Samsung Electronics is the largest affiliate of Samsung Group- a Korean brand. According to Forbes (2013), it is the 20th biggest company in the world in term of market value. There are a wide range of electronic devices which are provided by Samsung such as refrigerators, air conditioners, cameras, tablets, phones, especially TVs and smart phones. It has several subsidiaries in over 50 different countries and employs almost 370,000 people in FY2011 (Samsung, 2012).
The main market of this company is in Asia Pacific where they had 27 out of 36 factories and had 60% turnover of the company (ibid). This essay will describe the main developments of Samsung Electronics and use SWOT model to analyze and evaluate its position in global market, after that giving possible strategies as well as feasible proposals.
Samsung Group was established in Deagu, Korea in 1938 by chairman Byung- Chull Lee with only 30,000 won as capital (Samsung, 2013) and it became the principle largest Korean company immediately with exactly a quarter of total corporate Korean profits (Kotler and Armstrong, 2012, p.309). Over 30 years later, Samsung Electronics was founded under the name of Samsung- Sanyo Electronics and the first TV was produced. It has become well-known since 1980 when Samsung penetrated into international market with a large number of new products such as recorders, air conditioners and PCs.
In 1992, Samsung developed mobile phone systems which were basis for growths, and they had changed marketing strategy “top- to- bottom” in order to become an Electronics innovator by one year later (ibid). The span of the period from 2000 to present has been the golden age of Samsung with its position as the market leader in 13 electronic products (Samsung, 2013). It is considered as rank 3rd in most innovative companies in the world today (Shaughnessy, 2013a).
Samsung Electronics has several strengths and the most significant of such is that they provided a broad range of products for different segments. Kotler & Armstrong (2012) assert that Samsung divided their customers into certain classes which were based on demographics, in particular income. It created mobile segmentations such as Galaxy S3,4 for upper classes, Galaxy Ace for lower classes, and E1200 for middle classes, while their biggest competitor- Apple only had iPhones for upper classes (BBC, 2013b).
The result of this product diversification is that it could create high adaptability to satisfy customers and keep stable sales revenue for the mobile market. Indeed, Samsung had a significant market share for its industry when it accounted for one third of the global smartphone market (Reuters, 2013) and sold double than Apple in the first quarter of 2013 (Shaughnessy, 2013).
Another key strength of Samsung is the ability to produce products without outsourcing. Kotler & Armstrong (2012) argue that an independence in manufacturing can decrease the marginal cost, increase dependability and results in more competitive advantages for a company. For instance, Apple purchased screens from LG (Kim, 2013) so this led to higher costs and higher price of their devices: £499.95 for iPhone5 while only £399.95 for GalaxyS3 respectively (Carphone Warehouse, 2013).
Although Samsung has significant strengths, there are still certain weaknesses. Firstly, Samsung has faced issues in patents recently (Marketline, 2012). For instance, it had to compensate over $1 billion to Apple due to copyright infringement in US market (BBC News, 2012). Consequently, it lost goodwill, product values as well as banning of some tablets and smartphones (Bradshaw, 2012), which in turn, led to limits in their devices’ designs and features. In addition, its technology can be a weakness where it used Google’s software while Apple used their own; therefore this affects compatibility levels and the abilities to change.
Business environment and fast developing markets are generating remarkable opportunities for Samsung Electronics. There is no doubt that the biggest chance for Samsung is the rapidly increasing demand for mobile devices (Marketline, 2012). Samsung FY2011 and FY2012 indicates that the number of mobile phone sales grew by 30% and 20% to approximately $330 million and $400 million devices in 2011 and 2012 respectively. Forbes (2013) and IDC report (2013) also shows that the tablet market and the smartphone sales are predicted to rise five times and nearly 920m units in 2017.
These information proved that Samsung had high consumption and it will have ability to sell more devices in the near future. Furthermore, the needs in TV market will probably to be exceedingly high when an estimation of TV sales of Marketline (2012) in 2017 will be 510m devices. Consequently, this can bring considerable more benefits for the market leader, Samsung, rather than other players.
Nonetheless, Samsung Electronics also has to cope with potential threats. First of all, the severely competitive environment, the result of globalization, may cause difficulties for them (Marketline, 2012). For example, in term of tablets, the iPad was unique great competitive product of GalaxyTab some years ago, now Samsung had several strong entrants such as Surface, Kindle, Nexus, Asus (ibid) so it will probably be more difficult to hold market share.
Moreover, the increase in customer expectations also is an obstacle of development of Samsung Electronics because consumers nowadays are becoming more cautious when choosing products, so only exceedingly useful features on products can satisfy them.
To sum up, although there are some issues about copyright and inevitably fierce competitors, Samsung Electronics remains in high position and has a strong brand name in the international market generally. Recently, its biggest rival, Apple, is being less attractive to investors as the impacts of slowing sales (BBC, 2013a) while it has increased market share rapidly.
As a result, BBC (2013b) believes that Samsung is likely to take this advantage by keeping to supply varied products, especially smartphones to hold its high market share in the future because different products can cover each other and ensure total sales (Porter, 1998). However, Apple still is top brand in customer’s mind, so Samsung need to implement re-positioning strategy to improve its products’ position in their thinking (Kotler and Armstrong, 2012).