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Samsung Electronic’s Global Strategy Plan

Introduction

Samsung is a large business conglomerate that operates in different sectors, such as finance, advanced technology, and plant construction. This paper will focus on Samsung Electronics (SE), which is a flagship company of the chaebol. The South Korean multinational enterprise is well-known for its rivalry with Apple in the electronics industry. According to Schlegelmilch (2016), a global marketing strategy (GMS) is a strategy developed by the company’s management that encompasses different regions (countries) and is designed to coordinate a company’s marketing efforts. Wise GMS brings lower marketing costs, uniformity in practices, brand image consistency, and helps to achieve economies of scale by standardization. SE’s global strategy seems to be the main reason why Samsung continues to dominate the industry, overpassing Apple in market share.

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Environmental Analysis

Environmental analysis is an essential tool that helps to identify the main internal and external forces that may influence the performance of an organization. The PESTLE analysis tool will be applied to assess the current business environment of Samsung. This approach takes into consideration political, economic, social, cultural, technological, and legal factors (Stephens & Brice, 2018). All these factors should be considered to assess the company’s global successes.

Political

When a country’s political system is under the pressure of rapid change, it may lead to loss of business or disruption. Good trade relations between countries in which multinational organization operates have a direct impact on business efficiency. According to Razdan (2017), SE is present in 80 countries and is a global leader in the smartphone segment. South Korea still suffers from strained relations with neighboring North Korea. In 2016, SE’s home country faced a corruption scandal involving the then-president Park Geun-Hye and Samsung’s heir, Jay Y. Lee. As a result, Lee was sentenced to 5 years of imprisonment for bribery, but after one year in jail, his case was revised. Recently Lee made an apology and promised that he would be the last conglomerate’s leader from his family (Kim, 2020). Such kind of scandals undermines the brand’s image on the political level. Moreover, political aspects of the Covid-19 pandemic, such as travel restrictions, lockdown policies, may hinder the company’s further expansion.

Economic

This aspect is also crucial for SE as it aggressively pushes into emerging markets to make up for the losses it faces in developed countries. Despite the high saturation of the mobile vendor market, SE remains its leader and enjoys the added benefit. Nevertheless, the company is too dependent on smartphone sales; thus, further expansion or leader position in terms of innovations may be the answer for Samsung to remain on top. Its main global competitors are Google and Apple, while there are other rising forces such as Huawei and Oppo. For instance, the latter overpassed SE in terms of sales, becoming the leader in the Chinese market. Since Samsung started to target more luxury clusters of the market, any global upheaval may lead to a significant crisis in the company. However, Samsung has an extensive product line that helps it to compensate long breakeven of its flagship phones.

Social

This dimension addresses changes in the lifestyles and demands of consumers. During the last decade, the impulse purchasing of smartphones was spotted significantly increasing as consumers want to feel instant satisfaction (Razdan, 2017). Many shoppers perceive the time and effort spent to buy a particular device as a cost; hence, the product price is still an important aspect. Moreover, SE is currently facing problems in delivering software to its customers. For instance, some pre-build programs such as Bixby do not satisfy European consumers.

Technological

SE invests massively in research and development (R&D) and production technology that helps to maintain its leadership. The electronic industry is driven by technological innovation, so SE needs to deliver something new to maintain its core capabilities. The infamous story of the Galaxy Note 7 that had faulty batteries that could explode due to overheating can be an example of a manufacturing error. It significantly impacts the brand’s image and consumers’ loyalty, so Samsung needs to learn from this mistake.

Environmental

The global development of environmental issues created new regulations that interfere with manufacturing. The different directives concerning hazardous substances and climate change encourage electronic companies to comply. Nevertheless, giant industry players see the adoption of eco-friendly materials in their products as a competitive advantage (Razdan, 2017). The working conditions and wages also should be optimal to create an image of a caring brand. SE successfully adheres to major environmental requirements that contribute to favorable political factors.

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Legal

Intellectual property rights are the primary legal issues of Samsung. The electronics industry requires technological innovation that should be protected from the competitor’s imitation. SE’s sales and reputation were frequently affected by similar scandals. For instance, in 2016, Samsung China was accused of patent infringement by Huawei. Moreover, SE was involved in litigation concerning its alleged imitation of Apple’s design and technologies. It started a legal war between Apple and SE that is still pending.

General Strategy

Following the environmental assessment, Africa will be analyzed as a potential region that should be more targeted by Samsung. SE is already present in this region and accounts for almost half of the smartphones and TVs purchased by local citizens. Two years ago, the firm announced its intention to increase annual revenues coming from Africa to 20% of the company’s global total (Miriri, 2018). Top management planned to open more retail sites to decrease both delivery time and costs. It is the right moment to expand operations, and the presence of South Korea’s giant in Africa because the connectivity of the continent grows owing to high investments in telecommunication infrastructure. More and more people buy simple smartphones to have access to the banking system or social media.

Many African nations are currently going through a transformation phase that improves political, legal, and economic factors. Samsung must target more African countries like Kenya that conduct a wide range of reforms. According to the World Bank (2020), Kenya took 56th place in the Doing Business rating. In just four years, the country improved its overall rank by 57 spots and lags behind only Rwanda and Morocco. Moreover, Kenya’s annual economic growth rate reached 6% in 2019, which marked five years of its consecutive growth. It was achieved owing to positive investor confidence and a stable macroeconomic environment.

Kenya has approximately 53 million inhabitants, with Nairobi being the capital and the most populated city. It is a multi-ethnic country, where 70% of Kenyans live in rural areas (Gitogo, 2020). The National Bureau of Statistics also revealed that country’s population is young, as 75% of citizens are under 35 years. It means that the demographical situation is notably conducive because younger consumers usually demand advanced technologies.

There is a social tension between unemployed youth and expatriates that came together with multinational enterprises to work. Therefore, foreign investors in the region are seen as new colonizers who want to impose their will. For instance, Hope Depot and Walmart allegedly failed to enter East African countries due to their policy of marginalizing local workers. More and more people receive tertiary education, although workers in the region usually lack retail expertise and management skills.

Recent legal reforms are the most promising factors concerning possible expansion. The new law aimed at easing access for business credits was adopted a few years ago. The government also enforced minority investor protections and introduced technological solutions to its agencies (World Bank, 2020). In terms of politics, the new constitution that was adopted in 2010 started democratic developments in Kenya. Now it is a democratic republic that has a president who is simultaneously the head of government and state.

There is no doubt that SE should enhance its presence in Kenya. However, there is a lack of budget products that could compete with cheaper models of Chinese manufacturers. Samsung is Kenya’s leader among luxury offerings, but low-income consumers from rural regions await more basic products. SE’s global marketing strategy recently became too standardized that making it unsuitable for gaining a foothold in Africa. Local customer demand and feedback, together with decreasing market share, should encourage Samsung to improve its strategy and focus more on local demands, especially following Covid-19 pandemics. In 2019 Samsung announced seven A-series smartphones for the Kenyan market in an acceptable price range given their specifications (Otieno, 2019). Those reasonably priced devices helped to regain market share and to compete with Transsion and Huawei. Such a strategy, together with more intensive advertising, can see Samsung taking over the African market.

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References

Gitogo, W. (2020). Census 2019 data shows Kenya has a youthful rural population. The Kenyan Wall Street.

Kim, S. (2020). Samsung billionaire apologizes for succession scandal. Bloomberg.

Miriri, D. (2018). Samsung aims to double Africa’s share of its revenues in five years.

Otieno, D. (2019). Here’s Samsung’s 7 new smartphones for the Kenyan market. Techish Kenya.

Razdan, V. (2017). Analysis of Samsung Electronics’ strategy for the period 2014-2017. Web.

Schlegelmilch, B. (2016). Global marketing strategy. Springer.

Stephens, E & Brice M. (2018). Business policy and strategic management. Edtech Press.

World Bank. (2020). Doing Business 2020

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StudyCorgi. (2022, March 14). Samsung Electronic’s Global Strategy Plan. Retrieved from https://studycorgi.com/samsung-electronics-global-strategy-plan/

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