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SAMSUNG V/S SONY, THE COMPETITIVE COLLABORATION

PRESENTED BY ANKIT GUPTA ALANKAR GUPTA SHEKHAR SRIVASTAVA AMIT KUMAR JHA YATENDER MOHAN SINGH ROHIT PAUL

WHAT IS COMPETITIVE COLLABORATION?

TO BE DEFINED IN SIMPLE TERMS, COMPETITIVE COLLABORATION MEANS THAT COMPANIES MERGE TOGETHER, SIMULTANOEUSLY COMPETITING WITH ONE ANOTHER AND AT THE SAME TIME COLLABORATING THEIR SERVICES WITH ONE ANOTHER.

Collobaration For LCD . Samsung and Sony will reportedly spend 1.8 trillion South Korean won (about $1.9 billion USD) to buy a new facility to upgrade their S-LCD Corporation joint venture. The new upgrade will allow the companies to produce enough 8G LCD panels to meet increasing global demand. The Wall Street Journal adds that the new manufacturing line will be located in the Tangjeong complex southeast of Seoul, where production will start in 2009. Monthly output is initially expected to reach 60,000 units, versus 50,000 sheets currently. Samsung recently reported a robust first quarter flat-panel division profit of about 1.01 trillion South Korean won. The company also reported that margins were at a four-year high. Both companies expect LCD TVs to be in high demand globally in preparation for the Summer Olympic Games in China

INTRODUCTION

IN 2004, SONY THE ICONIC CONSUMER ELECTRONICS GIANT, FORMED SLCD, A JOINT VENTURE WITH SAMSUNG ELECTRONICS TO MANUFACTURE LARGE SIZED LCD(LIQUID CRYSTAL DISPLAY) PANELS FOR ITS TELEVISION DIVISION.

PRIOR TO SONY, SAMSUNG HAD ALSO ENTERED INTO STRATEGIC ALLIANCES WITH OTHER COMPETITORS LIKE APPLE, INTEL, MOTOTROLA, DELL, ETC. WITH HUGE INVESTMENTS IN RESEARCH AND DEVELOPMENT, SAMSUNG WHOSE PORTFOLIO DOES NOT INCLUDE BIG BRANDS LIKE SONYS TRINITRON AND APPLES IPOD, AIMS TO DISPLACE ITS COMPETITORS FROM THEIR LEADERSHIP POSITION.

CONT.

FOR A LONG TIME SAMSUNG ELECTRONICS HAS BEEN CONSIDERED AS A CLONE OF SONY, BUT WITH THE RESTRUCTURING AFTER THE ASIAN FINANCIAL CRISES IN 1997, SAMSUNG ELECTRONICS HAD UPGRADED ITS PRODUCT LINE TO COMPETE WITH SONY IN THE PREMIUM MARKET. SONYS ELECTRONICS DIVISION HAD DECREASED THE COMPANYS PROFITS. IN 2004, SONY HAD TURNED TO SAMSUNG ELECTRONICS FOR SUPPORT IN ITS LCD TV BUSINESS. IT WAS QUOTED: SAMSUNG IS LIKE THE OLD SONY. SAMSUNG HAS MUCH OF THE SPIRIT OF SONY 10 YEARS AGO.

Objective Of The Case


To understand the strategy of competitive collaboration To discuss how Samsung is using this strategy to gain a leadership position in the global consumer electronics industry

SAMSUNG GROUP WAS ESTABLISHED ON 1ST MARCH 1938 BY BYUNG CHULL LEE. IT WAS FOUNDED IN TAEGU, KORES WITH AN INVESTMENT OF 30,000 WON. THEY STARTED WITH EXPORT BUSINESS SLOWLY MOVING INTO SUGAR INDUSTRY. SAMSUNG FORAYED INTO THE ELECTRONICS INDUSTRY IN JANUARY 1969 BY INCORPORATING SAMSUNG ELECTRONICS MANUFACTURING. ITS BUSINESS ON MASS PRODUCTION, FOLLOW-THE-LEADER STRATEGY AND DEPENDENCE ON FOREIGN TECHNOLOGY.

CONT..

THE LATE 1970S AND EARLY 1980S MARKED DIVERSIFICATION AND GLOBAL GROWTH OF COMPANYS CORE TECHNOLOGY BUSINESSES. SAMSUNG ELECTRONICS MANUFACTURING REPORTED EXPORT SALES OF $100 BILLION IN 1978 AND BECAME A MAJOR MANUFACTURER OF THE KOREAN MARKET.

ALTHOUGH SAMSUNG ELECTRONICS MADE MEMORY CHIPS AND OTHER COMPONENTS FOR PRODUCTS OF JAPANESE AND AMERICAN COMPANIES,

ITS OWN BRAND FOCUSED MORE ON MANUFACTURING PRODUCTS AT A LOWER COST. IN 1995, KUN-HEE LEE, THE REIGNING CHAIRMAN, DISTRIBUTED SAMSUNG MOBILE PHONES TO HIS FRIENDS AND KEY WORKERS. HOWEVER, HE SOON BEGAN TO RECEIVE COMPLAINTS REGARDING DEFECTS IN THE MOBILE PHONES. THIS DIVERTED THE COMPANYS FOCUS MORE ON QUALITY OF ITS PRODUCTS. THUS, IT MARKED THE BEGINNING OF SAMSUNGS TRANSFORMATION INTO A GLOBAL BRAND.

The Sony Group is primarily focused on the Electronics (such as AV/IT products & components), Game (such as PlayStation), Entertainment (such as motion pictures and music), and Financial Services (such as insurance and banking) sectors. Not only do they represent a wide range of businesses, but remain globally unique.

Their aim is to fully leverage this uniqueness in aggressively carrying out convergence strategy so that they can continue to emotionally touch and excite their customers.

CONT

Major Japanese manufacturer of consumer electronics. Founded by Ibuka Masaru and Morita Akio in 1946 as Tokyo Telecommunications Engineering Corp., It adopted its present name in 1958. It began by making voltmeters, sound generators, and similar devices. Its first major consumer item was an audio tape recorder, introduced in 1950. Since then it has pioneered new technology for consumer products marketed worldwide, including the first pocket-sized transistor radio (1957), a colour videocassette recorder (1969), and the Walkman portable tape player (1979). In 1994 Sony released the PlayStation video game console. Its entertainment divisions include motion-picture firms Columbia TriStar and Sony Pictures and recording labels Epic and Columbia.

The complexities of operating a truly multinational corporation, however, began taking their toll on Sony. Most of the world's largest economies (Europe, Japan, and the United States) were experiencing a slowdown in the early 1990s. This factor created what Sony called 'an unprecedentedly challenging operating environment.' Although sales in most of Sony's businesses increased in 1992, operating income dropped 44 percent to 166 billion ($1.2 billion). Net income increased slightly to 120 billion. Sony's success had been a direct result of the wisdom of its founders, who had the talent to anticipate the demands of consumers and to develop products to meet those demands

SAMSUNG SONY COMPETITIVE COLLABORATION

SAMSUNG SONY COMPETITIVE COLLABORATION

SONYS ALLIANCE WITH SAMSUNG STARTED IN 2001, WHEN THE TWO COMPANIES SIGNED A MEMORANDUM OF UNDERSTANDING FOR SHARING INFORMATION ON MEMORY STICK TECHNOLOGY. IN 2003 THE COLLABORATION FURTHER STRENTHENED WHEN SAMSUNG ELECTRNICS OBTAINED THE LICENSE FROM SONY TO MANUFACTURE AND SELL MEMORY STICK. AFTER SPONSORING THE FOOTBALL WORLD CUP IN JAPAN AND SOUTH KOREA IN 2002, SAMSUNG ELECTRONICS BECAME A POPULAR NAME IN SEMI CONDUCTOR, TELEVISION, MUSIC PLAYERS, ETC. ON THE OTHER HAND, BY THEN SONY HAD FALLEN BEHIND THE COMPETITION IN FLAT PANEL TVs AND COMPUTER DISPLAYS.

THE JOINT VENTURE MOVE WAS INITIATED BY SONY FOR STRENTHENING ITS PRESENCE IN FLAT PANEL TVs THAT EMPLOYED LCD AND PLASMA DISPLAY PANELS. SONY AND SAMSUNG ELECTRONICS ARE EXPECTED TO SHARE HALF THE OUTPUT FOR THEIR USE AND SALE TO OTHER COMPANIES. THE JOINT VENTURE IS EXPECTED TO SUPPLY SONY WITH A STEADY SUPPLY OF LCD PANELS WHILE MAKING SAMSUNG ELECTRONICS SCREENS THE INDUSTRY STANDARD BY INCREASING THE CUSTOMER BASE.

SONY IS CONSIDERED AN APT PARTNER FOR SAMSUNG ELECTRONICS. IN ADDITION TO LCD PANELS SONY AND SAMSUNG HAVE ALSO PARTNERED IN THE BLU RAY GROUP. BLU RAY CATERS TO THE NEXT GENERATION OPTICAL DISC FORMAT OR DVDS AND PLAYERS.

ALTHOUGH JAPANESE AND SOUTH KOREAN COMPANIES HAD WITNESSED ENMITY WITH EACH OTHER. SONY AND SAMSUNG ELECTRONICS OBSERVED LESS FRICTION BETWEEN THEM AS THEY HAD BEEN CONDUCTING INFORMAL TALKS WITH ONE ANOTHER RELATED TO TECHNOLOGIES. THE DEAL ALSO MARKED THE EMERGENCE OF SAMSUNG ELECTRONICS AS A GLOBAL PLAYER WITH PROWESS IN MANUFACTURING, FINANCE, AND POPULAR PRODUCTS THAT HAD ENABLED IT TO OVERTAKE SONY- ITS PRESTIGIOUS RIVAL IN SOME KEY SEGMENTS, COLLABORATING WITH SONY WOULD ALSO HELP SAMSUNG ELECTRONICS TO GAIN FROM SONYS EXPERTISE IN POWERFUL DESIGN AND MARKETING EXPERTISE.

S-LCD, THE JOINT VENTURE COMPANY FORMED TO CARRY OUT MASS PRODUCTION OF LCD PANELS STARTED THE SHIPMENTS OF LCD IN 2005. AFTER OBTAINING THESE PANELS FROM S-LCD DEVELOPED BY SAMSUNG ELECTRONICS, SONY ASSEMBLES LCD TV BY INSERTING ITS OWN KEY COMPONENTS SUCH AS SEMICONDUCTORS AND BACKLIGHTS. THE LOW COST HIGH QUALITY PANELS ARE EXPECTED TO HELP SONY IN COMPETING MORE EFFECTIVELY. IT WAS OPINED THAT THE COLLABORATION OF SONY AND SAMSUNG CAME AT A TIME WHEN SONY REQUIRED COST-CUTTING IN IN ITS ELECTRONICS SECTOR.

SAMSUNG ELECTRONICS WAS CONSIDERED A GOOD FIT FOR SONY TO REGAIN ITS ITS LEADING POSITION IN FLAT PANEL LCD TVs WHERE SONY HAD FALLEN BEHIND ITS RIVALS. WITH THE TECHNICAL COOPERATION OF SAMSUNG ELECTRONICS IN THE LCD AND SEMICONDUCTORS SECTORS, SONY IS FURTHER EXPECTED TO CUT ITS COSTS.

SWOT ANALYSIS OF SAMSUNG

STRENGHTS
Samsung is technologically very advanced; it has heavy assets of technology. It is known for its technologically advanced products. Samsung crushed new product concepts in five months. It is strong corporate brand and known for its quality products and advanced technology use. It attracts customers by offering new and innovative design through understanding the customers that which type of designs are suitable to customers and what they want or asked about.

It heavily invest in technology, product design and human resource, because for the success of every organization human resource plays a major role, with out human resource no product can be made thats why Samsung gives more important to the human resource.

Samsung focuses more towards the innovations and try to keep improving the products to attract more customers and capture more market share.

WEAKNESSES
Although Samsung focuses innovation but it is not proactive to introducing new products, it waits to attack the competitors. It also lacks in product differentiation. Samsung caters mass market instead of niche market so for this purpose it sets low prices of products and low price products seem as low quality products, so Samsung products perceive as low quality as compared to competitors products. Most of the Samsung products are not user friendly which is a hurdle for Samsung to make it market leader

OPPORTUNITIES

Through make itself distinctive from competitors, it can gain more market share. By providing distinguish services it can increase its customer base. Another opportunity is product variation, by introducing unique products and existing products with variety; it can attract its target market and can get more market share. As the demand for the cell phone is increasing as compared to other electronic market, Samsung has the great chance to introduce user friendly mobile phones at affordable price. It would help to beat customers and also to lead market share

THREATS

Samsung competitors in electronic market are more dominant e.g. Sony, Panasonic, LG etc in home appliances and Nokia, rim, 3G, etc in mobile phones market so it has to struggle a lot to be the market leader. Telecommunication industry is growing day by day so the no. competitors also increasing so it is difficult for Samsung to establish in that industry, it is more behind in this industry as compared to other electronic items. Samsung advertisement is not excessive while the competitors advertise their products excessively which can take away the existing customers of Samsung

SWOT ANALYSIS ON SONY

STRENGHTS

ABILITY TO CREATE HIGH QUALITY PRODUCTS FOR ITS CUSTOMERS

BUSINESS IS REPUTABLE HAVE LEARNT FROM PAST FAILURES TO PRODUCE AND WORK BETTER COMPETITIVE TOWARDS OTHER COMPANIES
ABLE TO EXPAND ITS MARKET AND PRODUCE VARIOUS PRODUCTS

WEAKNESSES

HAS BEEN MAKING A LOSS FOR THE PAST FEW YEARS IN SOME SEGMENTS. SALES OF PRODUCTS HAVE SEEMINGLY STARTED TO SLOW DOWN COMPANY IS NOT BEING MANAGED FUNCTIONAL DEPARTMENTS ARE NOT COMMUNICATING WITH EACH OTHER THUS PRODUCTIVITY IS BEING AFFECTED.

OPPORTUNITIES
T

HE ENGINEERING DEPT. HAS INCREASED SIZE RESULTIN IN MORE HARD WORK IS NOT KNOWN TO COPY COMPETITORS THUS LEADING IN REPUTE ADVERTISING TECHNIQUES HAVE BEEN INCREASED TO ATTRACT NEW CUSTOMERS IS TRYING TO SELL THEIR HIGH QUALITY PRODUTS CHEAPER MAY DECIDE TO EXPAND OVERSEAS

THREATS

HAS POWERFUL COMPETITORS LIKE MICROSOFT


REPORTS SHOW THAT PRODUCTS ARE BEING DUPLICATED LACKS DIRECTION IN STRATEGY

CONCLUSION

APART FROM SONY AND SAMSUNG, MANY OTHER COMPANIES SUCH AS PHILIPS AND LG HAVE ENTERED JOINT ALLIANCES THE PARTNERSHIP WITH SAMSUNG PROVED THAT SONY NOW REQUIRED THE SUPPORT OF A COMPETITIVE FIRM TO OPERATE EFFECTIVELY THE DEAL WITH SAMSUNG ALLOWED SONY TO TAKE ADVANTAGE OF SAMSUNG EXPERTISE IN THE CORE BUSINESSES SUCH AS MEMORY CHIPS AND LCDS.

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