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value chain and competitiveadvantage

Kamis, 22 Novembe r 2012

value chain and competitive advantage of samsung

VALUE CHAIN AND COMPETITIVE ADVANTAGE of Samsung

Company profile

Samsung Electronics is part of one of the largest multi- billion dollar corporationsin the world. In 2007 it exceeded the $100bn mark in annual sales for the first time in its history. This makes it one of the world's t op three companies in theelectronics industry where only two other companies, Siemens and Hewlett-Packard, have posted larger revenues. The name Samsung literally means threestars or tristar in Korean, reflecting the Samsung Groups dominance in two

further sectors: Samsung Heavy Industries and Samsung Engineering andConstruction. If you are talking innovation in Samsung walks the walk and is nowthe established leader in consumer electronics, providing a range of leading-edgepremium products and, in their own words, leading the digital convergencerevolution. In so doing Samsung has made a remarkable transformation fromcopy-cat manufacturer to become Asia's most valuable technology company.Samsung today owes much of its success to its Value Innovation Programme. With6 design labs staffed by 450 people it is serious about understanding what it isconsumers need long before considering the technologies required to deliverthem. It believes (and, to be fair, evidence suggests) that success in consumerelectronics can only ever be short term and there is therefore a pressing need forcontinuous innovation in order to develop new technology platforms and createproducts that are first of its kind in the marketplace.Samsung spends more than $6bn on research annually. It recognises that many of its products, such as semiconductors and flat-screens, are now basic commodities,and its focus is on producing iconic devices for the next generation as SonysWalkman was in the 80s and the iPod is today. Samsungs innovation focus istherefore set firmly on design and, most specifically, on the design of digital TVs.Samsung launched the R7 LCD TV in 2005 which paved the way for the 2007Bordeaux, a flat screen television with contours reminiscent of a wine glass. Thisis Samsungs first LCD television to sell more than 1m units.

Samsung has also turned its hand to designing slick mobile phones, teaming upwith Bang & Olufsen to produce the Serene, and most recently the Serenatahandset. Described by FHM as cooler than an Eskimo in an Armani anorak it iscertainly giving its peers a run for their money. In the third quarter of 2007

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value chain and com petitive advantageof samsung

VALUE CHAIN ANDCOMPETITIVEADVANTAGE of Samsung ...

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Samsungs mobile phone division overtook Motorola to gain second place in themarket and has again seen growth in handset sales reaching 14% share. Althoughstill far behind Nokia, with the increased demand for 3G handsets and its strongposition in emerging markets, Samsung expects a further growth.

However, it is not all flash and glamour: Up until recently Samsungs memorydivision was responsible for 70% of the profit but overcapacity has led to anindustry wide decline. Undaunted however, Samsung, which often makes biginvestments during downturns so that it can increase its market share and makebigger profits when the industry cycle picks up, is raising its capital investment inthis division. As peers cut back this is a bold move that signals a strong confidencein the eventual upturn of the memory market. With a brand value now greaterthan Sony, it is clear that Samsungs strategy of delivering high quality productswith an emphasis on design is paying off and the company is confident of itsfuture performance. Time and again Samsung has proved it is able to look into thefuture and create whats just around the corner for the rest of us.

Vision

Samsung is guided by a single vision: to lead the digital convergence movement.We believe that through technology innovation today, we will find the solutionswe need to face the challenges of tomorrow. Technology opens opportunities forbusinesses to grow, for citizens in emerging markets to prosper by tapping intothe digital economy stage, and for people to find new opportunities.

MisionEverything we do at Samsung is guided by our mission: to be "digital-Company"the best.Samsung grew into a global corporation by facing challenges directly. In the yearsahead, our people are dedicated will continue to face many challenges andprovide creative ideas to develop products and services that lead the market.Their intelligence will continue to make Samsung a global company profitable andresponsible.

History of Samsung

1938 to 1970

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In 1938, Lee Byung-chull (19101987) of a large landowning family in the

Uiryeong county came to the nearby Daegu city and founded Samsung Sanghoe , asmall trading company with forty employees located in Su-dong (now Ingyo-dong). It dealt in groceries produced in and around the city and produced its ownnoodles. The company prospered and Lee moved its head office to Seoul in 1947.When the Korean War broke out, however, he was forced to leave Seoul andstarted a sugar refinery in Busan named Cheil Jedang. After the war, in 1954, Leefounded Cheil Mojik and built the plant in Chimsan-dong, Daegu. It was the largest woollen mill ever in the country and the company took on the aspect of a majorcompany.Samsung diversified into many areas and Lee sought to establish Samsung as anindustry leader in a wide range of enterprises, moving into businesses such asinsurance, securities, and retail. Lee placed great importance on industrialization,and focused his economic development strategy on a handful of large domestic

conglomerates, pro tecting them from competition and assisting them financially.In 1948, Cho Hong-jai (the Hyosung groups founder) jointly invested in a newcompany called Samsung Mulsan Gongsa , or the Samsung Trading Corporation,with the Samsung Group founder Lee Byung-chull. The trading firm grew tobecome the present-day Samsung C&T Corporation. But after some years Cho andLee separated due to differences in management between them. He wanted to get up to a 30% group share. After settlement, Samsung Group was separated intoSamsung Group and Hyosung Group, Hankook Tire, and others.In the late 1960s, Samsung Group entered into the electronics industry. It formedseveral electronics-related divisions, such as Samsung Electronics Devices Co.,Samsung Electro-Mechanics Co., Samsung Corning Co., and SamsungSemiconductor & Telecommunications Co., and made the facility in Suwon. Its first product was a black-and-white television set.

1970 to 1990

In 1980, Samsung acquired the Gumi-based Hanguk Jeonja Tongsin andentered the telecommunications hardware industry. Its early productswere switchboards. The facility were developed into the telephone andfax manufacturing systems and became the centre of Samsung's mobilephone manufacturing. They have produced over 800 million mobilephones to date. The company grouped them together under SamsungElectronics Co., Ltd. in the 1980s.

After the founder's death in 1987, Samsung Group was separated intofour business groups - Samsung Group, Shinsegae Group, CJ Group andHansol Group. Shinsegae (discount store, department store) wasoriginally part of Samsung Group, separated in the 1990s from the

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Samsung Group along with CJ Group(Food/Chemicals/Entertainment/logistics) and the Hansol Group(Paper/Telecom). Today these separated groups are independent andthey are not part of or connected to the Samsung Group. One HansolGroup representative said, "Only people ignorant of the laws governingthe business world could believe something so absurd," adding, "WhenHansol separated from the Samsung Group in 1991, it severed allpayment guarantees and share-holding ties with Samsung affiliates." One

Hansol Group source asserted, "Hansol, Shinsegae, and CJ have beenunder independent management since their respective separations fromthe Samsung Group." One Shinsegae Department Store executive directorsaid, "Shinsegae has no payment guarantees associated with the SamsungGroup."

In the 1980s, Samsung Electronics began to invest heavily in research anddevelopment, investments that were pivotal in pushing the company tothe forefront of the global electronics industry. In 1982, it built atelevision assembly plant in Portugal; in 1984, a plant in New York; in1985, a plant in Tokyo; in 1987, a facility in England ; and another facilityin Austin in 1996. As of 2012, Samsung has invested more than US$13billion in the Austin facility, which operates under the name SamsungAustin Semiconductor LLC. This makes the Austin location the largest foreign investment in Texas and one of the largest single foreigninvestments in the United

1990 to 2000

Samsung started to rise as an international corporation in the1990s. Samsung's construction branch was awarded a contract to buildone of the two Petronas Towers in Malaysia , Taipei 101 in Taiwan andthe Burj Khalifa in United Arab Emirates . In 1993, Lee Kun-hee sold off ten of Samsung Group's subsidiaries, downsized the company, andmerged other operations to concentrate on three industries: electronics,engineering, and chemicals. In 1996, the Samsung Group reacquiredthe Sungkyunkwan University foundation.

Samsung became the largest producer of memory chips in the world in1992, and is the world's second-largest chipmakerafter Intel (see Worldwide Top 20 Semiconductor Market Share RankingYear by Year ). In 1995, it created its first liquid-crystal display screen. Tenyears later, Samsung grew to be the world's largest manufacturer of liquid-crystal display panels. Sony, which had not invested in large-size TFT-LCDs, contacted Samsung to cooperate, and, in 2006, S-LCD wasestablished as a joint venture between Samsung and Sony in order toprovide a stable supply of LCD panels for both manufacturers. S-LCD was

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owned by Samsung (50% plus 1 share) and Sony (50% minus 1 share)and operates its factories and facilities in Tangjung, South Korea. As on26 December 2011 it was announced that Samsung had acquired thestake of Sony in this joint venture

Compared to other major Korean companies, Samsung survived the 1997Asian financial crisis relatively unharmed. However, Samsung Motor wassold to Renault at a significant loss. As of 2010, Renault Samsung is 80.1percent owned by Renault and 19.9 percent owned by Samsung.

Additionally, Samsung manufactured a range of aircraft from the 1980s to1990s. The company was founded in 1999 as Korea Aerospace Industries(KAI), the result of merger between then three domesticmajor aerospace divisions of Samsung Aerospace, Daewoo HeavyIndustries, and Hyundai Space and Aircraft Company. However, Samsungstill manufactures aircraft engines and gas turbines .

2000 to present

Samsung Techwin has been the sole supplier of a combustor module of the Trent 900 engine of the Rolls-Royce Airbus A380 -The largest passenger airliner in the world- since 2001. Samsung Techwin of Korea isa revenue-sharing participant in the Boeing 's 787 Dreamliner GEnx

engine program.In 2010, Samsung announced a 10-year growth strategy centred aroundfive businesses. One of these businesses was to be focusedon biopharmaceuticals , to which the Company has committed 2.1trillion.

In December 2011, Samsung Electronics sold its hard disk drive (HDD)business to Seagate .

In the first quarter of 2012, Samsung Electronics became the world'slargest mobile phone maker by unit sales, overtaking Nokia , which hadbeen the market leader since 1998.In the August 21st edition of

the Austin American-Statesman , Samsung confirmed plans to spend 3 to 4billion dollars converting half of its Austin chip manufacturing plant to amore profitable chip.The conversion should start in early 2013 withproduction on line by the end of 2013.

On August 24, 2012, a U.S jury ruled that Samsung had to pay AppleIncorporated US$1.05 billion dollars in damages for violating its patentson smartphone technology.Samsung decried the decision saying that themove could harm innovation in the sector.It also followed a South Koreanruling that said both companies were guilty of infringing on each other'sintellectual property.In the first trading after the ruling, Samsung shares

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on the Kospi index fell 7.7%, the largest fall since October 24, 2008, to1,177,000 Korean won . Apple then sought to bar the sales of eight Samsung phones (Galaxy S 4G, Galaxy S2 AT&T, Galaxy S2 Skyrocket,Galaxy S2 T-Mobile, Galaxy S2 Epic 4G, Galaxy S Showcase, Droid Chargeand Galaxy Prevail) in the United States.

On September 4, 2012, Samsung announced it plans to examine all of itsChinese suppliers for possible violations of labor policies. The companysaid it will carry out audits of 250 Chinese companies that are its

exclusive suppliers to see if children under the age of 16 are being used intheir factories

1.InboundLogistics:

Knowing that Samsung already has its own operations and activities in themanufacturing processes of their smart phones, most activities involved ininbound logistics are heavily refined. The key in the implementations to ourstrategy will be to synchronize Samsungs current scheduling and inventorycontrols with AuthenTecs in order to continuously create more value without

slowing down the manufacturing process.

2.Operations:

Operations will be one of the biggest keys to change with respect to the valuechain framework, second only to marketing and sales. The acquisition of AuthenTec would sprout a major issue in the manufacturing process. BecauseSamsungs manufacturing operation has mostly been localized to Seoul, SouthKorea, the North American companys China-based manufacturing of biometricscanners could put a delay in its production process. Logistics play a big role inensuring that scheduling and inventory control are matched with Samsungs pace;but because of overseas shipping and unpredictable delays that come with it, thisoperation potentially becomes less streamlined and thus can decrease value. A

possible solution to this challenge would be to relocate AuthenTecs operationscloser to Samsungs facilities for more immediate control over hardwareproduction. There would be considerable costs involved with such a move,including the increased labour costs in Korea compared to China. Samsung wouldneed to determine if the payback period for value they gain in their operationsoffsets the costs quickly enough to be worth making the move, or if it would bebetter to keep production as it is and risk the potential drawbacks of the distancedproduction of the scanners.

3.OutboundLogistics:

Current outbound logistics are very solid on Samsungs end. Because it has most of its operations localized within Samsung Town in Seoul, all activities related to

the gathering, storing or distribution of their finished smart phones (and all otherproducts) are done effectively, with little delay and with a streamlined logisticsmethodology. The acquisition of AuthenTec will not have any effect on theselogistics procedures, as the final state of the products is the same as in their oldersmart phone models.

4.Marketing and salesBecause our new game strategy is a position-building one, the marketing and salesis the most important point after operations to be considered in the value chainframework. The marketing and sales should be pitched to include both thebiometric scanners as well as the secure email/messaging network together as a

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security package deal. The target demographic is a new market that Samsunghasnt fully catered to until now, so new market research will have to beconducted on how to pitch the products in a way that will attract the business menand women who deal with sensitive data regularly and count on the security of their cellular and data networks for exchanging information. By using the correct marketing strategies, Samsung can maximize the value perceived by the public.The biggest challenge with this stage of the framework is in convincing current blackberry users that Samsungs network and security features on their mobilephones are superior to that of RIMs.

5.Service:

The value that services add or help to maintain should be considered in bothAuthenTec and Synchronicas acquisitions. Minimal training will be required foremployees in either category because they already have their expertise sincebefore the acquisition. There may be some standards that Samsung will preferthem to adjust to (in terms of safety standards or in the slight adjustmentsrequired to adapt their technology to Samsungs technology). The installation of the proposed security network will have many incurred costs due to its breadth(worldwide), which Samsung must be ready to cover in order to proceed with thepromise of enhanced and superior security.

6.Support Activities

With respect to support activities which enhance the value created through thevalue chain analysis, Samsung already has many of said activities in place. The newoperations regarding the upgraded technology would require small tweaks in thetechnology development support activity, mostly with updating materials andadjusting the building process.Firm infrastructure will be modified to account for new employees gained throughacquisition, which will include adjustments in the accounts related to saidemployees and their companies, the management of these employees, the qualityof the newest items produced, and in the information systems required tocommunicate live data across national borders. Closely related to the employeeinfrastructure are the adjustments in compensation via HRM for the employeesalready with Samsung and those joining Samsung through acquisitions.

8.Critical Evaluation of the Value Chain Framework:

The Analysis Value Chain Framework analysis has its shortcomings in not beingable to represent value-adding activities that Samsung might be performingoutside of the value chain. A lot of the value created by Samsung, even strictly inthe mobile market, comes from things like branding and human resources whichare not accounted for in such an analysis. Its because of this that we have selectedseparate analytics techniques throughout the report to understand Samsung andits operations from various perspectives. Determining inbound and outboundlogistics and the changes that would result in them from the acquisition of AuthenTec and Synchronica and the new activities added was the most difficult and perhaps vague sections of the Value Chain Analysis because thats not information readily available to the public. Determining how things would changeoutside of the obvious expectations related to data coming in and out of the newbranches and what the new employees have to offer is a difficult task with thelimited information available.

9.Human source management samsung community services team was established in 1994 as a Korean companythat is designed to facilitate the participation of employeesSamsung has given the 300 central office for public relations in the world

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samsung, samsung fully encourage and support employees. more than 61% of allemployees worldwide samsung donate their time and skills in various activities,and about 70 000 volunteers involved in the program from 1902 volunteers. Oneof Samsung's strongest assets is our team of talented researchers and engineers.More than a quarter of all Samsung employees42,000 peoplework everydayin research and development, and we expect that number to surpass 50,000 by2010. Atand amongour 42 research facilities around the world, theycollaborate on strategic technologies for the future and original technologiesdesigned to forge new market trends and set new standards for excellence.

10.Technology development of SamsungSamsung has grown to become one of the world's leading electronics companies,specializing in digital appliances and media, semiconductors, memory, and systemintegration. Now the quality and innovative products and Samsung has beenrecognized in the world. It all became a major milestone in the history of Samsung,shows how the company has developed its product range and achievement,increase revenue and market share, and follow its mission to provide a better lifefor customers all over the world.

11.Procurement As a world leader in digital technology Samsung Electronics advanced to a newera in product development, corporate culture and contributions to the globalcommunity.To achieve these objectives, we understand how important it is to buildrelationships and have the full support of the supplier class.

Samsung Electronics was looking for potential partners with world-classinnovative technology and special technologies to collaborate and create newbusiness opportunities.

Together with suppliers, we will work together towards a common goal: To be TheWorld's Number One.

Ethics ownership cer tificatesThe buyers of Samsung Electronics, realize and accept an important role inincreasing the value for the kustomernya.

In this important endeavor, we will do all transactions with suppliers with honestyand integrity for growth and shared prosperity. We will understand and complywith laws, regulations, and codes governing the implementation of this business.

ownership EmblemSamsung Electronics and Supplier will work together to make the best performance towards the Global Top Tier on the basis of the ideology of "Win-Win" and co-existense shared prosperity between Samsung Electronics and ourSuppliers.Sources of Samsungs cost advantage in DRAMsSamsungs cost advantage is clearly visible from the comparison of costs (andtheir elements) that were borne by the company and its competitors in 2003 (Tab.3): Samsungs overall cost was 24 per cent lower than the weighted average cost

of the other four producers; two most significant elements of the cost structure,i.e. raw materials and labour, were 36 and 27 per cent lower respectively. Whenexpressed by means of a relation of average selling price to costs (productivityof cost elements), the differences are even more visible (comp. Tab. 4 ): overallsuperiority of Samsung over its competitors exceeded 51 per cent!

The cost advantages related to raw materials may be explained by betternegotiated agreements with suppliers (perhaps due to the larger volumes of purchases comp. Fig. 5) and possibly less shipping and distribution costs that stem from the fact that Samsungs fab facilities are geographically collocated(while competitors facilities are spread world-wide). In terms of labourproductivity only Chinese SMIC outperformed Samsung, but that came hardlyunexpectedly: low labour costs in China had been and were to remain unbeatable

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for some time yet.

Other possibly meaningful factors that cannot be forgotten include: higher yields(due to process quality and use of more efficient, larger silicon wafers), use of common core design for different products supported by the flexibility of production lines (which enabled cost-efficient production of a wide variety of different semiconductors), and reportedly 12 per cent lower investment incapital assets related to the aforementioned strategic decision on fab collocation.

The last but not least element of the Samsungs cost puzzle (which, unfortunatelycannot be supported by concrete numbers from the case study, and is ratherbased on intuition) was the way the firm built and maintained intellectual capitaland stimulated innovativeness and creativity among employees. It had establishedan incentive-based remuneration system, it sponsored employees for PhDs andMBA education, it created a family-friendly working environment in which more of employees energy could be devoted to solving problems at work instead of troubles in private lives. In most modern industries, such a long-term approachand investing in human capital eventually pays off resulting in higher productivityand better and cheaper products.

2. Sources of Samsungs price premium in DRAMs

Samsung achieved an almost 15 per cent price premium over (the weightedaverage price of) its competitors (comp. Tab. 3). How was that possible?

There were, apparently, two main reasons for that: quality and product mix.The former was definitely a unique advantage in the semiconductor industrywhich was, generally, characterised by little product differentiation (in terms of physical and functional properties), and where demand was highly price-driven.Even though, due to the outstanding quality and reliability of its products,Samsung had managed to achieve a position which justified paying premium forits products. Between 1995 and 2005 the company won awards for performancefrom most of its major customers, and many of them (even rivals of one another)named Samsung their supplier of choice. Of course, the highly-recognisable brand(the value of which was estimated at almost USD 11 billion in 2003 !) helped to

maintain the price premium as well.

The Samsungs successful product mix strategy, on the other hand, was realisedthrough extremely wide differentiation of products that the companymanufactured: in DRAM memory segment it was over 1,200 different types! Thelarge product portfolio allowed Samsung to address a very broad market and toavoid fierce price fighting in the most competitive sector of so called commodityDRAMs (where many producers had to sell below production costs). Apart fromthe mainstream mass products (in general: low-cost

commodity DRAMs), Samsung offered:

legacy products, i.e. older types of chips, production of which was continuedafter the industry had moved to newer generations and which due to limited

supply could be sold at price premium;

specialty products chips designed for niche uses where the price wassusually agreed on bilaterally between Samsung and a given buyer (at the sametime, the company was able to optimise costs by building the customisedarchitectures using a common core design).

3. How Samsung should react to threat of large-scale Chinese entry?In my opinion, none of the two options of reacting to the Chinese menace that were presented in the case study, should have be chosen by Samsung as the onlyone. Rather, a mix of the two seemed to be an optimal approach.

Samsungs unique ability to maintain the low-cost and, at the same time,

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differentiated production should have been maintained, but simultaneously certain aspects of the changing industry environment might have been takenadvantage of as well. It was not necessary for Samsung to desperately look forways to decrease its labour costs (which is usually a reason for establishedcompanies to move their production to China): its cost advantage overcompetitors was supposed to remain for some time. On the other hand, in linewith an old Chinese saying: keep your friends close, but the enemies even closer,it was not advisable to ignore the rising competitors (as the industry had doneyears earlier with regards to Samsung itself). Earlier of later, China itself wasposed to become a significant (if not the most significant) market for

semiconductors, thus all actions aiming at better positioning itself to sell in themarket seemed to be highly desirable.Therefore, Samsung should have decided to partner with a Chinese firm forproduction of its low-end, legacy products. At the same time, its state-of-the-art technologies had to be kept in-house. Such a strategy would let Samsung preserveits valuable intellectual property; manufacturing of the mass market productstogether with Chinese did not pose a threat to the IP, since technologies necessaryfor that usually were no longer proprietary information. On the other hand, thepartnership might result in a possibility to further decrease the costs due toavailability of attractive subsidising from the Chinese government and lowerlabour costs, and of course prepare grounds for enlarging sales to customersin the opening and growing market.

There was, however, a number of important aspects that had to be rememberedwhile implementing the strategy:

Samsungs competitive advantage related to the unique breeding environment for innovation and efficacy of the centralised R&D and production should havebeen preserved, thus all new product development had to be kept in the Koreanheadquarters; another competitive advantage of the company, the quality, should have beendefinitely maintained, too; it might have become a challenge if part of theproduction was to be moved to China, therefore Samsung had to ensure it couldproperly influence its Chinese partner (e.g. by remaining a majority stakeholder inthe joint under taking); while overall reduction of costs was not of key importance for Samsung, thepartnership with a Chinese firm could have been, nonetheless, used for reductionof labour costs related to production of legacy products (in case of which theassociated gain was to be most significant) with no risk of compromising valuableintellectual property; that way, another competitive advantage of Samsung, theindustrys best ASP to cost ratio, would be further strengthened.However, in parallel to building the partnership, Samsung couldnt have forgottenabout other Chinese would-be competitors which would supposedly flourisharound. Therefore, the company should have kept strong focus on maintaining itstechnological leadership through cutting-edge R&D (still unavailable at the time,despite having relatively easy access to capital, for Chinese start-ups), especiallytowards future substitutes for DRAMS: flash memory chips.

Another way of impeding development of the competition, although more riskyand thus to be applied with care, was to suppress Chinese entrants by decreasingmargins on low-end DRAMs. A price on the edge of profitability, connected withSamsungs well-known quality, was likely to push competitors towards more orless significant operational losses; at the same time, Samsung would be still able toearn on the other products from its wide portfolio. A price war never is, however,sustainable in the long run, so a question remained: for how long were theChinese challengers able to operate in red? Some experts suggested that theymight be even better prepared for the years of initial losses than Samsung hadbeen back in the 1980

COMPETITIVE ADVANTAGE

The support you need when and where you need it

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Samsung respects the choice customers have in how and with whom they dobusiness. Thats why, to more effectively support product lines, Samsung hasestablished a geographically-dispersed base of direct dealers and indirect channelpartners that result in tight-knit national coverage. So, as a single- or multi-location operation, you benefit from having Samsung partners right where youneed them most near corporate headquarters, at branch offices or out in thefield.

A direct connection to Samsung through your

authorized dealer

As a decision maker for your business, its your job to make the right choices tokeep your business competitive and vibrant. With an authorized Samsung dealeras your telecommunications solutions provider you can rest assured that yourtelecommunications needs are being fulfilled. Look at your Samsung dealer asyour trusted advisor, keeping you informed about new technology advancements,service options and cost-effective measures that can give your business acompetitive advantage. Samsungs singular focus is on businesses like yours. Itsauthorized dealers represent a commitment to supportingyou with outstanding solutions and service capabilities. Dealer expertise issharpened in Samsungs mandated certification courses, so you can be confident in the technology and service you are receiving. Samsung supports its authorizeddealers along the entire continuum with product training, deployment, installationand professional services. This life cycle of support provides you with anadditional Samsung advantage - a five-year hardware warranty that reduces yourlong term costs. Its one of the ways Samsung thanks you for investing in theirsolutions.

A strong commitment to research & development Samsung strives to understand what customers need ahead of its competitors.Their engineers adjust their thinking to develop original and innovative productsthat will meet those needs, along with newtechnologies to lead the future market. They respond to the voice of thecustomer by designing and testing new products, and through hands-onmanagement of product lifecycles.Each year Samsung has invested at least 9% of sales revenue into R&D activities.

As the company continuesto increase R&D spending, their commitment to leading technologystandardization and securing intellectual property rights remains strong. In fact,Samsung was the largest publisher of U.S. patents in 2006 and is the owner of oneof the largest U.S. patent portfoliosincreasing patent procurement by 11 percent year over year.

Cutting-edge technology thats affordable.Samsungs expertise in voice/data convergence, wired, wireless communications,VoIP and core network technologies has produced OfficeServ 7000 a family of groundbreakingbusiness communications solutions that are redefining the rules of the game. TheOfficeServ platform provides you with businessadvantages across your entire spectrum of needs. First, youll enjoy the peace of mind that comes from knowing that your communications are being routed over asecure, reliable platform. Second, the intuitive design and scalable architecture of this platform enables growth in affordable increments, so your investment willcarry you well into the future with significant ROI. In addition, the systemsarchitecture provides flexibilitya medium where additional applications can beadded to enhance the power of Samsungs solutions. More and more small andmid-sized businesses are realizing the need for Computer Telephony Integrationsolutions to manage their resources and desktops. In response, Samsung hasdeveloped a suite of OfficeServ CTI applications for improving call handing,managing the user interface, interpreting and gathering call reporting andimproving customer affinity through screen pops that detail names and call

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history. Standards-based technology means that system serviceability is just aphone call away and your telecommunications are reduced in operationalcomplexity. With its single expandable architecture, OfficeServ 7000 installs andconfigures easily. You are considering a platform that not only gives you access tovoice and data throughout your office complex and even off-site, but alsoeliminates divergent systems, bottlenecks and competition between voice and dataapplications. Whether you are upgrading or are launching a converged system forthe very first time, this line-up of systems offers a perfect blend of versatility andpower that will speed up your business.

samsung products

Conclusion

Samsung Electronics is part of one of the largest multi-billion dollar corporations in the world.In 2007 it exceeded the $100bn mark in annual sales for the first time in its history. This makes

it one of the world's top three companies in the electronics industry where only two other companies, Siemens and Hewlett-Packard, have posted larger revenues. The name Samsungliterally means three stars or tristar in Korean, reflecting the Samsung Groups dominance intwo further sectors: Samsung Heavy Industries and Samsung Engineering and Construction.Samsungs cost advantage is clearly visible from the comparison of costs (and their elements)that were borne by the company and its competitors in 2003 Samsungs overall cost was 24

per cent lower than the weighted average cost of the other four producers; two most significantelements of the cost structure, i.e. raw materials and labour, were 36 and 27 per cent lower respectively. When expressed by means of a relation of average selling price to costs(productivity of cost elements), the differences are even more visible overall superiority of

Samsung over its competitors exceeded 51 per cent!

8/12/2019 Copy Value Chain

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5/21/2014 value chain and competitive advantag e: value chain and competitive advantag e of samsung

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