Samsung Smart Phones.

2015

Samsung Electronics:

Written by:

Submitted to:

Date of submission:

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 Samsung Smart Phones. 2015

Contents
Introduction: ................................................................................................................................................. 3
Company Background: .................................................................................................................................. 3
Country Background: .................................................................................................................................... 4
PESTEL Analysis: ............................................................................................................................................ 4
1. Political Issues ................................................................................................................................... 6
2. Environmental ................................................................................................................................... 6
3. Social Factor ...................................................................................................................................... 7
4. Technological Factor ......................................................................................................................... 8
5. Economic Factor................................................................................................................................ 8
6. Legal .................................................................................................................................................. 9
Porter Five Forces Analysis: .......................................................................................................................... 9
1. Competitive Rivalry ......................................................................................................................... 10
2. Bargaining Power of Suppliers and Vendors ................................................................................... 11
3. Bargaining Power of Buyers and Customers ................................................................................... 11
4. Threat of new entrants ................................................................................................................... 12
5. Threat of Substitutes....................................................................................................................... 12
Strategic recommendations:....................................................................................................................... 13
Conclusion: .................................................................................................................................................. 14
Bibliography ................................................................................................................................................ 14

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 Samsung Smart Phones. 2015

Introduction:

Samsung Electronics is a worlds largest Smartphone making company. The company was the

second company after Apple Corporation that started making Smart Phones. At present the

company has taken over Nokia devices and holds worlds largest market share in selling Smart

phones. Samsung Electronics is a subsidiary of Samsung Company which is located in South

Korea. The country is among the worlds fastest growing economy achieving 10% growth on

yearly basis. The purpose of the report is to make PESTEL analysis and apply Porters 5 forces

models to analyze the external environmental factors that affect the company. The strategic

recommendations will also be discussed so that the company can achieve higher growth targets,

improve sales and achieve sustenance in business growth.

Company Background:

Samsung electronics is a subsidiary of Samsung Company. Samsung Company was founded in

year 1938 by Lee ByungChul as a trading company. The company has its headquarters in Seoul,

South Korea. Samsung Electronics is one the worlds largest information Technology Company.

The company took over the world market as a leader in 2012, by taking over Nokia Devices

which was market leader since 1998. In year 2013 the company started its construction of

worlds largest mobile phone factory in Thai Nguyen province of Vietnam. At present the

Samsung Electronics Company holds 31% of the market share and has control over the largest

world market share(SamsungElectronic, 2015).

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 Samsung Smart Phones. 2015

Country Background:

South Korea is a country in Korean Peninsula in the East of Asia. The country has China on its

west and Japan on its East. The capital of South Korea is Seoul which is the worlds second

largest most populated capital city with nearly 25 million residents. South Korea at present is the

worlds 11thlargets economy and ranks 8th in the international trade. The country has border

issues with its Northern half named North Korea. This way a tension between the countries rises

at regular intervals as the country supports liberal ideas and North Korea supports communist

ideas.

PESTEL Analysis:

PESTEL initials for Political, Environmental, Social, Technological, Environmental and Legal

environment analysis which are external to the company. This way PESTLE analysis helps the

companies to look after the various issues and problems that may rise in the external

environment. In the present day there exists high competition in the market. Also the political

and legal environment has been changing at regular pace Therefore to sustain these conditions

the companies needs to analyze its conditions through PESTLE analysis so that the opportunities

can be availed and the threats to the business can be dealt with accordingly. The following shows

the various factors that forms part of the PESTLE analysis(Malhotra, 2002).

Table 1: PESTLE analysis of Samsung Electronics.

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 Samsung Smart Phones. 2015
Political
Legal Environmental
Economic Social
Technological
Political Environmental
1. Concerns related to use 1. Rise in demand of Smart
of Smart Phones during Phones in the United
federal elections. States.
2. Misguiding the voters 2. American customers
through fake messages. loyalty towards Apple
3. Political decisions are Smart Phones.
publicised, which are 3. Trend of using Smart
not required to be phones for show-offs.
displayed to public.
Technological Economic
1. Increasing number of 1. Global slowdown not
Smart Phones sellers in affecting the sale of
the United States. Smart Phones in the
2. Improving technology country.
and regular innovations 2. The cost of Smart
in the Smart phones has Phones has not become
become a regular a point of concern for
feature. buyers.
3. Increased applications 3. Availability of cheap and
in new Smart phones. non branded mobile
phones in the American
markets.
5
Social
1. Increasing trend of using
Smart Phones for social
connections.
2. The ownership of
branded Smart Phones
has become an essential
part of culture.
Legal
1. Restrictions on
downloading medical
related applications in
the Smart Phones.
2. Issues regarding the
download of software
that may affect the
security concerns of the
country.
3. Increasing compliance
for the Smart phones to
regulate the market
applications.
 Samsung Smart Phones. 2015

1. Political Issues

There are a number of political issues that has become a point of concern in United States of

America due to the increasing usage of Smart Phones. Actually in year 2012 the number of

Smart Phones users reached 92 million and these became the important mode of federal

campaigns in the country. Therefore the election campaign related regulations and anti-political

information transfers through videos and text messages has resulted in generating concerns for

developing security measures and prevention during the election period(Rao & Klein, 2004).

2. Environmental

The United States market has been controlled by Apple Corporation. The companys

Smart Phones are high in demand since its introduction in the market since 2007.

Thus after the careful study of the following data about the Smart Phone market

penetration by manufacturer and operation system for quarter four in year 2011 for

different countries can help in evaluating the real status of Samsung Smart Phone in

the market.

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 Samsung Smart Phones. 2015

From the above information it is clear that the United States market is controlled by Apple Smart

Phone which has become the priority of American people. According to a survey by ComScore

in year 2011, Apple Smart Phones had 29.6% of the market share followed by Nokia Devices

and then came Samsung Smart phones(Sharma, 2013).

3. Social Factor

Samsung Smart Phones has been widely accepted as the best methods of remaining in connect

with the family and friends in the United States. The use of Smart phone in the recent years has

increased manifolds which have resulted in changing the figures of market share that prevailed in

year 2011. Until the end of year 2013, the Samsung Smart Phone because of its cost effectiveness

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 Samsung Smart Phones. 2015
and similar features capability like Apple Smart Phone made it a hot stock in the United States.

This way the company Smart Phone became the worlds favourite in year 2013. This way the

Samsung Smart Phones are used as convenient and time saving devices to remain socially

updated(Nagarajan & Sheriff, 2013).

4. Technological Factor

The latest applications of Apple Smart Phones are very much similar to Samsung Smart Phones.

For example the Apples Iphone 6 introduced recently has a feature of lighter and thinner than its

earlier versions. But the similar kind of feature and technology are present in Samsung Galaxy

S5 which has an additional feature of 8-core exynos, 5 screen and two day battery backup. This

way the features of the top most brand mobile phone are very similar to Samsung Smart Phone

which are relatively cost effective(Mintzberg, 1994).

5. Economic Factor

Due to increasing unemployment and economic slowdown since 2008 the demand for goods and

services is facing a serious setback. However the demand for latest and high technology mobile

phones has never became a hurdle in purchase by Mobile Phone lovers. Thus the economic

factor does not affect the sale of Samsung Mobile Phones. Instead its cost effectiveness than

Apple iPhone has resulted in increasing its demand and gain more market share than

earlier(Jayachandran, 2004).

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 Samsung Smart Phones. 2015
6. Legal

There are various legal issues that are concerned with the use of Smart phone. The unlimited

applications allow the users to make use of even the most complicated and restricted application

through their mobile phones. For instance the mobile phone applications offering medical

devices like control such as measuring heart beat and other benefits are hindered from being

downloaded. Thus Samsung Electronics along with other mobile manufacturing companies has

to follow a legal format through which such applications that are not legal are avoided from ing

downloaded. The company is also required to follow the product safety through genuine battery

and follow other liability laws to track down the mobile phone during steal so that the purchase

experience can be made more comfortable and legal for the owners(Malhotra, 2002).

Porter Five Forces Analysis:

Porters five force model helps in analysing the external conditions that affect the business. This

way the various factors that influence in positive and negative terms to the business is analysed

through Porters five force analysis. The five forces of Porters analysis include the followings.

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 Samsung Smart Phones. 2015

Threat of
new
entrants.

Bargaining
Intensity of
power of
rivalry.
Smart Phone suppliers.
busiess of
Samsung
Electronics.

Bargaining
Threat of
power of
substitutes.
buyers.

The benefit of Porters Five Force analysis is that it helps in analysing the external environment

conditions that could prove beneficial if the opportunities are avail and fatal if the problems and

issues are not dealt on time. The competitive rivalry, threats of substitutes, bargaining power of

suppliers, the threat of new entrants and intensity of rivalry are all analysed through the Porters

five force analysis(Porter, 2008). The Analysis for Smart Phones market as per Porters five force

analysis is done as followings.

1. Competitive Rivalry

The competitive rivalry has been on the rise ever since the introduction of the Smart Phones in

North America. Due to this reason, every month there has been an introduction of new mobile

phone technology in year 2014. This includes Apple iPhone 6, Galaxy S5, LG G Flex phone etc.

This has resulted in the rise in the need to develop brand image, fixed cost and barrier to exit etc.

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 Samsung Smart Phones. 2015
Thus the varied features of competitive rivalry include the followings.

a. Rising number of companies manufacturing and selling Smart Phones in the United

States.

b. The tough competition has divided the market share almost equally among the market

leader companies such as Apple, Samsung and others.

c. The similar features and benefits has made it easier for the customers to select the best

suitable and most cost effective mobile phone irrespective of the brand name.

(Economou, Rivoire, Kozyrakis, & Ranganathan, 2006)

2. Bargaining Power of Suppliers and Vendors

Smart Phones manufacturing companies mostly select the suppliers from Asian countries so that

the cost of production remains low without affecting the quality output. Due to this reason

Samsung has initiated its process of developing the worlds biggest manufacturing factory in

Thailand so that the cost of making Smart Phones can be controlled to meet the competitive

market requirements. Samsung has made its ties with various suppliers such as Hamanatsu

Corporation, Mouser Electronics and various others companies. The strategic partnership and

support for further investment has helped the company in gaining control over the bargaining

power of suppliers and vendors(Economou, Rivoire, Kozyrakis, & Ranganathan, 2006).

3. Bargaining Power of Buyers and Customers

The bargaining power of buyers and customers in the United States has been increasing every

since. This is due to the presence of number of Smart phone making companys presence in the

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 Samsung Smart Phones. 2015
market. Apple, LG, HTC are among the few market leaders that give tough competition to the

products of Samsung Smart Phones. Also the customer loyalty towards Apple iPhone has

seriously affected the bargaining power of buyers and customers in the United States. However

the cost effectiveness and similar product feature has resulted in tempting the customers to the

company. The entrance of new Smart Phones with latest technology also attracts many customers

towards Samsung Smart phones(Chopra & Meindl, 2001).

4. Threat of new entrants

In the recent year there has been an excessive number of companies entering the American

markets. These companies offer the similar kind of Smart Phones at low prices. However the

quality assurance and after sales services is missing. This way Samsung Smart Phones has less to

consider about the threat of new entrants who are attracting new customers but the output and

performance of these cheap products has brought these customers back to Samsung Smart

Phones who prefer quality over cost. This way a right blend of quality and cost has resulted in

bringing no effect from the threats of new entrants(Caniels & Gelderman, 2007).

5. Threat of Substitutes

There are a number of Smart Phone options available in the United States. Lot many companies

has been selling their brand Smart phones. This has resulted in increasing the threat of substitutes

in the short run. Although these companies offers warranties similar to other branded Smart

Phones but the customers still find it difficult for their products to achieve the output, gains and

consistency as the leading brand products. Thus the threat of substitutes is for the short run, as it

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 Samsung Smart Phones. 2015
will affect the sales of branded Smart phones like Samsung forsome time. Therefore even the

switch over to other cheap brand will end in bringing back customers to the leading brands which

not only guarantee quality performance but also deliver it accordingly(Acharyulu & Shekhar,

2012).

Strategic recommendations:

A number of strategic recommendations can be given to the Samsung Electronics company for

dealing with the external environment that may prove threat if not dealt wisely.

1. Samsung Electronics must invest more in research and development so that there exist a

new technological upgrade in their Smart Phone at every regular interval that could tempt

the customers for purchase.

2. New schemes and promotions of latest Smart Phones with varied features needs to be

introduced regularly to keep the customers interested in getting more knowledge about

company product and services.

3. EMI or Easy monthly installment methods should be promoted so that the customers who

cannot spent huge amount at one time can move to purchase through easy monthly

installment method. This way they will not have to compromise quality and purchase

cheap products due to high cost price of Samsung Smart Phones.

4. All the legal aspects should be administered and followed so that any legal issue may not

rise for the company.

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 Samsung Smart Phones. 2015
5. Offering new applications including software updates, games and other applications

should be made available at the Android store so that the customer stays interested in

them.

6. The customer complaints should be dealt fairly, wisely and actively to achieve customer

satisfaction.

(Aseisdefimedia, 2011)

Conclusion:

In conclusion, Samsung Electronics has a lot of things to consider in its external environment.

The PESTLE analysis and Porters five force model provides an in-depth knowledge of the

problems, issues and opportunities available to the company in the external environment. The

strategic recommendations can help the company in availing the opportunities and get the most

desired results in terms of increasing sales and achieving consistent growth and sustenance in the

long run. Efforts should be made to follow all legal requirements so that the issues and problems

for the business should be avoided. Finally the company needs to develop new production ideas

and bring new innovations in action as the technology in the present day Smart phones get

obsolete very soon. Therefore bringing something new in the market is the best way to remain in

news for the company and avail opportunities for getting successful business for Smart

Phones(Winsource.com, 2012).

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 Samsung Smart Phones. 2015
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