Analysis of the External Environment of Samsung Electronics (Case Study Sample)

ANALYSIS OF THE EXTERNAL ENVIRONMENT OF SAMSUNG ELECTRONICS
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Analysis of the External Environment of Samsung Electronics
Introduction
Samsung Electronics Co. is an international electronics organization based in South Korea with an extensive global presence. The multinational firm was founded 1938 and as of 2009 employed over one-hundred and fifty-seven thousand (157,000) personnel. The company reported sales revenue of one-hundred and seventeen ($117) billion dollars during the same period. Samsung Electronics Co. is grounded on low-cost products, advanced manufacturing technology, and new product development. For over 70 years, the company has launched a wide range of technologically advanced consumer devices. These products include wearable devices, mobile phones, tablets, lenses, cameras, and computers among others. The organization is also regarded as one of the most diversified firms in the world (Hue and Ngoc, 2013; Xu,2009).
Vicious competition, along with rapidly advancing technological innovationcharacterizes the smartphone industry. In less than a decade, Samsung Electronics transformed itself from a low-profile organization with distinctivegoods and a low-price product portfolio to a market leader in the mobile phone industry. At the end of 2012 Samsung Electronics had 32.3% share of the European market, therefore, considered as the top Smartphone manufacturer in Europe and South Korea (Hue and Ngoc, 2013, pp.5). This paper aims to assess the macro-environment and micro environment surrounding Samsung Electronics, as well as summarize the organisations opportunities and threats.
An Analysis of the Macro-Environment Using the PEST Framework
Samsung Electronics Co. serves a global market; therefore, a macro-environment analysis is necessary. According to Husso, (2011, p. 7), the macro-environment comprises factors that are not within the direct regulation of the firm. These political, economic, social, andtechnological elements have the capacity to alter the working environment of an organization.
Political
According to theInstitute of Marketing(2009, pp.1), the operational environment that Samsung Electronics is exposed to in different regions consists of a combination of convenient and inconvenient policy requirements. The organization faces hostile business environments in some parts of the African continent and South East Asia. Other markets of operation offer the firm strategic business setting for operation. The company also faces political risks in some markets of operation. The political risks are as a result of instability and frequent modifications of the governing structures in Some African and Latin American countries. In addition, the firm tackles legal confinements in different markets of operation. Samsung Electronics also paid substantial penalties due to the policies against imitation. The lawsuit levied against the company by Apple Inc. not only cost the organization financial setback but also influenced public perception negatively(Dahlén, Lange, and Smith, 2009 pp. 1).
Economic
The economic factors examine the correlation between the finances and resources. The operations of an organization are adversely affected by the economic factors, including macroeconomic elements such as inflation, foreign exchange, economic growth, taxation, interest rates, and so on (Pahl and Richter, 2009 pp. 20). Volatility and uncertainty characterize the global environment in which Samsung Electronics operates. The company, therefore, employs marketing strategies that enable increased economic benefits to the organization. It utilizes selective target marketing combined with expansion into emerging markets in the developing world to improve profitability and mitigate against reduced purchasing power of consumers in the developed markets due to the global financial crisis. The organization operates on an international scale, and, consequently, also hedges against risks in foreign currency exchange rates. The company utilizes low-cost resources available in South East Asia to provide a competitive edge against its competitors (Hue and Ngoc, 2013 pp. 14)
Social
Samsung Electronicscommenced operations as a family business in South Korea but has had to adapt to a variety of local customs and traditions in the various markets of operation. The company employs a combination of local and global strategies to bridge the cultural and social gap and ensure smooth running of the business in the various countries of operation (Dahlén, Lange, and Smith, 2009 p.1). The companytailors its products and services to the preferences of the consumers in each market segment so as to ensure efficiency in customer satisfaction. Hence, the organization factors in social, cultural, geographic, and customer preferences.
Technology
The level of technological consumption worldwide is very high. The adaptation of technology is not only in the social sphere but also in the business circles. Technological advancements ensure reduced production costs and increased quality of an organization’s products. To ensure more sales and interaction with the consumers, Samsung Electronicsimplements an online marketing strategy. However, the organization's technology could be superseded by the rapidly improving technological innovations, (Ferrell and Hartline, 2010 pp. 3). The company’s success is anchoredon advanced manufacturing technology and new product development. The organization is also renowned for its culture of innovativeness. Nevertheless, the organization has faced legal inquiry due to the lawsuit filed by Apple Inc. that alleged the company had imitated its design.
An Analysis of the Micro-Environment Using the POTER’s Five Forces
The Porter’s five forces model consists of five elements, which are the threat of potential entry, the bargaining power of buyers, the bargaining power of suppliers, rivalry among competitors, and the threat of substitutes.
Threat of Potential Entry
The threat of potential entry to the mobile phone industry is very low due to many barriers to entry. These barriers include high capital requirements, especially for new entrants, as well as the high cost of funding a research and development department. Samsung Electronics has two major operating systems, the Google Android OS and iOS,which a new entrant would have to buy rights for or develop their operating system (Brostoff, Levin, and Bowers, 2014 pp. 17).
Bargaining Power of Buyers
The global bargaining power of the consumer is very high.Apart from the wide range of products and services produced by Samsung Electronics, there are also a variety of goods from the organization’s competitors that the consumers can select. These products include the galaxy range, which comprises of a variety of smartphones and tablets with different features. To considerably reduce the bargaining power of the consumer,the company uniquely differentiates its products and produces a variety of product designs at differentiated costs to accommodate a wide range of consumers (Anita, 2013 pp. 69).
Bargaining Power of Suppliers
The bargaining power of the suppliers is low. The organization supplies most of its raw materials and manufactures most of the required components such as processors, memory, and storage components (Brostoff, Levin, and Bowers, 2014 pp. 18).
Rivalry among Competitors
The rivalry among competitors in the smartphone industry is very high. Research and development is necessary due to increased technological innovations. For instance, Nokia lost market domination in the handset market to companies like Apple Inc. and Samsung Electronics due to advanced touchscreen technologies and broad wireless bands. The development of unique products aimed at increased market domination drives rivalry in the smartphone industry. The large size concerning operation, capital, and capacity of the dominant companies in the smartphone industry contribute to...