...Question 1: Samsung finds itself in an enviable position. Its competitive advantages in memory span all parts of the company and its production process. As seen in the graphs below, Samsung has a low Willingness to Supply (WTS) as measured by its raw materials cost of just $1.18, which is 36% lower than the competitors’ average. Its capital efficiency is superior by roughly 18% with a per unit depreciation cost of only $1.35. This efficiency largely stems from the high yield rates and productivity at Samsung, with average yields reaching 80% while competitors’ levels are in the mid 60% range. Additionally, Samsung’s quality and reliability allow it to achieve a price premium of at least 15% over its rivals. The graphs depict Samsung’s advantages in various components. To summarize, the significant price premium and the absolute advantages in terms of material sourcing and capital efficiency allow Samsung to enjoy operating margins of 24%(based on 256Mb equiv.) while other firms remain in loss territory. There are many activities at Samsung that give rise to such dominance in profitability. 1) Pricing: Samsung is able to charge higher prices mainly because of its superior quality and reliability. Typically, a faulty memory chip will cause huge losses for IT manufacturers. This makes them more willing to pay an extra dollar or two for Samsung chips compared with other memory chip makers 2) Depreciation: Samsung is able to cut down per unit depreciation costs by having...
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...“Samsung” case study 1. Introduction: Samsung Electronics Company, henceforth called “Samsung” in this case, was established in 1969 to manufacture black-and-white TV sets. In 1974, Samsung, which was a producer of low-end consumer electronics, purchased Korea Semiconductor Company and began its semiconductor industry. Under the leadership of the chairman of Samsung Group, Kun He Lee, Samsung has risen, with a remarkable speed, to become the world’s leading memory producer, ranking 2nd just behind Intel. Meanwhile, Samsung used the earnings from memory division to invest in various technology products like mobile phones, liquid crystal displays and so on. These businesses made Samsung generate the second-largest net profit of any electronic company outside the US. In spite the current success, Samsung was facing the competition from Chinese producer that would sacrifice profits for market share by providing cheap DRAM products. So what should Samsung do? There are 3 potential options: 1. Directly confront the competition from Chinese companies, perhaps by driving down DRAM prices, offer favorable service or coalescing with other memory producers. 2. Cede the DRAM market and shift to other businesses. 3. Collaborate actively with Chinese companies, maybe by expanding joint investment in China. And at the same time, increase its investment in cutting-edge products, particularly for new niche markets. The following paragraphs will first focus on analyzing memory market...
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...--------------------------------------- 3 2. General Environment analysis of the Mobile Industry in India --------------------------------6 3. Business model of Xiaomi with India market analysis--------------------------------------------9 4. Comparison between Samsung and Xiaomi -------------------------------------------------------11 5. Recommendation---------------------------------------------------------------------------------------13 6. Conclusion ------------------------------------------------------------------------------------------------15 7. Reference ------------------------------------------------------------------------------------------------ 15 1. Introduction 1.1 Background information of Xiaomi Xiaomi, a leading smartphone brand in China, has been trying to enter India’s mobile market in this year. India is a developing country which has a potential market for smartphones. There will be a detailed explanation and analysis of how Xiaomi enters India’s mobile market. We will also evaluate its strategy and provide some opinions or recommendations. We will describe the business model of Xiaomi and the original strategy that Xiaomi used in mainland China first. Then talk about the mobile market of India and the general environment of India. Point out some problems that Xiaomi is facing and try to provide some recommendations to solve its obstacles. Beijing Xiaomi Technology Co., Ltd is the world's third largest...
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...Introduction: Apple and Samsung are the two greatest companies in the world, when it comes to supply of Mobiles phones, laptops And TV’s. The fierce competition between Apple and Samsung is going on from a long time. And surely the consumer’s across the World are benefited by this competition. Apple Inc. is an American multinational partnership headquartered in Cupertino, California, that plans, creates, and offers buyer gadgets, machine programming, online administrations, and Pcs. Apple was established by Steve Jobs, Steve Wozniak, and Ronald Wayne on April 1, 1976 to create and offer Pcs. It was named Apple Inc. on January 9, 2007 to reflect its moved center towards buyer hardware. Its best-known fittings items are the Mac line of machines, the ipod media player, the iphone cell phone, and the ipad tablet machine. Apple has ceaselessly concocted imaginative items making it the most significant organization on the planet and abandoning all its rivals Samsung (Hangul: 삼성; hanja: 三星; Korean articulation: [sʰamsʰʌŋ ɡɯɾup]) is a South Korean multinational combination organization headquartered in Samsung Town, Seoul Samsung was established by Lee Byung-chul in 1938 as an exchanging organization. Throughout the following three decades, the gathering broadened into zones including sustenance transforming, materials, protection, securities and retail. Samsung entered the hardware business in the late 1960s and the development and shipbuilding commercial enterprises in the mid-1970s;...
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...ELECTRONICS INDUSTRY IN ASIA Research Paper Series No 3 In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea Jiwon Han, Wol-san Liem, and Yoomi Lee Research Institute for Alternative Workers’ Movements, South Korea In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea © 2013 Asia Monitor Resource Centre Asia Monitor Resource Centre Flat 7, 9/F, Block A Fuk Keung Industrial Building 66-68 Tong Mi Road Kowloon Hong Kong Tel: (852) 2332-1346 Fax: (852) 2835-5319 Website: www.amrc.org.hk The paper may be reproduced in any non-profit publications; credit is requested. In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea By Jiwon Han, Wol-san Liem, and Yoomi Lee (Research Institute for Alternative Workers Movements) February 2013 Edited by Asia Monitor Resource Centre Research team: Jiwon Han, Wol-san Liem, and Yoomi Lee The Research Institute for Alternative Workers Movements (RIAWM), Seoul, South Korea, was established in 2010 to contribute to the revitalization of the workers movement in South Korea and beyond. RIAWM is working to critically analyse the conditions workers face amidst the structural crisis of capitalism, and develop concrete policy for workers movement that both improves workers’ lives and strives towards an alternative political-economic system. RIAWM is affiliated to the social movement organization People’s Solidarity for Social Progress, founded in...
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...Samsung The philosophy of Samsung is “devoting of human resource and technology in the creation of products services which are superior hence contributing to a better global society. Under the philosophy Samsung has adopted a strategy which based on sport in the brand building. The firm acknowledges the basic role which is played by sports and by the Olympic Games as a promoter of its brand. Its management states that its strategy of sports sponsoring which fits well within their operations at Samsung is an integral part of the company’s philosophy. As they enter into the top plans propels the sponsorship of Samsung to a new era. It has been given an opportunity of acting on the same stage with the top brands of the world like IBM, Coca cola and visa which have enhanced their brand name considerably. Samsung would wish to accomplish two goals with the effort of sponsorship. Firstly it would be the building of brand awareness to especially create higher level of awareness than its rivals. The effectiveness of Samsung sponsoring was portrayed in 2004 in Athens Olympic Games which had a positive impact on the awareness of the brand. The second goal is the enhancement of the global imagery and attitudes towards its brand. Samsung considered its commitment to the Olympic movement as a key element in positioning and strategy. It makes contribution to Olympic Games success and at the same time enhances the brand image of Samsung and its market position. Samsung integrated successfully...
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...advantage: Samsung had both cost and differentiation advantage over its rivals. Kun Hee Lee, chairman of the Samsung Group, stern advice to his employees were to always demand superiority in product design and price efficiency which were directly related to cost and differentiation advantage. As a high-volume buyer, Samsung benefited discounts offered from raw material suppliers which had resulted Samsung’s cost to manufacture a DRAM chip to be lower than its competitors. Samsung’s ability to produce over 1,200 different variations of DRAM products was a huge advantage which was unmatched by its competitors. Samsung also provided “Specialty products” using customized architecture for niche markets. 4. Describe the resources and capabilities that form the basis of Samsung’s cost or differentiation advantage. a. Resource: Samsung had three types of resources: tangible, intangible and human resources as shown in Exhibit 2. Samsung’s R&D facility and its fab lines were collocated at a single site as opposed to its competitor’s facilities which were located at various locations. Samsung had the capital to invest in its R&D to master new technology, design and marketing of advanced technologies; and which contributed to produce multiple product architecture on each product line and gaining market share. Samsung human resource implemented different ways of acquiring talents, promotion strategy and health competition which resulted innovation and productivity. Samsung invested in...
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...An Overview of Mobile Phone Distribution Channels in China February 2003 TABLE OF CONTENTS 1 CHINA MOBILE PHONE MARKET ...........................................................................2 2 CLASSIFICATION OF CURRENT HANDSET DISTRIBUTION CHANNELS ..................3 2.1 2.2 2.3 2.4 Conventional Handset Distribution Channels .....................................................................3 Conventional IT Distribution Channels...............................................................................4 Household Appliances Chains .............................................................................................4 Number of Distributors/Retailers ........................................................................................6 3 OPERATIONS OF CHINA HANDSET DISTRIBUTION CHANNELS ..............................5 3.1 3.2 3.3 Inter-Channel Relationship..................................................................................................5 Distribution Modes for GSM Handsets................................................................................7 Distribution Modes for CDMA/GPRS Handsets..................................................................8 4. 4.1 4.2 4.3 4.4 CHARACTERISTICS OF HANDSET DISTRIBUTION CHANNELS IN CHINA ........9 High-end vs Low-end Handsets ...........................................................................................9 Major cities vs medium-to-small cities ......................
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...SAMSUNG ELECTRONICS CASE STUDY Attention: Chairman Kun Hee Lee Ariadna Torres Niubo 2016400073 Corporate Strategy - What recommendation would you make to Chairman Lee regarding Samsung’s response to the threat of large-scale Chinese entry? Why you make such recommendation? Samsung should defend its technological leadership and its benefit advantage, investing in R&D, strengthening its superior product, design and process efficiency to fight against the Chinese competitors. The company has to focus more on Flash and less in DRAM or SRAM, should start winding down PC chips and focus more on mobile and should defend the older generation of the legacy market for the next decade. If we talk about DRAM, in terms of frontier products we can see that Samsung has a core competence in design while China has a lack of technology and will need at least 10 years to catch up them. Due to this, Samsung should continue developing new frontier products in DRAM. Moreover, in terms of legacy products this are the ones that will take the biggest hit due to the ability of China to cheaply produce mass older generation chips. Despite that fact, Samsung can still defend its position near-term. They should produce for more or less 10 years until China gets good. After this, they should wind this down and outsource this production to Chinese MFGs by sharing blueprints. Finally, in terms of specialty products this are the ones that should require to be produced to...
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...called Samsung electronics. Samsung electronics is a multinational conglomerate company which consist of many subsidiaries under it from South Korea. This company has been around for a very long period, over 70 years since 1938 way back during World War II. Samsung electronics was founded by Lee Byun-Chull at Ingyo-dong which was at that time is called Samsung Sanghoe focusing on selling groceries with only 40 employees. Later he moved the business to Seoul in 1947, but he was forced to leave Seoul due to when the Korea war broke out where he started and founded a sugar refinery production company. Fortunately after the war ended, in 1960 Samsung entered the electronics market and investing a bulk into its research and development. After Lee Byun-Chull pass away, Samsung group was divided into four groups. Today, Samsung electronics is under the ownership of Lee Kun-Hee generating revenue of 220.2 billion USD and net income of 21.2 billion USD in 2011 consisting 344000 employees worldwide. Furthermore, Samsung electronics focuses on a wide range of products such as apparels, chemicals, electronics (smart phones, printer, air conditioner, refrigerator, televisions, cameras, laptops, vacuum cleaner, microwave, and washing machine), medical equipment and ships. On the other hand, Samsung electronics name is derived from the word three stars or tristar which the three symbolize huge, many and strong while the stars means eternity, thus forming its logo. At first, Samsung electronics...
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...Methodology/approach: the branded product for this paper will be Apple’s iPhone4S. Data to be covered in this first paper will include the following: Product/Brand Analyzed Corporate Background Market/Industry Analysis and Competition Market Segmentation and Target Marketing Relevant External Factors Module 1 SWOT Analysis Findings: Apple is a leader in sales and production in US Markets; with products that appeal across target markets. iPhone 4S sales have eclipsed internal Apple brands, as well as other smartphone companies in the U.S. market. Recent sales dominance, however, has not established an industry lead. Samsung, in partnership with Google’s Android Operating system, owns the global marketplace with something like 21% of total market share. Apple faces both technological and political challenges in the largest smartphone market, China, as it is unable to establish a partnership with the largest carriers there due to non-4G/LTE products. SWOT Analysis section provides specific details regarding branded product strengths, weaknesses, opportunities and threats. Conclusion: while Apple reigns supreme in US markets in terms of sales, and is indeed a global force, it has not established itself overall as the industry leader. It must build on brand/product strengths through release of newer 4G technology; reduce...
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...Semiconductor company founded, began with Wafer production. And acquired by Samsung latterly Crisis : 2001 – 2002 Semiconductor Industry Crisis Growth : Semiconductor Industry has 16% of growth rate On average, 1960 - 2000 1980s, Samsung Group more focus on Electronics market and found Samsung Electronics, manufacturing in South Korea built 8” Wafer technology developed, dramatically shift to Samsung of production capacity Recovery : Samsung survived crisis with their competency and Branding strategy Samsung Brand being listed as 21st valuable brands in the world by Interbrand Corp. Samsung Group started Electronics industry in television market 1960 1969 1974 1980 1992 Copyright © 2012 by College of Management, Mahidol University. All rights reserved. 2004 2005 Industry Summary Semiconductor Industry Market Size ตลาด DRAM in 2003 ($19.5 Billion) Avg. Growth rate = 16% Sales = $200 Billions (1996 – 2000) 68.2 521.5 896.4 535.3 Logic Chips 672.8 19% Samsung Micron Infineon Hynix SMIC 3% 33% Sales = $166.3 Billions 20% Memory Chips Production Volume in million unit 256 Mbit equiv. EXHIBIT 4 Sales = $33.7 Billions FLASH 32% Mobile devices SRAM 10% Server & Workstation DRAM 58% Desktop Copyright © 2012 by College of Management, Mahidol University. All rights reserved. 25% Samsung Micron Infineon Hynix SMIC Market Share ตลาด DRAM in 2003 Industry...
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...as its product concepts are no less innovative than the current offerings by competitors. Second, the 3G smartphone market is far from saturated. With HTC’s brand and R&D ability, HTC can vastly improve its market share. Third, Good artists borrow great artists steal--Pablo Picasso To implement and maximize the Me-Too Products strategy, my recommendations are as following: 1. Ensure the originality and creativity of “Me-to Products” • “Learn” from Samsung and “Steal” from Apple • Not necessarily price war involved, stay cool and stay stylish • Disruptive innovation—develop “Textbook” for students and “Solus” for the senior citizens. • Stick to Google Android system 2. Remain the pioneer of mobile computing a decade later • Keep the R&D intensity over 8 • Cooperate with both Google and Microsoft to develop products with Android and Windows systems at a ration of 2:1. 3. Transit from 3G to 4G • Develop the under-developed market, China and India, • Co-brand with China Mobile with a current 500 million subscribers • Emphasize “Quietly Brilliant” in East Asian countries...
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...BACKGROUND This Samsung Electronics (hereinafter referred as “Samsung”) case illustrates the history of Samsung’s success in their strategy in getting into the Dynamic Random Access Memory (DRAM), the high growth memory market segment in 1980s when then-key player, Intel had chosen to exit the business. Despite Samsung’s high internal production cost ($1.30 for a single 64K DRAM chip) which exceeded the prevailing market price which is below $1.00, consistent with its strategy, Samsung went ahead to build its large manufacturing fabrication facility amidst Samsung’s unproven technical knowledge in memory manufacturing business, uncertain industry performance then, harsh environment to build the semiconductor facility from ground zero which is highly sensitive to dust and electronic shock. All these coupled with Samsung’s vision, perseverance and determination has seen Samsung grown to a $25.1 billion of semiconductor exports as of 2004 commanding a 10.4% of the country’s export volume. In this report, we will analyze in depth Samsung’s production cost advantages that brought this chaebol to where it is today, and how Samsung’s competitive advantage has translated to Samsung commanding a price premium in DRAMs in 2003 before providing recommendations to Samsung’s senior management to respond to the threat of large-scale Chinese entry into the industry in order to continue differentiating itself as a market leader over its competitors. QUESTION 1: WHAT ARE THE SOURCES OF SAMSUNG’S...
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...Strategy Samsung Electronics Samsung has a clear cost advantage over its competitors We have identified the following key sources of cost advantages: Economies of learning, production techniques, input costs and residual efficiency. Economies of learning Samsung has demonstrated economies of learning. While in the 80’s Samsung had to acquire outside technology to begin production, Samsung soon lead industry with important breakthroughs such as “stacking” technique or successes in implementing the 8- and 12-inch wafer mass production. 12-inch wafer versus its predecessor yields a 10% lower cost per chip (Exhibit 10a) thanks to a greater output per step of production. Production Techniques The latter goes in hand with production techniques that ensure better yield rates. Minimizing defective chips brings down scrap and re-processing costs. In Exhibit 10c we can see that Samsung has 20% better yield than its closest competitor in this regards. Moreover, Samsung is able to keep producing legacy products (older than 1 year since launch) efficiently. By 2003, for example, Samsung was producing 16.40 million units of 64Mbit (merely 1.8% of its total production) while keeping fully loaded costs 27% lower than the weighted average cost of its competitors for this particular product (Exhibit 7b). Input Cost Large production volumes trigger high-volume purchases that results in discounts from suppliers. For example, raw materials represent on average 27% of the cost per unit for Samsung, for...
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