What I’ve learned from analyzing Samsung business strategy

Samsung has been one of the most stable company for years now..

a. Samsung is the second leading mobile company in the world just next to Apple, but in terms of the scale of innovation in the mobile and electronics components as a whole, it is leading the sector. It is important to learn the history of the company to get a better understand of its competitive edge. The expansion of smartphone era begins by Apple in 2008, but quickly Samsung penetrate the market by breaking up the market into 3 levels, High-end, Mid-range and Lower-end. This strategy has been calibrated and tried by the experienced marketing of its research team in the other segment units such as consumer electronics, semiconductors, and LCD & OLED panels. Thus giving Samsung the selling competitive advantage especially in the Asia market.

Now let’s take a look at its VRIN:

- Value: Samsung has been on the market since 1938, it is very proud of its experienced research team in exploring every possible new technology for the consumer, especially the regular everyday people for everyday use. Samsung relies most on its ability to provide high quality tech for mass consumers with many feature choices in a wide range of prices. Samsung also controls the A-Z of the supply chain, It designs, manufactures, and sales. Samsung also has positioned itself as a trustworthy brand with high durable quality and reasonable price and always up to date to the latest trend.

- Rare: Samsung particularly in the everyday consumer goods is in a crowded market, competing with low quality to high quality products from China to USA, it is not an easy battle but the market share is still available. As a result, Samsung is in an infinite game in Simon Sinek’s term, the only way for it to survive is to keep on playing the game and the losers are the ones who run out of the resources to stay in the game. The only rarity that I can point out perhaps is the Samsung renewal of its research team that always stay on the latest trend quicker than its competitors.

- Inimitability: Again thanks to the hard-working research team, Samsung expects to produce several patents annually across all sectors from washing-machine to mobile phones. It is the second biggest patents filed in the world next to IBM over the past 6–7 years. Not many company can do this, so far only Apple and by far it has only touching one sector and that is mobile phone, while Samsung has many more sectors under its umbrella.

- Non-substitutable: The one thing other than the superior research team that cannot be substitute in Samsung is the relationship and the supports it has from the Korean government itself. Not many multinational company can have a very good working relationship with the country of origin. This is important because this industry is competing with time, with the technology growth rates of the Moore’s Law on the doubling of the processor speed every two years. A single company alone will have a hard time leading the market, it needs the government’s help especially in investing heavily in R&D to keep on introducing new products on a continuous basis.

b. Capabilities created by the resources owned by Samsung:

Not only able to capitalize on the R&D and political power, Samsung also understands the socio-economic of Its market share. These combinations enable Samsung to predict what the market’s want. Samsung also relies on one of its sectors, and that is the Semiconductor sector. Samsung is the market leader in the semiconductor sector where the entire market is controlled only by 6 companies in the whole world. That gives Samsung a steady revenue to be spent on upgrading its competitive advantages.

c. Core competencies created by capabilities which distinguish Samsung from its competitor:

Samsung superior capabilities help contribute to its success in creating the technology and process competencies such as:

- Low cost of production (collaborating with contract manufacturers).

- Investment in production facilities.

- High investment in R&D.

- Availability of talent (scientists and designers).

d. Porter’s Five Forces Model analysis of Samsung:

1. Threat of new entrants: Low, high investment required for new product developent.

- Patent barriers.

- Customer loyalty.

- Advanced Technology in use.

- Legal & Regulatory pressure.

2. Threat of substitute products: Moderate, advancement of communication laws and technologies, more competition, and a short life-cycle of products.

3. Bargaining power of suppliers: Moderate, short lead times, captive suppliers, small size, can easily switch supplier, and low financial power.

4. Bargaining power of buyers: Moderate, buyers have limited alternative choice for high-quality new product, low switching cost, low adaptability time for new product, high brand image.

5. Rivalry among existing competitors: High, intense competition, the industry is reaching maturity stage,