Strategic Management for Samsung Company

1.Five forces model of Samsung.

2.Bostom Consulting Group(BCG) of Samsung.
3.A case study on Samsung company.

Prepared for: Prepared by:

Name: Muhammad Abu Jafar Name: Md Zakaria Hossain Rocky

Designation: Head of department of Bachelor of ID: 11-191-0051

Business Administration.
Department: of Bachelor of Business
Department: of Bachelor of Business Administration.
Administration.

"Success is not final; failure is not fatal: It is the courage to continue that counts."

- Winston Churchill. 

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Table of content:
Introduction……………………………....3
1.Five forces model of Samsung……………………..3
a) Threat of new Entrants………………….…4
b) Threat of Substitutes………………………4
c) Bargaining power of Customer…………4-5
d) Bargaining power of Supplier………….….5
e) Competitive Rivalry……………………….5
2.Bostom Consulting Group(BCG) of Samsung…….6
a) Relative market share…………………………..7
b) Market growth rate………………………….….7
c) Question Marks……………………………....7-8
d) Stars………………………………………....….8
e) Cash Cow………………………………..……..8
f) Dogs………………………………………...…..9
3.A case study on Samsung company………………..9
a) Strength…………………………………….….11
b) Weakness………………………………………12
c) Opportunities…………………………………..12
d) Threats…………………………………………12
e) Competitors……………………………..…..12-13

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 Introduction •
Samsung was founded by Lee Byung- Chull in 1938 as a trading company • South Korean
company • Largest Information Technology company measured by 2011 revenues • Assembly
plants and sales networks in 61 countries

1.Five forces model:

Five Forces Analysis of Samsung covers the company’s competitive landscape as well as the
factors affecting its sector. The analysis focuses on measuring the company’s position based on
forces like threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining
power of suppliers and competitive rivalry.
Samsung Five Forces analysis helps to analyze its current position in the market based on
multiple internal and external factors like competitors, customers, suppliers (vendors and
partners), financial strength, future scope & alternate solutions.

Let us start the Samsung Porter Five Forces Analysis:

In this article:

 Threat of New Entrants

 Threat of Substitutes
 Bargaining Power of Customers
 Bargaining Power of Suppliers
 Competitive Rivalry

Threat of New Entrants:

The threat of new entrants in the Samsung Porter Five Forces Analysis can be explained as
follows:
Samsung is one of the world’s leading consumer electronics companies. The technology industry
is highly competitive and requires constant innovations for a company to sustain itself in this
business. These innovations require a high capital investment which is not possible to gather by a
small company. If a prominent player enters this domain, they may struggle as they do not have
the technical know how to sustain in this business. Moreover, getting into this business requires
high brand value and trust amongst the customers, which might be difficult for a new player.
Without high investment, getting a premium appliance into the market in the likes of Samsung
would require a huge investment which is again very difficult to gather for a smaller player.
Customers also have high brand loyalty for Samsung in the case of home appliances. Thus it isn't
easy to pull Samsung or any other brand’s customers into buying a newer product. Samsung also

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enjoys economies of scale, which a newer company will not have. Switching cost is also very
high in this market which further prevents customers from switching their loyalty. Threat of new
entrants would be low for Samsung.

image:pixabay

Threat of Substitutes:
Below are the threats of substitute products of Porter’s Five Forces analysis of Samsung:
Threat of substitutes should be low for Samsung.
If we try to find any substitute, it is impossible to replace the level of capability supplied by a
mobile phone in one package. Individual substitutions are possible, such as televisions for
watching movies, standalone cameras for a photograph or video recording, landline or internet
calling for calling, computers for other tasks, and so on. Even yet, combining all of these
functionalities in one package, let alone in a tiny and portable form factor, seems unlikely in the
near future. As far as home appliances go, all of the products, be it TV, washing machine,
microwave, AC or fridge, none have received any significant substitute. Any device cannot
match the convenience and experience provided by these appliances. Moreover, Samsung has
many patents that restrict other companies from manufacturing a substitute product.

Bargaining Power of Customers:

In the Samsung Porter Five Forces Analysis the bargaining power of the customers can be
explained as:
Bargaining power of customers can be set to moderate. For low switching cost devices like
mobile phones, the bargaining power is high. Because Samsung is a business-to-consumer
corporation, no single client has a significant effect on Samsung's revenues. As a result, clients'
individual bargaining power is limited. On the other hand, customers have a lot of collective
bargaining power since they have a lot of alternatives in terms of brands and items accessible on
the market to pick from. Furthermore, buyers and consumers now have access to precise
information and comparison figures to make an informed selection rather than relying just on
brand value. For products having a high switching cost, like fridge, AC, Microwave, etc., the

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bargaining power of the customers is low. This is because high investment is required to buy
such products, and there is a limited branded option in this category.
Thus, the customer prefers to go with a well known brand.

Bargaining Power of Suppliers:

Following is the bargaining power of suppliers in the Porter’s Five Forces analysis of Samsung:
Bargaining power of suppliers in the case of Samsung is low. Samsung has a large number of
vendors to pick from. Samsung works with a variety of suppliers from across the world,
including the United States, Taiwan, China, South Korea, Hong Kong, and Japan. Many of the
vendors rely on Samsung for a large portion of their revenue. Thus, they cannot risk upsetting
Samsung. Furthermore, because Samsung's switching costs for its suppliers are low, it is largely
immune to any supplier ceasing to provide the raw material or if their prices are too high. When
compared to the number of firms like Apple, Samsung, and LG who are consumers of these
providers, the number of suppliers of specific electrical components is large. Moreover, Samsung
produces chips, processors, and displays and thus can work as a supplier to many of its products.
This reduces its dependency on any other external supplier.

Competitive Rivalry:
The impact of key competitors in the Samsung Porter Five Forces Analysis is as follows:
Many tech rivals can compete directly with Samsung’s hardware and software. Companies such
as Apple and Google produce high-end hardware, whereas Mi and OnePlus provide equivalent
capabilities at a reduced cost in the mobile phone market. Customers also have an option of
trying different devices because switching costs are low, and thus brand loyalty is rarely seen in
the mobile phone market. On its home appliance front, companies like Whirlpool, Voltas, etc.,
are giving a high competition as they sell almost similar products at a similar price range. They
have a lot of money to spend on R&D and are always coming up with new and inventive items.
They may also use this money to perform a lot of promotions for their items. The life of these
appliances is high and thus, getting a customer from the competitor is tough.

There is no such market that Samsung has joined, and no other company has entered it.
To conclude, the above Samsung Porter Five Forces Analysis highlights the various elements
which impact its competitive environment. This understanding helps to evaluate the various
external business factors for any company.

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2.Boston Consulting Group(BCG):
BCG Matrix (also known as the Boston Consulting Group analysis, the Growth-Share matrix, the
Boston Box or Product Portfolio matrix) is a tool used in corporate strategy to analyse business
units or product lines based on two variables: relative market share and the market growth rate.
By combining these two variables into a matrix, a corporation can plot their business units
accordingly and determine where to allocate extra (financial) resources, where to cash out and
where to divest. 
The main purpose of the BCG Matrix is therefore to make investment decisions on a
corporate level. Depending on how well the unit and the industry is doing, four different
category labels can be attributed to each unit: Dogs, Question Marks, Cash Cows and Stars. This
article will cover each of these categories and how to properly use the BCG Matrix.

Figure 1: BCG Matrix

BCG Matrix Example: Samsung’s Product Portfolio

Samsung is a conglomerate consisting of multiple strategic

business units (SBUs) with a diverse set of products. Samsung sells phones, cameras, TVs,
microwaves, refrigerators, laundry machines, and even chemicals and insurances. This is a
smart corporate strategy to have because it spreads risk among a large variety of business
units. In case something might happen to the camera industry for instance, Samsung is still
likely to have positive cash flows from other business units in other product categories. This
helps Samsung to cope with the financial setback elsewhere. However even in a well balanced
product portfolio, corporate strategists will have to make decisions on allocating money to and
distributing money across all of those business units. Where do you put most of the money and

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where should you perhaps divest? The BCG Matrix uses Relative Market Share and the Market
Growth Rate to determine that.

Relative Market Share:

The creator of the BCG Matrix used this variable to actually measure a company’s
competitiveness. The exact measure for Relative Market Share is the focal company’s share
relative to its largest competitor. So if Samsung has a 20 percent market share in the mobile
phone industry and Apple (its largest competitor) has 60 percent so to speak, the ratio would be
1:3 (0.33) implying that Samsung has a relatively weak position. If Apple only had a share of 10
percent, the ratio would be 2:1 (2.0), implying that Samsung is in a relatively strong position,
which might be reflected in above average profits and cash flows. The cut-off point here is 1.0,
meaning that the focal company should at least have a similar market share as its largest
competitor in order to have a high relative market share. The assumption in this framework is
that an increase in relative market share will result in an increase in the generation of cash,
since the focal company benefits from economies of scales and thus gains a cost advantage
relative to its competitors.

Market Growth Rate:

The second variable is the Market Growth Rate, which is used to measure the market
attractiveness. Rapidly growing markets are what organizations usually strive for, since they are
promising for interesting returns on investments in the long term. The drawback however is that
companies in growing markets are likely to be in need for investments in order to make growth
possible. The investments are for example needed to fund marketing campaigns or to increase
capacity. High or low growth rates can vary from industry to industry, but the cut-off point in
general is usually chosen around 10 percent per annum. This means that if Samsung would be
operating in an industry where the market is growing 12 percent a year on average, the market
growth rate would be considered high.

Question Marks
Ventures or start-ups usually start off as Question Marks. Question Marks (or Problem Children)
are businesses operating with a low market share in a high growth market. They have the
potential to gain market share and become Stars (market leaders) eventually. If managed well,
Question Marks will grow rapidly and thus consume a large amount of cash investments. If

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Question Marks do not succeed in becoming a market leader, they might degenerate into
Dogs when market growth declines after years of cash consumption. Question marks must
therefore be analyzed carefully in order to determine whether they are worth the investment
required to grow market share.

Stars
Stars are business units with a high market share (potentially market leaders) in a fast-growing
industry. Stars generate large amounts of cash due to their high relative market share but also
require large investments to fight competitors and maintain their growth rate. Successfully
diversified companies should always have some Stars in their portfolio in order to ensure
future cash flows in the long term. Apart from the assurance that Stars give for the future, they
are also very good to have for your corporate’s image.

Cash Cows
Eventually after years of operating in the industry, market growth might decline and revenues
stagnate. At this stage, your Stars are likely to transform into Cash Cows. Because they still have
a large relative market share in a stagnating (mature) market, profits and cash flows are expected
to be high. Because of the lower growth rate, investments needed should also be low. Cash cows
therefore typically generate cash in excess of the amount of cash needed to maintain the
business. This ‘excess cash’ is supposed to be ‘milked’ from the Cash Cow for investments in
other business units (Stars and Question Marks). Cash Cows ultimately bring balance and
stability to a portfolio.

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Dogs
Business units in a slow-growth or declining market with a small relative market share are
considered Dogs. These units typically break even (they neither create nor consume a large
amount of cash) and generate barely enough cash to maintain the business’s market share. These
businesses are therefore not so interesting for investors. Since there is still money involved in
these business units that could be used in units with more potential, Dogs are likely to be
divested or liquidated.

Figure 2: Cash Flows and Desired Movement in BCG Matrix

3.SWOT Analysis:
SWOT analysis of Samsung analyses the brand by its strengths, weaknesses, opportunities &
threats. In Samsung SWOT Analysis, the strengths and weaknesses are the internal factors
whereas opportunities and threats are the external factors.
SWOT Analysis is a proven management framework which enables a brand like Samsung to
benchmark its business & performance as compared to the competitors. Samsung is one of the
leading brands in the IT & Technology sector.
The article below lists the Samsung SWOT (Strengths, Weaknesses, Opportunities, Threats), top
Samsung competitors and includes its target market, segmentation, positioning & Unique Selling
Proposition (USP).

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 In this article:

 Strengths
 Weaknesses
 Opportunities
 Threats
 Competition

Samsung Overview
Parent Company Samsung Group
Category Consumer Electronics/Mobile Phones
Sector IT & Technology
Tagline/ Slogan The next big thing is here; Everyone's invited; Next is now
Samsung is leading electronics company especially mobile phones
USP
and TVs

Samsung STP
Segmentation Mobile Phones and Home Appliances seeking market
Target Market Almost Everyone who wants to buy a phone; also appliances
Samsung provides best phones and appliances for every need and
Positioning
price range

About Samsung

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SWOT Analysis of Samsung
For Samsung, SWOT analysis can help the brand focus on building upon its strengths and
opportunities while addressing its weaknesses as well as threats to improve its market position.
Let us start the Samsung SWOT Analysis:

Samsung Strengths
The strengths of Samsung looks at the key aspects of its business which gives it competitive
advantage in the market. Some important factors in a brand's strengths include its financial
position, experienced workforce, product uniqueness & intangible assets like brand value. Below
are the Strengths in the SWOT Analysis of Samsung.
1. Samsung is leading consumer electronics brand, which is present in the market for a long time
and has great brand recognition
2. Samsung offers lot of models and options for every price range hence increasing sales e.g.
Samsung Galaxy series has phone in almost all price ranges
3. It is one of the largest manufacturer of TVs, home appliances and mobile phones
4. Samsung brand awareness is at par with world's greatest tech companies
5. The company is known to launch new innovative models every year and keep the market
moving with its innovation
6. Samsung not only sells its own finished products but also provides a lot of parts like LCD
panels, memory etc. to other manufacturers
7. Samsung Galaxy smartphone series is one of the most popular product line offered by the
company
8. The company has more than 250,000 employees globally
9. Samsung products are sold worldwide hence making it a global company
10. The brand has excellent advertising via TV commercials, online ads, print ads, sponsorship
events and digital marketing
11. The annual revenue of Samsung is more than $200 billion
Samsung Weaknesses
The weaknesses of a brand are certain aspects of its business which are it can improve to
increase its position further. Certain weaknesses can be defined as attributes which the company
is lacking or in which the competitors are better. Here are the weaknesses in the Samsung SWOT
Analysis:
1. Because of intense competition, Samsung has to invest aggressively even for a small market
share growth
2. Past legal issues, lawsuits and challenges from environmental agencies impact the brand
image of the company

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Samsung Opportunities
The opportunities for any brand can include areas of improvement to increase its business. A
brand's opportunities can lie in geographic expansion, product improvements, better
communication etc. Following are the opportunities in Samsung SWOT Analysis:
1. Samsung can innovate more with their existing product line and diversify into newer products
2. Introducing geography specific phones and appliances can boost the brand
3. Adopting newer technologies to improve upon products can help boost its business
4. Bringing a more affordable innovative products at difference price ranges can help Samsung a
lot
Samsung Threats
The threats for any business can be factors which can negatively impact its business. Some
factors like increased competitor activity, changing government policies, alternate products or
services etc. can be threats. The threats in the SWOT Analysis of Samsung are as mentioned:
1. Intense price competition in the mobile market can hamper the margins for Samsung
smartphones
2. Samsung has major competition with local brands in all the segments that it operates in
3. The market is very dynamic and failed products can prove to be a big issue for the company
4. Global pandemic, economic crisis and fluctuating currencies can affect the supply chain &
business operations of Samsung

Samsung Competitors
There are several brands in the market which are competing for the same set of customers.
Below are the top 14 competitors of Samsung:

1. Apple 8. Toshiba
2. LG Electronics 9. Whirlpool
3. Oppo 10. Philips
4. Vivo 11. Sony
5. Microsoft 12. Lenovo
6. HTC 13. Xiaomi
7. Panasonic 14. Nokia

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Conclusion:
Samsung is the main brand for mobile phones with its high-end specifications. The users are
average consumers and companies. The main competitor is Apple; however Samsung gives the
competitive attention through mobile features. Many customers are loyal to Samsung mobile
phones and will continue to develop a relationship with the brand lastly, the customer decision to
buy a Samsung mobile phone is based on the phones enticing features making it a powerful
motivator

Reference:
1.https://www.mbaskool.com/five-forces-analysis/companies/18268-samsung.html
2. https://heartofcodes.com/bcg-matrix-of-samsung/
3.https://www.mbaskool.com/brandguide/it-technology/17035-samsung.html
4.https://www.coursehero.com/file/p1pgkjn/Conclusion-Samsung-is-the-main-brand-for-mobile-
phones-with-its-high-end/

It is better to do the work on time, but if the work of the time is done before the
time, everything will be ruined.-“Muhammad Abu Jafar”

Thank you Sir.

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