ASSIGNMENT

OF

STRATEGIC MANAGEMENT

SUBMITTED TO: SUBMITTED BY:

Mr. Navpreet Singh Sidhu Kanwaljeet Kaur
Roll no:962
MBA 4TH SEM

LALA LAJPAT RAI INSTITUTE OF ENGG. & TECH. GHAL KALAN

MOGA(142001)

Samsung Telecommunication
Samsung Telecommunications is one of five business units within Samsung Electronics,
belonging to the Samsung Group, and consists of the Mobile Communications Division,
Telecommunication Systems Division, Computer Division, MP3 Business Team, Mobile
Solution Centre and Telecommunication R&D Centre. Telecommunication Business
produces a full spectrum of products from mobiles and other mobile devices such as MP3
players and laptop computers to telecommunication network infrastructure. Headquarters is
located in Suwon, South Korea.
In 2007 Samsung Telecommunication Business reported over 40% growth and became the
second largest mobile device manufacturer in the world.[1] Its market share was 14% in Q4
2007, growing up form 11.3% in Q4 2006.[2] In Q1 2008 Samsung strengthened its second
position on the market and achieved 15.6% world handset market share.
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Business Strategy at Samsung
History has shown us that companies with good vision and R&D can withstand the downturn.
This fact is reinforced after learning how Samsung is extending its R&D and manufacturing
capabilities of flat-panel TV to solar and immersive displays. Also shifting LCD business into
survival model for the downturn with a focus on cost effective products. The decision to get
into the new product line has been triggered through the analysis of the flat-panel TV
industry growth as well as its own sales. Based on this data analysis, management team has
come out with a long term plan to grow and sustain a business that would go beyond 2010.

Strategic activities that could be seen are:

- putting an R&D team together for solar panel
- invest on developing new type of solar panel
- till new type of solar pannel is developed, continue using existing bulk crystalline panel
- use its strong brand, vertical integration (sales, support infrastructure, distribution structure,
production facility etc)

Other key notable point in this article is Samsung’s attitude towards accepting downturn as
survival game and involve employees for discussions and workshops to seek new growth
drivers, quick move from profit plan to survival plan (e.g., better utilization of production
methods to reduce cost, develop new methods to reduce cost of producing a product,
developing single platform). However focus on new technology, materials for its product
development has not reduced but it has increased to create advantage for Samsun Samsung's
High Design, Lower Profit Cell Phone strategy
Count on Samsung Electronics executives to put a brave face on it when they announce their
smallest quarterlyerating profit in nearly three years on July 14.
 Analysts expect Samsung to report
operating profits of about $1.35 billion in the three months to June. That's
a better earnings performance than key global rivals, but underscores the
problems the South Korean national champion is having in two critical
markets: flash memory chips and liquid crystal panels. Samsung execs
concede as much, though they think the earnings stall is pretty much
over.

"We are doing okay," says Samsung Senior Vice-President Chu Woo Sik.
"We've gone past the bottom and the second half looks much brighter."

Samsung, of course, is still a killer innovator and the most profitable

information technology player in Asia. And Samsung investors can take
some comfort in the fact that rival LG.Philips LCD, a key competitor in the
liquid crystal display panel business, recently posted a record quarterly
net loss of $340 million (see BusinessWeek.com, 7/11/06, “LG.Philips LCD
Swings to Loss in 2Q”).

MOBILE SLIDE. Samsung is still making money from its LCD unit, thanks
to its focus on hot-selling big flatscreen TVs. The profit margin from flash
chips, used for MP3 music players, digital cameras, and other mobile
gadgets, will be just below 30%, far below the approximately 40% of the
end of last year. That's not sensational, but hardly a disaster, either.

The far bigger worry is Samsung's slide in the global mobile-phone arena,
which used to be a money-spinner. Two years ago, Samsung looked as if it
had a shot at displacing Motorola (MOT) as the world's No. 2 handset
maker just after Nokia. (NOK) Now, the Korean company is a distant No. 3
and analysts don't expect it to catch up to Motorola anytime.

The reason: Samsung is missing-in-action in critical emerging markets

such as India for the fast growing market in low-end handsets. Since the
late '90s, Samsung has tried to establish itself as a high-end player and
ultra-cool brand by focusing on stylish, feature-packed products. The plan
worked, but the company seems to have missed the big market shift to
less expensive phones in recent years. "Samsung is a victim of its own
success," says technology analyst Daniel Kim at Merrill Lynch in Seoul

OLD PARADIGM. The focus on high-end products allowed hard-charging

Samsung to emerge out of nowhere as a trend-setter. In the past several
years, it led a switch to color from black and white screens and became
the first to make phones double as MP3 players and mobile TVs. It also
introduced the clamshell design and kept rolling out camera phones with
increasingly high resolution.

The gambit is no longer working. With cell phone saturation in the

developed world, the big growth comes in emerging markets where first-
time users still abound. "I like Samsung because of the speed with which it
responds to changing business environments, but when it comes to
phones, the company still lives in the old paradigm," says Ahn Young Hoe,
chief investment officer at fund manager KTB Asset Management in Seoul.
"It certainly risks diminishing market share."

Already there are signs Samsung is losing out. The consensus among
analysts is that in the second quarter of this year, Samsung won't be able
to match its first-quarter sales of 29 million phones. Worse, its profit
margin is set to slip back closer to the 8% it posted in the fourth quarter
of last year from 10% in January to March of this year. Compare this to the
margin of 17% a year earlier.

RIVALS RISING. Samsung maintains it is not neglecting the entry-level

markets. However, "our priority is in maintaining our brand image as a
maker of premium products with leading-edge technologies," says
Executive Vice-President Kim Woon Sub, a key figure for charting
Samsung's business strategy. "Our basic business approach is clear: we
won't compromise profits for the sake of a bigger market share. Even in
the entry markets, our focus will be the premium segment."

Execs argue that Samsung should be able to keep its standing in the
industry without competing with Nokia or Motorola for phones costing $50
or less. In the first quarter of this year, for example, Samsung's phone unit
sales rose 18% from a year earlier, they point out. The trouble is, rivals'
sales grew at much faster pace. Nokia's sales jumped 40% to 75.1 million
phones during the period and Motorola's 61% to 46.1 million.

A bigger problem lies in profitability. Although Samsung limited its

marketing efforts largely to mid- to high-end phones, its operational
income dropped 45% to $486 million in the first three months of this year.
In contrast, Nokia and Motorola posted income increases of 32% to $1.34
billion and 60% to $702 million respectively in the period.

RAZR MARGINS. The numbers underscore the need for the Korean
company to lower costs. One method could be outsourcing manufacturing
and globalizing the sources of components to include suppliers in Taiwan,
China, and India, where costs are lower than Korea. Yet a spokeswoman at
Samsung says her company had no plans to outsource the production of
phones for the sake of cutting costs because that would make it hard for
the company to control quality.

Instead, Samsung's answer is to roll out a profusion of fancy new models

that execs hope will drive both sales and earnings. Last month, it unveiled
three ultra-thin phones to tap the runaway success of Motorola's thin
clamshell RAZR.

"The biggest differentiating factor these days is design," Chu said, noting
that mobile carriers have been slow to migrate to next-generation
networks (see BusinessWeek.com, 7/17/06, “A Chat with Nokia's Alastair
Curtis”).

STILL SLIMMING. In an attempt to beat the U.S. rival in its own going-slim
game, Samsung last month in Europe started selling the X820 model
which is just 6.9 mm thick against 14 mm for RAZR. The bar-shaped
phone sports a two megapixel camera .

This month it is launching in Asia and Europe the clamshell D830, with a
9.9 mm-thick magnesium body, and the D900 slider phone that is 12.9
mm thick. Joining them in Europe is a new slim smartphone with a
QWERTY keypad, the SGH-i320, to compete with Motorola's Q (see
BusinessWeek.com, 7/11/06, “Motorola's Quirky New Smartphone”).
Samsung is negotiating with a U.S. carrier to bring them all here soon.

Eventually Samsung hopes its focus on handsets with cutting-edge

features such as 3.5G services and mobile TV will pay off. London-based
researcher Informa Telecoms & Media forecasts the TV broadcasting
market could be worth $8.4 billion by 2010.

"We are well placed to take the lead once mobile television and high-
speed wireless Internet service become widespread," says Chu. Maybe,
but Samsung will first have to make sure it won't be outgunned by its
rivals because it missed the boom in low-end handsets for emerging
markets
Samsung's Plan to Strengthen Its Weaknesses
Seoul - The global cell phone business has been in a funk lately, with handset sales off 11%
this year—a serious downshift from the double-digit expansion of recent times. Samsung
Electronics, though, has bucked the trend, boosting sales 7% in 2009 without denting its 10%
profit margins. That has helped the Korean giant increase its worldwide market share to 19%
and cement its position as the No. 2 player globally, behind Nokia (NOK), with 38%.
Samsung's reaction to the good news? "We have a long way to go," says J.K. Shin, the
company's new handset business chief.
Sure, there's a big dose of traditional Korean modesty in Shin's fretting. But while Samsung is
the top brand in the U.S., Shin is worried that the company remains a laggard in two key
segments: high-end smartphones and ultracheap models for developing countries. In
smartphones, Samsung has just 3.5% of a world market that's likely to grow 31% this year,
according to researcher Strategy Analytics. At the low end, Samsung still trails Nokia badly.
In India, its share is less than 10%, vs. Nokia's 58%. And of the 150 or so new models
Samsung will introduce this year, only a half-dozen cost less than $100.
COOL FACTOR
To make sure those shortcomings don't balloon into real problems, Shin has crafted a two-
pronged strategy to make Samsung a player in both segments. In the crowded field of
smartphones, Samsung aims to boost its cool factor with the Jet, a touchscreen model
unveiled in June that looks a lot like the iPhone. And taking a page from Apple (AAPL), in a
few weeks the company plans to introduce its own "app store" in Europe, where it will offer
programs designed to run on the Jet and other smartphones. Over the next few months,
Samsung will roll out similar Web sites for other regions. While manufacturing remains a top
priority for Samsung, "our focus is shifting toward software," says Shin.
The Jet has a lot going for it. It's faster and has a sharper display than Apple's handsets but
will be priced at least 20% cheaper than the latest iPhones. The problem lies in the software
available for the Jet. The iPhone's app store, where third-party developers offer thousands of
nifty programs, gives Apple a huge advantage. Although half of Samsung's researchers are
software engineers, the company has long refrained from selling content or applications "to
avoid creating friction with mobile operators," says Kwon Kanghyun, head of Samsung's
content service team. Now that Apple has broken the carriers' monopoly on content for
phones, Samsung is prepared to offer similar wares, Kwon says.
RISK TO EARNINGS
At the low end, Samsung faces a different set of issues. There, the emphasis is on efficient
production and distribution, which allow manufacturers to eke out a profit even on
supercheap devices. In this area, Samsung has shown decent progress. Over the past two
years, the company has expanded its retail networks and introduced simpler models made in
new, low-cost factories the company has opened in Brazil, China, India, and Vietnam. In
China, where it spent heavily on ads during the 2008 Beijing Olympics, Samsung's overall
market share rose to 22.4% in the first half of this year, from 17% a year earlier, according to
German researcher GfK Group. And its market share in Africa soared to 17% in 2008 from
6% two years earlier, Strategy Analytics says.
Still, Samsung faces high hurdles before it can even think about unseating Nokia. Despite
Shin's ambitions, Samsung's record in software is far from stellar. And its chances of
attracting anything close to the number of developers who are working on applications for the
iPhone are slim. With its aggressive pricing and marketing push, meanwhile, Samsung risks
cutting into earnings. Nevertheless, the Samsung phone chief isn't deterred. Says Shin: "We'll
make noticeable progress soon."