Samsung Electronics

Team 3:
Matthew Kollinger
Qiao Li
Ryan Campbell
Staton Standridge
 Vision, Mission, and Value Chain Analysis
Vision: Samsung is dedicated to developing innovative technologies and efficient processes that
create new markets, enrich people's lives and continue to make Samsung a digital leader.

Mission: 'We will devote our human resources and technology to create superior products and
services, thereby contributing to a better global society.

For Samsung, basic research, product development and design are primary
activities, unlike porters original value chain model.
Through Samsungs value chain, there is also spatial dimension because
these activities do not take place in the same place, but across the entire
globe, concentrated heavily in Korea, China, and Vietnam
Primary Activities Include: Technology and product planning, design and
engineering, procurement, inbound logistics, manufacturing, distribution
planning and forecasting, outbound logistics, marketing, sales, and service.
Supporting Activities Include: Firm infrastructure and HR management
5-Forces Model (Smartphone Industry), Key Rivals
Threat of New Entrants (Low):High capital required, necessity for
product differentiation, have to spend a lot of time on branding and
customer knowledge.
Bargaining Power of Buyers (High): Buyers can easily switch with
increased choices in mobile devices with relatively no switching
cost. Buyers will switch based on features and cost.
Threat of Substitutes (Low): While there are still some options for
buyers in the tablet market, there is still no other substitute and the
majority of the population will opt for a mobile device.
Bargaining Power of Suppliers (Low): There are many suppliers for
the mobile phone industry. Many different components with
suppliers all over the world so competition between suppliers is high
while the bargaining power of these suppliers to the mobile phone
companies is low.
Competitive Rivalry (Very High): The threat of rivalry is the biggest Key Rivals: Apple, Nokia,
threat to Samsung because of the low switching cost and the vast Blackberry, HTC, and Microsoft
amount of competition between other companies in the industry.
 Stage of Industry Life Cycle( Smartphone),
External Environment
The Smartphone industry is currently towards the end of the growth stage and should reach the
mature stage in the industry life cycle in the next five years.
Companies and their products are facing the necessity to differentiate in hardware because of the
competition between similar operating systems.
Products need to stand out in a wide array of choices in the smartphone market, having an android
operating system (such as Samsung) will not be sustainable in the future as more companies
switch to this platform. Apple continues to be differentiated because of their own OS and
hardware.

Economic: The economy of a country can be a huge determinate of whether a company enters a market.
Samsung does a wide array of demographic analytics before entering a new market.
Political and Legal: Samsung has recently violated Apple patents and has engaged in willful
infringement.
Environmental: Samsung is developing an environment-friendly products by driving eco-design and LCA,
structuring an environment supply chain management and plan for hazardous substances regulation,
and expanding a process capability of waste product and plan for EPR (Extended Producer
Responsibility).
 Financial Analysis
2010 2011 2012
ROA 13.1% 9.5% 14.2%
ROE 19.9% 14.4% 21.4%
Debt/EBIT
0.38 0.50 0.34
DA
EBITDA/Int
erest 48 45 76
Expenses

2010 2011 2012

2010 2011 2012
Revenue 154,630 165,002 201,104
Net Margin (%) 10.4 8.3 11.9
Gross profit 51,964 52,857 74,452
Asset Turnover 1.25 1.14 1.19
Operating Profit 17,297 15,644 29,049
Financial
Profit before 1.52 1.52 1.51
19,329 17,192 29,915 Leverage
Income Tax
Net Profit 16,147 13,759 23,845 Current ratio (%) 154% 161% 186%
In KRW (Korean Won)* Liability/Equity
50% 53% 49%
(%)
Debt/Equity (%) 12% 14% 12%

Net debt/Equity
- 13% - 12% - 19%
(%)
 SWOT Analysis
Samsung SWOT analysis 2013
Strengths Weaknesses
1.Hardware integration with many open source OS
and software
2.Excellence in engineering and producing
1.Patent infringement
hardware parts and consumer electronics
2.Too low profit margin
3.Innovation and design
3.Main competitors are also largest buyers
4.Focus on environment
4.Lack its own OS and software
5.Low production costs
5.Focus on too many products
6.Largest share in mobile phones and 2 place in
smartphones sales
7.Ability to market the brand
Opportunities Threats
1.Saturated smartphone markets in developed
1.Growing Indias smartphone market
countries
2.Growing mobile advertising industry
2.Rapid technological change
3.Growing demand for quality application
3.Declining margins on hardware production
processors
4.Breached patents
4.Growth of tablets market
5.Apples iTV launch
5.Obtaining patents through acquisitions
6.Price wars
 VRIO Analysis
Difficult of Exploited by the Competitve
Resources/Capability Valuable? Rare? Imitate Firm Implications
Tech & Prod. Line Sustained Comp.
Capabilities Y Y Y Y Advantage
Sustained Comp.
Brand Value Y Y Y Y Advantage
Sustained Comp.
Quality Y Y Y Y Advantage
Sustained Comp.
Brand Value Y Y Y Y Advantage
Product Mix & Temporary Comp.
Customization Y Y N Y Advantage
Temporary Comp.
Fabrication Capacity Y Y N Y Advantage
R & D Prod. Facility @
Same Loc. Y N - Y Parity
Temporary Comp.
Partners & Customers Y Y Y Y Advantage
 Samsungs Strategy
Samsung:
Samsung uses a diversification strategy to maintain its competitive advantage.
Because Samsung uses a huge portion of their revenue towards research and development,
Samsung diversifies its products. The company currently uses 5.7% of revenue towards
research while their competitor Apple only uses 2.4%.
Samsung is so much more than a smartphone-maker. It is a conglomerate, a manufacturer,
and the world's largest chip-maker. It makes many of the components that go into its
smartphones giving it a cost advantage and allowing it to be much more flexible in terms of
what it produces and when.

Apple:
Apple, though it has a diverse, well-managed, and futuristic supply chain, relies on external
partners, which can lead to delays and difficulties.
 Strategic Recommendation
Samsung currently does not own any software development companies
Allocate a larger portion of Samsung's revenue to the acquisition of software companies
Because software is not the companies strong suite, these software developments can create
huge value and better experiences for consumers that Samsung is currently lacking.
Questions?