Samsung SWOT and PESTEL Analysis

SWOT ANALYSIS
Definition
This is part of a company’s strategic planning process that
connects the company’s objectives and strategies to tactics and actions carried
out by employees. Often SWOT is part of a company’s strategic planning process
that connects its objectives and strategies to actions and tactics carried out
by employees.  To better decide what
changes to be made in a company and know where it stands on four key strategic
areas it has to use a SWOT analysis.

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SWOT Basics
Strength, Weakness, Opportunity and Threats (SWOT) is an
acronym that identifies the four critical elements of this analysis.  Strengths usually explain in detail an analysis
of the company’s advantages over its competitors. Weaknesses evaluate areas in
which the company is at a competitive disadvantage and has a possibility of
failure. Opportunities are untapped markets or business developments that the
company could venture in and make profit. Threats transverse the external
environment that could affect the company, an example being technological,
environmental and regulatory factors.
Strengths and Weaknesses
The main reason for using the SWOT analysis is so as to be
able to evaluate and assess a company’s strengths and weaknesses. This helps
the company understand its main market advantages and areas that competitors
could take advantage of.  Companies take
advantage of its strengths by using them as marketing messages so as to
differentiate them from their competitors. 
By understanding their weaknesses companies can decide what areas need
improvement and what areas are deeply rooted in the nature of its business.
Opportunities
By exploring untapped opportunities company leaders are able
to consider ways to grow. Any strong company has to look for ways to improve
and elevate its growth curve because without growth means failure and lack of
utilization of opportunities, therefore, giving an advantage to the
competitors. Opportunities are areas that could create more sales and profits
to the company, and these can be the inclusion of new and emerging markets, new
business and product developments and lastly strategic business partnerships.
Threats
Though this is not fun at all, companies always need to have
an idea of what external threats they may encounter so they can always be
prepared and avoid being caught unawares. 
Government regulation changes may affect the level of competition or
costs companies face. Ways in which a company gets access and uses natural
resources can be affected by environmental or conditional changes.  Companies that do not incorporate new
technologies are always affected negatively. (Hill and  Westbrook
(1997).
WHAT IS PESTEL  ANALYSIS AND WHY IT’S USEFUL?
So as to be able to achieve maximum results and get to its
optimum performance a company has to consider some factors. The Pestel analysis
explains these factors in six categories. 
POLITICAL
These refer to the magnitude of government intervention in
the economy.  Most times the foreign
policy of a country plays an important role in determining the trade
regulations that could either lead to trade restrictions or trade incentives.  A company can be highly affected by specific
regulations imposed by the government.
ECONOMICAL
Future operation of a company/organization is highly
affected by economical factors. Also, the cost of imported and exported goods
are highly affected by the changes in exchange rates in different regions. The
expansion and growth of an organization are highly influenced by the economy
since there is a change in cost of capital. (Yüksel, I. (2012).
SOCIAL
The macro-environment of the organization is formed by
different social factors, cultural and demographic aspects of the Social
factors include attributes in one’s career, age distribution, growth rate,
population, how individuals are conscious about their health and safety. A keen
analysis of these factors helps one understand the PESTEL analysis and help
organizations understand the dynamics of existing and the availability of
potential markets and future customer needs.
TECHNOLOGICAL
With the speed at which technology is evolving and customers
becoming more acquired to it, organizations have no option but to keep up with
this pace.  New technology makes the old
one obsolete and outdated. An organization/company that is not ready to embrace
new technology is at a chance of lagging behind its competitors and losing its
market value.
LEGAL
These are factors that affect the behavior of customers and
the operation of businesses. Things which may be affected by legal factors are
product transportation, profit margins, and viability of certain markets just
to mention a few.
These factors help in knowing if there are any dangers
behind selling certain products like drugs and sharp objects and can also
affect how a company stocks their inventory or interacts with the customer.
Consumer law is used so as to protect consumers from
companies that are involved in fraud and also preserve their rights when in the
market. This affects business because they have to put aside resources so as to
give detailed information about their products and services. 
Employment law is also known as labor law, and it explains
how companies’ employees should be treated. This also helps protect children
from child labor and also it makes the firing of innocent employees a bit
harder.
SAMSUNG SWOT ANALYSIS
Samsung Electronics Co. Limited is the consumer electronics
subsidiary of the Samsung Group, based in Suwon, South Korea. Samsung is
popularly known as the world’s largest manufacturer of mobile phones,
smartphones such the highly popular and successful Galaxy as well as other
electronic devices like Television sets, LCD panels home theaters,
refrigerators and even cooking appliances.
Having a great and undisputed manufacturing and marketing
expertise, Samsung is regarded as the world’s second largest consumer
electronics company the first being Apple,Inc. its American rival.
STRENGTHS
•   It is the world’s
most successful electronics manufacturer of television sets, liquid crystal
display (LCD) panels, mobile phones and smartphones and other electronic
appliances.
•    By use of its
strategic marketing style Samsung is the world’s number one mobile phones
seller with the world’s largest market share of 21.4% in 2015’s second quarter.
Apple comes second  with 13.9%
•    By use of its
impressive research and design capabilities, Samsung has been able to create
and roll out a payment app with similar capabilities to Apple Pay, in less than
a year the Samsung Pay.  Also, the
company has been able to incorporate many of the capabilities of both Apple
phones and Google Android operating system to its mobile devices.
•    Samsung not only
has strong manufacturing capabilities but also have undisputed marketing
strategies that have led to the success of the company.
•    Samsung has been
able to sustain long-standing relationships with retailers in the United States
and Europe that have been able to provide a steady sales channel for its
products through out the years.
WEAKNESSES
•   It is quite clear
that Samsung has not been able to match Apple Inc.’s marketing capabilities for
smartphones. This is because  Its share
of the U.S. smartphone market fell by 2.3% between 2014 and 2015 yet Apple’s
share price grew by 34.9%.
•    Some Chinese
competitors such as Huawei and Xiaomi are catching up to Samsung in the
smartphone market. In the year 2014 and 2015 Huawei’s share grew by 48.1%, and
Xiaomi’s share grew by 29.4%.
•    Samsung’s
dependence on customer electronics sales in markets that have limited resource
for growth is dangerous. The company depends on these markets an example being
the United States and Europe, for much of its revenue.
•    The public has
not accepted the Android operating system in an equal manner like the tech
community. This is because many consumers view Android as an inferior product
to Apple’s IOS.  Samsung devices use the
Google source application system and this is a weakness because it is not
preferred by a majority of people. 
•    Apple products
are viewed as more technology advanced and dependable on than Samsung products
by a large number of consumers.
•   Samsung needs to
improve its marketing efforts and standards, so as to be in the same level as
Apple.
OPPORTUNITIES
•    Samsung needs to
grow its market for smartphones, tablets and other technological devices in
developing regions where consumers are not familiar with PCs.  This is because in 2015 sales of tablets
overtook sales of traditional personal computers. An example of these regions
is Africa and India.
•    Samsung should
seize the increased demand for tablet and smartphone-based solutions and market
some of its products that are not known to many such as Samsung Pay
•    The company
should venture into new technologies such as wearable tech
•    The growth of the
middle class in the developing world will increase the market for consumer
electronics
•    Sales channels
such as Amazon.com can be used by Samsung to grow its online market
THREATS:
•    Samsung has not
been able to outdo Apple. ‘This is because Apple has emerged as the dominant
smartphone and tablet brand in some markets, such as the United States.
•    The growth of
Apple’s reputation for quality, reliability, and sophistication is a threat to
Samsung because it seems to be lagging behind.
•    Samsung is most
popular for its Galaxy devices. We could even say that it depends on these
devices. The problem is, the Google Android operating system, which these
devices depend upon, is not as popular with average people as iOS that is in
most other devices incuding Apple is.
•   Key markets for
Samsung are North America and the United States.  The declining and stagnating of the
middle-class incomes in these areas could reduce consumer buying power and
therefore affect Samsungs sales.
•    Samsung is
experiencing rivalry from Chinese manufacturers such as Huawei and Xiaomi. This
is evident because the capital share of these companies rose and Samsung’s is
falling.
•    If Apple decided
to produce more consumer products like home appliances and cameras, Samsung
could be greatly affected.
Though Samsung has been able to maintain an impressive
research, design and manufacturing capabilities, its marketing strategies are
questionable. There is a need for the company to revisit and improve its
smartphone marketing and design efforts so as to be able to maintain its market
share in crucial arenas like the U.S.
If the Samsung wants to maintain its position as an industry
leader it needs to:
1. New capabilities like Samsung Pay
2.  learn to deal with
aggressive Chinese competitors like Huawei and Xioami
3.Compete with Apple’s reputation.
PESTLE ANALYSIS OF SAMSUNG
INTRODUCTION
Samsung is a global company that operates in the market for
consumer appliances and gadgets. Samsung is owned by a South Korean family and
has global aspirations to expand into newer markets. Since Samsung is not
content with operating in some markets in the world, it wants to cover as many
countries as possible. This analysis focuses on the external environmental
factors that drive the Samsung’s strategy.
POLITICAL
A large number of markets where Samsung operates have a
political environment that is conducive for business. This means that its
operations run smoothly and though there might be some minor distractions to
its operations in some of the foreign markets like India, Overall it can be
concluded that Samsung is operating in markets where the political factors are
not harmful. Samsung has faced significant political blows in its home country
South Korea because of the country’s tensions with North Korea. Due to this
instability, the company has had to take into account this political factor and
also the threat of war in the Korean Peninsula. In areas where the political
environment is unstable Samsung faces a lot of political pressure. This includes
areas in many African and Latin American countries where the political
environment is unstable and experiences frequent changes in the governing
structures.This is not yet a major cause for worry for the company because it
has factored the political instability into its strategic calculations.
ECONOMICS
Opening up of several markets in the developing world means
that Samsung can expand in the global markets. This, therefore, means that
economic factors are a critical consideration. The current global economic
crisis has affected the purchasing power of customers forcing the company to
seek profitable ventures in the emerging markets. The global environment in
which  Samsung operates in has a lot of
uncertainties and volatilities which means that the company has to keep on
adjusting its strategies. Through expansion of Samsung into emerging and
developing markets has made it possible for the company to adjust well to the
tapering off of the consumer disposable incomes in the developed world. This is
the main reason that Samsung has an aggressive push into the emerging markets
with hopes that it shall recover all its lost businesses in the developed
world.
SOCIO-CULTURAL
Samsung being a South Korean multinational owned by a family
means that despite its global footprint it still operates from the core of a
Korean company and culture. This means that among its global operations,
adapting itself to local conditions is paramount. Since Samsung is a global
company that has had to act locally, therefore adapting a global strategy makes
it possible to be productive in emerging markets. Together with this, Samsung
has had to tailor its products in markets it operates in so as to cater to
their customers whose preference changes so fast.  It is important to note that Samsung operates
in a market niche that is strongly influenced by the lifestyle preferences of
consumers.  The fact that socio-cultural
factors are different in each country; Samsung has had to reorient itself in
each market accordingly.
TECHNOLOGICAL
Samsung is considered to be among the world’s leading
innovative companies. Therefore, the company is at an advantage of controlling and
making use of the power of technology and driving innovation for sustainable
business. This has resulted into an obsessive mission by the company to outdo
its rivals and competitors when it comes to technology and innovations. The
company’s main goal is to be the first to reach the produce devices that are
preferred by customers and also be the first products of their kind in the
market.
LEGAL
Due to Samsung’s alleged imitation of the Apple’s iPad and
iPhone it has had to face substantial penalties and law suits. This affected
the company negatively on areas of public perception and consumer approval
strategies. From Samsung’s experience of having various lawsuits with its
competitors, other technology driven companies should know that having an
elaborate basis of a design or model is key rather than making a fast move so
as to be able to present a product to the consumers that shall, in the end,
ruin your reputation.
ENVIRONMENTAL
Samsung has to be on the lookout when making its products so
as to be able to satisfy its customers. When doing this, it has to take into
account its social and environmental responsibilities so as to make sure they
are both ethical.  Therefore, this means
that the company should ensure that it does not compromise on its staff wages
or their working conditions for they are all involved in producing the final
product. (Grade and Pestel)
CONCLUSION
As Samsung prepares to expand globally, it has to be sure of
what is expected of it. Technology changes so fast and customer preference even
faster. Therefore, with this analysis, Samsung has clear guidelines on what to
expect in the global consumer landmine.
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