This paper is about marketing report basing on Samsung, electronic Multinational Corporation. It provides Pestel analysis, competitive environment, SWOT analysis and marketing mix element. Samsung’s uniqueness is depicted from its groundbreaking approach to business. Lee Byung-chull as a minor business firm founded the company in 1938. It advanced in its operation forcing Lee to vacate the headquarters to Seoul In 1947. However, the stability of the company was shaken by the 1954 war. Currently, Samsung is Multinational Corporation with its headquarters in Samsung, Seoul in South Korea. The company has consists of various allied ancillary firms. Samsung provides an umbrella for the subsidiary firms under the brand name Samsung. Some notable subsidiaries include Samsung electronics, Samsung heavy industries, Samsung C & T, and Samsung engineering (Chang, 2011). Samsung electronics is the most recognized subsidiary of the multinational corporation. Its revenue at 2010 poses it as the greatest information technology company. Samsung heavy industries are categorized as the second shipbuilder using the same revenue criteria.
The company operates in the consumer appliances and consumer electronics industry, manufactures, and markets a range of products that include TV’s, Mobile Phones, and Washing Machines among other things (Institute of Marketing, 2009). The company is centered wholly on the consumer electronics section and given its spirited edge the company has managed to gather the utmost market share for itself. The rise of the company has been tantamount with the growth of the alleged “Asian Tigers” (the countries of South East Asia). It has productively influenced the thriving global market for consumer electronics and has dealt with staying on top of the competition (Doole & Lowe, 2005).
Samsung’s Macro and Micro Competitive Environments
Samsung’s business environment is affected by both external and internal influences, which have an impact on both the local and global performance of its products. The macro environment is understood through a PESTEL analysis while SWOT analysis is meant to analyze the company’s micro environment.
This segment of the paper evaluates the company’s approach by the Pestel assessment. Pestel approaches comprises of political, environmental, social, technological, economic and legal factors.
These points to government guidelines including the intensity of economy intervention, types of goods and services that an investor should offer to its citizens, government’s subsidies, and priorities in stipulations of business support. According to Muralidaran (2007) a country’s political legislation can have an effect on various fundamental areas such as education of the workforce, level of infrastructure and the health of the nation. Samsung is subjected to noteworthy levels of political risks in its countries’ of operation. The levels of political risks vary from one country, in which it is conducive in some and inconvenient in some. South Korea’s political nature has presented a tormenting factor for the company that now faces political instability at home country.
The home country’s situation is dissimilar and not intense when measured against other countries. Some of the countries where Samsung is experiencing an inconvenient business environment include Africa and south East Asia (Institute of Marketing, 2009). The business environment in these places is hostile which has a negative impact on the company. Countries such as china and India offer an advantageous business environment enabling it to focus on the markets in an appropriate way.
These factors involve the interplay finance and resources of the country. Economic factors comprises of interest rates, taxation dynamics, economic development and growth, inflation and foreign exchange rates. These factors can have a remarkable impact on the business operation of a firm (Pahl & Richter, 2009). Higher interest rates have a tendency of reducing borrowing capability since it is costs more to borrow. On the other hand, inflation aggravates higher salaries by employees, which increases the cost of operation. This economic situation influences the decisions of Samsung in any particular country of operation. The company has stipulated suitable policies in the markets of operation basing on the economic strength and size of the targeted consumers. Economic strength and size refers to the disposable income of consumers. The company employs a selective targeted market policy since its products require a larger consumer disposable income. Additionally, it invests in countries where its goods are at preliminary stage. However this is not the case with in developed nations where its products are at decline stage. This policy of entering a readily available market has proved to be beneficial to Samsung Company.
The social environment consists of customs, practices and traditions that vary from one social group to another. Variations in the social status affect demand for a product and the readiness of people to work. Ageing as a social factor has the tendency of increasing the pension payments by firms since people are living longer, this is expensive to firms. The ageing population also affects demand. It also increases the demand for products for the aged. Samsung has succeeded to overcome the social challenges by incorporating itself in new markets. The approach of think global and act local has efficiently connected the social and cultural gap between its native country and foreign country (Dahlén et al., 2009). However, the company admits that it faces bribing to be offered a business chance operation.
Inventions change products and their production processes. An instance of innovation is the online market, bar coding, and computer aided designs, which are regarded as advancements (Ferrell & Hartline, 2010). The major benefit of technology is its ability to cut down production costs and improving quality. Samsung is proud of its inventive advance to technology and improving it for manufacturing products that deploys design technology and features. It is universally recognized that Samsung is strong on technology. The driving force behind the company’s vast ability and pride is its ingrained culture of innovativeness. Moreover, it has pioneered major technological inventions that it employed in introducing new products in global trade.
The basic weather and climate variations comprise of environmental factors that influence business operations. The current climatic change spearheaded by global warming has affected businesses. The tourism industry is an example of most affected sectors. Remarkably, the increasing wish to safeguard the environment is creating an impact on various industries such as transportation industry, which has experienced production of hybrid cars. Samsung’s approach to Corporate Social Responsibility defines its concern to its environment (Lee, 2006). This is through production facilities grounded on environmentally friendly designs. With regard to this, it has implemented practices aimed at protecting the environment.
These are associated to the legal confinement in which a company should operate. Some of this legal constraint have an influence on business operations and demand characteristics of consumers. The adoption of minimum wage rate policy by governments can affect a firm, since it will have to raise wages increasing the cost of production.
Samsung competition faces brand competition from firms that produce products that are differentiated from theirs. This type of competition requires market forecasting, for example, Samsung has envisaged the possible room for 3D TV market share increase. Samsung has analyzed its brand competitors such as Sony and applied necessary plans for pricing and supplying strategies on the grounds of market envisages. Samsung’s plan is to sell 83 million 3D TVs by 2014, which reflects that they will need to acquire 31% of the television market share. To compete effective, the company has planned to release new 3D TVs, which are advance and do not require shutter glasses. Majority of the competitors have preferred to a model similar to Samsung’s, which is 3D TVs. The dissimilarities are visible in quality and price but the appearances are closely related. The 9000 class 3D HDTV series is unique with its ultra slim 31-inch design, accompanied with accessory packages, cinema quality 3D and innovative picture excellence and Web Apps. It boasts of a handheld touch screen remote control. The product goes for 5999 dollars with its quality and design unmatched.
Sony, Japanese corporation is well recognized for its web advisements, integrating PDF documents to enhance consumer awareness. Sony Company is popular for its Sony Bravia, which is a 3D TV and sells for 2999 dollars. Bravia has similar features as its competitors though it takes after the trends of Samsung. The company is among the top five in the television marketing. Additionally, it invests in other areas of entertainment such as film production, MP3 players and gaming consoles. Sony Company uses other organizations ideas to improve its current product and gain market share as such it offers brand competition to Samsung Company.
Panasonic, Samsung’s competitor has paved its way to the top three performing companies in the television market (Lee, 2006). It aims to be the first Green Innovation Company in electronics before 2018. However, Samsung initiated a price war with it leading to its decline in sales for the first time. Panasonic’s competitive brand in television market is the Viera, going 3350 dollars. Viera opts to use plasma, which is inferior to Samsung’s LED backlight. This puts the Panasonic’s price under questions.
Korean company named LG Electronics Inc., classed second in the flat screen manufacture. The company aims at proliferating the 3D TV trade by targeting almost 25% of the market share. This reflects 950000 television sales based on yearly envisage of 3.8 million units. LG’s brand in the 3D TV market is the 55 inch. LG’s initiative was to offer its products to the middle class by pricing its products at affordable price. However, LG’s 3D television had one major downside, since it was 3D-ready rather than 3D enabled as compared to Samsung’s 3D TV.
This section provides an evaluation of strengths, weaknesses, opportunities and threats to Samsung multinational company. The success of firms can be attributed to the strengths that in the business environment. The company was able to utilize the above situations to their advantage. Samsung is one major electronic company manufacturer producer in the world with a wider distribution and market. Some of the strength and weaknesses are discussed below.
Michell (2010) points out that the company is technologically well ahead giving it an added advantage over its competitors. Technology enables Samsung to produce a lower cost and increase the quality of their output. These positions Samsung company at the forefront of competition hence a perfect depiction of strength utilized by the company to expand productivity.
Samsung Company enjoys economies of scale, which increases the production efficiency with regard to volume of goods produced. Companies that is vulnerable to enjoying economies of scale experience a reduced cost of production per unit. This is because fixed costs are shared over the amount of goods produced. Samsung being one of these firms enjoys lower production costs attributed to larger economies of scale (Stokes & Lomax, 2008). Additionally, its current ranking shows that it is the most beneficiary of this strength making it outperform competitors down the line with lower economies of scale. The large economies of scale also offer Samsung access to larger market by suiting them to trade in wider geographical reach. However, the implications are different in small to medium companies, which start to experience high costs of production leading to losses and restricting growth.
Samsung has available resources in form of labour. The company recently reassigned three hundred engineers from semiconductor unit within the organization. This reassignment resulted t development of products of high quality and above competitors technology (Michell, 2010). Other companies such as Sony and LG buy semiconductors from Samsung to be used in their 3D market and manufacture of 3D televisions. The efficient skill in semiconductors Samsung is much assured of the dominance in the 3D market and stay ahead of competition.
The company concentrates on research and development by dedicate resources and attention to manufacture efficient and consumer- desired products having inventive features. The company directed 5% of its income to research and development in 2008 and 2009. This was followed by deployment of 42000people in research and development activities. The success of 3D is allied to the extensive research. Currently, the company has various research centers worldwide.
Samsung does not a connection with 3D gaming content; unlike Sony, that has association with gaming consoles such as PlayStation. Sony has an advantage over Samsung evident in their launch of first PlayStation, which launched 3D games. This is the only perspective of the market that Samsung does not have role hence regarded as a weakness to the company because Sony can simply displace Samsung and acquire a large market share.
Samsung charges high prices for their products due to the semiconductor technology integrated in their high quality products. This makes it hard for the company to target middle and low class people who form a larger portion of the consumer market. This forces the company to expand the target, which is only achievable in 2014. The weakness presents less or minimal effects to customers since the product quality is unsurpassed and to the consumer, concerned with quality than price the effect are none. However, financial conscious customers will compare the prices with others and resort to cheaper alternatives (Ferrell & Hartline, 2010).
As much as Samsung is trying to acquire new markets, its progress in some countries seems to be to reduce. Samsung’s concentration in Europe and North America is far below. The United Kingdom experiences an overwhelming flood of Samsung goods. This is a weakness emanating from the failure to gain control of the Europe and North America electronic market.
Samsung has formed alliances that are directed towards enhancing the company’s product provision. Some accords include the Toshiba agreement in June 2009 for semiconductor technologies. Toshiba has many patents under its name. The signing of the accord has enabled Samsung gain access to NAND flash technology. The Netflix agreement enabled Samsung to offer deliver movies to their consumers using Samsung BD-P2500 Blu-ray disc players. These alliances have led newer avenues of profits.
Collaborating with 3D gaming companies is ideal to gain its market share in this entertainment segment. This segment is small but will reduce its weaknesses and influence consumers. Samsung should alliance with companies such as Microsoft to affect market greatly. Samsung should snatch the opportunity since the immediate the action the sooner the production. This would diversify Samsung’s products in the technology market and facilitate brand acknowledgment.
Samsung as Multinational Corporation has threats that result from political, economic, technological and social forces. Rapid technological advancement easily makes a product obsolete. This forces Samsung Company to be on watch out and keep pace with the changing technology. Failure, might result obsolesce of products within a very short time. Other threats that Samsung is liable to include competitor’s moves change in customer needs or demographic shifts. Dahlén et al. (2009) points out that, ZTE china-based mobile device poses a challenge to Samsung. Recently, ZTE surpassed Apple to become the third in the global ranking of handsets
The slow rate of acquisition of 3D TVs by consumers poses a threat to the multinational corporation. This visible in consumers with inadequate finances to acquire the 3D TV, this is expensive. This has discouraged the company from releasing other models. The company is devoted to ensure that the diffusion of the product into the market is a success. This threat makes Samsung company to be vulnerable of huge losses since the company has invested large amounts of finance and weakens the rate of goal attainment that profitability.
Samsung Marketing mix
Samsung provides a wide range of products in the 3D technology trade, providing LCD, plasma and LED 3D TVs. The LED 9000 is currently the most profit-fetching commodity. The high quality 3D TV is 55 inch or 46 inch with LED backlight. It is ultra-thin, the thinnest TV with a thickness of 31 inch. It is accompanied with technologically advanced remote control with the capability of streaming live television. Consumers who have purchased the product should recognize that they have bought the ultramodern and advanced TV available in the market. Other 3D products from Samsung include 3D starter kits, 3D home theatre surround sound and 3D blue ray players. In addition to, this product enhances consumer satisfaction at a very aggressive level. The pricing ranges from 1200 to 7000 dollars therefore it caters for a wide range of clients.
Samsung’s marketing mix incorporates promotion. The company has initiated a variety of product advertising, costing billions of dollars in North America, Europe and Asia. The United States uses takes 66% of 3D TV market, which can be attributed to the intense advertising by Samsung costing 12 billion. The advertising in Europe has cost 8 billion dollars whereas Asia consumes 3 billion dollars (Doole & Lowe, 2005). The mode of advertising involves using celebrities, which have the capability of convincing potential buyers and in mega events to enable consumers to experience the benefits of the 3D TV.
The advent of technology has made the company to resort to offering online services to their customers. It provides shopping deals and free shipping costs. Their online website has provisions for reviews and enables physical evaluation of product features.
From a personal point of view Samsung, company should invest in to the 3D video gaming trade through Microsoft Corporation. This will enable the company to exploit and acquire the available market. This will enable Samsung to use the XBOX 360gaming console from Microsoft. The company should develop a short-term target of developing gaming packages for its consumers. Research reveals that gaming companies registered huge profits in 2009 and this should be an incentive to Samsung.
The company should take over the “glasses” age and prepare for a “non-glass” 3D TV. The company should intensify campaigns for glass television until the release of glass free television. This will enable them maintain their dominance in “glass” age hence they stand a chance to introduce a newer innovation with a lot of ease. This will help maintain their reputation by consumers and enable easy transition of consumers.
Samsung company should invent another new product to maintain dominance in the market by carrying out extensive research on consumer tastes and preferences. It is not easy for a company to rise within a short span of time, the way Samsung did. It has proved to the world that it is possible to surpass the greatest United States and Japan multinational corporations. According to Glowik & Smyczek (2011), technology was the driving force behind Samsung’s success. Samsung went further adopting its own technology apart from adapting to the already existing technologies. Samsung’s case provides a moral and an inspiration to company executives of other business firms. The remarkable success characterized by the advancement from plain monochrome television manufacturers to high-tech semiconductors offers a recommendation to new ultra-modern companies (Viardot, 2004).
Samsung’s scenario is an allegation of a situation experienced by the company between 1970s and 1980s, which brought forth the implementation of reverse order policy. However, the current business environment had changed due to the World Trade Order establishment that had advocated for latest economic and trading policies. As a result, Samsung had to jump the huddle again to suit in the current competitive market conditions. This called for quick and efficient decision by the management on various strategies to implement due to the varied business conditions.
It is recommended that the company should develop global strategies. In-depth analysis of the company’s business activity and technological advancement will advocate that Samsung should generate global strategies in formation and local in execution within the markets of services. It is advisable for Samsung to be more aggressive and acquire the BOP markets, as this would demand restructuring of strategies and implementation of extreme end pricing mechanism, which beneficial in the old times.
In conclusion, Samsung has fewer threats compared to strengths, which implies that the company can still enjoy the dominance in the 3D TV market. To do away with risk the Samsung need to alliance with Microsoft to play a role in the gaming market. Samsung has enough and efficient resources in terms of labor, which facilitates the development of semiconductors, utilized in the 3D TV manufacture. The greatest threat faced by Samsung is the slow rate of diffusion of 3D TVs, which slows goal attainment. The best opportunity that Samsung has to increase its profitability is investing in gaming consoles.
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