BUSINESS

ANALYSIS: CASE
STUDY OF
SAMSUNG
ABSTRACT
Samsung Group is Korea's largest multinational conglomerate. Samsung
Electronics is Korea's largest electronics industry and the largest subsidiary
of the Samsung Group. Samsung Galaxy Note series models have been
regarded as the 'flagship' model of Android, and the Samsung Galaxy Note
7 has a double-curved screen, blue body, iris recognition, new S Pen,
waterproof, dust-proof and other functions have been recognized and
expected by many netizens. Among them, the huge Chinese market has
made great contributions to its achievements. However, the Note 7
smartphone produced has exploded in the past few years, which has hugely
affected its users around the world. Due to Samsung's improper handling
of its incidents and the recall of markets other than China, this practice of
treating Chinese consumers differently has led to a series of questions about
ethics.

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INTRODUCTION

Samsung is one of the well-known companies in South Korea and is the

abbreviation of Samsung Group, Korea's largest enterprise group. The
Samsung Group is Korea's largest multinational conglomerate and can be
regarded as one of the 'World's Most Admired Companies. The Samsung
Group includes a number of international subsidiaries, including Samsung
Electronics, Samsung Products, Samsung Life Insurance, etc. The business
covers electronics, finance, machinery, and chemistry (Samsung, 2019). The
Samsung Group was founded in 1938 by Lee Byung-Chull (Samsung,
2019). Each of its Samsung industries is a family business and is managed
by other members of the family. In the early 1990s, Lee Byung-Chull was
dissatisfied with the company's product quality, burning unqualified products
with $50 million worth of hardware (Velazco, 2013).

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INTRODUCTIO
N
At that time, Samsung hung the banner of 'quality first' and began to slowly
enter the world. Samsung is a unique company that has grown up from
these ashes, but the process of growth is very long. At the start-up period,
Samsung was a trading company with seafood as its main commodity. In
1968, Lee Kun-hee, an MBA from George Washington University, officially
joined Samsung and decided to acquire Korean semiconductor companies
in 1974(Velazco, 2013) in order to change the situation of relying on foreign
components and technology. Since then, Samsung has been able to produce
its chips, and this move has determined Samsung's development in the
coming decades (Velazco, 2013). Although the Asian financial turmoil in
1997 caused Samsung to suffer a serious loss, Samsung Electronics CEO
Yun Jong-Yong took the lead in making long-term success in wise
investment in products and sectors (Velazco, 2013). By creating the best
products and services, Samsung can provide customers with the fullest
satisfaction to improve the quality of human work and life and promote the
common interests of humanity.
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ORGANIZATION TYPE AND
STRATEGIES
Samsung Electronics is one of the flagship subsidiaries of the Samsung
Group, which is focused on consumer electronics, DRAM and NAND Flash,
smartphones, feature phones, microcontrollers and microprocessors, wireless
communication chips and foundry (McGrath, 2010). Samsung Electronics is
Korea's largest electronics industry and the largest subsidiary of the
Samsung Group. Among the list of the 100 most famous trademarks in the
world, Samsung Electronics is the only Korean trademark and a symbol of
the Korean national industry. Samsung's vision for 2020 is to create a
commitment to a better world with a richer digital experience through
innovative technologies and products (Samsung, 2019). Samsung's strategy
is to create sustainable management of comprehensive value. Samsung
not only creates economic value by maximizing profits and shareholder
value but as a global citizen, Samsung assumes greater responsibility to
create social value (Samsung, 2019).
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PLAYERS
Samsung is better at learning from its competitors than anyone
else (Nisen, 2013). Samsung is a competitor that can stand
shoulder to shoulder with Apple. Apple is a technically
talented designer, and Samsung is a top-smart businessman.
The early Samsung was once seen by the industry as a
“cottage” enterprise that produces cheap products. Later,
Samsung developed a new brand strategy, which shifted its
original business core from large-scale manufacturing to the
production of its brands. Moreover, Samsung pays attention to
competitors' new products and strategies and can compete
with Apple with a larger screen and more features. Samsung
also has many advantages over the design and production
capabilities of core components that other electronics
manufacturers do not have. 6
COMPETITORS, STRUCTURE, AND KEY
PLAYERS
Samsung has a completely independent vertical integration kingdom, and
many key components can be self-sufficient, which makes Samsung's
vertical integration more economic of scale and efficient. The advantages of
the supply chain and the industrial chain make Apple become both a
Samsung customer and a Samsung competitor. This table from JPMorgan
Chase clearly shows how much Samsung has produced itself. The SEC
represents Samsung Electronics, and SDC represents Samsung Display
(Nisen, 2013):
According to the contents of Samsung Security (n.d.), Samsung's
management can actively communicate with stakeholders and consider their
interests in decision-making. Stakeholders include clients, shareholders,
government agencies and business partners, non-governmental organizations
(NGOs), employees, and the next generations.

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PROBLEM AND ISSUES:
SAMSUNG NOTE 7 EXPLOSION
In August 2016, the Samsung Galaxy Note7 smartphone was
released for more than a month, and more than 30 explosions
and fires caused by battery defects have occurred
worldwide. Samsung had to recall the first version of the Note
7 in September (Lopez, 2017). On the morning of October 5,
2016, a flight of US Southwest Airlines flight number 994
was on fire because of a smoking Samsung Note7
smartphone (Golson, 2016). South Korea's Samsung
Electronics decided to suspend the production of the Galaxy
Note 7 smartphone and recalled more than 2 million devices,
eventually causing a loss of $5.3 billion to Samsung (Lopez,
2017). 8
PROBLEM AND ISSUES:
BATTERY-INDUCED EXPLOSION
The reason for the Galaxy Note 7 series of explosions is that the official answer is the
battery, or rather the battery supplier's design. Unfortunately, consumers don't see the
battery in their smartphones. Samsung conducted a large-scale charge and discharge test on
200,000 smartphones and 30,000 batteries. As a result, the burn-in phenomenon caused by
different reasons was found in both A and B batteries installed in Note7. The battery SDI
(battery A) of the first version of Samsung Note7 is due to design reasons, causing the
battery negative plate to be squeezed (Lopez, 2017) causing a short circuit between the
positive and negative terminals. The second edition of the battery ATL (battery B) melted
due to the manufacturing rigor, and the burr penetrated the insulating film during the
soldering process (Lopez, 2017), which directly caused short-circuit fire.

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SWOT ANALYSIS:
STRENGTHS
First, Samsung's brand awareness and brand loyalty are high
and have a good international brand image (Omer, 2019).
According to Choi (2014), Samsung has ranked among the top
10 in 12 major countries in its brand awareness surveys in 15
countries. According to Interbrand (2019), a New York-based
global brand consultancy, the company’s brand value jumped
from $32.2 billion in 2008 to $61.1 billion in 2019 and thus has
maintained the number seven rank in “the world’s most
valuable brand” list. Samsung is at the forefront of the IT
industry and is increasingly becoming a leader in the industry,
with its influence surpassing many traditional giants in the
industry. 10
SWOT ANALYSIS:
STRENGTHS

Second, Samsung's product development and design

capabilities and technology are strong (Omer, 2019).
Samsung not only has strong R&D capabilities but also
vertically integrated industrial integration capabilities built by
its factories and are rare among global information industry
giants. In 2018, Samsung Electronics won 49 IDEA design
awards in the Industrial Design Excellence Awards (IDEA),
including one gold, six silver, and two copper (Samsung
Newsroom, 2019). These prove Samsung's Design capabilities
have reached world-class levels.

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SWOT ANALYSIS:
WEAKNESSES

• First, Samsung's market positioning is not accurate because

the price of the product is far from high to high.
Positioning covers high, medium, and low-end markets, and
there is no focus on a single market. Although the products
are rich and the customer population is broad, it also makes
customers suspect the quality of the products.

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SWOT ANALYSIS:
WEAKNESSES

• Secondly, although Samsung Electronics has achieved rapid

development in recent years, the pressure from old-fashioned
electronic operators such as Sony is still very huge. Besides,
Apple is also an industry giant, and its advantages over
competitors are still in short supply.

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SWOT ANALYSIS:
WEAKNESSES

• Third, the lack of innovation is another shortcoming of

Samsung's smartphones. The lack of a master system and
relying on an external Android system is not conducive to the
long-term development of the company.

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SWOT ANALYSIS:
OPPORTUNITIES

With the rise of the youth market, college students and

white-collar markets have become Samsung's new high-end
smartphone competition. For students, smartphones have
become a must-have and a luxury. And Samsung's price
positioning is suitable for students and office workers to buy
without pressure. Compared to competitors Apple and other
mid-range phones, Samsung's system, and configuration are
very good, so consumer satisfaction has also increased.
According to Martin (2019), Samsung's strategic partnership
with software developers and online service companies is an
opportunity to increase its competitive advantage.
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SWOT ANALYSIS:
THREATS
Market changes are changing rapidly, and smartphone
updates are getting faster and faster. The market has a large
number of new products entering every day, which will lead to
an overall decline in the price of electronic products. And the
biggest threat Samsung faces is a strong competitor. High-
end market competitors such as Apple, HTC, Sony Ericsson,
and other smartphone manufacturers are constantly developing
new products in the market, and Samsung is easily killed by
strong competitors. Legal restrictions and unsupportive
policies may also make Samsung's development slow,
especially in major mobile technology markets such as the US
and the European Union (Martin, 2019).
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ASSESSMENT AND IMPLEMENTATION PLAN
On October 11, 2016, after experiencing a battery explosion, Samsung Electronics
decided to permanently stop production and sales of the Galaxy Note7 smartphone,
hoping to end this most shameful event in the company's history as soon as possible.
Moreover, in order to seriously investigate the recent burning of the Note7, Samsung
strengthened its quality management and decided to interrupt the production and sales of
the Note7 with user safety. The findings ultimately determined that the root cause of
the problem was battery design and manufacturing defects. Samsung allowed
consumers who had purchased the Galaxy Note 7 smartphone to replace the new phone
two weeks later and recalled a total of 2.5 million Note7 phones from 10 countries and
regions including the US, South Korea, and Australia (Jeong, Wells, & Kim, 2016).
However, because Note7 sold in mainland China uses a different battery supplier than
other countries, Samsung feels that the battery does not pose a safety hazard.
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ASSESSMENT AND IMPLEMENTATION PLAN
Unfortunately, China's Samsung Note7 smartphones exploded one after another, and it
was not until the seventh explosion that they took back all the Note7 smartphones sold
in mainland China. After the incident, representatives of Samsung Electronics
apologized to all consumers. Samsung also announced the '8-point battery safety test
system' to ensure the safety of mobile phone batteries in the future. It includes the
Durability Test, Visual Inspection, X-Ray Test, Disassembling Test, TVOC Test, ΔOCV
Test, Charge and Discharge Test and Accelerated Usage Test (Lopez, 2017). At the same
time, Samsung will also adopt a multi-layered security measures agreement during the
product planning phase. The agreement will enforce strict security standards for each
part of the equipment, including the overall design and materials used, hardware
strength and size, and new software algorithms. At the same time, it will enhance safety
in terms of battery charging temperature, charging current, and charging duration.
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SUMMARY
Galaxy Note7 first bombed on August 24th in South Korea, followed by a global recall
of 2.5 million units, and finally stopped production and sales and announced a full recall.
In these tough 47 days, Note7 continued to explode. In the face of consumer doubts and
pressure from public opinion, Samsung's response was rather regrettable, because
Samsung did not admit the mistakes at the beginning, making the whole event process full
of drama. In the beginning, Korean netizens posted a picture of the explosion of the
Korean version of the Samsung Note7 during charging. Samsung Electronics officially
responded to the Galaxy Note7 postponing shipments because of further testing for
product quality. When Samsung Electronics decided to fully recall Note7 in the Korean
market, Note7 will be available for sale in the Chinese market, because the Note7 China
version does not use the battery provided by the problem provider. Finally, Samsung
Electronics President publicly apologized for the incident and announced that it would
recall the affected 2.5 million Notes7 worldwide, and said that it will stop selling in the ten
markets where Note7 has been released. 19
RECOMMENDATIONS

Corporate ethics and social responsibility are important parts of the healthy development
of enterprises and the core content of corporate culture. Enterprises must adopt practical
methods and steps to strengthen the awareness of corporate ethics and social responsibility
and enable a balanced development between enterprises, society, and the economy.
Regarding ethics and social responsibility as a core resource of enterprise competitiveness,
enterprises should get rid of the misunderstanding of economic benefits and social
responsibility conflicts as soon as possible, take the initiative to meet the challenges in the
world economic integration, and quickly connect with the world to play an important role.

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 REFERENCES

• Choi, K. (2014). Samsung brand awareness rising. The Korea Times. Retrieved from:
http://www.koreatimes.co.kr/www/tech/2018/12/693_149983.html
• Golson, J. (2016). Replacement Samsung Galaxy Note 7 phone catches fire on Southwest plane. The
Verge. Retrieved from: https://www.theverge.com/2016/10/5/13175000/samsung-galaxy-note-7-fire-
replacement-plane-battery-southwest
• Interbrand. (2019). Samsung. Retrieved from: https://www.interbrand.com/best-brands/best-global-
brands/2019/ranking/samsung/
• Jeong, E., Wells, G., & Kim, Y. (2016). Samsung Rushes to Contain Fallout From Galaxy Note 7 Recall.
The Wall Street Journal. Retrieved from: https://www.wsj.com/articles/samsung-rushes-to-contain-
fallout-from-galaxy-note-7-recall-1473777044
• Lopez, M. (2017). Samsung Explains Note 7 Battery Explosions And Turns Crisis Into Opportunity.
Forbes. Retrieved from: https://www.forbes.com/sites/maribellopez/2017/01/22/samsung-reveals-cause-
of-note-7-issue-turns-crisis-into-opportunity/#6d45fe6624f1
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 REFERENCES

• Martin, V. (2019). Samsung SWOT Analysis & Recommendations. Panmure Institute. Retrieved from:
http://panmore.com/samsung-swot-analysis-internal-external-factors-recommendations
• McGrath, D. (2010). Analyst: Samsung is likely to pass Intel in ICs. EETimes. Retrieved from:
https://www.eetimes.com/document.asp?doc_id=1257223
• Nisen, M. (2013). Samsung Has A Totally Different Strategy From Apple, And It's Working Great.
Business Insider. Retrieved from: https://www.businessinsider.com/samsung-corporate-strategy-2013-3
• Omer, K. S. (2019). Swot Analysis Implementation’s Significance on Strategy Planning Samsung Mobile
Company as an Example. Journal of Process Management. New Technologies, (1), 56.
• Samsung. (2019). Retrieved from: https://www.samsung.com/us/

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REFERENCES

• Samsung Newsroom. (2019). Samsung Electronics Wins 49 IDEA Design Awards. Retrieved from:
https://news.samsung.com/global/samsung-electronics-wins-49-idea-design-awards
• Samsung Security. (n.d.). Communication with Stakeholders. Retrieved from:
http://www.samsungsecurities.com/csr/engagement.do?cmd=list&MenuCode=M020102
• Velazco, C. (2013). How Samsung Got Big. TechCrunch. Retrieved from:
https://techcrunch.com/2013/06/01/how-samsung-got-big/

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THANK YOU!!!

20XX Pitch Deck 24