?
Collaborative
ANALYSES
EXTERNAL ENVIRONMENT
6F
Threat of new entrants (High)
High economic of scale
High product differentiation
High capital requirements
Low switching costs
Easy access to distribution channels
Threat of substitutes (Low)
There was no effective substitute for memory chips
Bargaining power of buyer (High)
Price-conscious customer
Bargaining power of suppliers (High)
Only 3 main player
Other stakeholder (Government: High)
Support from initial country
Rivalry within industry (High)
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.
PEST
Politic
Relatively stable political condition (O)
Different policy in every country (T)
Economic
Economic stable (O)
Free-trade era (T)
Social and culture
Higher technology consciouosness (O)
Technology
Sort life cycle (T)
New technology (T)
INTERNAL ENVIRONMENT
Culture
Internal competition across global R&D sites
Structure
Divisional organization structure (product-based)
Resources
The cost advantages (low raw materials cost) - better negotiated agreements with suppliers
Highly experienced and capability employees, around 113,000 worldwide
Market leader in DRAM ‘92 - ’02
PROBLEM ROOTS
Strategy to compete with Chinese competitor
ALTERNATIVE SOLUTIONS
Cooperative strategy
Collaboration with Chinese manufacturer
Competitive strategy
Product differentiation
PROBLEMS
Samsung competitive advantage is under attacks. Their biggest market share product in micro chip was threaten by Chinese manufacturer.
New low-cost competitors: Chinese manufacturer
Samsung didn’t know yet how to respond to Chinese invasion:
Low-cost, differentiation or both?
Collaborative
ANALYSES
EXTERNAL ENVIRONMENT
6F
Threat of new entrants (High)
High economic of scale
High product differentiation
High capital requirements
Low switching costs
Easy access to distribution channels
Threat of substitutes (Low)
There was no effective substitute for memory chips
Bargaining power of buyer (High)
Price-conscious customer
Bargaining power of suppliers (High)
Only 3 main player
Other stakeholder (Government: High)
Support from initial country
Rivalry within industry (High)
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.
PEST
Politic
Relatively stable political condition (O)
Different policy in every country (T)
Economic
Economic stable (O)
Free-trade era (T)
Social and culture
Higher technology consciouosness (O)
Technology
Sort life cycle (T)
New technology (T)
INTERNAL ENVIRONMENT
Culture
Internal competition across global R&D sites
Structure
Divisional organization structure (product-based)
Resources
The cost advantages (low raw materials cost) - better negotiated agreements with suppliers
Highly experienced and capability employees, around 113,000 worldwide
Market leader in DRAM ‘92 - ’02
PROBLEM ROOTS
Strategy to compete with Chinese competitor
ALTERNATIVE SOLUTIONS
Cooperative strategy
Collaboration with Chinese manufacturer
Competitive strategy
Product differentiation