Samsung Electronics: SWOT Analysis And Current Challenges

Introduction to Samsung Electronics

Samsung Electronics is multinational organization which operates in South and North America, Europe and Asia. Headquarter of Samsung Electronics is situated in Gyeonggi-dox, South Korea. Actually, Samsung Electronics fabricated televisions from there they expanded their business by manufacturing home appliances like refrigerator, air conditions, washing machine and many other. Samsung also having a very good hold the mobile phones industry. Samsung Mobile gets consider as one of the biggest mobile phone manufacturer in the world. According to the official website of Samsung, the company is committed to evolve creative technological aspects and efficient procedures that makes all new markets, enhance individual’s lives and continue to build up Samsung as a digital leader (“Business Solutions, Services and Technology from Samsung”, 2018). Though having a very good grip on the market, Samsung is facing some serious issues which can be proved detrimental for the organization. Samsung’s de facto leader Mr. Lee Jae-young has been arrested in South Korea. There will be a bad effect of this incident on the company. Along with analyzing the issue facing by Samsung, a complete SWOT analysis of the organization can provide an internal overview of the company.

On hand Samsung managed to reach the extreme in corporate success, on the other hand it is confronting the deepest humiliation with the conviction and imprisoning on Friday of the company’s de facto chief Lee Jae-Young on deception charges (Lee, 2016). It is another sad news for such organization that was previously struggling to recuperate from last fall’s disastrous meltdowns of batteries in the company’s Note 7 phones of Galaxy series (PILLOT, 2013). The organization faces some huge challenges continuing its perch at the pick of the smart phone industry globally, which includes rivalry from the low cost handsets manufactured by China and Google’s newly launched the Pixel series smartphones. Company’s leadership appears to be striving to meet them. Company’s key electronics affiliate became the globes most profitably successful technology organization in the last quarter, as Mr. Lee, the group’s powerful vice-chairperson, was sitting there in the jail in Seoul waiting for his fate. Though the reality that Samsung Electronics collected approximately $10bn in quarterly gains should serve to investor concerns about the future of an organization whose boss has just been convicted to five years in jail. In spite of the conviction, some analyst presumes Samsung’s smooth run to continue, at least in the short span, as it continues to receive the recompense of long span strategic investments and a team of competent executives (Rapp, 2014). However, there are questions being raised regarding the organization’s further planning along with if South Korea’s biggest and strongest conglomerate should continue to be run in the way of a dynasty. The 49 years old scion had been efficiently leading the organization since his father, Mr. Lee Kun-Hee was became disabled to run an organization after a heart attack in 2014. Before Mr. Lee’s arrest in February, the junior Mr. Lee was in the middle of trying to concrete his position as successor, this argue included a debatable merger amid Samsung affiliates that finally became the foundation of his corruption trail. After this present scandal surrounding Mr. Lee exploded, the organization announced it would deconstruct its Future Strategy Office, an indistinct control tower which guided the conglomerate’s 62 affiliates with little supervision (Lee, 2016).

History of Samsung Electronics

Though the arrest of an organization’s vice chairman is something to worry, but Samsung should concentrate on the business part of the company. The organization should focus on the marketing and advertising of their home appliances, mobiles and many other products so that the annual turnover of the company remain highly profitable. Samsung should make a strong PR which will help the company to regain their image in the market. Along with all these Samsung must consider the quality of their products which will be the ultimate strong point of any company (Grant, 2016).

Samsung Electronics Co. Limited is literally the customer electronics subordinate of the Samsung Group, a composite located in Suwon, South Korea. Samsung is commonly familiar as the largest maker of cellular phones around the globe which include the highly accepted and prosperous Galaxy series. Samsung is also the biggest maker of LCD panels and Television globally. Due to the company’s marketing and manufacturing experts, Samsung is considered as the globe’s second largest customer electronics company. Only Apple Inc. which is the rival company of Samsung, reported larger turnovers. Regrettably, it is tough to determine precisely what Samsung’s are because the company situated in Korea and not covered by United States corporate reporting laws. The organization did report an approximate TTM revenue of $42.35 billion for the second part of the year 2015. That statistics is grounded on sales of 48 trillion Korean won (Chang & Liao, 2013).

• Samsung offers lots of mobile handsets with dissimilar kids of designs. The company focuses on innovative designs, which their biggest rival Apple does not.
• Samsung provides combination of open source operating system and software. The strongest strategy the organization took was modification of the open source technology such as Android Operating System. The globe is working with Android unlocked operating system. Different organizations are operating with this system. Android offers various exciting software, options and features. Keeping this strategy in mind, the organization seized huge ruthless advantages over the other mobile phone manufacturing companies (Ioannou et al., 2017).
• The organization focuses on the cost and the quality. When it comes about the costs of the production, Samsung has reached the economies of scales. The organization outsourced the production to various countries that has fierce advantage in manufacturing quality products at low cost.
• Samsung focuses on large product diversity. The organization has an enormous number of manufactured products in company’s product portfolio, it provides various types of products to the customers (Kim & Jang, 2015). In return, the surplus it makes is extremely stable. When on particular product’s sale goes down, other manufactured products may be encounter the increase of sales.
• The organization maintain a low cost in production. This allow Samsung to provide its manufactured products at a cheaper cost than its rivals companies.
• Samsung is certainly one of the most acknowledged brands all over the world (Lee & Lim, 2014).
• The organization still now has been holding a strong reputation of providing quality products in a low price. Samsung is enjoying a strong brand reputation globally.
• The focus towards environment is very high of Samsung. It has been consummating accountabilities towards the environment. They dispense energy efficient manufactured products. They fortify that the chemical used in the manufactured items do not distress the users. Presently, the organization is controlling the global reclaiming and take back programs in 60 countries (Ioannou et al., 2017).
• The R&D department of Samsung is very strong, which often help the organization to build innovative and creative consumer products.
• The number of skilled employees of Samsung all over the world is 489,000 (Ojelabi, 2017).
• Samsung is having more than 40% market share of smart phones in Netherlands (Rapp, 2014).
• Considering all the above mentioned strengths and strategies, Samsung has been able to get the largest market shares in mobile phone market.

• Samsung always maintains low profit margin. Due to the presence of various competitors, the organization need to keep their product price low to hold their customers.
• Some recent incidents, such as battery issue, the arrest of the vice chairman of the organization, damaged the brand image of Samsung to some extent (Lee, 2016).
• The product verity of Samsung is too large. This attracts a huge work if the portfolio of product is large (Rask, 2017). This is not possible to provide concentration to every product with enormous importance.
• Samsung does not have its own operating system, which Apple has. Apple provides their own operating system to the I-Phone and other apple products.
• The dependency of Samsung on consumer electronics is too high than the other manufacturer.  
• The operating system which Samsung is using have few lacking. Though the company have been pushing hard to make the Android operating system more quality oriented, but is still lacking perfection.
• Samsung dependent on other software largely. It cannot simply provide all of the needed software of its devices. It mainly depends on the third party applications (Wambui, 2013).

• The smartphone market of India is growing. Consumers are getting more technology dependent, and the smartphones came up as the most used tool of communication in this period.
• Most of the people who are using feature phones can make a switch towards smart phones.
• The urge for technologically facilitated pones are growing day by day (Sammut & Galea, 2014). This is happing because of the smartphones are becoming the closest alternative of computers.
• Samsung is doing their business for an extremely long span of time. The organization has been able to ensure a strong position in the market financially. As a consequence, this will be able to invest more in the future.
• Samsung has been purchasing other companies. It is fortifying the future growth of the organization. Currently, the organization acquired Harman, the giant in audio industry for $8 billion. Samsung also bought Viv, which is an AI platform from the manufacturers of SIRI and finished the purchase of NewNet Communication Technologies Inc (Rapp, 2014).

• Samsung is having an enormous number of competitors in the mobile market, and the number is growing day by day.
• The organization have some strong competitors such as HTC, Apple, Xiaomi and Lenovo in the mobile phone market. This is the biggest threat for Samsung (Sammut & Galea, 2014).
• The Chinese contenders are acquiring competitive advantages. Customers are accepting the Chinese brands spontaneously because these brands are manufacturing their products in a low cost and also selling it in a cheap rate in the market.
• Consumers are considering the quality of a product when they are going to purchase. This is why they are switching to companies who are offering better quality products.
• Samsung carries a large product portfolio which also has a very high risk. If any of the products do harm to the consumers, it obviously will affect the brand image of the company. Therefore, that incident will surely grow a negative image to the others (Kim & Jang, 2015).

The SWOT analysis of Samsung manifested that, the organization have numerous strengths against the company’s weakness. In addition, the organization have excellent opportunities along with some market threats. If Samsung decide to be stronger in the market by assuring quality, the organization will become stronger in future (Ying, 2016).

Samsung no doubt is a giant in the electronics market. Though the company need to focus on some certain areas which can help them to improve their business. The organization need to give some urgent concentration on the quality of their product. They have some bad reputation in the market due the blast of the battery of some of their handsets. In addition, to compete with Apple, the organization need to build up their own operating system which will be open sourced.

Conclusion:

Samsung managed to reach to the top of the mobile phone market, however they are facing some difficulties. After the arrest of the Vice-Chairman of the company, Samsung is facing some leadership crisis. The organization also faced some issues regarding meltdowns of batteries in the company’s Note 7 phones of Galaxy series. Competing with Chinese low coast mobile phones and other mobile phones Samsung reached to the top position. The main competitor of Samsung is mobile phone manufacturing companies like HTC, Apple et cetera. At last, the SWOT analysis of Samsung showed displayed the main strengths along with the weaknesses of the company. The analysis also put light on the opportunities which the company have in future along with the threats from which they have to be aware.           

References:

Business Solutions, Services and Technology from Samsung. (2018). Retrieved from https://www.samsung.com/us/business/

Chang, C. W., & Liao, C. C. (2013). Applying SWOT Analysis to Explore Taiwan Foundry Industry Management Strategy. International Journal of Innovation, Management and Technology, 4(1), 144.

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Ioannou, A., Vaienti, C., Angus, A., & Brennan, F. P. (2017, August). A cluster analysis of investment strategies in the offshore wind energy market. Institute of Electrical and Electronics Engineers.

Kim, H. R., & Jang, H. S. (2015). Strengths, Weaknesses, Opportunities, and Threats Analysis of Korea Construction Companies in the Vietnam Market. Journal of the Architectural Institute of Korea Structure & Construction, 31(5), 87-96.

Lee, A. J. (2016). Creating Spontaneity: The Evolution of the Samsung Group Under Lee Kun-Hee.

Lee, M. S., & Lim, C. S. (2014). Brand Marketing Strategies of International Smartphone Market. Commodity Science in Research and Practice: Non-Food Products’ Quality and Innovations, 97-102.

Ojelabi, T. A. (2017). An investigation of strategic management in the organization, on the example of the “Sumsung Electronics” (Doctoral dissertation, ?????????????? ???????????? ????????? ??????????? ??. ????? ?????).

PILLOT, C. (2013). Avicenne Energy. Li-ion battery material market review and forecasts 2012, 2025.

Rapp, A. (2014, July). A SWOT analysis of the gamification practices: Challenges, open issues and future perspectives. In Advances in Affective and Pleasurable Design: Proceedings of the 5th AHFE International Conference (Vol. 19, pp. 476-487).

Rask, L. (2017). How South Korea’s Improper Solicitation and Graft Act (Kim Young-ran Act) Can Help Protect US Trade Secrets. Cybaris®, 8(2), 2.

Sammut-Bonnici, T., & Galea, D. (2014). CONCEPTUAL FRAMEWORK.

Wambui, E. (2013). Samsung Smartphone strategic marketing: analysis of Samsung Smartphone marketing strategy decisions and the consumer perception to the implemented strategies.

Ying, F. (2016). Samsung’s international strategy. An Analysis.