Samsung Electronics Final(3)

8/11/2019 Samsung Electronics Final(3)

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SAMSUNG

ELECTRONICS :

ENTERING INDIABy-

Anuj, Srishti,

Lokesh, Sagar,Saurabh, Syed


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SAMSUNGS NEWMANAGEMENT Samsung Electronics had emerged as a leader

in the global electronics industry.

Goal of Samsungs New Management:

To develop and market superior products andservices for a better global society.

TOP PRIORITIES :

1) Quality

2) Globaliation !) "ultifaceted integration


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HISTOR O! SAMSUNG Samsung Electronics #as founded in 1$%$ in Su#on&

South 'orea as Samsung Electric (ndustries& originallymanufacturing electronic appliances such as Ts&calculators& refrigerators& air conditioners and #ashers.

1$*1 + The company had manufactured over 1, millionblack and #hite Ts.

1$** + (t merged #ith Samsung Semiconductor -ommunications.

Samsung Electronics is the global market leader in morethan %, products& including semiconductors such as

/0" & S/ 0"& ash memory and hard drives& digitaldisplays such as 3/ displays& plasma displays and43E/ displays & home electronics such as Ts& //players&


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/espite spectacular performance for more thant#o decades& Samsun could not ignore theemerging dark realities of the 1$$,s.

'orea had a poor record of intellectual property

rights protection. Global electronics leaders became

apprehensive.

Samsung started facing di5culty in accessing

advanced foreign technology and high laborcost.


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2,,6 + Samsung surpassed 7apanese rival Sony forthe 8rst time to be rated as the ne# leading andmost popular consumer electronics brand in the#orld by (nter9brand.

2,,: + Samsung Electronics; handset divisionovertook merican rival "otorola & making it the

#orld;s second9largest mobile phone maker. t the end of 2,,: + Samsung Electronics

e" of the ?.S. and @e#lett9Aackard of the ?.S.& among the #orld;s top threecompanies in the electric appliances andelectronics industry.

SAMSUNG E"E#TRONI#S


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Today& Samsung brand is the best kno#nSouth 'orean brand in the #orld and in 2,,*.>usiness #eek rated Samsung as 21st on theTo$ %&& 'est Glo(al ')an*s +&&,.Samsung overtook 7apanese rival Sony as the

#orld;s leading consumer electronics brand.g

history


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Weakness

Focus on mass market

instead of niche market, thishampered the growth of the

company.

High investment in R&D.

Increasing competition.

STRENGTH Spotted the need of changing marketscenario at the right time.

High market share that continues togrow !o"i#e phones and memorychips$and %D.

'he de"t to e(uity ratio continuous#yimproved from)**+ in --* to **+in--).

ompany/s vision was strong and a#oudto stretch it/s product #ine in a specificmarket segment of e#ectronics andinstrumenta# products, in order to meet theconsumer/s needs.


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Opportunity Increase in in e#ectronic consumer

market. 0rowing demand of innovative

products.

0overnment faci#itating the privatecompanies and #i"erating the ru#es.

High + of younger popu#ation,

which is e1pected to "e the futuremarket.

Threats 2 #ot of e#ectronics

companies emerging day "yday.

%ow cost hinese producerseroding profita"i#ity.

3ew techno#ogies #ike nanotechno#ogy may rep#ace the

e1isting Samsung/s drumtechno#ogy.


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BCG MATRIX


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CONTINUED...

'4 DR2!

'4 DR2!

Consumer electronics, Telecommunications

Information system

Consumer electronics, Telecommunications Information system

Fish, fruits flour meals

and machines

Fish, fruits flour meals

and machines Semiconductors emory !roducts

Semiconductors emory !roducts


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LEGAL In 5u#y --, 06I initiated economic #i"era#i7ation. Reforms such as de#icensing of industria# investment, deregu#ation of

industries reserved for pu"#ic sector and encouragement to FDI.

!olitical 8o#itica##y unsta"#e environment.

India9pak issues. :ureaucratic issues.


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ECONOMIC TREND


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!I-E !OR#ES MO.E"

R/0al)1 w/t2/n /n*ust)1:

(ndustry #as e


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FI4> F6R>S !6D>%

:uyers;:uyers were #arge#y 6>!, with no one contro##ing more than ?*+ of g#o"a#8 market.6>! wou#d negotiate hard for price as memory represented )9?+ of 8 costand )9@+ of mo"i#e phone cost.

:uyers wou#d pay + premium for re#ia"i#ity of product. :uyers were high#yfragmented

>ntry :arrier;>ntry "arriers were high. It invo#ves high capita# investment and comp#e1techno#ogy.


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0>3>RI S'R2'>0I>S and :%A> 6>23

Samsung offered over ?** different variations of DR2!.Samsung was market #eader in memory chip techno#ogy and constant#y remainedahead of its competitors.An#ike competitors, Samsung tried to differentiate "y creating new uses forDR2!s. Samsung had #aunched new DR2! products with product9specificapp#ications in #aptops and persona# game p#ayers.It ena"#ed Samsung in creating new markets that were unavai#a"#e to itscompetitors "y deve#oping new app#ications of memory and #atest "ettertechno#ogy.'his had provided Samsung dua# advantage of cost and differentiation over itscompetitors.

It was #ike creating :#ue 6cean in every few years.


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ISSUES IN THE CASE Samsung faced rising factor costs in Korea. Retaining a high operating profit margin was

becoming difficut.

!ntense competition in ow"end segment ofboth domestic # goba markets.

$igh rate of increase in abor cost. %nti &''( go)t. reguated wages, but in &''*

due to abor mo)ement, wage negotiationswere eft to the management # empoyees.


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ISSUES IN THE CASE Labor cost component in Korea was twice to

that of South Asian products and four timeshigh as that of +hinese products.

o)t. cut back on subsidies and e-port credits. +ost of goods sod increased by '.'/ and

genera administrati)e e-penses rose by 0&./. 1arket penetration of Korean goods in %.S.

market fe drasticay. 1arket share2in %.S3 decined from 0.4/ in

&''( to .5/ in &''5.


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Korean market was dominated by 0 payers"Samsung, L.. # 6aewoo.

Samsung ost market eadership position to L. in&''0.

7ntry of foreign firms ike Sony, Sanyo, Sharp,

8hiips, 7, 9hirpoo made situation worse.

+ompan

y

&':' &''( &''& &'' &''0 &''*

Samsung *5.& *5.; *;.; **.& *&.& *(.:

L 0:.' *.4 **.* *.* *.: *&.;

6aewoo &;.; &(.: &(.& &0.* &5.& &4.4


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ISSUES IN THE CASE There was a need to sought new suitabe

sites to set"up goba manufacturing units. 8anning group shortisted four countries to

Kim" !ndia, i. Kim was intrigued to do business in !ndia as

!ndia was fifth argest economy in word,third argest 68 in Asia, second in eading

emerging nations and offered high prospectsfor growth.


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INDIA- EMERGING MARKET

7conomic iberai>ation in &''& faciitated entry ofpri)ate and foreign in)estors in many industries. Specia support was gi)en to promote seected

industries to boost e-ports and de)eop

infrastructure.

81-90 90-91 91-92 92-93 93-94 94-95

68 at ?+ ;.; ;.* (.: ;.& ;.( ;.0

Agricuture 0.* 0.: ".0 5.& 0.0 *.'

!ndustry 5.' 4. "&.0 *.& *. :.0

1anufacturing

4. 5.& "0.4 *.& *.0 '.(

Ser)ices 5.5 ;. *.' ;.& 5.: 5.(


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?oreign e@uity participation was increased from *(/to ;&/ in &''&.

!ndia appro)ed %S&.0 biion in ?6! in &''*"';. !ndia introduces ibera pant ocation poicy. !ndia had third argest poo of scientific and

technica workforce in word. %nempoyment and underempoyment made

unskied # semi"skied abor easiy a)aiabe at owcost.


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ENTR CONCERNS 9as the time appropriate for entryB 9oud it be easy to gain a foothod in !ndian

market amidst tough competiti)e scenarioB

9hat shoud be appropriate mode of entry atinitia stage" e-port, joint )enture, technicaicensing or fuy owned subsidiaryB

9hich segments shoud be targetedB 9hat woud be the right positioning and

marketing"mi-B


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SOLUTIONI!!"#! $% K&'#(:

&"Samsung first issue was it was difficut to retain its high operating profit margin as it was

facing twin pressures of intense competition in the ow"end segment of both domestic andgoba market.

" +ost of goods sod increased by '.'/ and seing administrati)e e-penses aso rose by 0&./.

0"the poitica reforms process by &''* in Korea, it resuted in rising abor cost as abor unionsdemanded better working en)ironment and wages.

*"Cew 7ntries of foreign payers in Korean market which was the resut of dereguation by

&''5.?oreign firms ike Sony, 1utsuhito, Sanyo, Sharp, 8hiips, 7, Siemens ,9hirpoo and Loa-were buiding their market infrastructure to impro)e saes ser)ice.

S&)"*$&% +&' K&'#( M(',#*:

&" +ompany tried to e-pore new opportunity. !t tried to set up goba manufacturing units fromwhere it coud ser)e a major markets, e)eraging economies of scae to undermine thecompetiti)e strength of domestic payers. To do so !t e-panded its goba business in !ndia andother arge economy nation which had great potentia for growth.

" Samsung estabished its business in de)eoping countries ike !ndia, i

9ith eectronics goods ike coor tee)ision,


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SOLUTIONI!!"#! $% I%$(% M(',#*:

&"!ndian domestic market was highy competiti)e and price sensiti)e.

"?oreign payers ike L, 8anasonic, rundig and 6aewoo were panning to enter the !ndianmarket.

0"=uying beha)ior of !ndian consumers were different as per )ariety in demographics rura,urban, ow per capita income consumers etc.

*" 8oitica uncertainty in !ndia was high and ack of stabiity of !ndian go)ernment.

S&)"*$&%

&"!ndia was fifth argest economy in the word, had third argest 68 in Asia and was secondargest among emerging nation. !ndia had high prospect and earning potentia in practicay aareas of business. So Samsung did e-periment initiay in !ndian market with its +oor T< in bothrura and urban market.

"=uying beha)ior of !ndian consumers were different but rura consumers were brand oya thanurban. A study conducted by 8hiips in Tami Cadu re)eaed that amost an entire )iage owned asinge brand of tee)ision such as


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RECOMMENDATION&" Samsung product were ess costy than Dapanese brands manufactured injapan and they ost the cost ad)antage o)er Dapanese brands produced inSouth Asian countries and aso +hinese brand. They shoud set up pant in!ndia where abor cost is ess and manufacture product at ow price and high@uaity and use economies of scae in broader way.

"Samsung shoud focus on rura market of !ndia more than the urban market

as urban market is saturated and demand word cass product at cheaperprice whereas rura customers are more brand oya, need specific features inthe product and ask for )aue for money.

0" Samsung shoud impro)e its post sae ser)ice for the customers and asoestabish ser)ice center in both urban and rura areas and aso in)est moneyin high ad)ertisement and promotions.

*"Samsung shoud use marketing mi- in more efficient manner as !ndianmarket is highy competiti)e, )ery much price sensiti)e and ask productwhich are )aue for money.


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CONCLUSION


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SAMSUNG

?aced 8robems in positioning of its products Korean market and !ndian market difference +ost management was a big probem Lost most of its market =oom in mobie Lost its =A6A

+apitai>ed on android Again osing its position


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AN /UERIES

Samsung Electronics Final(3)

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