Samsung's Competitive Advantage

1. Does Samsung have a competitive advantage? If so, how are they creating added-value compared to industry competitors? Make sure to quantify your claims. (In answering this question, you will find helpful information in exhibits 6-7k (but not only there)). a. Compare Samsung’s “value stick” to that of an “industry average” competitor and briefly justify any differences. (Remember that willingness-to-pay and willingness-to-supply are generally unobservable, but you can still engage in informed speculation.) b. Propose potential explanations for the higher WTP/P and/or lower C/WTS of Samsung. (Recall that with Walmart we discussed the squeezing of suppliers vs. more efficient operations as potential sources of their low cost advantage, while with Zara, we noted how the WTP advantage arose through faster response and thus fewer fashion misses rather than because Zara’s clothes have great cachet vis-à-vis those of competitors.) Based on your analysis of the activities of the firm, and data from the case, what are the most important drivers of Samsung’s WTP/P and/or C/WTS advantage, if any? ANSWER 1
Samsung does have competitive advantage on both ends of the “value stick”. At the top, Samsung is able to demand higher prices for its products, while also driving lower production costs by using various innovations and efficiencies.
WTP – Customers have an increased WTP for a reliable supplier. By 1995, after a period of producing “shoody products”, Samsung has put quality first and started winning various awards for “reliability and performance”. Samsung because the preferred supplier for most of its customers due to the reliability of their products. Mr. Lee has urged all employees to put quality first at all times, launched mass burnings of flawed products, and admonished its employees about their quality control. The firm’s culture for excellence and quality control helped Samsung capture 1% average price premium that the customers were willing to pay