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INTRODUCTION

Samsung Group who was founded in 1938 and at present works in subsidiaries like Electronics, Machinery, Chemical Industries, Retail Services, Financial Services, Entertainment and others Samsung Group is the world largest conglomerate by revenues of $174.2 billion in 2007-08

Samsung started their operation in handset market in 1988 and become world second largest Mobile Handset Maker.

Samsung Group

Founded in 1938 exporter of dried fish, vegetables, and fruits flour mill and confectionery machines 1950s Economic Stabilization Korean War - Samsung lost all assets aimed to help rebuild Korean economy; entered the manufacturing industry (sugar,fabrics) became a leader in modern business practices (recruiting from outside) 1960s Expansion of Key Industries entered electronics and chemical industries 1969 established Samsung Electronics Co.

Samsung Group
distribution hotels amusement theme parks trading construction textile advertising baseball team security

% of Sales ($72B)

Electronics 28% Other 38%

home appliances wireless communication semiconductors

Machinery & Heavy Equipment 6% Chemicals 2%

cameras aircraft ships dump trucks oil trucks

life insurance credit card services securities trading finance and trust management services

Financial Services 26%

polymerized compounds plastics specialty chemicals

Samsung Electronics

Established in January, 1969 1970s: Bet the future on electronics laid the groundwork for electronics in Korea helped the domestic economy grow paved the way for exports 1980s: A more comprehensive electronics company established plants in Portugal and US established Semiconductor and Communication corporation began memory chip business Early 90s: Integration and Globalization Mid-Late 90s: Implementing new management strategies New Millenium: Digital Vision

Focus: 4 Core Markets


Home Multimedia

Mobile Multimedia

Personal Multimedia

Core Components

Samsung Electronics
% Sales ($27B) % Operating Profit
Digital Media 6% Semiconductors 40% Digital Media 29% Telecommunications 12% Home Appliances 3%

Home Appliances 8%

Telecommunications 23%

Semiconductors 79%

Financial Overview
Revenue (billion Won)

Revenue growth and Operating Income suffered in 1996 1997: New CEO Jong Yong Yun major turnaround

Operating Income
(billion Won)

new business focus new management practices

very positive results in 1999, but

Stock Performance Samsung is feeling the effects of the downturn in the high-tech market
Common Stock Preferred Stock

COMPETITORS ANALYSIS
SAMSUNG MOBILE

HANDSET MARKET SHARE


Overall Market Share (2007-08)
Motorola LG 5% 6% Samsung 6% Sony Ericsson 13% Nokia 63% Others 7%

Overall Market Share (2008-09)


Motorola Others 12% 4% LG 4% Samsung 10% Sony Ericsson 6%

Nokia 64%

GSM Handset Market (May '09)


LG Others Motrola 5% 8% Sony 1% Ericsson 3%

GSM Handset Market (July '09)


LG Others Sony Motrola 5% 8% Ericsson 1% 3% Samsung 14%

Samsung 11%
Nokia 72%

Nokia 70%

SWOT ANALYSIS

SAMSUNG
STRENGTHS
Diverse Product line Reliability

WEAKNESS
Lack of Innovation Low end segment

OPPORTUNITIES Rural Market Green Handset Initiative Samsung Marine market

THREATS Chinese Handsets iPhone Economic Crisis

Agenda

Samsung Group History & Structure Samsung Electronics


History Company Focus Financial Overview Strategy Organizational Structure Challenges

Strategy

1997 Turnaround: Cut a third of workforce, cut debt Sold and spun off divisions Set firewalls to other Samsung Divisions New business proposition: profits Streamlined inventories Diversification

Strategy

New Economy: Exodus of engineers and managers to startups Top 4 conglomerates: $1.2B in startups (Samsung: $520M)
Stakes of up to 29.9% in 80+ startups

Startups benefit from links to global networks and financial expertise You simply cant survive without adapting to the fastchanging Internet era, and one solution is linking up with startups

Strategy Digital Vision: A Company that leads the digital convergence revolution Brand power, logistics, IP:
High-margin products Create value chain that integrates competencies of all areas Customer and market oriented

Global network by function Performance evaluation and compensation system

Strategy

Digital Vision: Innovation, meeting challenges and creativity Target debt-to-equity ratio: 50% R&D: 7% of total revenues Overseas partners:
Joint R&D projects Technology transfer arrangements Joint investments

Organization Structure

4 main groups with 14 divisions Samsung Electronics

Digital Media

Information & Communications

Semiconductors

Home Appliances

Management & Employees

59,000 employees Development of employees strategic to success Making rounds encouraged as a key management practice

Recruiting and Training

Heavy investment Focus on creating agents of change Expertise in technology and marketing

Culture

Entrepreneurial Profit focused Decisive Different from other firms in Korea and within chaebol

Current Challenges

Internal: You must maintain a sense of crisis to stay competitive Profits vs. Growth
Financial discipline

Foster creativity Executives jumping ship for startups

Current Challenges

External: Abandon dependence on cheap commodity products Emphasis on goods developed in-house
Rivals are outsourcing production and design

Guide the company into the global electronics elite

Current Challenges

Corporate Governance: Cross-shareholding among affiliates


Shifth funds among subsidiaries Manipulate debt-to-equity ratios

Outside directors appointed by family Lack of accountability to outside shareholders

STP STRATEGIES

MARKETING STRATEGIES

SAMSUNG
Brand Ambassador: Aamir Khan Providing free content on the mobile by collaborating with the copyright owners of Bollywood movies. For e.g Ghajini, Love Aaj Kal Promotional offers like free entry to the show of 10 ka dum Organizing contests like Samsung Mobile Karaoke Festival Opening the Samsung Fun Club for better customer relationships. Free online software updates, tutorials and customer service Highlights the innovative features of its products through a combination of innovative advertising and branding. Established many Samsung Mobile Stores to increase the visibility of the brand

SAMSUNG Products Overview


The USP of the Samsung mobiles is the superior display quality that it has due to the technology used in all Samsung products The high end mobiles possess most of the features but lack quality in terms of music and camera of Sony Ericsson, and durability and user-friendliness of Nokia Medium level mobiles of Samsung again possess good display but lack in features as well as the price is quite high as compared to other brands The low end mobiles are very costly as compared to the same end mobiles of other brands and are less durable also, but has more features than other brands Now Samsung is coming up with innovative features like HD display, woofer quality sound and better camera.

RURAL PENETRATION STRATEGIES

New entrants Porters five forces for DRAM Guarded by economies of scale Significant capital costs Learning Curve Threat of retaliation Little brand identity significance Government Policy e.g. China Customers No significant buyers by volume Buyers are very price sensitive Price limited by other memory substitutes Little threat of backward integration?

Suppliers No significant differentiation of inputs Suppliers not concentrated No threat of forward integration

Rivalry Small no. of competitors Significant exit barriers Cyclic Industry growth

Substitute products Danger of future substitutes given rapid changes Probable little switch cost

Established in 1969 to manufacture black and white TV sets Purchased a Korea Semiconductor Business in 1974 In 1980 dedicated most of its resources to semiconductor business and built its first manufacturing facility. By early 1990s, was amongst the industrys top contenders Brand value rank grew from 43rd in the world ($ 5.2 billion) in 2000 to 21st in the world ( $12.6 billion) in 2004 and 20th in 2006 (16.1 billion) Ahead of many brands such as Pepsi, Google, and Siemens

Samsung History

Total net revenue in 2004 was $78.5 billion, and $78.7 billion in 2006

Samsung Structure

Spans 58 countries Samsung Electronics has 5 business divisions :


Semiconductor Digital Media Telecommunications LCD Digital Appliances

Samsung Performance

Cost Advantages Lowest raw materials cost (volume) Lowest depreciation Labor and SG&A not high Shared core designs Lower cost fabs (12%) Flexible production lines Higher yields (because of process quality) Highest Price Highest reliability in industry: >$1 premium

Generic Competitive Strategies


Two dimensions of competitive strategy Competitive advantage - low cost vs. differentiated play Target Market - broad vs. niche play Samsung, because of the unique ecosystem created

around it, has successfully spread its product line across both of these dimensions

Generic Competitive Strategies


Lower Cost
Overall Low-Cost Provider Strategy (Commodity DRAM)

Differentiation
Broad Differentiation Strategy (Cutting Edge DRAM)

Target Market

Broad Range of Buyers

Best-Cost Provider Strategy (Samsungs Strategy)

Narrow Buyer Segment or Niche

Focused Low-Cost Strategy (Low cost flash memory)

Focused Differentiation Strategy (Rambus DRAM)

Combined low-cost/differentiated strategy is difficult to achieve

Difficult to implement Firms aiming to do this are often stuck in the middle

Firms products are too costly to compete with low costs providers product, and too undifferentiated to command the price premium gained by the differentiated firm

A variety of internal and external factors have helped Samsung achieve this desirable position

Samsungs Combined Lowcost/Differentiated Strategy

Samsungs success has been due to a variety of factors:


Successfully customize products around a core design Large product portfolio (occupy the entire spectrum for a broad market play) Collocation of fab and R&D facilities (internal conversation among engineers to decrease time to market)

Samsungs Combined Lowcost/Differentiated Strategy (contd)

Easy access to Asian market Combination of educated guessing and pure luck (e.g. stack design vs trench design) Talent pool strategy: Access to local talents, sponsoring employees for PhD and MBA education) Availability of capital: E.g. from 1983 to 1985 during recession of semiconductor industry, Samsung allocated significant capital to build capacity

SAMSUNG

It has a better BRAND RECALL in rural market Tying up with local co-operatives to push handset sales in the rural segment. Samsung recently tied up with the Indian Farmers Fertilizer Co-operative (IFFCO) for rural telephony. It has increased its distribution network in western and eastern parts by tie ups with SSK and Link respectively. Developing partnerships with regional organizations. Customization of software for local marketHINGLISH in text messaging.

FUTURE CORPORATE STRATEGIES

Samsung strategies

Our Vision Samsung is guided by a singular vision: to lead the digital convergence movement. Our Mission Everything we do at Samsung is guided by our mission: to be the best digital-Company.

Samsung

Division of Samsung Mobile is into 6 major categories Style Infotainment Multimedia Connected Essential Business

Samsung

Samsung Progresses the Future of Wireless Technology with Mobile WiMAX and LTE Samsung : Concentrating on Smart Phones with touch Screen features

CORPORATE SOCIAL RESPONSIBILITIES

Corporate Social Responsibility - SAMSUNG


1. SOCIAL WELFARE Investing in teenagers futures, through support of science education and creative thinking that encourages leadership. Assisting children in low-income families by supporting educational infrastructure Discovering and supporting outstanding students Supporting programmes that encourage family well-being. CULTURE & ARTS Samsung has contributed extensively to numerous museums, galleries and exhibits in Korea and in many countries, including the United States and France. The Samsung Museum of Modern Art collects preserves and exhibits modern and contemporary art Samsung also hosts and supports various cultural events for children and programmes that encourage their early artistic development.

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VOLUNTEER SERVICES In 1995, Samsung launched the Social Contribution Corps to encourage employees to get involved in community service. employees use their expertise and skills to give back to local communities, and each employee donates an average of 10 hours to community-based projects.
ACADEMICS & EDUCATION Korea Youth Science Olympiad, National Students Creativity Olympiad Samsung has teamed up with the Green Family Movement Association to run a "green school," which promotes environmental awareness in children

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Other programmes like an employee dog adoption centre; guide dog school; working dog breeding centre; and detector dog and rescue dog operations. The Samsung Reclaim is an 80% recyclable handset that is set to be launched very soon

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