1. What are some of Samsung’s greatest competitive strengths?
Samsung’s greatest competitive strengths are its innovation, and ability to produce a product at a fast pace. Samsung allocates a large portion of company spending to research and development in order to stay ahead of the game. Samsung was responsible for producing the first Blu-Ray player, first cell phone with an MP3 player inside, and popularizing the PDA phone. Samsung also created a tablet PC that is Flash enabled. This is a big leap for tablets, and iPad has not even crossed that bridge yet. These innovations are what keeps Samsung growing strong, and the rest of the competitors playing catch-up. Samsung is also a very well-known international brand. This stands true for Apple and Sony as well, however Samsung commands an early Market share and yields enormous profit margins when it is the first to launch a brand new product on the market.
2. Samsung’s goal of $400 billion in sales by 2020 would bring it to the same levels as Walmart. Is this feasible? Why or Why not?
I think that $400 billion in sales is not feasible for Samsung unless it branches off to new markets and has new products. Market diversification will allow Samsung to spread the sales across different markets and not just rely on technology to get them to that goal. The CEO of Samsung may be calculating inflation into that number as well, very high inflation. The market leader of technology, Apple has just set a new record for sales out of any company to date – doing over $46 billion in one quarter. this projects that Apple can come out with a little over $140 billion in sales for 2012. Samsung is not far behind those numbers, however the company has stopped disclosing phone sales and I was unable to find an accurate sales number. Because I could not find past sales for Samsung, and the company trades in the Korean market and not U.S., I am unable to accurately forecast where the CEO would get such a number. I do not speak korean, so I feel like Samsung is a little shady with the performance numbers. If Samsung can out sell Apple and gain that larger market share, I still do not think that number is accurate. There are too many unforeseeable threats in the electronics industry. Staying cutting edge can only last so long before another company comes in and does it better – Apple has proved this with the cell phone/MP3 player. Samsung is growing and I do not think that number is not possible, I just strongly feel that it is reaching too high. $300 billion, maybe.
Samsung’s greatest strength is its ability to innovate and produce. Samsung has very short project phases (project phase to store shelves in six months for some products). Samsung has spent a lot of money on R&D, which allows the company to have more advantages to new and undiscovered technologies. Samsung is the second largest producer of memory chips. This is a very important aspect of the business because most of the products today use memory chips. Samsung is able to produce these high quality chips for a low cost and turn that savings onto the consumer. This is how Samsung stays competitive with Smart phone sales. Memory chips are one of the most expensive -price-driving aspects of smart phones. Samsung is able to cut the middle man out (because they are the middleman) and share that cost savings with the consumer with the resultant reduced price phones. Samsung is able to offer lower priced goods because of this, however they can be seen as a potential threat, which I will discuss later.
Samsung Is focused on R&D, which may result in a lack of attention to other vital departments of the business. Samsung typically does not improve current product, they redesign and rename new releases. This can cause product confusion with current Samsung users, which could lead them to be disgruntled to the brand. Samsung is constantly coming out with new products – using smart phones as this example. People who own the latest Samsung smart phone will soon see a new model appear on the market, leaving their “new” phone in the dust. Samsung is so focused on keeping current with trend, it loses sight of it current users. Instead of releasing upgrades to enhance current products, Samsung releases a new phone. There is not enough time to build hype for a new smart phone, it almost catches everyone by surprise. Companies such as Apple, has forums and rumor chat sights about upcoming releases. This is key to building hype around a product, well before it is available in the market. This gives people time to create the need for the product. Movies do this as well.
We will see trailers for an upcoming movie well before the release date in order to create that desire and need for the product. Samsung needs to focus on building this hype and not dumping the latest product on store shelves with little to no notice before-hand. Another weakness of Samsung is the product materials. Samsung uses plastic for all of its smart phones and other cell phones. Plastic makes the product feel cheap and poorly constructed. I have compared the construction of a Samsung smart phone to my iPhone 4 and they do not even compare in contraction and feel. The Samsung phones feel bulky and “creaky” when the phone has been used for over a month. The usage of materials can definitely improve to make the product feel of better quality. Samsung is spend a lot of its time and money on what is inside the phone, however when most people go to purchase a new cell phone they look at the exterior, and then what does it do – not the other way around.
Samsung has the opportunity to open up to new markets. Some of the markets, Samsung is already in, however the products are not overtaking and of the current competitors. Samsung is losing market share in the home appliances market to LG and GE. These are big players that offer a wide variety of products to all segments of consumers. Samsung is offering higher-end washers and dryers that have a multitude of functions, however these washers do not fit in every consumer’s budget. Samsung needs to offer a wider selection of washers and dryers that fit into a lower-income demographic. Also, appliances such as refrigerators are products that have a low disposal rate. Samsung is offering refrigerators for the higher-end market and leaving out the majority consumer market. By putting bluetooth and LCD televisions in refrigerators is inventive, it is not going to be a selling point for everyone. Not everyone wants to be consumed with technology everywhere they go.
Samsung has the opportunity to expand its market reach to new segments – the average buyer. Samsung also has the opportunity to take its low cost memory chip to different markets. The low cost memory chip is attractive for any company that has memory enabled devices. Partnering with innovative shoe companies that are looking to expand on the “smart shoe” idea will definitely be looking for a memory chip in order to save the user’s data. This is one of many up-in-coming opportunities for memory chips. Samsung would not have to dump money into R&D for memory chip market penetration strategies because the product already exists and is up-to-date.
Samsung will always be threatened by the trends of technology. Trends cannot be predicted easily and keeping up consumer needs is the best a company can do. Samsung has to assess any problems people have, and then create a product to solve those problems. This will cost time and money, and if the product is not well received by the consumers; it can be a very costly venture for Samsung. Technology also has a short life span. Technology can be new and cutting edge one day, and then obsolete the next. Samsung is threatened by competitors coming up with brand new products and ideas that are well perceived by the consumers. Samsung will then have to play catch-up in order to have a chance of competing. Samsung is also threatened by the large market share LG and GE have on the home appliance market. Appliances typically do not turn over quickly, and people very will purchase a new appliance is their current one is working fine – despite the new advancements.
Samsung will have to spend a lot of time and money to develop products that take market share away from the main competitors that have brand loyal customers. Another threat to Samsung is the competitor’s advertising campaigns. Samsung’s competitors have more money allocated to marketing than Samsung does (Samsung’s is tied up in R&D). Competitors have more market saturation than Samsung and run television commercials more often than Samsung. This goes back to the need of building product hype. Samsung needs to build more hype and lead time when releasing new products. Samsung prides itself on getting a product on the shelves in less than six month, however if it makes that seven months and spends one month advertising the product, Samsung may see greater sales.
Courtney from Study Moose
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