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
