Samsung, which was formerly known as the Samsung Electric Industries is a multinational electronics organization of South Korean origin. The headquarters of the organization is located in Suwon, South Korea. Samsung is considered to be the flagship organization of the entire Samsung Group. The company accounts for more than 70% of the total revenues of the group. The organization has sales networks and assembly plants in more than 70 countries in the world and it employs more than 300,000 people in its various locations. Samsung is considered to be the largest information technology in the world with respect to the revenues that is generated by the organization (Samsung com. 2018). The company is the largest manufacturer of electronic components like, semiconductors, lithium-ion batteries, flash memory, hard drive and chips. The products that are manufactured by the organization include, LED and LCD panels, semiconductors, televisions, digital cinema and many more. Samsung makes the largest number of memory chips in the world. Televisions, mobile phones, digital or DSLR cameras are major products of the entire line of the organization. The management system of the organization has changed in the entire course of its operations in the industry (Samsung com. 2018).
Benefits of strategic planning to Samsung Electronics
The business strategy of Samsung has shown high levels of flexibility in the ways by which the organization is always determined to change the strategies according to the changes that take place in the external environment. The company initially started its business operations as a grocery related store in Korea in the year 1938. Later it engaged its operations in various other businesses which include, insurance and securities, woollen mill and many more. The organization mainly believes in then changing of business directions as and when required according to the business environment (Adams et al. 2016).
The three major pillars that support the business strategy of Samsung are as follows,
The strategies that have been established by Samsung in the years of its operations have been the major reason behind its success in the industry.
Discussion related to the role of environmental analysis as a process of strategic planning
The strategy formulation related process of the organizations need to be based in extensive research and information collected about the company. The strategists need to understand the information that is related to the internal and the external operations of the organization. This will help the companies in effectively formulating and implementing the various policies (Cusumano, Kahl and Suarez 2015).
The environment of the organizations consists of two parts internal analysis and external analysis. The environmental analysis of Samsung will be also based on the internal environment of the organization and the external factors that affect the revenues in the industry. The internal analysis will be based on the strengths of the organization, the weaknesses, the opportunities that company has in the industry and the threats posed towards the operations of the organization. The external analysis is however based on the political factors of the country where it operates, the social conditions of the country, the economic condition of the country, the technological capabilities of the country and the legal factors that affect the operations of Samsung (Donate and de Pablo 2015).
The analysis of the internal and the external environment of Samsung have helped the strategists of the company in the formulation of effective strategies that can be profitable for its operations.
Internal analysis – SWOT framework
Samsung Electronics is a major part of the Samsung, a South Korean conglomerate which is based in Suwon, South Korea. Samsung is the largest manufacturer of LCD panels and televisions in the world.
Strengths – Samsung is considered to be the most successful manufacturer of electronic products in the world. It has established the position of the largest of manufacturer of television sets and many other consumer products. The organization has also gained the number one position as the manufacturer of smartphones and it acquires around 21.4% of the entire mobile market share in the world. The research and development related capabilities of Samsung are also quite impressive in nature. The company has always tried to compete against its rivals by manufacturing and providing products that are similar or better than those manufactured by its rivals (Elmes and Barry 2017). The manufacturing and the marketing related capabilities of the organization is also quite strong in nature. The relationship that the organization has established with the retailers in various of its operations have helped Samsung in gaining a unique position in the market.
Weaknesses – Samsung has been able to replicate the features that are offered in the products of its competitors. However, the organization has not been able to match up with the quality and capabilities that are available in the products of Apple. The Chinese competitors of Samsung have been another major cause behind the lack of revenues of the organization in the industry. The shares of the rivals of the organization have increased in comparison to that of Samsung. The Samsung is highly dependent on the sales of this division for most of the revenues (Helfat and Martin 2015). This has decreased the potential for growth of the organization in the different industries. The operating system that is used in the phones manufactured by Samsung are considered to be inferior as compared to those of its biggest competitor in the mobile phone division Apple. The marketing related efforts of the organization have also not been able to capture the interest of the consumers in the market (Hill, Jones and Schilling 2014).
Opportunities – The industry related to electronics and smartphones have been growing in the countries like, India and Africa. The sales of the various products that are manufactured by Samsung, like, television sets, mobile phones are in huge demand in the market and this has can be used as an opportunity by Samsung to further grow in the market. The new technologies are capturing and the market and Samsung can plan for the manufacture of products like, wearable tech, payment services. The growth of middle class people in the various developing countries have increased the market for electronic products. The huge growth of the online market can also be a major opportunity for Samsung (Jackson, Schuler and Jiang 2014).
Threats – The rivals of Samsung have emerged in the market and the organization has been unsuccessful in gaining reliable position in the market. The decline in the income of middle class people have further reduced the buying power of the consumers. This has affected the key market of Samsung. The Chinese organizations have posed major competition to Samsung and have acquired a huge portion of the entire market of consumer electronics and mobile phones. The rivals of the organization have entered the various markets where Samsung has its major operations and has the key market for its products (Luthans and Doh 2018). This has increased competition of the company and further have affected the revenues in an adverse manner.
External analysis – PESTLE framework
Samsung is mainly global conglomerate which has its operations in the “White Goods” market which is related to the consumer appliances and gadgets. The company has its operations in many countries of the world and PESTLE assists the strategists and the marketers of Samsung to understand the environment in which it plans to operate.
Political factors – The majority of the markets in which Samsung has its operations is conducive in nature however, there are disturbances in some of the countries as well. The organization therefore mainly operates in the countries where the political conditions are sovereign in nature. In the recent times the organization had to face major political issues in its home country. The reasons behind these issues were the relationships of the country with North Korea. The organization had to therefore take into account the political instability that was created in the Korean market (Schaltegger and Wagner 2017). Samsung also has to face many political pressures in the Latin American countries and the African countries as well. This is mainly related to the frequent changes that have occurred in the structure of the government.
Economic factors – The economic dimension of the countries in which the organization operates has been the critical for the operations of Samsung. The major reason being the opening up of many new markets in developing world. This can further lead to the expansion of the global footprint of Samsung. The global crisis in the economy has however been a issue for the operations and profitability of Samsung. This decreased the purchasing power of the consumers belonging to the developed markets (Schnackenberg and Tomlinson 2016). This compels the strategists of the organization to formulate strategies for entering into the emerging markets. The macroeconomic environment related to the operations of Samsung is full of uncertainties which leads to changes in the strategy of the organization in a frequent manner. The organization has been able to adjust to the various changes that have been occurring in the external economic environment.
Social factors – Samsung belongs to the Korean origin and is a family owned business organization. This implies that in spite of being a global organization, the core values of the company are still related to its home country. The major aspect for the organization in this case will be to adapt to the local conditions and culture of the country in which it is operating or planning to further expand. The strategists of the organization need to formulate a glocal strategy which can helpful for its operations in the various countries. The niche market in which Samsung operates is affected by the local preferences and choices of people (Smith 2014).
Technological factors – Samsung has acquired the position of one of the world’s largest and leading innovative organizations. The company has a major advantage of harnessing the technological power that is provided by the countries. This has further formulated an obsessive mission of the company to be technologically ahead from its competitors in the market. The organization has however gone too far in this process by imitating the products that have been manufactured by its rivals. Samsung has still been able to reach the customers quite fast in this competitive market. The strategists of the organization are major reason behind this capability of Samsung (Spieth, Schneckenberg and Ricart 2014).
Legal factors – The legal factors are related to the various boundaries that are faced by Samsung in the various countries. The organization also had to face many legal issues in the past due to imitation of the products of other organizations. Legal factors also include the approval of strategies that are formulated by Samsung.
Environmental factors – The ethical consumers have increased in the market and they are demanding for products which are made in an environmentally and socially responsible way. Samsung therefore has to be aware of the needs of these ethical buyers, by ensuring the high levels of working condition in their factories and other facilities (Wirtz et al. 2016).
Evaluation of the SWOT analysis
The global reach of Samsung has been the major strength of the organization in the industry. The South Korean organization was able to become a global name within a short time due to the strategies that were implemented and the changes that were made in the strategies according to the needs of the consumers. The research and development related capabilities have proved to be another major strength in the operations of the organization which has helped Samsung in maintaining its competitive advantage (Wright, Coff and Moliterno 2014). The other factors which have proved to be beneficial for the organization are the marketing and the manufacturing capabilities and the long-standing relationships with its retailers. The major reason behind the issues faced by the company was the dependency of the organization on one part of the conglomerate for its revenues. The company has many opportunities related to growth in the industry which can be utilised to increase its revenues. The high growth the electronics industry and increasing demands can be profitable for the organization and its operations in various countries. Samsung is also facing major threats in the market which is related to its tendency to imitate the products of its rivals (Wu, Straub and Liang 2015). The lack of proper quality has further affected the reputation of the organization in the market. The sales and revenue of Samsung has reduced due to these mistakes made by the organization.
Recommendations related to future direction of Samsung
References
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