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Samsung Electronics - Harvard Business School

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Samsung Electronics


Introduction: With the introduction of new Chinese competitors in the DRAM market it is necessary for Samung to access their strategy for the future. Looking at past trends in the DRAM market, current market situation, and projections for the Flash market, the best option for Samsung is to focus their efforts on growing the Flash technology, while maintaining their DRAM output. This is the best course of action because Samsung’s customer loyalty will carry their market share in the DRAM market, while they are focusing on establishing this type of dominance in the Flash market.


Problem Statement: Memory industry is expected to experience a cyclical downturn in 2005. Samsung has been a market leader in memory chip technology and has constantly remained ahead of its competitors. But over the last few years memory industry is experiencing fierce rivalry and Samsung is facing fresh challenges from new Chinese entrants. Many mainland Chinese firms who have so far focused on the logic chip market are ready to enter the memory chip market. Entry barriers are high in the memory industry as it involves high capital investment and complex technology. But these Chinese firms with the help of joint ventures and foreign partners are in a position to get license and technology. These new entrants have patience to sacrifice years of profits to gain market share just like Samsung had in 1980s. Strategically, Samsung has two options: one is to actively collaborate with Chinese partners which would provide access to local Chinese market, cheap resources and local talented engineers. The other option is to invest heavily in...

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