Strategy Analysis of Samsung Electronics Company (Essay Sample)

Business Strategy
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Executive summary  PAGEREF _Toc382502758 \h
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1. Introduction  PAGEREF _Toc382502759 \h
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2. PESTEL Analysis  PAGEREF _Toc382502760 \h
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2.1 Political aspect  PAGEREF _Toc382502761 \h
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2.2 Economic aspect  PAGEREF _Toc382502762 \h
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2.3 Socio-cultural aspect  PAGEREF _Toc382502763 \h
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2.4 Technology  PAGEREF _Toc382502764 \h
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2.5 Environment  PAGEREF _Toc382502765 \h
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2.6 Legal aspect  PAGEREF _Toc382502766 \h
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2. Porter’s Five Forces  PAGEREF _Toc382502767 \h
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2.1 Bargaining power of buyers  PAGEREF _Toc382502768 \h
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2.2 Suppliers’ power  PAGEREF _Toc382502769 \h
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2.3 Threat of substitute products  PAGEREF _Toc382502770 \h
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2.4 Degree of rivalry  PAGEREF _Toc382502771 \h
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2.5 Barriers to entry and exit  PAGEREF _Toc382502772 \h
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3. Internal environmental analysis (Value chain analysis)  PAGEREF _Toc382502773 \h
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3.1 Primary and Secondary activities  PAGEREF _Toc382502774 \h
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4. Analyse current strategy and suggest future strategy (Use Bowman’s Strategy Clock)  PAGEREF _Toc382502775 \h
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5. Conclusion  PAGEREF _Toc382502776 \h
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6. Reference list  PAGEREF _Toc382502777 \h
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7. Appendices  PAGEREF _Toc382502778 \h
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7.1. PESTLE framework  PAGEREF _Toc382502779 \h
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7.2. Porter’s Five Forces Industry Analysis  PAGEREF _Toc382502780 \h
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7.3. Value Chain  PAGEREF _Toc382502781 \h
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7.4. Strategy Clock  PAGEREF _Toc382502782 \h
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Executive summary
This report provides a strategic analysis of Samsung Electronics Company (UK) for its Smartphones. It includes PESTEL analysis, Bowman’s Strategy Clock, Value Chain analysis, and Porters Five Forces analysis. The findings in the report include; the Samsung Company is subjected to political risks in the UK such as the taxation policy, international trade, political stability, environmental laws, and the enlargement of the EU. These factors affect its business operations negatively. Economic factors such as taxation dynamics, inflation, interest rates, and economic development also influence the operations of the Samsung Company in the UK. In addition, it is realized that the company complies with the legal, environmental, and social-cultural factors in the UK, in order to operate smoothly. Some factors favour the company’s business operations, and others do not. To gain a competitive edge, the company employs business strategies that make it unique from its rivals. This is achieved through cutting costs and increasing differentiation. Finally, the report shows that the company does not employ pricing strategies such as cost leadership to gain a competitive edge for its Smartphones (Galaxy S1-5) in the UK. It recommends that the company needs to adopt a cost leadership strategy, in order to gain a competitive edge.
Strategy Analysis of Samsung Electronics Company (UK) – Smartphones (Galaxy S1- S5)
1. Introduction
Samsung Electronics Company (UK) is a subsidiary of the giant Samsung Electronics Multinational Corporation that has its headquarters in South Korea. The UK-based company was founded in 1984, a period when the giant multinational company pursued strategies that enabled it expand its operations to different parts of the world (Michell, 2010). The Samsung Electronics Company (UK) is a leader in the electronic industry of the UK. This is affirmed by the company’s high performance, stability, and high growth rate among others in the country. These achievements are as a result of efficient and effective strategies that the firm employs, in order to gain a competitive edge in the UK market. The company offers microchip and electronic products such as TV monitors to businesses, computers, cell phones, and printers among others. This report analyses the strategy of the UK-based Samsung Electronics Company for Smartphones (Galaxy S1-5), which is one of the Smartphones the company produces and markets in the country. The report uses PESTEL framework to analyse the external environment, in which the Samsung Electronics Company (UK) operates in, value chain analysis to describe the internal environment of the company, Bowman’s Strategy Clock to describe the current strategy that is employed by the firm, and suggest a future strategy, and Porter’s Five Forces framework to evaluate the UK market, in terms of supply power, threat of substitutes, and power of competitors among others. The paper concludes with a brief summary of the whole discussion.
2. PESTEL Analysis
The PESTEL framework is used to analyse the external business environments, in which an organization operates. The framework is used to analyse political, economic, social, technological, environmental, and legal business environments (Rundh, 2011).
2.1 Political aspects
Political factors refer to guidelines of governments, regarding the types of products and services that an investor should offer, government subsidies, and the intensity of economic intervention among others. According to Rundh (2011), political legislation of a country is instrumental to the changes experienced in workforce education, infrastructure, and health sector among others. Considering that the UK is not the home-country for Samsung Electronics Company (UK), the company is subjected to political risks in the country (Michell, 2010). As for the taxation policy, the UK government imposes significant business barriers on foreign products. For instance, foreign companies pay huge taxes for to get their products succeed in the country. This favors domestic companies, and hence is likely to affect the profitability of Samsung Smartphones (Galaxy S1-5). On the contrary, the EU enlargement provides the business marketers of Samsung with an opportunity to expand its market base in the country. However, it also creates room for other competitors from the EU countries to expand their markets into the UK. This poses stiff competition for Smartphones that are offered by Samsung Electronics Company (UK). In addition, the UK trade and investments policies encourage foreign investors into the country, and hence stiffen competition of giant multinationals such as Apple, Motorola, and Sony among others.
2.2 Economic aspect
Hollowell & Miller (2008) posit that basing on the economic strength and size (the disposable income of the targeted consumers) of the target customers in UK, Samsung Electronics Company (UK) stipulates favorable policies. For instance, Needle (2010) opines that considering that Samsung Galaxy S1-S5 (Smartphones) require a larger consumer disposable income, the company incorporates a selective targeted market policy. In addition, the UK is one of the countries with favorable economic status, where the company’s products are at preliminary level. In other words, entering and succeeding in a readily available market like the UK, is an added advantage of the success of Samsung S5 (a luxury commodity). This is because people living here earn incomes of above average. Furthermore, the lending rates for businesses in the country are favourable. This encourages people to take loans, and hence encourages spending. The economic situation of the UK has a negative impact on people’s purchasing power. For instance, most people here are not price sensitive, so long as the quality of products or services is good. Therefore, this gives the Samsung Company an added advantage for its luxury products.
2.3 Socio-cultural aspect
A social environment refers to customs, traditions, or practices observed in different social groups. Samsung Electronics Company (UK) understands that customs, practices, and traditions vary from one region to another. It recognizes that variations in social status affect the demand for Smartphones (Galaxy S1-5) and readiness for people in the UK to work for the company. Social factors in the UK are instrumental to the migration of people into the country. In turn, this migration leads to the increase in market size, as well as labor provisions for Samsung Electronics Company (UK). It also increases the demand for Smartphones (Galaxy S1-5) and other products offered by the company. In reference to Glowik (2009), the company has succeeded the social challenges in the UK, through the ‘think global’ and ‘act local’ approaches.
2.4 Technology
Innovation and inventions influence production processes. Telemann (2010) opines that some of the technological advancements in businesses, include online marketing and selling, computer aided design technologies and features, and bar coding among others. Technology plays an integral role, in improving performance of Samsung Electronics Company (UK). For instance, it helps the company to cut down on costs of production and marketing of Smartphones (Galaxy S1-5), and improves its quality. According to Smila...