1. Describe Samsung as a conglomerate. What type of diversification does Samsung pursue? Identify possible factors such as core competencies, economies of scale, and economies of scope that might underlie its success as a diversified conglomerate (chaebol). Which do you consider its key success factors?
The meaning of conglomerate is that an enterprise that diversifies into a market that has no connection to the market in which the enterprise is operating for the moment. Conglomerate is a financial strategy for an enterprise in order to increase the shareholder value. The negative purpose of this strategy is that it increases risk along one or more markets, as well as reducing profit improvements, and sales company-wide. Samsung was producing and selling noodles, as well as groceries when it first arrived on the market. Samsung got a conglomerate by entering in the electronics market in the 60s. Samsung’s enterprise is now evaluated among the world’s biggest consumer electronics manufacturers, as well as they build electronic parts for the aircraft company, Airbus. We can definitely identify different factors that might underlie its success as a diversified conglomerate. The first one, Core Competencies represents the unique strengths incorporate within an enterprise, which provide to a company to differentiate its products and services from its concurrent. Samsung has been able to utilize its core competencies to divert off the competition. Economies of Scale is another factor, which appear when a company’s average cost per unit decrease at its output increases. Samsung has used this factor by developing a huge number of electronic items, with its big product diversity. Finally, Economies of Scope is another factor, which rely to the savings that comes from producing two or more outputs or offering different services at a less cost than producing each