ARMY INSTITUTE OF BUSINESS ADMINISTRATION, SAVAR

Term Paper On
Strategic Management of Samsung

Course Name : Strategic Management

Course Code : MGT 6403

Submitted To
DR. Nahin Hossain

Lecturer

Submitted By
Nishat Anjum Aurica

ID : M9200B024

Batch : MBA-09

Date of Submission: August 06, 2021

 Table of content

Chapter
Topic Page No
Name

Chapter
Introduction 01
One

Company overview 02-06

2.1 Company Background 02-03

2.2 Mission statement of Samsung Company 03

Chapter
Two
2.3 Vision statement of Samsung Company 03

2.4 Core Values of Samsung Company 03-04

2.5 SWOT Analysis 04-06

Chapter Practices of strategic management 07-10

Three

Findings and discussion 11-13

Chapter
Four 4.1 Strategy Samsung mostly follow 11-12

4.2 Success rate of Samsung 12-13

Chapter Recommendation 14-15

Five

Reference 16
 Chapter One: Introduction
In the era of modern technology and innovation, for over 70 years, Samsung has been dedicated
to making a better world through diverse business that today span advanced technology,
semiconductors, skyscraper and plant construction, petrochemicals, fashion, medicine, finance,
hotels and more. Samsung Electronics leads the global market in high-tech electronics
manufacturing and digital media. Samsung Electronics is one of the world's largest semiconductor
manufacturers; Samsung Electronics is also South Korea's top electronics company. It makes many
kinds of consumer devices, including DVD players, digital TVs, and computers, color monitors,
LCD panels, and printers; semiconductors such as DRAMs, static RAMs, flash memory, and
display drivers; and communications devices ranging from wireless handsets and smart phones to
networking gear. The company, which is the flagship member of Samsung Group, also makes
microwave ovens, refrigerators, air conditioners, and washing machines. Nearly half of sales come
from the Asia/Pacific region. Top industries for Samsung Electronics Co. are memory chip and
module manufacturing, communications chip manufacturing, wireless telephone handset
manufacturing. Samsung is no longer the company that it used to be, it is a company that has put
in a lot effort and money for changing its reputation. Today, Samsung is striving and growing into
one of the most successful companies ever. It has an extensive product line that caters to many
different people. It no longer operates on low profits; it‘s striving on the highest. Though
innovative, reliable products and services, talented people, a responsible approach to business and
global citizenship, and a collaboration with their partners and customers, Samsung is taking the
world in imaginative new directions.

However, not all of them have the potential and proper strategy to successfully sustain an
entrepreneurial business endeavor of their own. The researcher wished to capture the essential
strategy to align the arrow towards targeting the highest level of competitive business performance.
To support this study on the strategic management system for competitive business performance,
the researcher had consulted most of the textbooks written by famous authors in business strategy
made available on the Internet. Therefore, this paper discussed and demonstrated those literature
reviews that have given strong support on the subject.

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 Chapter Two: Company overview
2.1 Company Background

Samsung Company is a South Korean international corporation whose headquarters are located at
Samsung Town in Seoul. The organization comprises multiple affiliate businesses that run on the
Samsung trademark. Lee Byung-Chul established the organization in 1938. Initially, Samsung was
a trading company. The corporation specialized in grocery farming and the production of noodles.
It also sold dried food locally. Between 1938 and 1958, it used the Samsung Byeolpyo noodles
logo, which represented its primary line of business. In 1947, the Korean War led to Lee fleeing
Samsung Town, which resulted in the closure of the business . He opened a sugar refinery business
in Busan. Later, Lee and Cho Hong-Jai, founder of Hyosung Group established a new business
that became known as Samsung Moolsan. In 1951, the corporation split, and Samsung Moolsan
transitioned to Samsung Group. The Corporation embarked on an aggressive diversification
strategy resulting in it venturing into the electronic industry and shipbuilding business.

In 1968, Lee invested in the electronics business, culminating in the establishment of Samsung
Electronics, which is a subsidiary of Samsung Group. In 1970, the company manufactured the first
12-inch black-and-white television set (TV). It continued to look for ways to enhance the
manufacture of TVs, and three years later, Samsung Electronics made a 19-inch TV popularly
known as Maha 506. In 1978, the business became the global leader in the manufacture of
television sets. The increased diversification of product lines led to Samsung manufacturing its
first personal computer in 1983. The company’s objective was to become the leader in the
electronics industry. In 1991, Samsung ventured into the mobile phone business. Investment in
modern technology enabled the organization to produce the first liquid crystal display (LCD)
screen in 1995. After a ten-year period, Samsung became a leader in the production of LCD screens
globally. The organization’s logo has evolved. Today, Samsung has a blue logo that depicts
consistency, steadiness, and corporate social responsibility. The corporation also has an audio
logo. Samsung Company uses a unique font dubbed Samsung one, which enables the organization
to realize the steady and widespread visual distinctiveness of its products. The font was devised to
be applied across Samsung’s different device portfolio. It made it easy for customers to read all
Samsung products ranging from the smallest gadgets such as smartphones to the most massive
electronics like refrigerators and TVs.

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In 2004, the organization surprised the world by developing the first-ever 46-inch LCD television.
In 2007, Samsung realized the dream of becoming the global leader in the electronic industry. In
2012, Samsung Electronics became the largest manufacturer of mobile phones worldwide. In 2017,
the business continued to internationalize its electronics and activities. At this time,
semiconductors and mobile phones are the significant sources of revenue for the corporation.
Presently, Samsung’s brand value is ranked sixth globally.

2.2 Mission statement of Samsung Company

Samsung’s mission statement is “We will devote our human resources and technology to create
superior products and services, thereby contributing to a better global society.” The statement puts
all its emphasis on the superiority associated with the products it brings to its customers. In fact, it
exhibits confidence in their potential to change the overall society.

2.3 Vision statement of Samsung Company

Samsung’s vision statement is “to inspire the world with our innovative technologies, products,
and design that enrich people’s lives and contribute to social prosperity by creating a new future.”
The statement calls attention to its leadership position and how it directs the market and upgrades
life itself with its products and services.

2.4 Core Values of Samsung Company

Samsung core values include “people, excellence, change, integrity, and co-prosperity.” Samsung
has a very rich culture in all its facilities across the globe, and all of them display similar and
comparable practices. This element is because they all operate under the same values as discussed.

At the heart of this company is everyone who directly and indirectly relates to Samsung, and the
company highly respects them and calls for everyone to do so too. One of the ways to do so is by
maintaining top-quality performance at all levels and in all activities while looking to stimulate a
positive change all the time. Samsung states that, while delivering is important, honor must precede

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everything else. Most importantly, Samsung promotes settings and practices that evenly distributes
benefits such that no single entity benefits on its own. Instead, everyone gets a piece of the cake,
ensuring prosperity across the board, including its employees, clients, and other bodies.

➢ People: At Samsung, it‘s dedicated to giving people a wealth of opportunities to reach

their full potential.
➢ Excellence: Everything done at Samsung is driven by an unyielding passion for
excellence to develop the best products and services on the market.
➢ Change: In today‘s fast-paced global economy, change is constant and innovation is
critical to a company‘s survival. They set their sights on the future, anticipating market
needs and demands.
➢ Co-prosperity: Samsung is dedicated to being a socially and environmentally responsible
corporate citizen in every community.

2.5 SWOT Analysis

Samsung is the biggest company in the world in the electronic device market. Samsung SWOT
analysis reveals how the second largest technology company used its competitive advantages to
become a leader in consumer electronics, home appliances and semiconductors industries.

It identifies all the key strengths, weaknesses, opportunities and threats that affect the company
the most.

Strength Weakness

SWOT
Analysis

Opportunities Threats

Fig 2.1: SWOT Analysis

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Strength:

✓ Wide Product Portfolio

✓ It is the world’s largest manufacturer of television sets, LCD panels, mobile phones and
smartphones
✓ Innovative organization at the forefront of new technologies and ideas.

✓ Strong brand loyalty

✓ Strong brand name

Weakness:

✓ Competitors are catching up in the smart phone market.

✓ Smart phone sales declining, consumers are less reluctant to update their phones on a
yearly basis because of the cost of the phone, the lack of excitement from upgrading
and the little technological difference in updating their phones.
✓ Samsung is constantly making efforts to diversify the markets from which the sales are
derived, but they are still very dependable on the US Market. As a result they are
vulnerable in a possible downturn of the US economy.

✓ Curved TV range and 3d range turned out to be a flop

Opportunity:

✓ To take advantage of developing markets such as Africa and India.

✓ The middle class market is growing around the world this could result in an increased
opportunity for Samsung to further sell their products.
✓ The E-commerce market is on the tremendous rise and Samsung is already benefiting from
it.
✓ Samsung can make impressive transformational accomplishments if it invest in its HR
management.

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Threats

✓ Apple is still the dominant player within the market

✓ Technology has reached a stage where consumers do not feel they have to upgrade every
year
✓ Competition from opponents especially from those within the consumer electronics,
smartphone products, and computing industries has reached a record high.

✓ As the middle class are becoming more financially squeezed and stretched in some
markets they are more likely to opt for alternative brands such as Xiaomi and Huawei

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 Chapter Three: Practices of strategic management
Samsung is a huge conglomerate that is well-known and respected globally. Its iconic brand is
considered leader in its respective field in the industry. As a huge multi-national conglomerate, it
consists of many business units or products with worldwide following and in the assignment
excerpt, it mentioned some like first and foremost their flagship galaxy s4 and its previous series,
the note, chips, displays and other technology. Aside from what is mentioned in the excerpt,
Samsung had a variety of technological product advancement like their own version of tablet,
phablet, other phone models, laptops, appliances and a lot more products. The company also
involves in manufacturing, most especially in smartphone components as detailed in the table and
therefore not heavily dependent on outside source of supplies from other companies which one of
the competitive advantages of Samsung.

Samsung follows various types of strategies. Some of strategics are given bellow-

➢ Diversification Strategy:
Samsung's product development strategy has played a vital role in making Samsung a
diversified global brand. Samsung develops new products which target its existing market
segments and regions. Samsung uses a combination of enhancing its existing products to
completely launching a new product under its brand name. The extensive product portfolio
of Samsung which includes apparels, automotive, solid state drives, telecommunications
equipment, chemicals, consumer electronics, electronic equipment, medical equipment,
home appliances, semiconductors and electronic components speaks volumes about
Samsung’s diversification strategy.
➢ Competitive and intensive strategy:
Samsung's generic competitive strategy (Porter's framework) and intensive strategies for
growth (Ansoff Matrix) focus on utilizing technological innovation to support the
company's competitive advantage in the consumer electronics, semiconductors, and home
appliances markets.
Samsung applies the broad differentiation generic competitive strategy. Based on Michael
E. Porter’s competitive strategy model, the strategic objective of broad differentiation is
to maintain competitive advantage by providing unique products targeting a wide market,
which in this case is industry wide, involving practically every person or group that buys

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 smartphones, laptops, and other equipment. To achieve Samsung’s strategic plans for
growth and expansion in the global market, this generic strategy requires the application of
product development as a main intensive growth strategy to compete against technology
firms like Apple, Google, Sony, and LG.
➢ Limited Growth Strategy:
It is the type of strategy in which an organization focuses on its current products that are
being produced and the potential market. Ways of growing are considered to make the
product more innovative. Growth strategy is an organization's plan for overcoming current
and future challenges to realize its goals for expansion.

Samsung basically relies on four different growth strategies that is, Market Penetration, Market
Development, Product development and Innovation.

➢ Product Development: Samsung targets same old customers with a new product. By
launching a new product, they will attract more customers towards their product and can
increase their market share by doing so. For the awareness of the product, they advertise in
TV, newspaper, and pamphlets and on billboards. A strategic objective of product
development in this case is to grow the business through new products, such as new
electronic gadgets. Also, this intensive strategy grows Samsung's operations through
iterative innovation, which leads to improved versions or variants of existing products.
Samsung's product development strategy has played a vital role in making Samsung a
diversified global brand. Samsung develops new products which target its existing market
segments and regions. Samsung uses a combination of enhancing its existing products to
completely launching a new product under its brand name.
Example: Samsung launching Galaxy S5 mobile phone
➢ Market Development: Samsung entering a new market will cause an increase in market
growth and its market shares. By adopting this strategy, they enter a new market by
targeting new customers in other areas. New market for Samsung could be a new Country
or a new City within the same country it is operating in before. Samsung opts for market
penetration to increase its market share. In growing markets, Samsung launches its market
penetration strategy to increase its existing market share. The company can adopt

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 aggressive marketing and promotions, offer competitive pricing etc. to eat into its
competitors market share.
Example: Samsung introducing its product in a village or a new country.

➢ Market Penetration: Samsung maintains its market shares. the organization innovates
its product so that their potential customers doesn’t get bored with the product and they
can attract new customers. In this way their customers will be satisfied with the product
and this can lead to greater market share for Samsung. Samsung opts for market
penetration to increase its market share. In growing markets, Samsung launches its
market penetration strategy to increase its existing market share. The company can adopt
aggressive marketing and promotions, offer competitive pricing etc.
➢ Innovation: Samsung is a company that is very technology oriented and it continuously
improves its technology infrastructure and acquisition. The company uses the most
advanced technologies available to come up with new and innovative offerings for
customers to attract them away from its competitors such as Apple and Lenovo.

The future strategy Samsung, will adopt is substantive growth strategies. In substantive growth
includes vertical integration.

➢ Vertical Integration:
There are three types of vertical integration, vertical forward integration and vertical
backward integration and horizontal integration.
➢ Vertical forward integration: Vertical forward integration in a business is when a
manufacturer decides to controls distribution or retail store. Samsung will cut themselves
off from the wholesalers to sell directly to retailers and then the retailers directly to the
customers. Samsung focuses on the Mid-to-High Powered LED Market. With welcoming
the era of lighting, LED industries are slowly switching from horizontal labor division to
vertical integration development. Switching to vertical integration is Samsung's main
development strategy.
Example: Samsung owning retail shop or franchise and sells their product directly.
➢ Vertical backward integration: It is a form of integration in which companies controls
its suppliers directly. There will be efficiency and cost will be saved. This might cut
transportation cost, improve profit margins and make Samsung more competitive.

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➢ Horizontal integration: Horizontal integration is the acquisition of a business operating
at the same level of the value chain in the same industry. This is in contrast to vertical
integration, where firms expand into upstream or downstream activities, which are at
different stages of production. So Samsung do not follow horizontal integration.

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 Chapter Four: Findings and discussion

4.1 Strategy Samsung mostly follow

Growth is crucial to the long-term survival of a business. It makes it easier to acquire assets, attract
new talent and fund investments. It also drives business performance and profit. Developing and
then managing a business growth strategy can start by assessing company’s financial health and
how prepared company is for growth. By uncovering the gaps in finances and operations, changes
can be made to put company on more solid footing and more in touch with the state of business
and its opportunities and risks. Samsung, is using is Growth Strategies.

Samsung is an innovative brand and has used a mix of cost leadership and differentiation cleverly
to grow market share and achieve stronger financial results. Instead of leading only on the basis of
costs, it has used some elements of cost leadership alongside differentiation to reach a larger
audience segment worldwide which has led to higher sales and revenue. The smartphone industry
has grown highly competitive and there are several influential brands that are competing for market
share there. To beat the competitive pressure, apart from its higher-priced Galaxy smartphones,
the company has brought a large range of other smartphones that are priced affordably. Unlike
Apple, which relies exclusively on its range of premium iPhones, Samsung has brought a wider
mix with products in varying price ranges and catering to the different needs and preferences of a
wide segment of consumers.

Innovation is one main source of competitive advantage for Samsung which is among the leading
investors in research and development in the entire industry. In the smartphone industry mainly
due to the overcrowding of brands, achieving differentiation has become difficult. However,
Samsung and its flagship product, Galaxy smartphone stand out easily from among the crowd. In
several other product categories too including televisions, the company has achieved strong
differentiation through technological innovation.

While product innovation is the main source of differentiation for the company, it has also focused
on marketing and promotions to build a differentiated image and create a unique identity in the
market. In this way, product quality and marketing both have helped the company differentiate
itself from the other brands in the market. However, the most important thing is that the level of
competition in the smartphone as well as the home appliances industry has grown too high. So,

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companies like Samsung have to invest a large sum each year in R&D to maintain their competitive
edge.

This is the strategy that Samsung has employed very well to grow its customer base and achieve
higher sales and profitability. The company has expanded globally and sells its products to a large
base of customers in all corners of the world. The company has formed strong brand equity through
a consistent focus on product quality and technological innovation as well as customer experience.
Higher brand equity led to higher sales and the company benefited through growing sales in all the
leading markets globally. As a seller of smartphones and home appliances, Samsung has always
focused on customer experience and brand image which has led to strong customer loyalty. This
helped its further growth in the later years since increased reliability led to higher penetration of
existing markets. And Product development is the strategy of growing sales through the release of
new products in the existing markets. This is a leading growth strategy followed by technology as
well as home appliances and smartphone brands.

4.2 Success rate of Samsung

Samsung's success is largely based on its brand management processes. From its early days of
repositioning the brand from a cheap manufacturer to a brand of class and quality, Samsung has
had a consistent policy of basing all activities in line with its brand strategy. The revamped
competitive strategy and marketing programs that Samsung designed and implemented have been
a huge success. The global value of Samsung's brand increased by more than 200% from 2003 to
2008, and it took over Sony as the most valuable consumer-electronics brand. By the end of 2012,
Samsung's profits were up a whopping 76%, fueled by the growth of the mobile division, which
suddenly became the most profitable part of Samsung. Samsung was the only company other than
Apple making a profit in mobile, and it seemed to be closing in on Apple’s dominance, prompting
The Wall Street Journal to publish its famous “Has Apple Lost Its Cool To Samsung?” headline
in January 2013.

By the time the Galaxy S4 launched in March 2013, the anticipation surrounding Samsung’s
products could only be rivaled by Apple. It was officially a two-horse race.

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But it only took another year for things to come crashing down. Profits tumbled in 2014, even
during the normally lucrative holiday season. Throughout the year, Samsung blamed increased
competition in mobile for the downturn.

Samsung, one of the biggest smartphone players in the world, has the highest global smartphone
market share of nearly 21%. This is higher than other players like Apple and Huawei. Samsung’s
success with Android has been nothing short of brilliant. What’s even more fascinating is that
earlier Android players like HTC, LG and Sony weren’t able to match the success Samsung. Even
the parent company of Android, Google is still struggling with sales of their own Pixel branded
smartphones. In 2007, Apple reviled its iPhone to the public. It was a revolutionary device, that
intended to change the phone market forever. It introduced a new kind of operating system, the
iOS. iOS was different from other mobile operating systems in two ways:

✓ operating system was intended solely for touch screen devices.

✓ Secondly, it introduced an app store.

On the other hand Google was working on their own mobile operating system, known as Android
today. Google had acquired Android inc. for $50 million in 2005. However, after seeing the new
iPhone in 2007, Google started redesigning their own operating system with a clean slate. In 2008,
HTC Dream was released, which was first ever Android smartphone.

With the release of Android, Samsung also launched its first Android smartphone. Samsung
released Galaxy series of devices. Specifically, Samsung launched Galaxy S series in 2010, which
intended to take on the Apple’s iPhone. That was one of the biggest steps in company’s success
that was about to follow. Samsung’s Galaxy S series is still today one of the best selling
smartphone series for the company. Samsung Galaxy S2, which was second iteration of the Galaxy
S series, launched in 2011, really helped Samsung to solidify itself as the Global Smartphone
leader by overtaking Apple in terms of sales with a market share of 21% compared to 14% of
Apple.

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 Chapter Five: Recommendation
Samsung has design several compensation and benefit policy based on the total return of work.
Cash compensation is about minimum wages and incentives while provided by Samsung are
income protection and work/life balance of the employees. The cash compensation of Samsung is
delivered in the forms of basic wage/salary and performance based incentives. Samsung is
applying the minimum wages laws in every country and pays up to three-times the minimum salary
in region in order to help improve the welfare and quality of life and its employees. Incentives are
paid according to the performance of an individual employee, team of employees, a total business
unit, or combination of them. Samsung incentive program is divided into individual performance
incentives and group performance incentives. The group performance incentives program is also
segmented into productivity incentive and profit sharing. Productivity Incentive acts as an extra
bonus that pays to employees when additional profit achieved to improve work efficiency. Profit
Sharing is a policy that gives out portion of additional profits to employees when management of
each unit of business performs is higher than targeted goal. Compensation of employee is
determined by group profit sharing partially. Profit sharing gives out to employees in the form of
cash or stock.

Samsung provides training programs tailored to different job levels and positions for all employees
around the world based on three pillars- Core Program, Leadership Program, and Expertise
Program. So that they share the same vision for our values and future growth. Training is the
process of planned programs and procedures undertaken for the enhancement and improvement of
employees performance such as attitude, knowledge, skills and behavior. These programs can
incredibly improve the entire performance of group. Training can be considered as a short process
and it’s applied to lower, middle, senior level management and technical staff. There are many
purposes of training and development. First of all improving quality of workforce is the program
that can help improving the quality of work. Mostly, training is conducted in a certain area such
as marketing, finance or HR, which eventually help in improving quality of work in that specific
area. Next purpose is to enhance employee growth by attending training and development program,
employees are able to master their duty of jobs and develop themselves in a professional way.
Preventing obsolescence is also one of the effective programs. This helps employees to keep
themselves up to date with new trends in latest technology. Samsung does not implement training

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and development in their HR management, those untrained employees may be more costly than
even the wage paid to them due to the mistakes they easily make. Trained employees asks for less
help and improve their own efficiency and skills further. By letting the employees know that
company always cares and invest for them, employees would tend to work harder to reciprocate
the favor. And hardworking eventually will create more returns, profit margins and production.
Training and development provide employees a good chance to realize their potential and make
them to work at their best level of abilities.

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Reference

Book

✓ Philip Kotler & Kevin Lane Keller (2005), Marketing Management, 12thedition, India:
Asoke K. ghosh, Prentice Hall of India Private Limited
✓ Strategic Management Theory- An integrated approach 9th edition, Charles W. L. Hill,
Gareth R. Jones.

Report

✓ Samsung financial summary and financial reports year 2017,2019,2020

Internet

✓ http://trading.samsungcnt.com/EN/trading/re/402030/html.do
✓ https://www.samsungsem.com/global-network/philippines/training-development.do
✓ https://en.wikipedia.org/wiki/Samsung
✓ http://www.scribd.com/
✓ http://www.samsung.com/uk

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