Is Samsung Mobile Business Model sustainable in China facing the growing Chinese competitors ? “Change everything except your wives and kids” Lee Keun-Hee, CEO of Samsung group in 1993 after he visited an electronic store and saw Samsung products gathering dust behind Sony and Panasonic products.
Why did I choose this subject ?
I have been following this company for 6 years so far. Recently, I have been really concerned by the fact Samsung has been losing market share and displaced its number one spot in China.
I wanted to discover what were the main reasons of this collapse.
Origin of this study :
With the swift development of science and technology, the global economy has been widely open. The management environment of multinationals has changed, and the global competition is fiercer than ever. Moreover, the product life cycle is shorter than before. All kind of internal and external Factors determine whether a multinational company can live, survive or even die. Sometimes, they have to change their whole vision.
Management strategy, Marketing strategy, Investment strategy are also part of the study as they will influence the business model of a company. Here, we will be focusing about a leader in a domain who got recently overthrown by globally less experienced companies. We will take the example of Samsung Mobile as the (ex) leader and we will take 2 Chinese mobile phone companies ( Lenovo and Xiaomi ) as potential candidates of Samsung’s place.
How are we going to carry out this study ? :
This study examines the management strategy, the marketing strategy and the ***. Stratey for the three companies ( Samsung Mobile, Lenovo, and Xiaomi ). Through a comparative analysis of the 3 Major themes taught at school, we are going to show how no kings rule forever in the business world. Management, marketing
This study framework :
This study will consist of 3 majors parts ( themes seen at school ). The first part will be comparing the Samsung management strategy against its 2 Chinese competitors. As we will be discussing Samsung mobile business strategy, human resources, cross cultural management and Chinese ( so global ) strategy management. Lenovo and Xiaomi The second part will be covering the marketing strategy aspect such as the We will briefly talk about Samsung Mobile and its Chinese competitors profile.
Samsung Mobile :
Samsung Telecommunications is one of five business units within Samsung Electronics, belonging to the Samsung Group, and consists of the Mobile Communications Division, Telecommunication Systems Division, Computer Division, MP3 Business Team, Mobile Solution Centre and Telecommunication R&D Centre. Telecommunication Business produces a full spectrum of products from mobiles and other mobile devices such as MP3 players and laptop computers to telecommunication network infrastructure. Their headquarters is located in Suwon, Republic ok Korea. In 2012 Samsung Telecommunication Business reported over 35% growth and became the second largest mobile device manufacturer in the world. Its market share was 25% in Q4 2012, growing up from 11.3% in Q4 2009. At the end of December 2012, quarter of 2011. As of Q4 2014, Samsung is the largest manufacturer of devices running Google Android with a 36% market share in the world.
Lenovo Smartphones :
Lenovo Group Ltd. is a Chinese multinational computer technology company with headquarters in Beijing, China, and Morrisville, North Carolina, United States. It designs, develops, manufactures and sells personal computers, tablet computers, smartphones, workstations, servers, electronic storage devices, IT management software and smart televisions. In 2013, Lenovo was the world’s largest personal computer vendor by unit sales. It markets the ThinkPad line of notebook computers and the ThinkCentre line of desktops. Lenovo has operations in more than 60 countries and sells its products in around 160 countries. Lenovo’s principal facilities are in Beijing, Morrisville and Singapore, with research centers in those locations, as well as Shanghai, Shenzhen, Xiamen, and Chengdu in China, and Yamato in Kanagawa Prefecture, Japan.
It operates a joint venture with EMC, LenovoEMC, which sells network-attached storage solutions. It also has a joint venture with NEC, Lenovo NEC Holdings, which produces personal computers for the Japanese market. Lenovo was founded in Beijing in 1984 as Legend and was incorporated in Hong Kong in 1988. Lenovo acquired IBM’s personal computer business in 2005 and agreed to acquire its Intel-based server business in 2014. Lenovo entered the smartphone market in 2012 and as of 2014 is the largest vendor of smartphones in Mainland China. In January 2014, Lenovo agreed to acquire the mobile phone handset maker Motorola Mobility from Google, and in October 2014 the deal was finalized.
Xiaomi Inc. is a privately owned Chinese electronics company headquartered in Beijing, China. The world’s 3rd largest smartphone distributor, Xiaomi designs, develops, and sells smartphones, mobile apps, and consumer electronics. Since the release of its first smartphone in August 2011, Xiaomi has gained market share in mainland China and expanded into developing a wider range of consumer electronics. The company’s founder and CEO is Lei Jun. The company sold over 60 million smart phones in 2014. The company has over 5,000 employees, mainly in mainland China, Malaysia, Singapore, and is expanding to other countries such as India, and Indonesia.
According to IDC, Xiaomi was the third largest smartphone maker in the world followed by Lenovo and LG at fourth and fifth place respectively. Samsung remains at the first place despite declining shipment volume, followed by Apple Inc. at second place. In end of December 2014, Xiaomi became the world’s most valuable technology start-up after it received $1.1 billion funding from investors, making Xiaomi’s valuation more than $46 billion.