Problems of Samsung
Samsung’s Mobile Phone Business
Abstract: This paper examines Samsung Electronics successful growth strategy in the mobile phone business. It examines its early efforts at developing a competitive product in the domestic market, its globalization strategies, and some of the key challenges it faces today. The paper provide insights into how a late-comer to an industry can overcome certain disadvantages and successfully position itself as a widely respected and successful brand.
Key words: Samsung, mobile phone, strategy
I. Introduction
For Samsung Electronics, 2003 was a watershed year. It successfully positioned itself as one of the world’s best mobile phone manufacturers and its products were featured all over the media. Many were calling its mobile phones as “the best gift for Christmas” or “the Mercedes of mobile phones.” Samsung’s achievements were particularly remarkable considering that its primary focus had previously been in semiconductors and home appliances. Indeed, when it first made the decision to enter the mobile phone business, industry observers viewed the move as foolhardy and reckless. But, much to their surprise, Samsung’s foray into the market turned out to be a great success, contributing significantly to the company’s profit growth and brand reputation. In 2003, Samsung posted net profits of 6 trillion won ($5 billion) on annual sales of 43.6 trillion won ($37.9 billion). As of April 2004, its market capitalization stood at around 100 trillion won ($87.4 billion). It had also surpassed Sony, which had been a benchmark for Samsung, in terms of revenues and market capitalization. (Exhibit 1) Samsung’s exports currently account for two-thirds (79%) of total sales. In addition, Samsung has built its brand around the world; in 2003, the ‘Samsung’ brand was ranked 25th in the annual BusinessWeek/Interbrand study of the world’s most valuable brands, having grown from $8.31 billion in 2002 to $10.85 billion in 2003.
Abstract: This paper examines Samsung Electronics successful growth strategy in the mobile phone business. It examines its early efforts at developing a competitive product in the domestic market, its globalization strategies, and some of the key challenges it faces today. The paper provide insights into how a late-comer to an industry can overcome certain disadvantages and successfully position itself as a widely respected and successful brand.
Key words: Samsung, mobile phone, strategy
I. Introduction
For Samsung Electronics, 2003 was a watershed year. It successfully positioned itself as one of the world’s best mobile phone manufacturers and its products were featured all over the media. Many were calling its mobile phones as “the best gift for Christmas” or “the Mercedes of mobile phones.” Samsung’s achievements were particularly remarkable considering that its primary focus had previously been in semiconductors and home appliances. Indeed, when it first made the decision to enter the mobile phone business, industry observers viewed the move as foolhardy and reckless. But, much to their surprise, Samsung’s foray into the market turned out to be a great success, contributing significantly to the company’s profit growth and brand reputation. In 2003, Samsung posted net profits of 6 trillion won ($5 billion) on annual sales of 43.6 trillion won ($37.9 billion). As of April 2004, its market capitalization stood at around 100 trillion won ($87.4 billion). It had also surpassed Sony, which had been a benchmark for Samsung, in terms of revenues and market capitalization. (Exhibit 1) Samsung’s exports currently account for two-thirds (79%) of total sales. In addition, Samsung has built its brand around the world; in 2003, the ‘Samsung’ brand was ranked 25th in the annual BusinessWeek/Interbrand study of the world’s most valuable brands, having grown from $8.31 billion in 2002 to $10.85 billion in 2003.
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