Executive Summary and Introduction
Summary
The business segment, Samsung Mobile, of Samsung Electronics has been contributing effectively towards the success of the entire group. Its commendable performance in the past few years is due to its effective strategic management policies. These strategic plans are devised on a global level, and have been instrumental in making the company earn recognition and loyal customers. The policies have helped the group to face competition competently.
Introduction
The report focuses on the strategic policies and competitive approach used by Samsung Mobile in Europe and North America. The company is renowned the worldwide over particularly in the West where it has earned many loyal customers. Samsung Mobile has successfully implemented strategic management tactics which allowed it to use resources efficiently.
The Samsung Group specializing in electronics originated in Asia. It started off as an electronics consumer goods manufacturing concern in Korea in 1938. The operations began on March 1, 1938 under the supervision of the then chairman, Byung-Chull Lee, in Taegu, Korea. (Samsung Group Timeline and History 2007). According to Edwards (2003), the organization grew and opened subsidiaries worldwide. The manufacturing concern launched different categories of products over the years. Edwards (2003) stated that the company shifted its focus from the selling concept to the marketing concept. A few years ago, the company embarked on strategic branding policies and brand management.
Nystedt (2007) wrote in his article that the Samsung Mobile segment of the Samsung Group received much recognition and became a major source of its revenue. The progress in the cellular technology and industry worldwide allowed the business of Samsung Mobile to prosper.
Today, the mobile phone and devices utilizing cellular technology are being used individuals from all walks of life. According to Nystedt (2007), these users not only include high-profile business personnel but also students and housewives. He further asserted that life without cellular technology is unthinkable in Europe and North America in modern times. Fast, reliable and easy communication is fast becoming a necessity.
Nystedt (2007) stated that the Samsung Mobile’s strategic management understood and realized this need of its consumers. Various beneficial mobile devices and phones using powerful branding strategies were introduced. Strong sales and distribution networks were set up by the company. The writer believed that the pace at which the organization is progressing, it may even stand as the top mobile phone and related accessories company in the world.
According to Nystedt (2007), Samsung Mobile is about to launch mobile television keeping in view the growing demands of the consumers. This would be a truly digital TV operated by latest technology by the name of Advanced VSB (A-VSB). The company claims itself to be a pioneer in launching electronic goods using the new technology. The author remarked that it prides itself in being amongst the few companies in the world which have introduced novelty technology products. (Nystedt 2007),
According to Kim (2006), Samsung Mobile has global strategic policies in place. The tactics used to achieve competitive advantage and boost brand power remain the same worldwide. Nonetheless, the researcher asserts that slight variations in functional policies and strategies do exist in some countries in order to meet the local demands, and use available resources efficiently. (p. 126 – 137).
Kim (2006) believes that it is because of the innovative technologies, various product categories and powerful branding strategies that Samsung Mobile has reached the position of being among the top multinational mobile phone and related accessories companies in the world. The intellectual and human capital owned by the company is truly remarkable. (p. 126 – 137).
The researcher learnt a little known secret of Samsung’s success. The company does not market itself as a Korean brand. Neither does the Samsung relate to its country of origin when penetrating new markets and launching new products. This prevents the organization from being affected by the low image of the country. (p. 126 – 137).
Business Context: Segments, Products, Competition and Recent Performance
Segments
Samsung Mobile itself is a business segment of the Samsung Group. Rather, it can be said that mobile phones and related accessories is one of the various businesses which Samsung Electronics specializes in. This segment is doing brilliantly well and the Samsung Group considers it to be more of a star. Samsung Mobile is currently a cash cow generating massive revenues for the parent group and is on the verge of becoming a star. If the segment continues to deliver excellent performance and keeps earning the first movers advantage in latest technologies, in the near future, Samsung could be at the top among the electronic goods companies in the world. (Samsung Mobile, n.d.)
Samsung Mobile is thriving flourishingly well all over the world particularly in the United Kingdom. Not to say that the segment is not doing as good in the other countries, it is actually that its consumer base is increasing more rapidly in the United Kingdom. The range of mobile accessories and goods offered by Samsung mobile are becoming increasingly popular especially in North America and Europe. The company is also performing well in Asia. (Samsung Mobile, n.d.)
Products
According to information presented by Samsung Mobile: Phones (2007), the Samsung Group offers a diversified range of products. The products are categorized into different segments or businesses. One of the segments is dedicated to mobile phones and their related accessories along with other electronic goods such as televisions which are portable. (Samsung Mobile: Phones 2007)
Samsung Mobile has launched various products. However, in some countries, the a greater variety of products is introduced than the others. Although the products remain essentially the same, some countries offer more models and different versions of the mobile phones than the others. (Samsung Mobile: Phones 2007).
According to Review GSM Phone (2007), even if the models of the products are the same, the features and functionalities differ from country to country. The needs of the customers vary from country to country particularly when it comes to features relating to the use of language.
A good number of people in Canada, North America speak French. Therefore, the mobile phones available in Canada have the option of changing the language of instructions to French. (Review GSM Phone Samsung 2007)
Besides, as it is stated in Mobile Review (2004), technology differences in countries also make it possible for Samsung Mobile to provide products using latest technologies to more advanced and developed nations. Countries which are not as technologically advanced are offered products with simpler features and functionalities. (Mobile Review 2004).
Nystedt (2007) writes his article that Samsung Mobile is about to launch a new mobile TV with new Advanced Advanced VSB or A-VSB technology. The launch of the upcoming product using the latest technology was announced in January 2007 at an International Consumer Electronics Show held in Las Vegas. The vice president of Samsung, John Godfrey, announced that the digital television broadcasters would have to upgrade their systems in order to make them compatible with the state of the art digital TV which Samsung would launch. (Nystedt 2007)
Competition
Samsung Mobile, being a multinational company, is faced with cutthroat competition in the fast progressing world. Herrick (2007) illustrates in is article that as the technology is advancing and leading to the manufacture of state-of-the-art products, Samsung Mobile is experiencing immense competition in the industry. The competitors not only include well-established multinational giants, but also smaller firms operating in different countries on a smaller scale. The competitors vary from country to country. (Herrick 2007)
The major competitors of Samsung Mobile include LG, Nokia, Motorola, Vodafone and Sony Ericsson. However, there are many other competitors which occupy either niche or smaller markets, and operating either on a regional or national level. These not so popular competitors include many German, Japanese and Chinese brands. (Herrick 2007.; Vodafone 2007).
Recent Performance
The Samsung Group ranked 46 among the Fortune 500 companies in 2006 according to CNN (Fortune 2008). The launch of Samsung Mobile has worked in favour of the parent group. The sole concentration of the business was on the latest cellular and related technologies. This enabled the concern to penetrate into the international markets particularly in North America and Western Europe which are much technologically advanced. (Samsung’s Goal: Be Like BMW 2005).
According to Samsung (2008), the entire Samsung Group earned USD 50 billion in exports by the end of December 2004. A good percentage of contribution to this revenue was made by Samsung Mobile, a subsidiary of the group. (Samsung Group Timeline and History 2007).
A survey held by Business Week and Interbrand over a period of five years from 2000 to 2005 revealed that the brand power of Samsung Electronics had increased tremendously which no other brand was available to attain. According to the survey, the power of the Samsung brand had risen to 186%. (Samsung’s Goal: Be Like BMW 2005).
Summary of Purpose, Objective and Strategy
Purpose
Like all other mobile phone and devices companies in the world, Samsung also wants to earn a name for itself and increase its customer base. It hopes to be the market leader in the global village in the near future. The Samsung Mobile segment is dedicated to serving the needs of the modern day world where technology is advancing at a rather swift rate. The senior executives want to follow the footsteps of BMW. (Samsung’s Goal: Be Like BMW 2005).
Objective
According to Review GSM Phone Samsung (2007), the company is already a leader in the telecommunications market in many countries like Russia. It is yet to achieve the global leader status. In North America and Europe, it still needs to put in more efforts to achieve its objective of serving the consumers as a market leader. (Review GSM Phone Samsung 2007)
The business aims wants a larger consumer base and wishes to penetrate into niche and smaller markets which it has not yet occupied. The strategy to achieve the position the business desires is by providing customers value and satisfaction, and catering to their needs and wants. (Review GSM Phone Samsung 2007)
Strategy
The Samsung Group implements global policies which are framed and devised by the strategic management. According to a report presented by The Best Brand (2006), the strategies are made keeping in mind the consumer tastes, preferences and demands along with the internal and environmental resources and threats. Although many of the strategies are geared towards marketing and brand building, a balance between the company’s strengths and weaknesses is kept. (EFFIE/ The Best Brand 2006).
The report states that the Samsung Mobile uses its strengths to avail opportunities. It knows well that it has to be become star by building on its cash cow capabilities. Therefore, the business follows the strategic management policies well and takes advantage of the rapidly progressing technology. (EFFIE/ The Best Brand 2006).
The Samsung Mobile uses the growth strategies in order to reach out to the maximum number of customers according to the report. It is penetrating new markets with existing and innovative products and technologies. It is also developing itself in the already existing markets by offering new, improved products with innovative features and functionalities. (EFFIE/ The Best Brand 2006).
Analysis and Strategic Agenda
Internal Scan: SWOT and Resources
Strengths
Samsung (2007) claims that it has a well-established brand equity, and has performed tremendously well since the past decade particularly from 2000 onwards. Various innovative products with value-added features and functionalities have been launched by Samsung Mobile which have been very successful. The business strongly believes in playing to its strengths. (Samsung Group Timeline and History 2007).
The senior management (2007) claims that the company has a diversified and talented human and intellectual capital. The executives pride themselves in having such capable employees and are confident that the workforce as well as the strategic partners including distributors, dealers, marketing and advertising agencies round the world would help Samsung Group, particularly the Samsung Mobile business segment, reach the rank of a global leader in electronics and telecommunication goods and devices. (Samsung Group Timeline and History 2007).
Weaknesses
Park (1996) wrote that although the company strives to penetrate new markets, its concentration remains more on a few countries in Europe and North America. Samsung mobile focuses more on United Kingdom and United States compared to other countries.
Park (1996) further assets that although the diversified workforce is an asset to the organization, many cultural and linguistic differences arise which lead to group conflicts and interpersonal grudges. Communication between individuals belonging to different nations may not be as effective as between those who share the same culture and social background.
Park (1996) asserts that undoubtedly, the company has a strong financial backing, but it is not concentrating on any one or a few areas of core competencies. It focuses on not just on manufacturing, and research and development. The business is heavily investing into development of newer markets and segments. It wants to capture as many markets as possible in a smaller span of time. Park (1996) feels that instead of taking thoughtful and careful steps in order to reach the global position it desires, Samsung is seems to be in a hurry to launch new products, segments and marketing campaigns.
Opportunities
There is an increasing need of faster, reliable and easy communication. Samsung Mobile sees a great opportunity in this. The technologies are advancing at a great pace. The business, by gaining a deep insight into consumer preferences and needs, can develop products according to what the market desires. Samsung Mobile has ample opportunities to cease particularly with the rise in global population and the need for swift communication. (EFFIE/ The Best Brand 2006).
Threats
According to Herrick (2007), Samsung Mobile is faced with many pressures and threats from the external environment particularly the competitors. Just like Samsung, its competitors are also making great efforts to earn loyal customers.
Many smaller firms are also being set up local groups in different countries in which Samsung is operating. These smaller firms provide relatively inexpensive products for better communication. Therefore, the Samsung Mobile does not face competition only from the giants like Nokia, LG, Vodafone and Motorola. There is a cutthroat competition taking place in the market world over. The company has to be very careful in all the steps its takes to overcome competition. (Herrick 2007)
Economic booms and slumps, and various natural or tragic catastrophes like Katrina in United States and the 7/7 incident in United Kingdom impact the sales of mobile phones and other related devices adversely. The consumers anticipate worse situations ahead. Those who work on daily or weekly wages take off from work, and therefore, their purchasing power goes down. Besides, those who can afford products of Samsung tend to save their money rather. The consumption patterns change. (Herrick 2007)
Environmental Scan: PEST
Political
According to Herrick (2007), any kind of political instability in North America or Europe can adversely affect the sales of Samsung Mobile brands. The politics and the political situations of different countries impact the purchasing power and buying habits of the customers. Even the political decisions of the countries impact the sales of the products. For example, when the United Kingdom decided to join hands with United States in the war on Iraq, there was a sharp drop in the sales figures of Samsung in United Kingdom. However, the country recovered from the crises and worked hard to earn the highest brand equity by the end of 2004. (Herrick 2007; Samsung Global Code of Conduct 2007)
Economic
The economic situation of the country also impacts the sales of Samsung. With economic recessions, the purchasing of the customers goes down. According to Herrick (2007) the customers begin to consider latest technology products as luxury items. They tend to save money and it for basic and primary necessities of lives such food, shelter and clothing. Stock market crashing or Wall Street shares falling would lead to a decline in Samsung sales. (Herrick 007)
Social
As the world is technologically advancing, societies round the world are craving for modern and state of the art technology devices which would fulfil their needs. The population of the world is rising and at the same time, there is more awareness among the people about newer technologies and faster, reliable and easy means of communication. (EFFIE/ The Best Brand 2006).
The living standards are, ostensibly, improving the world over. According to the report on Samsung Mobile’s strategic and marketing practices, there remains a large untapped market by Samsung Mobile. The company can increase its customer base with some investment and effort and achieve its dream of becoming a global leader. (EFFIE/ The Best Brand 2006).
Technological
According to Review GSM Phone Samsung, the massive progress in technologies is paving a path for Samsung to come up with innovative products to cater to the increasing demands of the modern day customer of the West particularly from North America and Europe. The rapid development in different state-of-the-art technologies is a key Samsung Mobile’s success. As the business has a strong financial backing, it can invest in research and development and launch new and improved existing products. (Review GSM Phone Samsung 2007)
Core Competencies
According to the report on Samsung Mobile’s strategic and marketing practices, the core competencies of the Samsung Group remain manufacturing, product development, research and development, and marketing/ branding. Recently, the focus has shifted more towards strategic brand management of Samsung Mobile. (EFFIE/ The Best Brand 2006).
The business uses the corporate brand name instead of having some other brands. The entire group believes in corporate branding and capitalizing on the power of the brand. (EFFIE/ The Best Brand 2006).
Discussion of Strategic Options and Choice
According to Samsung (2007), the strategic decisions are usually made annually at a conferences and meetings held at the headquarter in Korea. However, some strategic choices are made which are specific to the region. As North America and Western Europe are more technologically advanced, different innovative products are launched and sold there. This is different for developing countries. The executive committee views past performance of the business segment as well as its future potential and its ability to capitalize on the strengths and opportunities before arriving at a firm decision. (Samsung Group Timeline and History 2007).
Analysis of Recent Competitive Environment
Competitor Action and Performance
Motorola has been aggressively marketing and launching campaigns to promote the sales of its brands. The launch of the slim mobile phone range by Motorola has been very successful and has allured away many Samsung Mobile customers towards it. (Samsung Group Competitors 2008; Mobile Today n.d.,)
It is reported that Nokia has shown consistency in terms of marketing and research and development efforts over the years. LG has also been making great progress with the launch of new features in mobile phones. (Mobile Today n.d.,)
Successes and Failures
Successes
A special report published by Business Week in 2005 revealed that the Samsung Electronics has successfully earned the highest brand value according to Interbrand and Business Week estimates. This is highly commendable. Samsung Mobile has contributed the most towards the success of the entire group. The brand value had increased to 186% in five years. Some critics felt that the company was following the footsteps of BMW. (Samsung’s Goal: Be Like BMW 2005)
Failures
According to Herrick (2007), Samsung Mobile has not yet faced a failure as such. However, it has faced ups and downs in times of economic crises, political instability, natural calamities and tragic disasters. The sales of the products have fluctuated on and off although the disparity has never been so great. The report by Business Week asserts that Samsung has been triving well. (Samsung’s Goal: Be Like BMW 200)
Strategic Risk and Uncertainty
As with any other business, Samsung Mobile is faced with the same competitive and environmental threats and concerns as any other multinational company. There is great uncertainty and ambiguity in the world. Strategic decisions are based on past performance and the anticipation of the future. However, the future is unpredictable. Only speculations can be made about the future. What the future has in store for the company can only be revealed with time. The company is faced with cutthroat competition and operates in a highly predictable world. (Herrick 2007; EFFIE/ The Best Brand 2006; Park 1996)
Managing Uncertainty
Uncertainty can be managed with strategic policies. The company has been very effectively overcoming ambiguities in the corporate world as well as real life. It has always overcome slumps and shocks through its efficient and powerful policies. According to Nystedt (2007), the company is also developing new and more assertive strategic plans for 2008.
Analysis and Critique with Literature Review
Jaffe & Scott (1995) assert that the corporate world is highly unpredictable. Samsung Mobile has to stay at par or rather ahead of competition. Therefore, it believes in adoptin of best practices which are flexible enough to adapt to the ever competitive business environment. This means altering or rather, reengineering processes and workflows. (p. 11).
According to McRae (1998), as many employees resent change, it is difficult to make them unlearn their traditional method of performing work. Old habits die hard. Therefore, it is vital that internal marketing is used by the business to motivate employees to accept the change and adapt to it without compromising on their efforts. The company has provide adequate training to them so it becomes easy for them to accept the change. (McRae 1998, p. 195)
Alignment of Strategy with the Organization, Structure, and Coordination of Resources and Competencies
It is crucial that all the strategies be aligned with the strategic management policies and be made keeping in mind the resources available and the core competencies of the organization. Even if the policy concerns managing change and uncertainty, it should be synchronized with the other strategic decisions made by the executives. ((EFFIE/ The Best Brand 2006).
Sustainability of Advantage, and Influence of Uncertainty on Strategy and Strategic Process
Samsung enjoys the advantage of the power of the brand. It has well-established brand equity and has worked hard to achieve. This is a major asset and can capitalize on its brand equity to earn competitive edge and overcome hindrances placed by uncertainties in the ever changing world. (EFFIE/ The Best Brand 2006).
Conclusion
Samsung Mobile has performed brilliantly well in technologically advanced countries of North America and Europe. This has been possible due to its effective strategic management policies.
References
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