File - Matthew B. Kollinger

Report
Samsung Electronics
Team 3:
Matthew Kollinger
Qiao Li
Ryan Campbell
Staton Standridge
Vision, Mission, and Value Chain Analysis
 Vision: Samsung is dedicated to developing innovative technologies and efficient processes that
create new markets, enrich people's lives and continue to make Samsung a digital leader.
 Mission: 'We will devote our human resources and technology to create superior products and
services, thereby contributing to a better global society.”
 For Samsung, basic research, product development and design are primary
activities, unlike porter’s original value chain model.
 Through Samsung’s value chain, there is also spatial dimension because
these activities do not take place in the same place, but across the entire
globe, concentrated heavily in Korea, China, and Vietnam
 Primary Activities Include: Technology and product planning, design and
engineering, procurement, inbound logistics, manufacturing, distribution
planning and forecasting, outbound logistics, marketing, sales, and service.
 Supporting Activities Include: Firm infrastructure and HR management
5-Forces Model (Smartphone Industry), Key Rivals
 Threat of New Entrants (Low):High capital required, necessity for
product differentiation, have to spend a lot of time on branding and
customer knowledge.
 Bargaining Power of Buyers (High): Buyers can easily switch with
increased choices in mobile devices with relatively no switching
cost. Buyers will switch based on features and cost.
 Threat of Substitutes (Low): While there are still some options for
buyers in the tablet market, there is still no other substitute and the
majority of the population will opt for a mobile device.
 Bargaining Power of Suppliers (Low): There are many suppliers for
the mobile phone industry. Many different components with
suppliers all over the world so competition between suppliers is high
while the bargaining power of these suppliers to the mobile phone
companies is low.
 Competitive Rivalry (Very High): The threat of rivalry is the biggest
threat to Samsung because of the low switching cost and the vast
amount of competition between other companies in the industry.
 Key Rivals: Apple, Nokia,
Blackberry, HTC, and Microsoft
Stage of Industry Life Cycle( Smartphone),
External Environment
 The Smartphone industry is currently towards the end of the growth stage and should reach the
mature stage in the industry life cycle in the next five years.
 Companies and their products are facing the necessity to differentiate in hardware because of the
competition between similar operating systems.
 Products need to stand out in a wide array of choices in the smartphone market, having an android
operating system (such as Samsung) will not be sustainable in the future as more companies
switch to this platform. Apple continues to be differentiated because of their own OS and
hardware.
 Economic: The economy of a country can be a huge determinate of whether a company enters a market.
Samsung does a wide array of demographic analytics before entering a new market.
 Political and Legal: Samsung has recently violated Apple patents and has engaged in “willful
infringement.”
 Environmental: Samsung is developing an environment-friendly products by driving eco-design and LCA,
structuring an environment supply chain management and plan for hazardous substances regulation,
and expanding a process capability of waste product and plan for EPR (Extended Producer
Responsibility).
Financial Analysis
2010
2011
2012
Revenue
154,630
165,002
201,104
Gross profit
51,964
52,857
74,452
Operating Profit
17,297
15,644
29,049
2010
2011
2012
ROA
13.1%
9.5%
14.2%
ROE
19.9%
14.4%
21.4%
Debt/EBIT
DA
0.38
0.50
0.34
EBITDA/Int
erest
Expenses
48
45
76
2010
2011
2012
Net Margin (%)
10.4
8.3
11.9
Asset Turnover
1.25
1.14
1.19
1.52
1.52
1.51
Profit before
Income Tax
19,329
17,192
29,915
Financial
Leverage
Net Profit
16,147
13,759
23,845
Current ratio (%) 154%
161%
186%
Liability/Equity
(%)
50%
53%
49%
Debt/Equity (%)
12%
14%
12%
Net debt/Equity
(%)
- 13%
- 12%
- 19%
In KRW (Korean Won)*
SWOT Analysis
Samsung SWOT analysis 2013
Strengths
Weaknesses
1.Hardware integration with many open source OS
and software
2.Excellence in engineering and producing
hardware parts and consumer electronics
3.Innovation and design
4.Focus on environment
5.Low production costs
6.Largest share in mobile phones and 2 place in
smartphones sales
7.Ability to market the brand
1.Patent infringement
2.Too low profit margin
3.Main competitors are also largest buyers
4.Lack its own OS and software
5.Focus on too many products
Opportunities
Threats
1.Growing India’s smartphone market
2.Growing mobile advertising industry
3.Growing demand for quality application
processors
4.Growth of tablets market
5.Obtaining patents through acquisitions
1.Saturated smartphone markets in developed
countries
2.Rapid technological change
3.Declining margins on hardware production
4.Breached patents
5.Apple’s iTV launch
6.Price wars
VRIO Analysis
Valuable?
Rare?
Difficult of
Imitate
Y
Y
Y
Y
Brand Value
Y
Y
Y
Y
Quality
Y
Y
Y
Y
Brand Value
Product Mix &
Customization
Y
Y
Y
Y
Y
Y
N
Y
Fabrication Capacity
R & D Prod. Facility @
Same Loc.
Y
Y
N
Y
Y
N
-
Y
Partners & Customers
Y
Y
Y
Y
Resources/Capability
Tech & Prod. Line
Capabilities
Exploited by the
Firm
Competitve
Implications
Sustained Comp.
Advantage
Sustained Comp.
Advantage
Sustained Comp.
Advantage
Sustained Comp.
Advantage
Temporary Comp.
Advantage
Temporary Comp.
Advantage
Parity
Temporary Comp.
Advantage
Samsung’s Strategy
Samsung:
 Samsung uses a diversification strategy to maintain its competitive advantage.
 Because Samsung uses a huge portion of their revenue towards research and development,
Samsung diversifies its products. The company currently uses 5.7% of revenue towards
research while their competitor Apple only uses 2.4%.
 Samsung is so much more than a smartphone-maker. It is a conglomerate, a manufacturer,
and the world's largest chip-maker. It makes many of the components that go into its
smartphones giving it a cost advantage and allowing it to be much more flexible in terms of
what it produces and when.
Apple:
 Apple, though it has a diverse, well-managed, and futuristic supply chain, relies on external
partners, which can lead to delays and difficulties.
Strategic Recommendation
 Samsung currently does not own any software development companies
 Allocate a larger portion of Samsung's revenue to the acquisition of software companies
 Because software is not the companies strong suite, these software developments can create
huge value and better experiences for consumers that Samsung is currently lacking.
Questions?

similar documents