Posted: August 10th, 2024

Samsung Strategic Analysis Report Prepared by

Samsung Strategic Analysis ReportPrepared byKevin Jones, Abdullah Maasi, Frances MihulecforMG 899 AEmporia State UniversityTable of Contents I. Samsung’s Corporate Environment.................................................................................. 3 Company’s Background................................................................................................................................................ 3 Company Identity............................................................................................................................................................. 4 Corporate Governance.................................................................................................................................................. 4 SWOT Analysis.................................................................................................................................................................... 5 Porter’s Five Forces Analysis.................................................................................................................................... 5 Works Cited.................................................................................................................................. 6 Appendices.................................................................................................................................. 7 Appendix 1 -1...................................................................................................................................................................... 8 Appendix 1 –2..................................................................................................................................................................... 9I. Samsung’s Corporate EnvironmentCompany’s BackgroundByung-Chull Lee, who started his first business in Taegu, Korea in 1938, founded Samsung. 1951 saw the birth of The Samsung Corporation, a business mainly focused on trade exports such as vegetables, fruits and fish. The company soon ventured into the insurance sector for a brief time. In 1969, the corporation entered into the business of electronics as Samsung-Sanyo Electronics. The first electronics product manufactured by the company was a black and white TV that carried the brand name Samsung-Sanyo(Vision). From humble beginnings as a small Korean company, Samsung has become a global brand that deals in myriad of electronic products and has lately ventured into other Asian markets to introduce its low-cost variants to capture the market especially in the mid-range segment. This has given a huge impetus to the company in terms of financial gains and global reach. But at the same time, Samsung has been accused of imitating some world-class products – primarily Apple offerings like the iPhone and iPad. Because of this, the company has been associated with low-cost variants and has lost the leadership in terms of innovation and differentiation (Vision). The long-term vision of the company is “Inspire the World, Create the Future." This vision is in line with the company’s mission of achieving maximum market share in the technology products and thus defines the future. The company wants to focus on value creation as well as innovation by making sure that it reaches to every consumer at a best possible price(Vision).Company IdentitySamsung is known in the media primarily for its mobile technology such as smartphones, tablets, and smart watches, comparative to such competitor companies as Apple. Instead, the company is in the business of providing innovative green technology to personal, business, and health IT sectors, including B2C as well as B2B sales. Smartphones and other mobile devices represent only a small component of this venture. Coupled with technological innovations, green technology for the purpose of a more sustainable future is Samsung’s overall focus and this is best fulfilled by being present in otherwise seemingly unrelated sectors (2014). Corporate GovernanceThe total ownership structure at Samsung electronics is divided as follows: Foreign: 55 % ; major Shareholders: 15 % ; treasury stocks : 12% ; Domestic Institutional 14 % and Domestic Individual: 3 %. The shareholding structure is divided into major stockholders through common stock and preferred stocks. Major stockholders of Samsung are Kun-Hee-Lee, Samsung Corporation, Samsung Welfare Foundation, Samsung Foundation of Culture, Ra-Hee-Hong, Jae-Yong Lee, Samsung Life Insurance, Samsung Fire and Marine Insurance and Oh-Hyun Kwon (Overview). The corporate governance at Samsung work to enhance company’s decision-making and the supervisory process is based on the highest standards of governance, transparency and accountability. Currently, the Board of Directors is comprised of four executive and five independent directors. The independent director guarantees the board’s independence and transparency and established the decision-making process by taking inputs from outside experts. Independent directors meet separately from executive directors. The directors are prohibited from engaging in business activities within the same industry. This also prevents the conflict of interest as per Korean Commerce Act and the Company’s Articles of Incorporation (Overview). The directors are elected according to Article 24 or Article of Incorporation in Korea and according to that, the company should have 3 to 14 directors who are appointed in general shareholders’ meetings. The Independent Director Recommendation Committee recommends independent directors. The independence of any directors is established by Korean Stock exchange listing standards (Overview). SWOT AnalysisSee Appendix 1 – 1Porter’s Five Forces AnalysisSee Appendix 1 – 2Works Cited2014 Samsung Electronics Annual Report. Web. 21 Sep 2015. <.samsung.com/us/aboutsamsung/investor_relations/financial_information/downloads/2015/SECAR2014_Eng_Final.pdf">http://www.samsung.com/us/aboutsamsung/investor_relations/financial_information/downloads/2015/SECAR2014_Eng_Final.pdf>. Overview. Samsung. Web. 15 Sep 2015. <.samsung.com/us/aboutsamsung/investor_relations/corporate_governance/boardofdirectors/IR_BoardComposition.html">http://www.samsung.com/us/aboutsamsung/investor_relations/corporate_governance/boardofdirectors/IR_BoardComposition.html>. Vision & Mission. Samsung. Web. 15 Sep 2015. <.samsung.com/us/aboutsamsung/corporateprofile/visionmission.html">http://www.samsung.com/us/aboutsamsung/corporateprofile/visionmission.html>.AppendicesAppendix 1 -1StrengthsWeightRatingScoreCommentsVertical Integration18%40.72Realized Synergies from different lines of businessDiversification10%20.2Realized Synergies from different lines of businessGreen Technology11%30.33They are supposedly focused on this, but not necessarily great in all respectsResearch and Development25%41Corporate Social Reliability9%30.27WeaknessesCommentsDiversification10%-2-0.2Impedes growth and agilityAdvertising8%-2-0.16Not focused on differentiation innovationsFocus on competitors and their technology9%-4-0.36Perception that they copy their competitors100%1.8OpportunitiesCustomer Churn18%50.9When customers go through upgrade cycles they can select other manufacturers. This is a way of continuing growth in a saturated marketGreen Technology6%20.12Green technology is growing in many industriesGrowing market for Healthcare IT vendors10%50.54k TV Standard and evolving Entertainment Technologies13%30.39Presents opportunity to increase market share if capitalized on properlyThreatsCustomer Churn13%-4-0.52When customers go through upgrade cycles they could select opponents phones instead of ours.Market oversaturation15%-5-0.75Core businesses are heavily saturated in developed markets.Lawsuit from Apple16%-2-0.32Due to the perception that they are copying opponents, Apple has already won over 1.2 billion in damages and is continuing to sue Samsung for other infringements - Samsung is appealing to Supreme CourtOther infringement lawsuits6%-1-0.06TiVo has recently sued Samsung. In the IT industry, it is easy to infringe on another patent somewhat unintentionally.Potential Security Breaches3%-1-0.03A breach across Samsung's devices could cause significant legal liability.100%0.23Appendix 1 – 2Porter’s Five Forces Analysis for SamsungIntensity of competitive rivalryIntensityScale is 1-5Number of competitors5industry growth rate4Industry growth is slowing in Developed marketsproduct differentiation4Low Differentiation leads to high pressure: minimal differentiation that isn't as effectiveStorage Costs5Strategy Differentiation5Low Strategy Differentiation leads to high pressureExit Barriers44.590.00%(Extremely High)Threat of New EntrantsCost Advantages1High cost advantages with scale lead to low pressure of new entrantsCustomer Brand Preferences2Government Restrictions5entrants proprietary knowledge1Access to Raw Materials3Some countries may favor new companies with improved accessentrants access to government subsidies1entrants control of distribution system52.5751.43%ModerateThreat of Substitute ProductsVariety of subsitute products1substitute products quality1cost of switching to a substitute product5Low cost leading to a high forcesales of substitutes1240.00%Moderatebargaining power of suppliersnumber of suppliers in the industry1Many suppliers leading low forcedifferentiation of suppliers services2availability of suppliers' products2Highly available, but some limitations lead to low forceswitching costs2threat of forward integration by a supplier11.632.00%LowBargaining power of BuyersDemand for a product2Product differentiation4Low differentiation leads to higher forceSwitching costs4Low switching costs but replacements/alternatives are expensiveBuyers' knowledge of competing products5Buyers' disposable income2Price fraction of all purchases4Buyers' ability to postopone a purchase33.4368.57%Moderate

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