SUBJECT 401

Strategic Management
Submitted to: Dr. Kartik Dave
By:
Sourabh Jagoree

Case 1
Samsung Electronics: Managing Innovations in an Economic Downturn
Summary
Samsung Electronics goal to go beyond its current position in 2007 - 08 (the year of financial
crisis) to become a premium life-style brand through its range of smartphones helps us
understand the concept of dynamic capabilities, which guides the management team to stay on its
path to achieve predictable results. This case shows the growth story of a company which had
reached a point where growth sustainability becomes a question at the heart of its strategic
management.

1. Mission and Vision

Samsung is dedicated to developing innovative technologies and efficient processes that create
new markets, enrich peoples lives and continue to make Samsung digital leader.
Through innovative, reliable products and services; talented people a responsible approach to
business and global citizenship and collaboration with its partners and customers, Samsung is
taking the world in imaginative new directions.

2. Samsung's Value Chain

As a hi-tech company, Samsung Electronics and affiliates are determined to maintain leadership
in all areas related to mobile and media technologies. The intellectual spearhead of this is
Samsung Advanced Institute of Technology (SAIT). The way in which this institute and its
related organs around the world begin the preparation for the development of new products is the

first of the three layers of product development. The next two are at the centre of the Digital
Media and Communications division and at each product division. Procurement of components is
in principle based around Samsung Electronics Device Solution division and affiliates. Products
not made by this division are procured through a transparent process. These are then assembled
in the appropriate factories of the division around the world. Device Solutions and Digital Media
divisions divide into two, one as a B2B operation with marketing and logistics focused on
Korean and Incheon airport, and the other as a B2C company with a sophisticated logistics and
global Enterprise Research Planning (ERP) system managed by Samsung Electronics Logitech
and Samsung Digital System (SDS). Sales and Marketing come under a different management
structure, which is based on geographic area, rather than product, working with outsourced
logistics and vendors in each market. In 2007, Samsung was ranked 7th out of the 25 leading
companies for its integration in this field.

3. Dynamic capabilities of Samsung

1) Opportunity recognition and entrepreneurial insights by top management
2) Rapid catch-up through technology acquisition and learning
3) Leapfrogging competitors through product and process innovation
4) Product line diversification leveraging existing capabilities and resources
5) Resource release through restructuring during the financial crisis

4. Limitations of Samsung's Exploration Mode

1. Rising raw material costs and fluctuating exchange rates that led to dilution of profit margins
2. High sales and administrative expenses, hence, low operating margins
3. Losing out market share in semiconductor chips and TV segments to lower cost products
4. Had to adopt Googles Android operating system to grow instead of using its own which would
have reaped huge benefits

5. Future Challenges

Samsung Group could face challenges in coming years has yet to come up with specific
measures on how and when to hand over his management control of the country's largest familyrun conglomerate.

The biggest challenge facing Samsung is to keep his management control over Samsung.

The challenge is to build a customer-service network to work with enterprises as well as a robust
security platform that can meet the needs of the world's most-security-conscious network
managers.

Case 2
Lego Friends: Leveraging Competitive Advantage
What is Lego Friends?
Lego Friends is a product range of the Lego construction toy designed to appeal primarily to
girls introduced in 2012. The LEGO Friends are a group of 5 very different and very talented
girls living in Heartlake City. The theme includes unique "mini-doll" figures, which are about
the same size as the traditional minifigures but are more detailed and realistic. The sets include
pieces in pink and purple color schemes and depict scenes from suburban life set in the fictional
town of Heartlake City. In December 2011, the Lego Group (TLG) has announced the release of
Lego Friends, sixth attempt of the company to market a product for girls. Lego Friends, which
was supported by a comprehensive marketing campaign $ 40 million was designed to introduce
the fun of building with Lego for girls, which represented less than 10 percent of the audience for
Lego. Poorly executed brand extensions business and pass building games as free kit scripted
almost cost him his independence in 2004, so the launch of Lego Friends was of strategic
importance. Yet within hours of the appearance of the product, which was harshly criticized for
reinforcing stereotypes Gender and damage the precious brand Lego. Jrgen Vig Knudstorp,
CEO since 2004 had saved TLG and ushered in an era of sales growth with a number of
successful strategic initiatives.

1. Resources and Capabilities of Lego

In the todays scenario, the landscape of the current toy market is changing day after day due to
high proliferation of electronic toys and games. Children are now growing up in a an
entertainment economy which is saturated with lots of play systems and games.So there are
certain resources and capabilities which Lego owns such as :

Lego, a traditional toy maker has stick to its core values of creativity, imagination, learning, fun
and quality in it products. So there are a huge chances of threats which can be reduced because
of many varieties of options and games are available to to satisfy their consumers. .

Legos Strong standing history of stability of its core values and their ability to maintain the past
and present offers both psychological and professional advantage against the new entrants in the
market is their biggest resource.

In terms of Tangible assets, it has its Cash flows from profits and in terms of intangible assets the
Lego brad name and the technology they use is the biggest resource they hold which add
contribution to their existing brand value.

Customers are willing to pay premium prices for this brand rather than paying for a local brand ,
which again gives the customer a sense of comfortability and satisfaction and which In turn is
maintained by Lego in terms of perceived price and quality.

Lego is also having an advantage of Brand equity which helps Lego in bringing out with a new
product in the market and letting them bring in new customers ad the people are already trusting
Lego brand the most.

2. Sustainable Advantage
When the situation of Lego company started getting worsen up because of the high competition
from the electronic segment of the toys the demand for the Lego products started falling , So
there were certain quick decisions which were immediately taken to control these market forces
and maintain the same value and image of Lego in minds of Consumers :

LEGO does very well is to strike a good balance between creativity and discipline. The company
does this through a combination of processes, roles, tools, committees, and structural changes.
This has helped LEGO give its teams enough space to be creative and enough direction and focus
to be profitable.

LEGO has also developed an ability to do different types of innovation. A good product is only a
minimum requirement to compete in an industry. It may get temporary sales, but won't get the
company any sustained competitive advantage. LEGO has been very good at pairing new
products with TV shows, comic books, games and complementary merchandise like T-shirts and

backpacks. The result is a set of products that are more likely to go viral and generate more
revenue.

Lego also started to diversify itself in the existing market as it pursued numerous other brand
extensions. For example 1. California based Design Studio
2. Media Group in United Kingdoms
3. Lego Educational Centre
4. Lego Lifestyle ( Clothing , Watches, Bags etc)