Executive Summary

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 I. Introduction

In January 2015, officials from Samsung Electronics, the South Korean electronics giant,

announced that they were making a major wager on the supposed Internet of things. This spoke to

an arrival to the firm’s idea of a computerized home, where all the firm’s gadgets and appliances

would be associated with the Internet. Samsung was only one of the players competing to shape

the associated home of things to come, and it was a long way from clear whose vision would win

or regardless of whether it would be profitable.

The wager appeared to be vital for Samsung in light of the fact that it faced profit

pressures and strong competition from price cutting Chinese new businesses, for example, Xiaomi

and Huawei in the mobile phone industry. Samsung had been a pioneer in offers of smartphones,

yet its position was being challenged in a developing number of business sectors by lower-valued

cell phones. Simultaneously, Samsung was facing stiffer competitor from Apple, which had been

coordinating Galaxy telephones, tablets, phablets by presenting bigger and less expensive

adaptations of its own exceptionally well known iPhones. Hence, when Yun Jong Yong was

appointed as the CEO and President of Samsung Electronics in 1996, the firm was facing serious

financial problems that threatened its survival. The company was left with huge debt as an

economic crisis engulfed most of Asia in 1997, leading to a drop in demand and a crash in the

prices of many electronic goods. Yun also stated that they are already losing millions of dollars

each month, and if it continues their firm would fall into bankruptcy in just three to four years.

That was the starting point of Yun together with the nine senior managers of Samsung Electronics

to discard their falling strategy risking their positions in the firm if things go wrong.

Administrators at Samsung asserted that the firm’s strength lay in the assorted line of its

items, which included televisions, cameras, PCs, and also washing machine. In spite of the fact

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that cell phones represented as much as 66% or 2/3 of its profits, Samsung could have expanded

their incomes from its different contributions. Moreover, in contrast to the entirety of its opponents,

Samsung made the greater part of its own segments, which could have enabled it to offer better

items with lower costs. This would have empowered the firm to create benefits regardless of

whether net revenues on a portion of these items kept on declining.

Regardless of its accentuation on hardware, Samsung knew about the gather move in

gadgets up from hardware to software. In 2014, the firm presented its first cell phone that ran on

Tizen, an operating system that it had created with Intel and different accomplices. In spite of the

fact that the system was not liable to challenge existing mobile operating system, for example,

Google's Android, Samsung was hoping that it would provide it with a platform on which to bring

Tizen to the mass market by introducing the product on TVs, cameras and watches. In the end, it

may likewise turn into the system that Samsung could use to associate all gadgets and appliances

to make the Internet of things.

The company wants to achieve its vision with a strategic plan that will make the firm the

number one Electronics leading company and maintain the sustainability in the market. Samsung

Electronics try to push out of its precarious financial position where the firm began to develop its

own products than to copy those that other firm had developed. The firm started to develop of

products that would impress the consumers with their attractive designs and their advance

technology.

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 II. Research Design and Methodologies

This paper was created by research from reliable sources by using the company’s data

based on the case study. As secondary sources, the strategists used internet sources to gather some

information.

Strategists used the different methodologies or tools to determine the significant factors

that directly affect the company. First, is the PESTEL Analysis, which also used to identify the

external forces that may affect an organization positively and negatively. Second is the Porter's

Five Forces as a framework to assess and evaluate the competitive strength and position of a

business organization. These forces help to understand new products that are potentially profitable.

This theory is also used to identify the areas of strength to improve the weakness and to avoid the

mistake. The internal and external environment factors that has a big impact is the SWOT Matrix

it is used to start the strategic planning exercise to determine the advantage and disadvantage that

affect the entire operation. The framework is considered a powerful tool to support the decision-

making because it is enabling an entity to uncover opportunities for success that were previously

unarticulated or to highlight threats before they become overly burdensome. Therefore, SWOT

Matrix is a process for integrating data and analyzing its big impact in the organization. This is an

excellent tool for facilitating strategic thinking and planning. Strengths and Weaknesses are

derived from the analysis of the organization’s internal situation. While the opportunities and

threats are derived from the analysis of the external situation. It has been adopted by organizations

of all types as an aid to making decisions. Additionally, the TOWS analysis is a variant of a SWOT

analysis and is an acronym for Threats, Opportunities, Weaknesses and Strengths. A TOWS is a

commonly used strategic planning tool can add real value to an organizational operation, helping

to take the strategic planning one step further. Moreover, the strategists used Boston Consulting

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Group Matrix to analyze the different business units or product lines. It also helps the companies

to allocate resources where they are most appropriate as well as to use the results in brand

marketing, portfolio analysis product management, and strategic management. The y-axis is the

graph that represents rate of market growth while, the x-axis represents market share. It is also

helping necessarily to add input for the decision-making process but does not probably consider

all possible factors that a company may face. Another tool that is being used by the strategist is

the Space Matrix, whereas it is a strategic management tool that focuses on strategy formulation

especially as related to the competitive position of an organization because they have a positive

advantage that will exactly help for the operation. Furthermore, the Competitive Performance

Measure Matrix is a competitive profile matrix that compares a company and its rivals. It reveals

the strengths and weaknesses for each company, and critical success factors show areas of success

or areas for improvement.

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 III. Strategy Planning

Samsung Electronics Co., Ltd. is a South Korean multinational electronics company

headquartered in Suwon, South Korea. It was established as Samsung Electronics Industry

Company on January 13, 1969 and held an initial public offering on June 11, 1975. The company

changed its name from Samsung Electronics Industry to Samsung Electronics following a

resolution passed at the Annual General Meeting of Shareholders on February 28, 1984. The

Company separately oversees three independent self-determining divisions such as: Consumer

Electronics Information Technology & Mobile Communications and Device Solutions. Due to

some circular ownership, it is the flagship company of the Samsung chaebol, accounting for 70%

of the group's revenue in 2012. Samsung Electronics has assembly plants and sales networks in 80

countries and employs around 308,745 people. It is the world's largest manufacturer of consumer

electronics and semiconductors by revenue. As of June 2018, Samsung Electronics' market

cap stood at US$325.9 billion.

Samsung is a major manufacturer of electronic components such as lithium-ion

batteries, semiconductors, chips and flash memory devices for clients such

as Apple, Sony, HTC and Nokia. It is the world's largest manufacturer of mobile phones

and smartphones, started with the original Samsung Solstice and later, the popularity of

its Samsung Galaxy line of devices. The company is also a major vendor of tablet computers,

particularly its Android-powered Samsung Galaxy Tab collection, and regarded for developing

the phablet market through the Samsung Galaxy Note family of devices. It has also developed 5G

capable smartphones through the Galaxy S10 and Galaxy Note 10 and foldable phones through

the Galaxy Fold. Samsung has been the world's largest television manufacturer since 2006, and

the world's largest manufacturer of mobile phones since 2011. It is also the world's largest memory

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chips manufacturer. In July 2017, Samsung Electronics overtook Intel as the largest

semiconductor chip maker in the world. Samsung Electronics is the world's second largest

technology company by revenue.

Brief History

Samsung is a South Korean multinational conglomerate headquartered in Samsung

Town, Seoul. It comprises numerous affiliated businesses, most of them united under

the Samsung brand, and is the largest South Korean chaebol (business conglomerate).

Samsung was founded by Lee Byung-chul in 1938 as a trading company. Over the next

three decades, the group diversified into areas including food processing, textiles, insurance,

securities, and retail. Samsung entered the electronics industry in the late 1960s and the

construction and shipbuilding industries in the mid-1970s; these areas would drive its subsequent

growth. 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 globalized its activities and electronics; in particular, its mobile phones and

semiconductors have become its most important source of income.

Notable Samsung industrial affiliates include Samsung Electronics (the world's

largest information technology company, consumer electronics maker and chipmaker measured

by 2017 revenues), Samsung Heavy Industries (the world's 2nd largest shipbuilder measured by

2010 revenues), and Samsung Engineering and Samsung C&T (respectively the world's 13th and

36th largest construction companies). Other notable subsidiaries include Samsung Life

Insurance (the world's 14th largest life insurance company), Samsung Everland (operator

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of Everland Resort, the oldest theme park in South Korea) and Cheil Worldwide (the world's 15th

largest advertising agency, as measured by 2012 revenues).

Year Samsung Milestones

Samsung Electronics established as a maker of televisions with technology borrowed

1969 from Sanyo
1977 Samsung Introduces its first color television
Samsung begins to focus on undercutting Japanese rivals with me-too products, with
1981 little emphasis on design
1988 Samsung launches first mobile phone
1993 Samsung begins to reinvent the firm through design
1994 Samsung hires design consultancy IDEO to help develop computer monitors
1995 Samsung sets up in-house design school, the Innovative Design Lab of Samsung
Yung Jong Yong takes over as CEO; he declares "Year of Design Revolution,"
1996 stressing that designers should lead in product planning
1998 Asian financial crisis dents Samsung's ambition, forcing it to cut design staff by 28%
Samsung once again focuses on design, and CEO Yun Jong Yong calls for design-led
2000 management
Yun initiates quarterly design meetings for top executives and opens designs labs in
2001 Los Angeles and London
2002 Samsung's "usability laboratory" inaugurated in downtown Seoul.
2004 Market Value of Samsung rises above $100 billion
2008 Lee Yoon Woon takes over as CEO from Yun
Samsung is set to announce its first loss since 2000; the firm announces major
2009 reorganization
2010 Gee Sung Choi takes over as CEO
2013 New co-leader team is formed.

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 SAMSUNG
Founder: Lee Byung-chul
Chairman: Lee Kun-hee
Vice Chairman: Lee Jae-yong

Samsung Group Shinsegae Group CJ Group Hansol Group

Subsidiaries:
Samsung Electronics Co., Ltd.
Samsung Electronics Chairman: Lee Kun-hee
CEO and President: Yun Jong
Yong (1996)
Samsung Engineering

Samsung C&T Corporation

Samsung Heavy Industries

Samsung SDS

Samsung Life Insurance

Samsung Fire and Marine

Insurance

Cheil Worldwide

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Vision

“Inspire the World, Create the Future”

Mission

“Inspire the world with our innovative technologies, products and design that enrich

people’s lives and contribute to social prosperity by creating a new future.”

Core Values

 People

We value our people with a strong belief in "A company is its people" philosophy and

providing opportunities to perform their full potential.

 Change

We rapidly take the initiative in executing change and innovation with a risk awareness:

we cannot survive if we do not constantly strive to innovate.

 Co-prosperity

We take full responsibilities as a good corporate citizen in pursuit of mutual prosperity

with our community, nation and human society.

 Excellence

We give our best efforts with endless passion and a challenge spirit to become world best

in every way.

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  Integrity

We act in a right and ethical way in all manners, ensuring fairness with honor and grace

Business Nature and Main Activities

Samsung Electronics is a manufacturing company and it focuses on four areas: digital

media, semiconductor, telecommunication network and LCD digital appliances.

The digital-media business area covers computer devices such as laptop computers

and laser printers; digital displays such as televisions and computer monitors; and consumer

entertainment devices such as DVD players, MP3 players and digital camcorders; and home

appliances such as refrigerators, air conditioners, air purifiers, washers, microwave ovens,

and vacuum cleaners.

The semiconductor-business area includes semiconductor chips such as

SDRAM, SRAM, NAND flash memory; Smart cards; mobile application processors; mobile

TV receivers; RF transceivers; CMOS Image sensors, Smart Card IC, MP3 IC, DVD/Blu-ray

Disc/HD DVD Player SOC and multi-chip package (MCP).

The telecommunication-network-business area includes multiservice DSLAMs and fax

machines; cellular devices such as mobile phones, PDA phones, and hybrid devices called mobile

intelligent terminals (MITs); and satellite receivers. The LCD business area focuses on

producing TFT-LCD and organic light-emitting diode (OLED) panels for laptops, desktop

monitors, and televisions. Samsung Print was established in 2009 as a separate entity to focus

on B2B sales and has released a broad range of multifunctional devices and printers and more. As

of 2018 Samsung does not make printers any more. They sold that part of their business to HP.

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Market Served

Samsung’s targets a very wide range of consumers ranging from normal day to day usage

devices to industrial standard equipment. The usual target age group of customers range from the

20s to 50s or even older, as long as the person has the ability to purchase and use the products that

Samsung has to offer in the market.

Teenagers to early adults (age 14 ‘25). This age group of Samsung product consumers is

usually Samsung’s smartphone target customers as they are mostly technology savvy. This group

of customers is growing as Samsung saw that this group has more spending power in recent years

compared to in the past.

Adults (age 26 ‘ 50) ‘ This specific group of targets the largest portion of Samsung’s target

market as this is the group of consumers that have the most ability to purchase any of the product

Samsung has to offer in the market be it smartphones, smart television, cameras or any other

household products like vacuum cleaners or washing machines. This portion of customers will

continue to grow in the years to come.

Location

Samsung Electronics Co., Ltd. is a South Korean multinational electronics company

headquartered in Yeongtong District, Suwon, South Korea.

Samsung has started opening dedicated stores to showcase their goods.

Korea

Samsung has various service stores throughout all of South Korea, which have showcases

of various Samsung products available for purchase, and also have repair centers for those

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items. It also has stores dedicated to the installation of large household appliances such as TVs,

dishwashers, and refrigerators. It also has stores just for the sale and repair of its memory

products, such as the SSDs.

Canada

Located in Toronto in the Toronto Eaton Centre, the Samsung Experience Store has two

levels.

Others:

 CF Richmond Centre

 CF Sherway Gardens

 Metropolis at Metrotown

 West Edmonton Mall

 Yorkdale Shopping Centre

United States

 New York – Roosevelt Field

 Houston – The Galleria

 Los Angeles – Americana at Brand

In addition to these locations, Samsung runs a Samsung Experience Shop located inside

Best Buy stores.

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Current Stage in its Life Cycle

Samsung launched a 10-year Vision 2020 corporate goal for the firm to join the ranks of

the top 10 global companies by achieving $400 billion in sales. Although it already ranked as the

largest technology company in the world by revenue, Samsung was determined to continue to grab

market share from competitor across a wide range of product categories. To reach its targeted sales

goal, Samsung was recognizing to focus more strongly on each of its businesses, encompassing

several different businesses that were allocated to three major divisions: Consumer Electronics, IT

and Mobile Communications and Device Solutions.

Past Performance and Key Achievement

Samsung had been a leader in sales of mobile phones and it had been seen to their net

income for the past 6 years of their operation. From 2009 to 2013, Samsung increased its net

income from 9,571,598 (KRW) to 29, 821,215. Below are the summarized income statement and

balance sheet of the firm from 2009 to 2013.

Year Ending December 31

2009 2010 2011 2012 2013

Revenue 136,323,670 154,630, 328 165,001,771 201,103,613 228,692,667
Gross Profit 41,728,806 51,963, 504 52,856,651 74,451, 682 90,996,358
Operating Income 10,309,038 16,352, 670 15,861,224 29,049, 338 36,785,013
Net Income 9,571, 598 15,799,035 13,734,067 23,185,375 29,821,215

Year Ending December 31

2009 2010 2011 2012 2013
Total Current Assets 54,211,297 61,402, 589 71,502, 061 87,269,017 110,760,271
Total Assets 112,179, 788 134,288,743 155,631, 251 181,071,570 214,075,018
Total Current Liabilities 34,204, 424 39,944,721 44,319,014 46,933,052 51,315,409
Total Liabilities 42,734,204 48,818,652 58,150,956 63,977,518 69,632,402
Total Stockholders' Equity 72,925,734 89,229,623 101,725,852 121,480,206 150,016,010

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 Samsung had been a leader in sales of mobile phones worldwide and it was facing stiffer

competition from Apple last 2014.

Smartphone Sales Worldwide, 2014

Company Market Share
Samsung 32%
Apple 15%
Huawei 5%
LG 5%
Lenovo 4%
Xiaomi 4%

Executives at Samsung claimed that the firm’s strength lay in the diverse line of its

product. Table below shows the global market ranking of its product.

Global Market Ranking, 2014

Product Category Market Rank
Memory Chips 1
Digital Televisions 1
Mobile phones 1
Side-by-side refrigerators 1
DVD Players 2
Washing Machines 2
Camcorders 3
Digital Cameras 3

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Relationship with Key Stakeholders

Samsung Largest Clients (Q1 2010)

Rank/Company Part Description Percent of Total

Sales

1 - Sony DRAM, NAND flash, LCD panels, etc. 3.7

2 - Apple Inc. AP (mobile processor), AMOLED 2.6

DISPLAY, DRAM, NAND flash, etc.

3 - Dell DRAM, flat-panels, lithium-ion batteries, 2.5

etc.

4 - Hewlett-Packard DRAM, flat-panels, lithium-ion batteries, 2.2

etc.

5 - Verizon Communication Handsets, etc. 1.3

6 - AT&T Inc. Handsets, etc. 1.3

Relationship with Apple Inc.

Despite recent litigation activity, Samsung and Apple have been described

as frenemies who share a love-hate relationship. Samsung is a major supplier for Apple – first

providing memory for the early iPod devices in 2005, and Apple is a key customer for Samsung –

in 2012 its component sales were thought to be worth in the region of $8 billion revenue to

Samsung – to the point where Apple CEO Tim Cook originally opposed litigation against

Samsung wary of the company's critical component supply chain for Apple.

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 In April 2011, Apple Inc. announced that it was suing Samsung over the design of its

Galaxy range of mobile phones. The lawsuit was filed on 15 April 2011 and alleges that Samsung

infringed on Apple's trademarks and patents of the iPhone and iPad Samsung issued

a counterclaim against Apple of patent infringement In August 2011, at The Regional Court of

Düsseldorf, Apple was granted a preliminary injunction against the sale and marketing of

the Samsung Galaxy Tab 10.1 across the whole of Europe excluding the Netherlands The ban has

been temporarily lifted in the European Union, with the exclusion of Germany, whilst it is

investigated whether or not the original injunction was appropriate.

On 31 August 2012, the Tokyo District Court ruled Samsung Electronics' mobile devices

did not violate an Apple patent. The case only addressed Apple's patent that allows mobile devices

and personal computers to synchronize or share data with each other and is not comparable with

the U.S. court case ruled on 24 August. On 18 October 2012, the U.K. High Court ruled that

Samsung did not infringe Apple's design patents. Apple was forced to issue ‘a court-ordered

apology to Samsung on its official U.K. website.

Relationship with Best Buys Co. Inc.,

Best Buy and Samsung joined together to create the Samsung Experience Shop, a store-in-

a-store which allows customers to test the company's newest products, as well as get training in

mobile products they already own. In summer 2013, more than 1,400 Best Buy and Best Buy

Mobile stores have established the Samsung Experience Shop. About 460 square feet of space are

dedicated for the SES, with the company's placement at Best Buy's entrance, as well as its sign

visible in any part of the store. The purpose of the Samsung Experience Shop is to make Samsung's

products, i.e. the Galaxy, more accessible to customers.

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 The first Samsung Experience Shops began rolling out across Best Buy locations in the

United States in May 2013. In May 2014, Best Buy announced its plans to add 500 new Samsung

Entertainment Experience Shops. While the previous Samsung Experience locations focus

primarily on showcasing and providing support for Samsung's Galaxy smartphones, cameras, and

tablets, these new locations will showcase and support the company's home theater products.

Unlike the Samsung Experience Shop, the Samsung Entertainment Experience will be run

by Samsung trained Best Buy associates. The new centers are expected to finish rolling out across

Best Buys in the US by January 2015.

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Environmental Analysis

PESTEL Analysis

It is a tool used to examine the forces (Political, Economic, Social, Technological,

Environmental, and Legal) in external environment of Samsung that may affect the organization

positively and negatively. This will determine the impact of the forces to the organization.

P olitical The political instability wherein there’s a war between South and North
Korea laid direct impact in the company.

E conomic Growing middle class in developing world will increase market for
consumer electronics.

S ocial Growing demand for technologically advanced electronics.

T echnological The birth of Internet of Things signifies that every gadgets and appliances
would be connected to the internet.

E nvironmental Rise of the ethical consumer who wants his brands to source and make the
products in an environmentally responsible manner.

L egal Samsung had to go to bureaucracy to seek approval for new products,

budgets and marketing plans.

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 Porter’s Five (5) Forces

It is a framework for assessing evaluating the competitive strength and position of

Samsung. It is important for the firm to know what factors has a strong and weak impact in

reaching its goals.

THREATS OF NEW ENTRANTS:

Legend: (WEAK)
(+) Advantage
(+) High Investment Required
(-) Disadvantage (+) High Production Technology
Weak – Positive Impact (+) High Switching Cost

Strong – Negative Impact

BARGAINING BARGAINING
POWER OF POWER OF
SUPPLIERS: BUYERS:
Rivalry among Existing
(STRONG) (STRONG)
Competitors:
(STRONG) (-) Commodity
(-) Critical
Materials products
(-) High Competition
(-) A few of (-) More provider
(-) Market Moving Fast in the market
suppliers
(-) Price is Competitive Factor (-) Low
(-) The most
supplier is larger switching cost
company for buyers

THREATS OF SUBSTITUTE
PRODUCTS:
(WEAK)

(+) No substitute technology

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Threat of New Entrants: WEAK
The threat of new entrants for the company of Samsung is weak. Due to high investment

required, high production technology, and high switching cost, it would be difficult for the starting

business to enter to the electronic industry. This means that Samsung has high barriers to enter to

deter new entrants.

Threat of Substitution Product: WEAK

The low substitute availability of technology for Samsung products make the threat of

substitution a weak force. This also means that the threat of substitution products in the market

don’t have a big impact in reaching Samsung’s goal.

Bargaining Power of Buyers: STRONG

The buyers in the case has a strong bargaining power. This is because Samsung offers

commodity products, it has a low switching cost for buyers, and there are many companies that

provide the same product as Samsung offers. This means that the buyers can easily influence price

decreases.

Bargaining Power of Supplier: STRONG

The bargaining power of supplier in the case of Samsung is strong based on the small

number of suppliers in the market, the materials are critical and most of the suppliers are big

companies. This means that the supplier can easily influence price increases.

Competitive Rivalry

Rivalry among existing competitors is strong. Samsung faces tough competition because

the price is a competitive factor, there is a high competition, and the market is moving fast.

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 SWOT Matrix

It is a framework used to evaluate a Samsung’s competitive position. It is important,

for Samsung to assess internal, external, current and future potential factors that may affect its

market position.

Strengths Weaknesses

 Diverse line of its product  Dependability to Google through

 Lower cost but high quality product Android
 Having their own components in  Lacking of Own Operating System
manufacturing products  Low profit margin
 Going Concern Ability
 Well dedicated Directors
 Strong and competitive manpower
 Merit based system
 Strong Research and Development
 Leading position in Memory Chips

SWOT
Opportunities Threats

 Growing demand for technologically  Strong competition

advanced electronics
 Growing middle class in developing
world will increase market for
consumer electronics
 Birth of Internet of Things
 Threat of new entrants
 War between North and South Korea
 Bureaucracy Process
 Rise of Ethical Consumer

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 IV. Strategy Formulation

Time Context

The problem took place on January 2015.

View Point

The Chief Executive Officer of Samsung Electronics is the one who will decide in the

strategies to be used in order to achieve its vision and goal.

Statement of the Problem

How will Samsung Electronics integrate all its product lines through the Internet of

Things?

Statement of Objectives

 To be able to achieve its corporate goal for the firm to join the ranks of the top 10 global

companies

 To achieve the $400 billion dollars sales for the next 5 years.

 To be able to have a greater control over the whole ecosystem.

Areas of Consideration

Internal Environment

Strengths:

 Diverse line of its product

 Lower cost but high quality product
 Having their own components in manufacturing products
 Going Concern Ability
 Well dedicated Directors

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  Strong and competitive manpower
 Merit based system
 Strong Research and Development
 Leading position in Memory Chips

Weaknesses:

 Dependability to Google through Android

 Lacking of Own Operating System
 Low profit margin

External Environment

Opportunities:

 Growing demand for technologically advanced electronics

 Growing middle class in developing world will increase market for consumer electronics
 Birth of Internet of Things

Threats:

 Strong competition
 Threat of new entrants
 War between North and South Korea
 Bureaucracy Process
 Rise of Ethical Consumer

Alternative Courses of Action

ACA#1: Continuous Innovation of Products

Non-stop innovations and continuous adaption of the disruptive changes of the

technology. The firm should be able to adapt with the disruptive changes of the technology to be

able to keep up with the trend in the market.

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ACA#2: Create Stronger Competitive Advantage

Tizen is one of the most important asset of Samsung Electronics, hence developing it

more would create stronger competitive advantage for the firm to make its competitor unable to

keep up with them.

ACA#3: Enhancement of Research & Development

Research and development must be continuously enhanced to able to come up with new

innovative products with better quality at a speed with which none of its competitors can keep up

with hence increasing its market share and keeping its position as the leading Tech Giant safe.

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Analysis of ACA
Alternative Course of Advantages
Action #
ACA#1 Continuous New premium products are
made that attracts more
Innovation of Products customers and makes the
firms increase its sales.
ACA#2 Create Stronger Creating a product that has
Tizen as its operating
Competitive Advantage system will create many
features of other Samsung
premium devices like ultra-
power saving mode and
download booster.
ACA#3 Enhancement of Develops new versions of
products or improving
Research & Development existing designs.
Disadvantages
High investment is required
as the innovation of
products need a lot of
money and time to innovate.
Since this is still new and
needs more development, it
doesn’t quite match up to
the Android run Galaxy line
when it comes to specs.
Trial and error. Research
and development needs a lot
of money and time in order
to be developed. It is trial
and error because we are
experimenting and
developing something
without an assurance of
what will the outcome be.
Page 26 of 38
Conclusion

Decision Matrix

TOWS MATRIX

The tows matrix is relatively simple tool for generating strategic options. By using it,

Samsung can look intelligently at how it can best take advantage of the opportunities open to the

firm, at the same time they can minimize the impact of weaknesses and protect their company

against threats.

Weaknesses: Strengths:

(1) Dependability to Google (1) Diverse line of its product

through Android (2) Lower cost but high quality
(2) Lacking of Own Operating product
System (3) Having their own components
(3) Low Profit Margin in manufacturing products
(4) Going Concern Ability
(5) Well dedicated Directors
(6) Strong and competitive
manpower
(7) Merit based system
(8) Strong Research and
Development
(9) Leading position in Memory
Chips

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Opportunities:
(1) Growing demand for
technologically advanced
electronics
(2) Growing middle class in
developing world will increase
market for consumer electronics.
(3) Birth of Internet of Things
Threats:
(1) Strong competition
(2) Threat of new entrants
(3) War between North and South
Korea
(4) Bureaucracy Process
(5) Rise of Ethical Consumer
OW Strategies
O1, W1: Intensive development
of Tizen to replace the Android as
an operating system used by
Samsung Electronics.
O1, W2: Continuous adaption
and development with the specs
and features offered in the
software.
O3, W2: Further development of
Tizen and make it a way a through
the internet of things.
TW Strategies
T1, W2: Venture a fund for the
R&D Development for the
development of software.
T2, S1: Raise structural barriers
T2, W1: Must develop and furnish through offering a full line of
the newly invented operating products.
system of Samsung Electronics
which is the Tizen.
T5, S3: Produce cost efficient and
customer oriented services.
OS Strategies
O1, S1: Venture in the areas more
and aim to produce the
commodities that satisfy the needs
of all classes of customers.
O1, S8: Use the available fund to
support the continuous
development of a premium brand.
O2, S2: Create the brand that will
make the product standout in the
middle class market.
O3, S1: Aggressive development
and innovation of products
through the integration of the
internet of things.
O3, S8: Venture fund for the R&D
Department to continuously
develop the innovation of products
through summing it up in the
internet of things.
TS Strategies
T1, S9: Continuous product
innovation.
Page 28 of 38
 BCG Matrix

The BCG Growth-Share Matrix is a tool related to the product life cycle. It is important for

the company to allocate their resources for pursuing its market share goals. Samsung has a basis

for allocating their resources across it product line, based upon competitive position and market

opportunity making for a more strategic based decision.

STAR QUESTION MARK

HIGH

SAMSUNG GEAR VR
SMART PHONES
INNOVATOR EDITION
Market Growth Rate

MEMORY CHIPS
(Cash Usage)

COW DOG
LOW

CAMCORDERS
HOME APPLIANCES

DIGITAL CAMERA

HIGH LOW
Relative Market Share
(Cash Generation)

Page 29 of 38
Question Mark:

Some of Samsung products are still in that phase of development which it has a low market

share but high demand for product hence, Samsung Gear VR Innovator Edition has the potential

to generate a high market demand and high market share.

Star:

The product of Samsung that has a high market growth and high market share is the smart

phones and the memory chip hence, Samsung must maintain its stronger position in the market.

Cash Cow:

This product in low growth market with high market share is also called mature stage of

business. Return on investment is high but slow expansion indicate the lower market share.

Samsung sells home appliances in different region and reach in global market, but due to low

creativity and the firm doesn’t offer the latest technology, it result in low market share which is in

cash cow class.

Dog:

This is the declining stage of the life of a product. Camcorders and Digital Cameras of

Samsung has less cash usage and less cash generation which means both the market share and

market growth are low.

Conclusion:

Milk the Samsung Appliances, don’t waste money on the Camcorders and Digital Camera,

invest in the Mobile phones and Memory Chips and give Samsung Gear VR Innovator Edition

some experiment fund to see if they can become a star.

Page 30 of 38
 Competitive Performance Measure (CPM)
The CPM Matrix is a powerful strategic analysis tool. It is important, for Samsung’s

business owners, stockholders and other interested parties to see the strengths and weaknesses of

its major competitors on a single page.

Competitive Strength Assessment (Rating Scale: 1- Very Weak; 5-

Very Strong)
Analysis Result
Hewlett
SAMSUNG APPLE Packard
Key success factor/
Importance Strength Weighted Strength Weighted Strength Weighted
Strength measure
Weight Rating Score Rating Score Rating Score

Quality/Product 0.2 4 0.8 3 0.6 1.33 0.266

Performance
Reputation/Image 0.05 5 0.25 3 0.15 1 0.05
Manufacturing
Capability and 0.1 4 0.4 3 0.3 1 0.1
Technological Skill
Profit Margin 0.1 2 0.2 3.33 0.333 1.33 0.133
Production Capacity 0.1 4 0.4 3 0.3 1.67 0.167

New Product 0.2 5 1 4 0.8 2 0.4

Innovation Capability
Financial Resources 0.1 4.67 0.467 3.67 0.367 2 0.2
Market Share 0.15 5 0.75 2 0.3 1 0.15
Overall weighted
competitive strength
1 33.67 4.267 25 3.15 11.33 1.466
rating

Among all the two (2) identified major competitor of Samsung, the CPM Matrix clearly

shows that Samsung has the highest weighted average in terms of the given key success

factor/Strength measures.

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 Space Matrix

Space Matrix is a strategic management tool and it is important for Samsung to use for the

purpose of determining the type of a strategy a company should undertake. It would be easy also

for the management of Samsung to identify the most appropriate strategy for them.

Financial Strength Environmental Stability

Liquidity Ratio +6 Internet of Things -2

Substitution
Y Axis

Solvency Ratio +5 Technology -2

Profitability Ratio +4
Total +15 Total -4
Average +5 Average -2

Total Axis Y Score: 3

Competitive Advantage Industry Strength

Quality/Product
Performance -2 Growth Potential +6
Reputation/Image -1 Investment Required +6
Production Capacity -2 Capacity utilization +5
New Product
Innovation
Capability -3 Switching cost +2
X Axis

Market Share -1 Tight Competition +6

Fast moving of
market +6
Competitors
Competitive Price +6
Number of Suppliers +2
Total -9 Total +39
Average -1.8 Average +4.88

Total Axis X Score: 3.08

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LEGEND:
+1 being the worst, +6 being the best (Financial Strength and Industry Strength)
-1 being the best, -6 being the worst (Competitive Advantage and Environmental
Stability)

Page 33 of 38
 The diagram shows that the firm is in a favorable position and is able to take an

aggressive growth strategy. It is operating in an attractive and stable industry and has a major

competitive advantages backed up by significant financial strength. It need to use its internal

strengths to develop an appropriate strategy.

8.2 ACA Selection

Among the three (3) alternative courses of action mentioned, the strategists selected the

first ACA, which is, the Continuous Innovation of Products. Under this Alternative Course of

Action, the strategists would like to specify the non-stop innovations and continuous adaption of

the disruptive changes of the technology. The firm should be able to adapt with the disruptive

changes of the technology to be able to keep up with the trend in the market. Hence, continuous

innovation of products will be a great contribution to reach Samsung Electronics’ goal to join the

ranks of the top 10 global companies through the Internet of Things. The Research and

Development department should conduct a primary research through surveys in gathering

information to identify the market trends, and the buying behavior, and to satisfy the wants and

needs of consumers in the market that is in line with the technological changes. Thus, creating

products that are significantly different from the competition and those products must have a

greater value to the public.

Page 34 of 38
 Target
Performance Performance Person/ Unit
Area Measure Responsible
Output Time Frame

Financial - Profitability -5% Increase in Finance and

Performance Revenue 1 year Marketing
- Solvency Department
-Remove unnecessary
- Liquidity Expenses

Customer and - Market Share - 10% increase in

Market market share 1 year Marketing
Performance - Customer Department
Loyalty - Customer Retention
by satisfying them

Internal - Management -Strategic Human Resource

Efficiency and Leadership Management 1 year Management
Effectiveness
- Employee Skills - Skilled Labor

Long Term - Product Quality - Products that will in

Development line with the Internet Research &
and Innovation - Product Design of Things Within 5 years Development
and Features Department
- Tizen was developed
- Operating System and improved

Page 35 of 38
 V. Strategic Implementation

Recommendation

Upon studying the case of Samsung Electronics, the Strategists are recommending some

strategies to help the firm achieve its goal; to join the Rank 10 Global Companies Worldwide by

targeting the $400 billion in sales. Under the Business Strategy, the Strategists are recommending

that the firm should adapt the Differentiation wherein they will create products that are

significantly different from the competition. In addition, the product must have a greater value to

the public. The Strategist has also recommendation for the Marketing Department under the

Functional Strategy. The firm should adapt Product development wherein they can develop new

products for existing markets or develop new products for new markets. Lastly, under the

Corporate strategy, Strategists are recommending that Samsung may use the Horizontal growth,

whereas they will expand their operation into other geographic locations and/or by increasing the

range of products and services offered to current markets.

Objectives:

 To achieve the goal to join the rank 10 of global companies worldwide by targeting the

$400 billion in sales by 2020

 To develop a new product for the existing market and the new market that is connected

with the internet of things

 To adapt the differentiation wherein to create products that significantly different from the

competition

 To use the Horizontal Growth to expand the operation into other geographic location

Page 36 of 38
 Action Plan

Strategy/Tactics Program/Activities Procedure Responsible Budget

Research and
Development
Functional department should
Strategy conduct a primary
research through
Product surveys in gathering Research and 3 to 5 Billion
Development information to identify Development KRW
Strategy Innovation of the market trends, and Department
Products the buying behavior,
and to satisfy the wants
and needs of
consumers in the
market that is in line
with the technological
changes.

Creating products that

Business Strategy
Creation of Newly are significantly
Marketing 5 Billion KRW
Innovated Products different from the
Differentiation Department
competition and those
Strategy
products must have a
greater value to the
public.

Expand Samsung’s
operation into middle
Corporate class countries and Research and
Strategy Expanding Development
Geographic increase the range of 4 Billion KRW
products and services Department
Horizontal Growth Locations
offered to current
markets.

Page 37 of 38
 VI. Strategy Evaluation

To ensure that the strategic implementation will be successful, strategists have come up

with three strategic evaluation that will monitor the current progress of the strategic

implementation.

STRATEGY EVALUATION

People
Action Plan Responsible Time Frame Procedure

All the department Build all department

Monitoring of the heads of Samsung Annually annual plans around
Established Strategies Electronics. the corporate plans
and strategies.

Research and Set up monthly

Development strategy meetings with
Strategic Procedure Department and established reporting
Planning Marketing and Monthly to monitor your
Sales Department progress.

Set up annual strategic

review dates,
including new
Strategic Reviewing All the department assessments and a
of Plans heads of Samsung Annually large group meeting
Electronics. for an annual plan
review.

Page 38 of 38