About Samsung

Samsung is a South Korean electronics company which sells televisions, household

appliances and perhaps most notably, mobile devices. Samsung was founded by
Lee Byung-chul in 1938 as a trading company. Following Lee's death in 1987,
Samsung was separated into four business groups – Samsung Group, Shinsegae
Group, CJ Group and Hansol Group. Since 1990, Samsung has increasingly
globalised its activities and electronics; in particular, its mobile phones and
semiconductors have become its most important source of income. As of 2017,
Samsung has the 6th highest global brand value.

Samsung Electronics as a global IT company has achieved faster growth during the
recent years. The brand is operational globally with its 217 operation hubs running
worldwide. Samsung Electronics is headquartered at Suwon, South Korea. The
revenue of the brand reached 239.6 Trillion Korean won in 2017 rising from 201.9
Trillion Korean Won in 2016. Its business is divided into five divisions including
consumer electronics, IT & Mobile communications, Semi Conductors, Displays and
Harman. The IT & Mobile communications division accounts for the highest part of its
revenue which was nearly 40% in 2017 followed by semi-conductors at 28%.

SWOT ANALYSIS

STRENGTHS

1. Brand Image

One of the key strengths of Samsung is its brand image and that’s why it is one of
the most popular electronics and IT brands globally. Apart from being an innovative
brand that has brought several market leading products likes Galaxy smartphone and
High Definition screens, it is also known as a socially responsible brand. A strong
brand image is a sign of popularity and Samsung ranks among the top brands in the
Asian markets in terms of popularity. In the recent years several successful product
releases and a great branding strategy have strengthened this image further.

2. Global presence:

Global presence is also a key strength of Samsung. It has 217 operation hubs
operational globally. Apart from that, it has offices across 73 countries that employ
around 320,671 people (as of end 2017).

3. Large product portfolio:

Samsung has a large product portfolio of products including semi conductors,

displays, smartphones and consumer electronics as well as computer products. It
also has a nice line of laptops and desktops as well as printers even if its market
share in the computing industry is small. However, it surpassed Intel a few years ago
to become the leading chip maker of the world.

4. Stronghold Asian markets:

Asian markets are Samsung’s stronghold. Both China and India are leading markets
for Samsung where the popularity of its products is high. US may be the largest
market for Samsung but the Asian markets are growing increasingly important for the
global brands. China is a developed country and holds immense potential as a
market for consumer electronics, computer parts as well as smartphones. India is
also developing very fast and holds immense potential as a major Asian market.

5. Dominant position in smartphone market

Around the world smartphone sales and usage are growing. A very large part of the
global population uses smartphones and this market is expected to grow faster in
size in future. Samsung’s smartphones have been highly popular in the global
industry and its dominant position is mainly due to its Galaxy smartphones. The
dominant position in the smartphone industry has played a key role in the growth of
revenue of Samsung. This is also why the brand is focusing on innovation in this
area so as to tap this huge market to its full potential and grow its revenues faster.

6. Strong focus on research and development:

Samsung is a major technology brand but the tech industry is marked by intense
competition. To retain its leading position in the tech industry, the company has
maintained heavy focus on research and development and invests a major sum
every year. This is a critical advantage since spending on R&D enables brands to
grow sources of competitive advantage as well as bring unique products ahead of
their competitors. However, this focus on R&D has also earned Samsung very high
level of popularity around the globe.

WEAKNESS

1. Low-Profit Margin

Samsung always keeps low profit market. This is because there are lots of
competitors in mobile industry. So in order to keep the customers, they must offer
their products at low price.

2. Damaging Brand Image

A few of the recent incidents affected its brand image negatively. For example, in
May 2018, a California jury held that Samsung must pay Apple almost $540 million in
a patent infringement lawsuit directed to smartphones. On the other hand, Samsung
brand image has been damaged to a considerable extent due to a number of product
safety issues. Samsung Galaxy Note 7 smartphone is the most notable case, where
the company received at least 92 reports of Note 7 batteries overheating in the
United States, with 26 reports of burns and 55 reports of property damage due to the
explosion of the phone. These incidents led to Galaxy Note 7 smartphone model
being abandoned by Samsung. Moreover, the multinational electronics company has
to recall 144,000 Samsung washing machines worldwide due to being prone to
causing fires. There were similar smaller incidents in the past with the recall of
184,000 microwave ovens in the United States in 2003 and the recall of 210,000
refrigerators in South Korea in 2009.

3. Too Many Smartphone Models

Samsung has released more new smartphones models in 2017 than its competitors.
Having too many smartphone models lowers economies of scales and increases
costs.

4. Weak Position in the PC Market

While the PC market has declined during the recent years, still it is a major market
with huge potential. HP, Lenovo, Dell and Apple are the leading players in this
industry and Samsung’s market share is much small as compared to them. While
Samsung has brought a nice line of computer products still competition is intense
and it has not been able to be among the top six in this industry.

5. Higher dependence on the American markets

Samsung depends on the American markets for a large part of its revenue and this
can be a weakness. Fluctuations in the American markets can affect its revenue and
profits. To reduce it, Samsung would need to penetrate the Asian and European
markets deeper. Moreover, depending too much on American markets can subject it
to unnecessary pressures which can be avoided by having a more consistent
performance globally.

7. Lack its own OS and Software

Software and OS production has a high profit margin which can increase integration
of company’s products and brand loyalty. Samsung is a hardware leader but has too
much of dependence for software from other parties. Without strong software and
OS, Samsung is at disadvantage over its competitors.
OPPORTUNITIES

1. Artificial Intelligence and Innovation

Industrial development are occurring at a fast movement and this deals the expertise
kinds a key opportunity to bring their products and user capability a step forward of
their contestants.AI is a warm space present now that can help Samsung improve it
is buyer experience multiple.
Furthermore directing on this area can able it carry larger products and increase its
admiration faster. The technology market has developed highly stimulating and
competitive and the best alternative before, any technology variety regarding to raise
its corporate and revenue faster is to spend in innovation.

2. Personnel management

Personnel in the technology trade is the main source of competitive benefit. The
leading technology styles are capitalizing in the area to employ and maintain the best
as well as train their workers to perform at their best. Spending in better personnel
management will improve Samsung’s output to and common performance. It must
participate in training development and engagement of its workers to grow its
competitive advantage and profits.

3. Digital marketing and supply chain management

Digital technology has grown fast in the recent years got new chances of marketing
as well as personnel or HR and supple connect administration for the business
brands. Marketing and supply chain organization are very important capacities for
any technology product. Samsung can able use digital technology to involve its
clients and suppliers better. Moreover, digitizing the supply cable has been establish
to offer several important profits like reducing costs and lead time.

4. Diversification and acquisitions

Samsung must try to increase its market share and client base through variation and
by getting other business.in the technology manufacturing there are several related
areas where divarication can simple open new channels of profits and growth.
Samsung is the good financial form, it will be easily for the product to generate new
source of revenue by acquiring other smaller trades that strong its core offerings.
Samsung annual report (2017) https://techrunch.com/2018/01/30
TREATS

The external macro-environment of a company consists of both opportunities and

threats that affect the competitive advantage of the company, thereby affecting the
long-term sustainability. The analysis of the external threats helps in the strategic
management of the company for the formulation of appropriate strategies to avoid
the threats and sustain its market position. The SWOT analysis of Samsung
electronics shows that a number of significant threats are existent that affect the
market position and growth of the company. They are elaborated as follows:
I] Apple Company poses one of the most significant threats to the company.but
Huawei overtook Apple to become the world’s second-largest smartphone seller
behind Samsung in the second quarter,(1) the first time in seven years that any
contender has managed to split the top two. The different aspects with regard to this
threat affecting the competitive advantage are:

1. Brand Loyalty

The brand loyalty of Apple and across the world due to the high quality products with
innovative features has affected the position and market share of Samsung
considerably, and It is the first time in seven years that Samsung and Apple have not
held the top two positions. Huawei’s fast growing is threating the Samsung, before
Apple being historically weak in the second quarter, but the rise of Huawei as
significant,“Consumers remain willing to pay more for premium offerings in numerous
markets and they now expect their device to outlast and outperform previous
generations of that device which cost considerably less a few years ago,” Anthony
Scarsella from IDC.To satisfy the customer’s demands. Huawei is Bringing 5G into
Reality prior to samsung.(2) although Samsung still rules the market with higher
market shares and sales. The market shares of Huawei's share of smartphone
shipments worldwide from 1st quarter 2012 to 2nd quarter 2018, samsung has risen
from 4.6% to 15.8% in second quarter of 2018 compared to Samsung was worst hit
by the slowdown of the big three, down 10% year-on-year selling 71.9m
smartphones for a 20% share of the market. Huawei raced into the second spot
selling 54.2m phones in the quarter, up 41%, for a 15% share of the market. Apple
sold 41.3m iPhones, up 1%, for a 12% market share.

What people said….

“The continued growth of Huawei is impressive, to say the least, as is its ability to
move into markets where, until recently, the brand was largely unknown,” said Ryan
Reith, programme vice president of IDC’s Worldwide Mobile Device Tracker.
“The continued growth of Huawei is impressive, to say the least, as is its ability to
move into markets where, until recently, the brand was largely unknown,” said Ryan
Reith, programme vice president of IDC’s Worldwide Mobile Device Tracker.
It is striving fast, from an unknown brand to beating the Apple and spliting to the top
2.it conceives the greatest threat of Samsung.
 2. Specific Products

The specific products of Huawei Company pose looming threat for Samsung
affecting the market position. Huawei honorvsGalaxy The introduction of the honor
series of Apple has affected the market position of the Galaxy series of Samsung
due to the innovative features and high quality. Although, the profits and market
shares of both the series are neck to neck; however, it is seen that the Galaxy S6
could not meet the challenge of P20 and P20lite with considerable decrease of
shipment and market total compared to Huawei. Example Huawei pay vs Samsung
pay. the introduction of mobile wallet services for making payment and facilitating
cashless purchases through smartphones has been implemented by both the giants,
Huawei and Samsung with Huawei pay and Samsung pay respectively, with the
crucial role of banks. Both of them have separate system for making the transactions
using finger print. However, the main difference is the higher number of steps for
conducting the mobile transaction in Samsung Pay compared to Huawei Pay that
increases the possibility of friction during the process. Additionally, Samsung does
not provide information regarding the storage of transaction or purchase history of
customer, while Huawei has confirmed that no such history is stored in its data.

3. Litigation issue

Samsung has faced legal lawsuit for infringing patents of Huawei in the smartphones
and other mobile devices Huawei wins patent infringement lawsuit against Samsung.
Samsung and Apple settle seven-year-long patent fight over copying the iPhone, but
in 2018,Huawei emerged victorious in its patent infringement lawsuit against
Samsung. As part of the ruling, Samsung is ordered to halt manufacturing and sales
of the offending devices. The companies have been in patent lawsuits with each
other since 2016. Samsung lost it’s patent lawsuit against apple and Huawei.
These litigation issues of patent infringement may affect the import and export
business of the company, as well as penetration into new markets due to negative
impact on the authenticity of its devices and the company, as a whole.

4. Generic competition
The competition posed to the company from the rival competitors within the same
industry pose high threat for substitution of the products with relatively cheaper
devices having similar features. The different companies posing threats in different
markets for example in india Market.
From the chart:
Xiaomi has seen considerable growth in the Chinese market given tough competition
with the manufacture of cheaper mobiles that have efficient features, thereby giving
tough competition to samsung.Mi versus Galaxy – sounds like a sci-fi epic. It may
turn out to be epic alright, but the battle is on terra firma, in the world’s second
largest mobile market, India, between China’s Xiaomi and South Korea’s Samsung.
Vivo and oppo in India are giving considerable competition to Samsung due to their
successful penetration with high quality devices at considerably cheaper prices with
regard to technology devices compared to Samsung .

5. Market Saturation Increased competition & Price wars

The market for smartphones and technology devices is saturating all over the world
with increasing number of devices from new entry of mobile phone companies and
falling of prices. This competition and price wars from the rival companies affect and
pose considerable threat to the profit margin of the company, since Samsung is
known to sell expensive phones relying on the looks and features of the smartphone.
Hence, this may force the company to lower the prices to ensure growth (Euronews,
2014). In different markets, the threats may be elaborated as follows:

US: This is a significant market for smartphones due to its being a developed
country. In addition, the companies selling smartphones and mobile phones are
multinational companies making the market saturated affecting the position and the
probability of innovation diffusion is high making the adoption of smartphone reach a
saturation point The United States is one the largest smartphone markets in the
world with one of the highest smartphone penetration rates worldwide. In 2017, 68.4
percent of the U.S. population use a smartphone. Almost 75 percent of smartphone
subscribers in the United States.

Europe: The high use of smartphone has led to market maturity in Europe due to
high penetration of the smartphone companies owing to increase in the replacement
behavior. (8)This has contributed to the increase of the shares of Apple and Huawei
compared to Samsung with the high use of the ios system compared to android .
Since 2011, Apple's iOS market share has varied between 14 and 21 percent.
Introduced by Google in 2007, Android is the most popular smartphone operating
system in the world as of 2016. Since its release, sales of smartphones running on
the Android have grown strongly over the years.

Asia: Asia is a growing market for smartphones and technology devices.(9) However,
the rise of many companies such as Lenovo, vivo, xiaomi etc., that provide high
quality devices with multiple features at comparatively cheaper prices than Samsung
affect the market position of the company. Moreover, countries such as China have
reached saturation level in the smartphone market due to the rise of the replacement
buyers rather than the first time buyers (Euronews, 2014).

6. The internal- environment consists of threat

Samsung Electronics Co Ltd (005930.KS) on Tuesday said it expects profit growth

in 2017 despite challenges arising from political uncertainty, after record chip
earnings glossed over the Note 7 smartphone fiasco in the fourth quarter. Samsung
is embroiled in an influence-peddling scandal surrounding President Park Geun-hye,
with five Samsung Group executives already grilled by prosecutors and
investigations ongoing. The uncertain business environment such as the changing
political landscape in Korea