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The Success Factors of Samsung Electronics
Introduction
In this report, we are going to discuss the success of Samsung electronics and will point out the factors that play a key role in the success of the company. To understand those factor effects we will use three different techniques of analysis PESTEL, SWOT, and marketing mix respectively. We will see how a single factor from the analysis techniques is effecting in the success of the company.
Company Introduction
Samsung Electronics Ltd. Headquarter is situated in South Korea and has assembly plants in 80 different countries all over the world with more than 300000 employees. Samsung Electronics supply the different types of electronic components to other multinational companies like Apple, Sony, and HTC.
Company Background
The first plant Samsung Electronics was established in South Korea in 1969 by the Samsung Group. Samsung Electronics Company was starting producing many electronic components in the starting years like calculators, machines and TV sets. Samsung Electronics in 1981 manufactured the ten million plus TV and in 1983 with the help of other companies, Samsung Electronics began to produce dynamic random access memory. The company produces its first mobile phone in 1988 but got a very poor result in the form of revenue from the market. The reason for the failure of the company mobiles in the market was its biggest competitor Motorola mobile phones. After seeing all of this scenario Samsung Electronics CEO Lee Kun-hee changed the strategies of the company and added the new technology for manufacturing products for the customers.
Present Situation of the Company
Samsung Electronics introduces the S mobile series and generated record operating profit of 36.79 KRW trillion in 2013. In 2014 Bmes and Noble with the help of Samsung Electronics introduce the new Nook look tablet which was the big source for company profit and another thing which was playing the key role for company profit was Samsung Note Smartphone. At the end of the fourth quarter of 2014, the companys total operating profit was 25.03. In the first quarter of 2015 Samsung Electronics decrease profit of 39% as compared to previous years due to a hard competition of Apple iPhone 6 & 6plus. To compensate Samsung to join the partnership with IKFA to enhance the technology level in mobile phones and at the end of the year, the total operating profit of Samsung Electronics was 26.41 trillion KRW. Samsung Electronics in 2016 provided the facility of cloud to its customer by making an agreement with the cloud-computing company. At the end of 2016 Samsung Electronics generated the total operating profit of 29.24 trillion KRW. In 2017 Samsung Electronics increase its operating profit with the help of its memory chips and flexible display that contributed 68% in the total operating profit of 53.65 trillion KRW. The total operating profit in 2018 was 58.89 trillion KRW. The current goal of the company is generating 400 billion dollars in revenue for a year. Samsung is the company who got the result of 8k through satellite on TV in 2019.
Plan of the report
In the upper section, we have discussed the introduction, the introduction includes what this report is about and the detail information of the selected company. In the next section, we will identify the issues that we need to discuss about the success of the company as wee as we will use two analysis techniques marketing mix and pester analysis to identify the factors that were effected on the success of the selected company. In last after conclusion, we will provide some recommendation and Appendixes.
Issues Identified in the report
Factors that are playing a key positive role in the success of Samsung Electronics are the following.
- Variety of products
- Latest technology use
- Biggest technology Supplier in the world
Clarification of the Aim of the report
The purpose to write this report is to identify the factors that are playing a key role in the success of Samsung Electronics Ltd. What are the capabilities that allow the company to survive in the competition? We will use three different analyzing techniques, first, pester to understand the external position of the company in the market. External position means the company position as economically, socially, politically and environmentally, etc. and marketing mix to understand strategies of the company for four Ps like a product, price, place, and promotion. Then we will use the SWOT analysis to know about the company internally as strengths and weaknesses as well as external opportunities and threats for the company. After doing this, we would be able to analyses what are the most important elements for a company to compete in a huge competition.
Clarification of the theoretical context
PESTEL analysis
Pestel analysis is used to identify the external or macro factors that affect the company’s ability to functioning properly. Thes external factors are economic, political, social, technological, legal and environmental. Pester is also very helpful in testing the SWOT analysis of any company.
Economic factors include some external forces like interest rate, cost of raw material or unemployment rate that affect a company’s performance positively or negatively. These factors has a major effect on the growth rate and profit ratio of any company.
Marketing Mix
Companies use marketing mix to define strategies, how they have to achieve a single goal or set of goals. The marketing mix includes four elements (4Ps) product, price, place, and promotion.
SWOT analysis
SWOT analysis is the best tool for a company to design strategies and compare those strategies with competitors. A SWOT analysis includes four elements to discuss strengths, weaknesses, opportunities, and threats. After analyzing all strengths, weaknesses, opportunities and Threats Company design the strategies by using them to achieve company goals.
PESTEL analysis
Economic Factors
One of the major benefits for the Samsung Electronics Company is the high-value currency of the South-Korea. Samsung has to face the many external expense of taxation rate, employment ratio, and interest rate. Samsung has permission to sell products all over the world and this is the most beneficial thing to increase revenue.
Social Factors
These factors are very helpful for a company to understand the changing trends of customers’ needs and demands in society. The reason of the change in trends can be influenced by friends, family or can be due to time and space, etc.
First Samsung has a good image in society due to the quality of products. Peoples needs and wants living in any society are more trendings towards the use of the latest technology, which is beneficial for Samsung.
Technological Factors
As the world has become a global village everyone nowadays demanding products with innovative technology that has affected a lot to many companies. This factor is very useful to understand the changing demands of a targeted market.
To compete in the market Samsung Electronics needs to adopt technology for production and provide the latest technology to the customers to gain more market share. All products of Samsung Electronics (like LEDs, mobiles, washing machines, and memory chips) are technology-related so its good for Samsung that people are addicted to technology use.
Environmental factors
It is the duty of a company to take care of the surrounding elements in an environment and its effect a lot to a company functioning like you cant produce any product or use any process which affects badly to your surroundings.
Samsung Electronics is a company that deals with technology so technology have a bad effect on the environment. Thats why Samsung Electronics faces a lot of ethical issues from the environment. So to deal with this issue Samsung is investing in the protection of nature.
Legal Factors
There are some policies for a company in any society defined by law to force the company to function accordingly. It is the responsibility of the company that it should be aware of the policies of the area in which a company exists to understand how these policies can affect the functioning of the company.
Samsung is facing lots of issues because of other substitutes like iPad, iPhone and reason is these products are providing consumer data security. Samsung also needs to take some actions for the security of the individuals because it has become the first priority in the need sets of customers.
Marketing Mix
Product
The product can be a tangible product or any service. The product of any company should be of high quality and must satisfy the need of the customer. As the real purpose of any company to sell products is profit as the real purpose for customers to buy products is its quality.
Samsung Electronics deals in different product categories businesses like Printing solution, Visual Display, Digital appliances business. Each business further contains different products. Due to a lot of product verities, Samsung Electronics always got a good competitive edge. As we have seen in upper case when in the first quarter of the year 2015 Samsung face a loss in mobiles due to Apple Company he urgently takes an agreement with another company for different type of product category and which again increase its revenue.
Price
The company provides the goods to the customer and demands money for it from the customer. The company decided to set the price of any product that can be based on various factors like production cost, price of raw material or image of the product.
Samsung Electronics is using different price strategies to compete in the market. First Strategy that a Samsung Electronics is using is price skimming by providing new high-quality products at a high price. And when after some time competitors launched mobile phones with that technology Samsung lower the price. The second strategy that a company used is competitive pricing, as Samsung is not only producing Smartphones but also many other types of Home Appliances. Samsung is not able to capture the position in the market as it has for SmartPhones so the company uses the technique of competitive pricing. The last technique that Samsung is using for pricing is the line pricing technique in which Samsung is offering different products at different prices to differentiate the quality of the product is the customer’s mind.
Place
Place means where the company has to place its product in the target market. Many companies invest in retailers to fix a front view for products at retailers’ shops. Before placing a product it’s very important for a company to know that it is there people are capable of but that product or not.
AS we know, Samsung Electronics Ltd. is the world’s largest company of Electronics so to handle business Samsung is using different sales and dealer channels. There are 158 attractive stores in Korea work under Samsung Electronics. Samsung has also decided to spread these consulting stores in other countries.
Promotion
Promotion means communicating with the customer about the product. Communication can be done through different resources and in different ways. It is also very important for a company to know when to communicate. The most useful and effective tool for promotion is word of mouth but it is not in the control of any company. Advertising is the best tool used for one way communication with the customer.
Samsung is investing a lot of money for the promotional purpose all over the world. The amount spent by Samsung for SmartPhones is many times higher than the Apple Company. Due to its higher quality, Samsung has a good image and positive word of mouth in the market. Samsung has its own Samsung consulting stores in China, some news channels spreading the new that Samsung has decided it spread this idea all over the world.
SWOT analysis
Strengths
Strength means what are the best qualities of the company that other competitors dont have, what capabilities can be beneficial for the company or what is uniqueness in your company for customer point of view.
The first strength of Samsung is a good image in the market. Many people ever year all over the world wait for Samsung too launched the latest edition mobile so they can buy it. The second strength of Samsung is in many countries of the world. The target area of Samsung is very huge. The third strength of Samsung is its number of products. Samsung is working in Home Appliances, Visual Display, and printing solution business.
Weaknesses
All those actions inside the organization that an organization needs to improve are the weaknesses of the company. A company needs to improve all those factors that can affect badly on the performance of the company.
Diversity in products is the biggest weakness of Samsung. Samsung is not able to set a specific image in the mind of the customers. Apple is defeating Samsung by creating a good specific image that Apple is for upper-quality people. No doubt Samsung is using this weakness by capturing the area of the Asian market and trying to convert it into strength but still not getting profit such as Apple company.
Opportunities
All external factors that can impact positively on the functioning of the company can be categorized as opportunities. A company should have knowledge of all opportunities available from the market to get an advantage from them. Opportunities can low tax rate, a higher number of population and a low number of competitors. Samsung has a lot of competition both in the US and in Asia so there is an opportunity for Samsung to mover fastly in a new geographical area. People nowadays demanding new technology so Samsung can gain more market share by investing in the department of research and development.
Threats
All external factors that can impact badly on the functioning of the company can be categorized as threats. A company should design strategies to protect it from these threats.
The big threat for Samsung is increasing the number of users for Vivo and Oppo mobile phones. Samsung sale is continuously decreasing in china and India because of these two major competitors. Due to an increase in the number of competitors, Samsung is losing the loyalty of the customers. To deal with this issue Samsung has made an agreement with a cloud-computing company and has connected a lot of customers through the internet.
Conclusion
In this paper, we have found the factors behind the success of the company. Firstly, we have discussed the history of Samsung Electronics and a little bit of its current situation means the current market share gain and which type of products Samsung Electronics is producing. After discussing we have shown it graphically. In the second section after discussing what this report is about we have used different analyzing techniques PESTER, marketing mix, and SWOT analysis. In pester analysis we have discussed how Samsung Electronics is dealing with external factors, that include environmental factors, political factors, social factors, and legal factors. To deal with environment factor Samsung is investing in nature, Samsung has designed strategies to deal with political and legal issues and for social factors, Samsung is already in a strong position for the technological invention. And in the marketing mix, we have analyzed the 4Ps which are the product, price, place, and promotion. In product, we have seen Samsung is producing different types of product in different industries like in Visual Display Samsung has launched different LEDs and LCDs. In Price, we have discussed the different pricing techniques used by Samsung, which are competitive pricing, skimming pricing, and line pricing. Competitive pricing is using for all those products which are not much famous in their markets. Line pricing to capture the Asian markets and in the last skimming to compete in SmartPhones markets. The last analysis technique that we have used is SWOT analysis to check the strength, weaknesses, opportunities, and threats for Samsung Electronics in the market and how Samsung is dealing with these factors to survive for the company. success. As we also have seen that Samsung’s performance is high in utilizing the internal strength to gain more market share and struggling to convert company weaknesses into strength. Externally we have discussed how Samsung is getting advantage from opportunities and avoiding threats.
Recommendations
As the company has introduced the concept of Samsung consulting stores in Korea, it should be in other countries like India and the US. It will help the company to increase the sale and gain back the losing loyalty of customers. The reason people are switching towards other brands like Vivo and Oppo phones, Samsung should invest now in only expensive mobiles. First, it will help the company to create a strong image like iPhones and Ipads and second the revenue of the company will also increase. Samsung needs to invest more in the advertising of other products like home appliances and solution printer business, it will help the company to generate more profit. Samsung has a lot of competitors in major markets like India, Korea, and the US so it will be better to move in the new market.
Instead of agreement with the cloud-computer company, Samsung should invest in its own security system like Apple company. As technology is changing the customer needs and wants are also changing. People nowadays are linked with each other through mobile phones so they are more conscious about the security of the data.
Samsung is not good in taking the feedback from the customers, that can be the reason for losing the customers loyalty. Samsung should invest more in research and development department to ensure it. Samsung can also build a special social media team that can gather the viewpoints of the customers and can also be a useful tool in creating artificial words of mouth to gain more market share. The question is how Samsung can create artificial words of mouth? Answer to this question, company needs to hire employees who spread false positive news for the company. For example, Im saying posting on facebook local page I have use the Samsung Note 10+, its world’s best phone without showing that im the employee of the company. This will help the company more than any direct marketing campaign.
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