Mobile phone manufacturers have recently been engaged in cutthroat struggles to entice customers. The battle has not been easy for Samsung and the other competitors as well. In order to remain relevant in the market, these companies have been competing aggressively to control the market. This essay will discuss some of the features that Samsung can adopt to capture the market value with the smart watches.
Features that would enable Samsungs Gear S smart watch to capture value
While trying to entice customers with hi-tech products, there are several factors that must be considered. Samsung has been doing everything in its power to remain the leading brand in the smart watches market although the competition from other leading competitors such as LG has been very steep. However, it is worth noting that Samsung has played its role as a market leader by setting the trends in innovations. Nevertheless, the company is not doing enough to outshine the competitors (Smith, 2010).
The Gears S smart watch by Samsung is a brilliant product although there is more that needs to be put into consideration. Compared to LGs smart watch, the Gear smart watch is not as classy as it should be. Samsung needs to understand that people wear watches for elegance and to express their sense of fashion (Smith, 2010). While the curved screen has played a great role in persuading customers, Samsung should think about adding more fashion to this product. This can effectively entice the growing number of consumers who love elegance. The Samsungs Gear S smart watch is a brilliant product because unlike other competing products it has a space allocated to hold a line (Kim, Jeon, Lee, Jeong & Jeong, 2014).
This makes the watch independent unlike the other companies products which must be connected with the phone via Bluetooth. Nonetheless, the brilliant design lacks elegance. Wrist watches are normally worn to show a sense of fashion. If the company can consider reviewing the watchs design to make it more appealing and fashionable, it can easily capture the market value.
The type of innovation that relate to Samsungs S gear smart watch
The first point to note in defining the type of innovation that suits Samsungs smart watch is that it is a Product Innovation type. The innovation of Samsungs smart watch which is a product introduced into the market by the company is the main focus (Johnson, 2014). However, this innovation has been undergoing changes over the years hence creating the aspect of incremental innovation. Incremental innovation is a process whereby a products features are changed but the system remains the same. This may include the physical look and design among other physical and structural sketches.
In addition, the aspect of radical innovation is also depicted since Samsung is the trend-setter in this market (Kim et al., 2014). Radical innovations involve the establishment of new dominant designs and the main concepts of a product. Samsungs innovation is therefore best described as a radical innovation type as well as an incremental innovation due to the processes discussed above.
Conclusion
This essay has outlined the various measures that Samsung can take to capture the value of the market. It has also defined the types of innovations with regard to Samsungs new smart watch technology. Due to the many processes that the new product has undergone, it can be described as an incremental innovation as well as a radical innovation as it has been outlined and justified in this essay.
Kim, K. H., Jeon, M. Y., Lee, J. Y., Jeong, J. H., & Jeong, G. M. (2014). A study on the app development using sensor signals from Smartphone and smart watch. Web.
Smith, D 2010, Exploring Innovation 2ed, McGraw-Hill Education, New York. Web.
Key design features that have made Samsung smartphones attain great success are reimagined camera, aesthetic shape and size, elegant display, and durability. These key features reflect the inspirational design of Samsung that has contributed to its current image and brand in the global market. The reimagined camera is one of the key features of the Samsung smartphone that reflects the inspirational design. The camera has revolutionized the way smartphones capture stunning images in any lighting conditions. The reimagined camera has a dual aperture that adapts to light as the human eye for it captures images in bright light and dull lighting conditions (Samsung, 2018). Multiprocessing technology allows Samsung smartphones to process images quickly and reduce the background noise, which affects the clarity of images.
Samsung smartphones, the Galaxy S9 series, have a high-speed camera of 960 frames per second, which can capture fast-moving objects and give stunning images (Samsung, 2018). In addition, the high-speed camera provides a super-slow-motion feature that allows cameras to capture moments of objects that the human eye cannot perceive. Dynamic random-access memory gives Samsung smartphone has superpixel sensor, which enhances accurate detection and stabilization of the image. The camera also allows modification of images into personalized emojis and smileys and sharing them incompatible formats. The graphics interchange format (GIF) is an important feature that enables modification of pictures and presentation of epic moments (Samsung, 2018). The reimagined camera employs intelligence technology of image recognition which identifies face and iris features for security and privacy purposes. The front camera of the Galaxy S series has 8 megapixels for sharp and clear selfies, while the back camera has 16 megapixels for high-definition images.
The shape of the Samsung smartphone is attractive and provides a comfortable touch. Curved and smooth edges are unique features that characterize Samsung smartphone and make it stand out among other smartphones. Users like the shape of Samsung smartphones because curved and smooth edges are comfortable and tangible. Additionally, curved edges enhance the usability and functionality of Samsung smartphones for users can easily navigate quick buttons and functions. Samsung smartphones have metallic and glass exterior designs, which offer a glittering and impressive appearance. The metallic finish reflects the quality of smartphones, whereas the glassy appearance depicts perfect artistic color. Slimness is another feature that characterizes the shape and size of Samsung smartphones. This feature does not only enhances portability but also the usability of Samsung smartphones. Broad screens promote display and enhance the usability of smartphones.
Samsung smartphones have an elegant visual display that depicts clear and appealing mobile applications. The screen of Samsung smartphones is wide and perfectly fits into the display frame for the maximum depiction of applications. In providing vibrant images, Samsung uses the organic light-emitting diode (OLED) and the active-matrix organic light-emitting diode (AMOLED). The OLED and AMOLED are innovative technologies that have revolutionized screens. Samsung smartphones, such as Galaxy S9 and Note 5, offer the best display among smartphones because they use OLED technology. According to Gibbs (2018), a combination of the OLED screen and high-pixels makes Samsung smartphones display clear images and rich colors. Moreover, the Samsung Galaxy S series have a dual-curved display, which provides a wide view of the screen and convenient perception of notifications. Hence, the elegant display is a key feature that makes Samsung smartphone a competitive brand in the market.
Samsung had dedicated its innovative design to making durable products that withstand wear and tear during use. According to Stone (2017), Samsung offers the most durable smartphones that pass military-grade testing, which validates their use in hard industries such as construction, manufacturing, transportation, and military. The screen can withstand constant drops for AMOLED display provide a flexible cover that is resistant to shattering. Superior glass protects the screen against abrasion and shock that usually cause damage and reduce the lifetime of smartphones. Additionally, the Samsung smartphone has an external metal frame that gives curved-edges and offers strong protection to internal components against shattering during drops. As water destroys smartphones, Samsung has designed its smartphones to be water-resistant. Samsung galaxy series, especially the Galaxy series from S7-S9 and Note 8, are resistant to water when submerged in a depth of 1.5 meters for about 30 minutes (Jung-a, 2016). The ability to resist water is a feature that has enhanced the durability of Samsung for water is a major factor that destroys smartphones.
Respected and Successful Brand
Since Samsung operates in a competitive market, it employs a market mix pricing strategy to penetrate and advance market share. Pricing is a delicate strategy for it requires consideration of product quality and market trends. In the smartphone industry, customers look for products that are not only quality and unique, but also affordable (Dospinescu & Florea, 2016). In this view, Samsung ensures that the products it offers meet the unique needs of target customers and compete effectively with dominant brands such as Apple, Tecno, and Lenovo. As Samsung often releases new innovative products into the market, it utilizes a skimming price strategy. This pricing strategy entails setting prices high during the introductory phase of the product for a company to gain maximum profits from early adopters but reducing the prices for late adopters who are price sensitive. Such a pricing strategy has enabled Samsung to gain profits from the innovativeness of its products and dominate the market because it targets both high-end and low-end customers. To achieve a significant share of the low-end market share, Samsung employs a penetration price strategy. The products of Samsung are more competitive in the market than those of Apple, the leading innovative company in the smartphone industry. Therefore, the affordability of Samsung products has made it stand out in the competitive markets and emerge as a successful and extensively respected brand across the globe.
Samsung has effectively leveraged its innovative strategies to gain the image as a respected and successful brand in the smartphone industry. Samsung has been infamous for producing substandard and cheap products adopted from other companies across the globe. However, the reinvention of its image and brand emerged when Samsung started to focus on innovation as a competitive strategy in the market. Dospinescu and Florea (2016) report that Samsung smartphones are competitive in the market for they provide unique designs with classy and stylish models that meet diverse preferences and tastes of customers. The focus on innovations has boosted the market share of Samsung because the interests of customers come first. In essence, customers prefer Samsung products to those of other competitors in the market for they are diverse innovative designs that meet modern functionalities and performance.
Samsung employs the horizontal integration strategy in the production of its smartphones and other products. In essence, Samsung focuses on the design features of the hardware component of the smartphone and gets the updated software component from Google. In contrast, Apple, the major competitor of Samsung, employs a vertical integration strategy for it produces both the hardware and software components of its smartphones. The advantage of the horizontal integration strategy is that it provides economies of scale, increases competitive advantage, and creates synergies in marketing. The affordability of Samsung smartphones emanates economies of scale, which reduces production costs. Since Samsung produces diverse smartphones, it targets expansive markets and diverse customers, hence, gaining considerable market share. Moreover, the global brand names of Samsung, Google, and Android create synergies in marketing, which have played a critical role in the expansion and dominance of Samsung smartphones in the global markets. Thus, the horizontal integration strategy has helped Samsung to weather competition, penetrate global markets, and expand its market share.
In marketing smartphones, Samsung employs compelling marketing strategies and distribution channels that do not only penetrate diverse markets but also reach out to customers in diverse markets. Samsung distributes its products or contracts certain companies to distribute products in specific regions to ensure consistency in pricing and services provided. In this view, customers get to understand the nature of products that Samsun offers in various stores and distribution channels. For example, Samsung permits communication companies in various countries to market and distribute its products. Given that communication companies influence the purchasing behavior of customers, they provide a robust platform for Samsung to advertise, penetrate, and dominate the smartphone market. Samsung dedicates many resources to marketing its products for it believes that market dominance is dependent on its advertising strategies. Rutnik (2017) reports that Samsung allocated $10 billion to marketing activities out of which the largest share ($4 billion) went to advertising in 2016. In countries and regions that Samsung has penetrated, it undertakes promotional activities and carries out extensive advertising to sustain market share and brand image.
References
Dospinescu, N., & Florea, D. B. (2016). Smartphone brands design and buying decision. Ecoforum, 5(1), 139-150.
The launch of a new product is a complicated and multi-level process that requires considering all the aspects of the market activity. While working on product development, a company necessarily carries out the relevant market research, targets its audience, works out SCM strategy, and evaluates potential risks. Product development always has some practical aims whether it is the sales increase or positions strengthening.
The paper at hand is devoted to the analysis of the launch of Samsung Gear VR from different perspectives: the product development model, the business analysis, its technical implementation, etc. The key focus is put on the potential outcomes that this implementation will have for the companys performance in general.
Idea Generation and Screening
Every product that appears in the market is initially developed in response to the relevant demand. Thus, it is reasonable to assume that Samsung Gear VR was introduced to meet the demand of keen gamers and those who would spend hours playing the Sega VR in the early nineties.
It is essential to note that Samsung was not the first one to enter the VR market by the time it appeared, such products as Oculus Rift, PlayStation VR, and HTC Vive had already occupied the niche (Lowe par.1).
Moreover, according to the latest annual report produced by Samsung, the innovative sphere is critical for the companys survival (Samsung 6). The launch of the VR product is a successful attempt to support their innovative strategy. Hence, the prerequisites of Samsung Gears appearance are the following: the launch of the similar products developed by competitors, the need to introduce some innovations, and the intention to engage new clients.
Concept Development
While developing a products concept, it is critical to ensure that it possesses some unique characteristics that will guarantee a certain competitive advantage in the relevant market. In the case of Samsung Gear VR, its key distinguishing feature resides in the fact that it is the first time that the virtual reality option is available through a mobile device. As long as their product line already comprises different mobile versions Galaxy S7, S6, etc. it is only necessary to develop the relevant hardware. Hence, in terms of costs, the company managed to fit in a relatively moderate budget as there was no necessity to start from scratch.
The product engineering was carried out in close collaboration with Oculus, an experienced market player in the field of innovative technologies. It is essential to note that the company chose a highly beneficial strategy ensuring that the new product would be compatible with the most expensive products Galaxy versions.
Business Analysis
The success of the companys performance is based on an effective and consistent strategy. Thus, every product produced by the company is aimed at expanding the product line, the targeted audience, and the type of the occupied market niches. Moreover, the introduction of a new product is often determined by the increase in demand for the already existing items. As a result, before the concept of Samsung Gear VR was designed, it was essential to understand in what way it might contribute to the businesss development.
First and foremost, Samsung Gear VR is expected to assist in extending the targeted audience. Thus, gamers and high-tech lovers are likely to join the Samsung club. Also, the project was outsourced with the help of another professional in the relevant market. Hence, the cooperation with Oculus also opens new prospects in terms of the clients engagement the loyal customers of the latter will necessarily get interested in the commonly produced innovation.
Moreover, according to the companys forecast, their smartphone sales were about to fall in 2016 (McCormick par.5). Keeping in mind the fact that their innovation is compatible with smartphones only, it is rational to presume that product development is partially determined by the attempt to push up the smartphones sales.
Lastly, the environment within which Samsung has to operate is highly competitive. Thus, the gap between Samsung and its key rival, Apple, in terms of the market share is very insignificant (see Figure 1).
Figure 1 ( Marketing budget of Samsung Electronics and its major competitors for 2013 ).
Therefore, to keep up with its competitors, the company is obliged to introduce some innovations once in a while. Otherwise stated, the appearance of Samsung Gear VR is a strategic trick aimed at strengthening the brands positions in the market.
Beta Testing and Marketing
Beta-testing and marketing testing are important stages in the process of a product launch as they allow eliminating some critical flaws that might hurt the products performance. The first pilot test carried out by Samsung and Oculus showed that the product had some disadvantages that would essentially impede its promotion. Thus, for instance, the first version of Samsung Gear VR was only compatible with Note 4.
Besides, the cost of the pilot variant was not competitive thus, the customers were supposed to spend about 200 dollars on the innovation (Lee par.1). Taking into account the fact that a potential client might also have to purchase the relevant mobile phone, this price is excessive. As a consequence, Samsung and Oculus have incorporated the essential modifications so that the final version is compatible with a larger number of smartphone versions and its cost is twice lower.
Technical Implementation
Samsung has one of the most efficient Supply Chain Management (CSM) strategies in the relevant market. Thus, the company has developed a complex and multi-level chain that ensures a prompt and cost-effective operation. According to experts, Samsung relies on the principle of the so-called six sigma which implies extra effort in terms of the innovation activity (Emerald Management First 2).
From this perspective, the developed SCM strategy turned out to be highly assistive in the framework of promoting Samsung Gear VR. The company saw to the fact that their loyal clients were particularly encouraged to purchase the product by making it compatible with the largest number of Galaxy versions possible. Moreover, all the official distributors were engaged as soon as the so-called clients version appeared so that the product became immediately available both in the shops and at the online platforms.
Pricing
It is essential to note that the price of the product is highly competitive. Thus, in comparison to the products of a similar type, Samsung Gear VR is a low-cost innovation (see Table 1).
Company
Product Name
Price
Samsung
Samsung Gear VR
99$
Oculus
Oculus Rift
599$
HTC
HTC Vive
799$
Table 1 Cost Comparison .
Assuming that along with buying Samsung Gear VR one is also required to purchase the relevant Galaxy version, the price will turn out to be almost twice higher. In the meantime, even taking into account the extra expenses, this product remains the cheapest in this line.
Launch
The launch of the product was accompanied by a powerful advertising campaign. Thus, Samsung decided to introduce Samsung Gear VR on Christmas Eve; as a result, the first revenues were quite considerable. Further revenues depend largely on the competitive capacity of this product. At the current point, its key benefit resides in the low cost. However, if the quality parameters turn out to be lower than those of the rivals offers, the revenues are apt to fall by the second year of sales. According to experts forecasts, the general demand for VR products has been initially overestimated; thus, the revenues are expected to be gradually decreasing (Grubb par.1).
Conclusion
The analysis of the product development of Samsung Gear VR has shown that its launch is a perfect pitch in terms of marketing. Thus, first and foremost, the introduction of this product has assisted Samsung is strengthening its positions in the innovative sphere. Moreover, the company is likely to push up its smartphones sales as the owners of Gear VR will necessarily have to purchase some versions of the Galaxy mobile phone as well.
Also, the developed product possesses a consistent competitive advantage from the pricing standpoint. In case it manages to show good quality characteristics, it will remain the leader in the relevant niche.
From the revenue perspective, it is problematic to forecast the potential impact as the VR market is a relatively new field and, thus, it is highly difficult to make any predictions. In the meantime, an insignificant increase is likely to be seen in the course of the first two years.
Works Cited
Emerald Management First. Supply Chain Management Six Sigma at Samsung, 2007. Web.
The market principles are very complicated, but there are always rules according to which different generic marketing principles are formed. Pricing is one of the market principles, which is impossible to control absolutely (if it is not an absolute monopoly market) as there are always a lot of factors which influence the price construction. Samsung is one of the world famous brands, which offers its products according to the pricing policy which exists. The prices of the products are influenced by a lot of different factors, starting with direct and indirect costs and finishing with customers preferences and brand name.
Theoretical Foundations
In general, there are two main methods of pricing, which are used by all companies according to the basic article by Avlonitis and Indounas (2005). These methods of pricing are the cost-plus method and the pricing according to the markets average prices. The names tell for themselves and these methods are the most convenient on the market price.
Research Findings
Samsung is the company which is famous for its electronic products, more over it is world brand, but the pricing policy of Samsung Company is influenced by other companies and the Samsung prices also influence the prices of other companies, as they are in constant interconnection. The example is the interconnection of Samsung and Sony prices may be suitable here. Samsung places the price of $150 for some item. Sony changes its price for $130 per unite. When Samsung changes its price, Sony will also make it higher. This is called the concept of maximization of profit (Jagpal & Jagpal, 2008, p. 377).
The other method, which is used by the Samsung Company, is the brand name usage. People mostly buy products of the companies with the brand name rather than the products of other unknown companies, especially in the field of electronics. Peoples consideration is that brand companies can be trusted and the quality of them is higher. So, it may be said that brand name is one of the methods of companies pricing (McNeilly, 2008).
The customers likes and dislikes may also influence the pricing of Samsung Company as the named customer is customer led and the wishes and desires of the customers are followed. The customer interest in this or that model may be the factor whether to higher or lower the price, as well as to keep the price unchangeable (Kotler, 2006).
The main pricing method which is used by many companies, and Samsung Company is not the exception, is the quality characteristic products (Liegey & Shepler, 2000). The company takes into consideration the level of complexity while model manufacturing and its side appearance, that is the number of innovations which are inserted in the model. The new models cost higher as every innovation should be paid more, and when the model is for about half a year or a year old (we should not forget that we deal with electronics), so the price may be leveled to the cost-plus or according to the markets average prices.
Conclusion
The pricing generic marketing principle of the market is one of the most flexible as it is closely connected with the manufacturing process and the economic relations with other countries. The innovations in this field occur frequently as the science develops and more and more new ideas are involved in the producing process. Samsung tries to provide such prices which could interest different layers of citizens, with different levels of income.
Reference List
Avlonitis, G. J., & Indounas, K. A. (2005) Pricing objectives and pricing methods in the services sector, The Journal of Services Marketing, 19 (1), pp. 4757.
Jagpal, S, & Jagpal, S 2008, Fusion for Profit: How Marketing and Finance Can Work Together to Create Value, Oxford University Press
The Galaxy 7 Note case study evokes different reactions because of the initial Samsungs response and the actions that followed. The company publicly denied that the smartphone was faulty and below the industry standards. I believe it was inappropriate for the company to deny such accusations despite knowing that the product was prematurely launched to compete with Apples iPhone 7. However, when the issue became a global crisis, Samsung attempted to correct the unethical business practices by recalling the faulty gadgets and replacing them with newer versions. This was a strategic move that promoted the companys corporate social responsibility (CSR) and enhanced its competitiveness.
Background Experiences
Following ethical practices ensures that organizations promote the workers integrity and enhance business image and trust among the stakeholders. I believe that adopting business ethics as a guiding principle in the production process and customer relations to avoid negative publicity is critical. I feel that Samsungs case shows the significance of using moral laws to support corporate social responsibility initiatives as a means to achieve business goals. The company produced Galaxy 7 Note without proper testing to compete with the iPhone 7, endangering the lives of many users. Although Samsung denied the initial allegations of the smartphone exploding, it took considerable measures to recall more than 2 million phones worldwide and replace them with improved versions. In my opinion, the move shows that organizations should include customer value and experience as part of the core business strategy that informs CSR practices.
Important Takeaways
The case provides numerous lessons that companies should consider in their CSR operations. Negative publicity significantly affects the companys reputation and can impact customer loyalty leading to fewer profits. However, through practical CSR approaches, a firm can redeem its name and improve its market share. Jizi et al. (2013) claim that a special relationship exists between corporate governance and CSR efforts. The study found that CEOs might use higher CSR disclosures to appease the stakeholders to salvage their reputation. This indicates that CSR can be used as a strategic initiative to restore a brands image after a public relations crisis. Samsung exploited this philosophy to ensure business continuity and competitiveness in the dynamic smartphone industry. Further, it emerged that the company was promoting ethical business practices, which resonates with consumers interests. In that case, the increased market share resulted from the widely publicized CSR initiative of recalling the phones and replacing them with newer models.
Other Comments
Kants categorical imperative assumes that individuals should act in ways that can be regarded as universal laws. This implies that making others happy is a moral duty not imposed by statutes (Tapek, 2018). Applying categorical imperative in Samsungs CSR stunt shows that the company chose to replace the faulty smartphones to gain a competitive advantage. The organization attempted to present itself as an ethical corporation despite using CSR as a means to achieve the business goal (Tapek, 2018). This approach can help other organizations to develop sustainable CSR initiatives to ensure continuity by ethically appealing to the consumers. Although the company might have incurred losses during the process, the long-term organizational goals were achieved. In most cases, the categorical imperative fails to apply in businesses because of the costs involved in fulfilling these mora duties and raising the shareholder value. Despite this hindrance, Samsung was able to overcome these expenses to promote customer happiness. Therefore, firms can selectively apply this concept in their CSR approaches to enhance the sustainability of the business image.
The purpose of this study is to find out whether the use of diversification by Samsung in the penetration of the Saudi Arabian market has been successful. A case story is provided detailing how the company incorporated a combined approach to diversification to ensure its success. Currently, Samsungs main concern is to remain relevant in a field that is constantly changing and crowded with both international and local competitors.
Research Design, Data, and Methodology
The case used academic secondary sources to collect data. The sources were retrieved from qualified and well-known publishers and journals. It is important to note that there are sufficient studies that have been done on the subject that made it possible to write the report.
Results
Several findings were realized after the literature review was conducted. The main finding that was recorded was the success of the combined diversification approach in the Saudi Arabian market. It can be argued that if the company had not used a combined approach then it would not have had the success it currently enjoys.
Conclusions
In conclusion, diversification indeed was the viable marketing strategy for Samsung in Saudi Arabia. Not only did the strategy allow the company to maintain its market share but it also ensured the growth of the company portfolio. Saudi Arabia is known to prefer local products. This goes to show the effort put up by Samsung to maintain the top spot in the industry in the region. It is crucial to note that the company has employed the use of other strategies in the same country before. However, diversification was selected due to its applicability.
Introduction
Samsung is one of the largest conglomerates in South Korea. Headquartered in Seoul, the company is well known for its electronic products even though it has ventured into other business lines as well. As of 2017, the company was valued at US$188.9 billion. One can argue that the company has had to use different strategies to penetrate almost all markets in the world. This is due to the differences in economies in the different markets it is in.
For example, it is the largest phone brand in Africa. To achieve this, the company came up with a marketing strategy that lowered the prices of its product in the African market. The reason is the lower economic status of the target group in that specific market. The same strategy is not applied in the US, where the economy is more stabilized. The assignment will, however, consider strategies that the company has used in Saudi Arabia. It is prudent to mention that it has employed the use of diversification as a key tool of entering the Saudi Arabian market.
The paper will have a literature review that will discuss the companys application of the diversification marketing strategy in the Saudi Arabian market. Additionally, the methodology used and a case storyline will be provided. Findings and implications of the study will be presented alongside some discussion questions and answers and conclusions will be drawn from all the material that will have been discussed.
Overall, the paper will provide a comprehensive understanding of the stated strategy, detailing why it was the best option for Samsung when the company was trying to enter the Saudi market. A brief comparison will be made with other strategies that the company has used in the other markets as well. The paper will prove that combined diversification was the best marketing strategy for Samsungs penetration of the Saudi Arabian market.
Literature Review
Overview of Industry and Company Background
The mobile phone industry has grown over the years at an alarming rate. Giachettia and Marchi (2017) attribute this to innovation and technology. The industry is highly populated with local and international companies all seeking to satisfy the needs of their target audience. One of the reasons for this is the fact that it is fast-moving. The target audience is also always looking for new and better smartphones for use.
As mentioned, technology and innovation have also played a big role in the advancement of the industry. The cell phone has been developed to offer maximum comfort and convenience for telecommunication. For example, smartphones have combined the traditional camera, radio, and recorder into one small package that individuals can carry at all times. Equally important to state is the fact that the Asia Pacific is the largest manufacturer of cell phones.
Samsung is one of the major manufacturers of smartphones. The company is prevalent in some areas such as Africa and Asia due to its flexible and affordable pricing. Indeed, the company employs different strategies to maintain its market share. Giachettia and Marchi (2017) add that Apple is the brands biggest competitor. Even though the company is well known for its mobile phones, it has also ventured into other businesses.
Some of these businesses can be linked back to the main business line while others are very different. For instance, the company makes mobile phones and household equipment such as fridges and washing machines. Even though the two are very different, they are tied together by the technology they use. However, the company also ventured into biopharmaceuticals, which are very different and not connect to its main business line at all.
Theoretical/ Exploratory Research
Diversification in marketing is a strategy that allows a new brand to penetrate a given market of interest by introducing a customized product for that target group (Bowen, Baker & Powell, 2015). There are several types of diversification strategies and even though companies usually adopt one in their marketing plan, they can also be combined for better results. The commonly used diversification strategies are the vertical, concentric, and conglomerate.
Gnizy, Cadogan, Oliveira, and Nizam (2017) explain that vertical diversification usually relates directly to the companys main business line. It does this by going back to a stage in the production cycle and producing brands related to that stage. An example can be given to explain further. Company A is a real estate company and has been building houses for decades. If the company decided to use vertical diversification, it would look within the real estate and construction business. Therefore, it could start selling cement or paints and so forth. Whereas the product is new it is still tied to the companys main business line.
The second type of diversification is concentric diversification. Bowen et al. (2015) explain that this type allows the company in question to make new products that help it manage any new technologies and maneuver the market system.
For instance, a bakery known for selling cinnamon bread can start producing biscuits to capture the market more. Indeed, whereas the two products are linked by the same production procedure, they are very different. This is unlike the third diversification strategy as products do not relate at all. Bowen et al. (2015) confirm that the conglomerate diversification strategy allows a company to make new products that have no relation to the current business lines or their distribution channels. For instance, a company that deals with phones starts producing food as well and so forth.
Gnizy et al. (2017) argue that the use of diversification as a marketing strategy is coupled with a need for difference both within the company and among the target group. Using the same M10 and M20 for further explanation, one can argue that the Saudi Arabia market feels different from special since they are the only ones currently retailing the product. Gnizy et al. (2017) reveal that companies use this strategy to increase their market value in a particular country. It is important to note that although Samsung is currently the largest seller of mobile phones in Saudi Arabia, Apple has taken a keen interest in the region as well.
There are three reasons why Apple is becoming more famous in the region. The first is the rise of the middle and upper classes of people in the country. These people can afford the more expensive Apple phones easily than before. Secondly, the influx of people from other countries and cultures into the Saudi market has led to a bigger interest in other brands. This is particularly the case of citizens from Europe and America, where Apple is the preferred brand. The third reason is the differences in technology and systems that people are keener on now. Indeed, one can state that the use of diversification in Saudi Arabia was tactical as it would raise the profile of the company and hold on to the number one spot in the market.
It is important to point out that Samsung is well known for using skimmed and competitive pricing as the core of its marketing strategy. Crespo, Suire, and Vicente (2016) argue that skimmed pricing is the use of high prices to target a select group of people. There are some Samsung products that high-cost. Crespo et al. (2016) reveal that the need to identify a certain class makes skimmed pricing one of the best marketing strategies.
The higher the price of a product the more valuable it becomes regarding identity and class. It is prudent to mention that skimmed costing also involves the lowering of prices to attract clients who could not afford the product at the time of the launch. Both Samsung and Apple are known for using this strategy to remain relevant. For example, a product that launches today and retails at USD 200 will not cost the same if a competitor introduces a similar product into the market. Additionally, if the same company releases a new version of the same product, the price of the initial item will drop.
As mentioned, Samsung has also used competitive pricing to retain its market share. The company uses market research to come up with the right pricing strategy. Albeit the changing economy and ease of accessing money in Saudi Arabia, the company has not raised its pricing much. Bowen et al. (2015) admit that competitive pricing, albeit important, should be considered due to the high possibility of inflation. Even though the country has been on an upward economic scale, Samsung has to put in measures to protect its brand.
Cohesive Summary of All Relevant Findings
One can denote several things from the literature review. The first is the fact that Samsung uses diversification as a marketing strategy to reach its different target groups more effectively. This is especially the case with affordable versions of their mobile phones. Indeed, even though the company uses both skimmed and competitive pricing techniques, it still provides the expected type of product to its clientele.
Unlike Apple, its biggest competitor, Samsung has created a niche for itself in the market due to keen market research that involves all types of clients. It is important to point out that there are studies that show that the use of diversification can also help a company maintain its market share value. One can argue that this is the main reason why Samsung chose the diversification strategy for penetrating the Saudi Arabia market. Despite the broad nature of diversification, companies can incorporate any of the principles of the different types of diversification in their marketing plans.
It has also been realized that many of the companies that use diversification as a marketing strategy do so primarily to develop a culture of the class. Many consumers associated some brands with class. Diversification makes this easily achievable regardless of the price of the item. Indeed, one can argue that companies have used pricing as a key method of dividing their target audiences into classes. For instance, Samsung has several versions of the Galaxy brand that are very expensive. These versions are perceived to be of a higher status than the other affordable Galaxy products. To ensure that everyone has the chance of being in this pre-determined class, Samsung lowers the prices of previous versions when they launch new brands of the same line.
Methodology
Data will be collected empirically through secondary sources. This means that the researcher will rely on academic journals and reviews to get the needed data. The literature review has provided ample evidence that many studies have been done on the topic. The essay will combine these studies and come up with conclusions from the experiments that have been done on the same. The sources that have been chosen are not only peer-reviewed but have been identified as the best resource for the needed data due to their quality and context. It should be noted that the researcher has no affiliation with any of the sources that will be used. This reduces the level of bias that might have been recorded. A case storyline will also be presented by the assignment.
Case Storyline
Samsung: How It Started
In 1938, Lee Byung-Chul registered Samsung as a trading company dealing with textiles, retail, insurance, and food processing. Interestingly, people believe that Samsung began as a cell manufacturer when it did not. The company moved into cell manufacturing in 1960 and grew this business line to become its main source of income. In the mid-1970s, the company ventured into construction and shipping industries which further enhanced their cell phone business line as they were now able to ship their products on their own.
The new business line (shipping) helped the company save on costs and allowed Samsung to sell its products in different parts of the world. After the founders demise, the company management divided it into four main groups namely Samsung, Hansol, Shinsegae, and the CJ Groups. Indeed, it can be suggested that the companys success should be pinned on a strong brand name. Therefore, one can argue that the brand name has ensured loyalty to an extent that clients prefer the brand regardless of the product being bought.
Diversification
The company has employed different strategies in an attempt to completely penetrate different markets. One such strategy is diversification which entails the use of a new customized brand to penetrate a given market of interest. To ensure that the company still maintained its reputation, it has used diversification, especially in Saudi Arabia, by customizing products it already has in the market. The company currently has over 200 subsidiaries in the stated market. The company has partnered with several other companies all over the world to ensure diversification even further. Each of these partnerships has allowed Samsung to become a household name.
It is important to note that diversification has ensured the company is well-known to people of different economic backgrounds. This is because it has both affordable and highly-priced products. These products are found within the same market but target different groups of people. Indeed, there are times when the products slightly different but the difference in pricing is due to the status they are associated with at a given time. It is important to point out that the company has also used other marketing strategies in the region but this was the most common.
Samsung has used all the stated diversification strategies in different markets. In Saudi Arabia, the company relied mainly on the first type of diversification. As mentioned previously, the vertical diversification approach introduces a new product in the market that is closely related to the companys main business line. For example, Samsung revealed the Galaxy M10 and M20 in the Saudi market first. This product can be bought online from anywhere in the world but is currently only retailed in Saudi Arabia. As mentioned previously, the company is well known for its electronic products. The Samsung Galaxy has been in the market for over five years now.
Each year, the company releases a different and arguably better version of the Galaxy brand and chooses target countries where the new product will retail. There are various reasons why the company chose Saudi Arabia to retail the M10 and M20 brands. Even though Saudi Arabia is not considered a developed country in economic terms, it is a high-income country. Therefore, the target group can afford high-end phones. The M10 and M20 retail at approximately USD 130 and USD 180 respectively. One can argue that these phones are still relatively affordable compared to other brands such as Apple. Whereas this is true, the prices are slightly higher compared to other similar products by the company.
Future Projections
Arguably, there are a lot of things that Samsung has in store for the future. The company has focused on biopharmaceuticals since the mid-1990s and there are indications that it will invest more in this business line. The Samsung Medical Center has invested heavily in both facilities and educational centers. The facilities have been referred to as Chinas number one health centers offering viable services for both in and outpatients.
The center has also invested in medical research and has given out money for the same. It is arguable that this venture still uses the diversification approach as it offers a different product completely. It is not clear whether the company is looking to manufacture medicine but the management has been keen on innovative health solutions. It is interesting to note that the company has combined its biopharmaceutical business line with its cell phone one. Currently, a majority of Samsung smartphones have Samsung Health, an application that can record heartbeat rate, pressure and monitor fitness activities.
Findings and Implications
Findings
Several findings can be realized from the case story. The first is that whereas Samsung is not changing its main business lines, it is looking to diversify its portfolio further. One can point out that the cell phone industry is crowded with competitors. The additional fact that more people are investing in locally made mobile phones threatens the companys market share. This is especially the case in the regions where the company has made a name for itself such as Africa and the Middle East. It is crucial to point out that the company has put measures in place to continue securing its place in the market despite the challenges. Despite this, there is a need to diversify further by bringing in new products under the same trusted brand.
It has also been realized that diversification has to be strategically implemented for it to be successful. Samsung has managed to do this by tying its products and business lines together with one aspect or the other (apart from the brand name). For example, as mentioned earlier, the company has incorporated Samsung Health into some of its common mobile phones. This ensures that the clients have knowledge of the health business line the company also engages in.
Indeed, Samsung Medical Center is only in China yet phones that are shipped to Africa also have the Samsung Health application. The main reason for this is the fact that the company intends to grow its biopharmaceutical and health business line as well. Thus, they are ensuring that their brand is recognized also as a health brand for easier market penetration at the right time.
Implications
There are several implications of the findings that were realized. The first is that the cell phone industry has to keep innovating to remain relevant. Samsung has added more features to their phones to ensure relevance. The fact that their medical center is also rated highly makes its health mobile app more practical. Additionally, the changing cell phone industry will prompt current competitors in the field to invest in other business lines. The fact that more people prefer to support local brands within their countries as a way of ensuring authenticity continues to pose a challenge to cell phone manufacturers. Therefore, diversity is important for the survival of all companies in the industry.
Conclusions
In conclusion, marketing is crucial when trying to enter new markets. This is also the case for companies that have had long-lasting brands such as Samsung. The company is currently the largest cell phone brand in Saudi Arabia and it has employed various marketing strategies to secure its position. As per the requirements of the assignment, only one of these strategies was discussed. The chosen strategy was diversification which allows a company to introduce a customized brand into the market.
Research shows that the strategy has worked well in new markets as it enhances a feeling of a class. For instance, if Samsung were to develop a new version of the Galaxy specifically for Saudi Arabia, it might consider incorporating some of the popular culture needs among the Saudis. This would make the region feel special and boost sales of that particular product.
The essay was guided by the thesis statement that combined diversification was the best marketing strategy for Samsungs penetration of the Saudi Arabian market. From the literature review and findings presented, one can argue that the thesis was proven true. Combined diversification refers to a mixture of the three types of diversification strategies that can be used. The company has to choose when to apply the said types of diversification, and when to combine them. Indeed, Samsung has used other strategies to help secure its market share. However, diversification stands out as it has also led to the diversification of the companys portfolio. The research studies that were used to write the literature review also prove the same.
Discussion Questions
Analyze the cell phone business industry with a key interest in Samsung mobile
The cell phone business industry is very diverse. One can argue that it is an overcrowded field. Three of the major cell phone manufacturers are Apple, Samsung, and Huawei, although there are many other companies all over the world. Samsung is known to have penetrated the field more as it has focused on developing countries as well. The company has products that target both high-end and low and middle-income clients. It is important to point out that Samsung has taken cell phone innovation further in an attempt to maintain its profit margins. For instance, it has incorporated its other business lines into the cell phone line.
One of the business lines of the company is biopharmaceuticals and it has opened a Samsung Medical Center in China to this effect. To ensure that all its clients know about their interest in medicine and medical research, the management has incorporated Samsung Health in a majority of its products. The same has been done with its other electronics where the company ties the products to one another. This has also enhanced the brand.
How did Samsung manage to penetrate the Saudi Arabian market?
Diversification was key in the penetration of the Saudi Arabian market. This is the customization of a product to suit the specific needs of the target market. It is important to note that whereas the company has not made entirely new mobile phones for the Saudi market, it has introduced new versions of their main phones in the market. For example, the M10 and M20 were launched in Saudi Arabia and were retailing only in the stores in the country. Other users had to purchase the same product online.
Explain the different types of diversification techniques used in marketing?
There are three types of diversification technics namely vertical, concentric, and conglomerate. Vertical diversification allows a company to manufacture a product from one of its production stages. On the other hand, concentric allows the company to create a possible product using a futuristic approach by taking into account any technologies and new market trends. This product usually falls into one of the business lines of the company.
Lastly, conglomerate diversification introduces a completely new product into the market. This product is usually very different from any other that the company has created in the past. Indeed, one can argue that the last type of diversification is the riskiest regarding business. Therefore, companies have to ensure they do viable market research to manufacture a product that will give back their return on investment.
What type of diversification did Samsung use in Saudi Arabia?
Samsung used a combined approach to the diversification strategy. One of the advantages of the combined approach is the flexibility of the strategy. The combined approach allows for the company to not only rely on their clients needs (as they know them at the time) but also be able to provide new and exciting products.
What is the future projection of Samsung?
One can argue that the company has a stable future due to some of the investments it has already made. The cell phone industry is ever-changing and the fact that more people are invested in buying local products makes the environment that much harder for manufacturers. However, Samsung has invested heavily in other electrical products and health care. This provides the company with the needed stability of the future in case the cell phone industry collapses or becomes too overcrowded.
References
Bowen, P. H., Baker, K. H., & Powell, E. G. (2015). Globalization and diversification strategy: A managerial perspective. Scandinavian Journal of Management, 31(1), 25-39.
Crespo, J., Suire, R., & Vicente, J. (2016). Network structural properties for cluster long-run dynamics: Evidence from collaborative R&D networks in the European mobile phone industry. Industrial & Corporate Change, 25(2), 261-282.
Giachettia, C., & Marchi, G. (2017). Successive changes in leadership in the worldwide mobile phone industry: The role of windows of opportunity and firms competitive action. Research Policy, 46(2), 352-364.
Gnizy, I., Cadogan, J. W., Oliveira, J. S., & Nizam, A. (2017). National-regional diversification strategy and export performance: An extended abstract. In: P. Rossi (ed.) Marketing at the confluence between entertainment and analytics. Developments in marketing science: Proceedings of the academy of marketing science. (pp. 29-33). New York, NY: Springer.
This paper discusses security risks and their influence on both the company that manufactures a potentially dangerous product and its clients. The recent issue with Samsung Galaxy Note 7 will be described. Some background information on the topic will be provided and followed by the damage caused by the recall. The way the company responds to the public and will be mentioned as well as its outcomes. Finally, possible alternative strategies will be considered.
Product and Security Risk
Samsung Galaxy Note 7 was released in September of the previous year and attracted the attention of numerous customers immediately. Among the main shortcomings of the product, professionals identified its high price (alternative devices could be more advantageous unless the S Pen is used), iris scanner (the users need to hold the phone close to their faces), and the hybrid slot (limited opportunity to exchange the storage). However, these limitations had never been considered critical. As it turned out, the main problem of this phone was its battery. It seemed to be an advantage of this product initially because it could be charged fast using a wired or wireless way (CSMArena team, 2016).
The security of the clients was affected as the phones spontaneously burst into flames. As soon as the first 35 cases of this accident were reported, the company decided to recall the product, including all those that had already been sold. As the professionals found out, the problem was in the lithium-ion battery. The liquid that surrounded it was flammable, which was normal. However, Samsung Galaxy Note 7 was rather thin so that the element that separated different sides of the battery was not enough to resist heat. When the liquid turned hot, it made the phone explode (Hollister, 2016).
Damage Caused by the Recall
When Samsung decided to recall its product, about 1 million phones were already sold. In addition to that, 1.5 million more items were manufactured (Hollister, 2016). All of them were considered to be dangerous to human health and were no longer allowed to be sold, which affected the companys revenue significantly. It should also be mentioned that Samsung planned to manufacture about 19 million phones so that the total recall of Samsung Galaxy Note 7 could have reached more than $16 billion in lost revenue. Still, the missed sales led only to the $5 billion initially. Trying to save the situation, Samsung thought of an idea to resume global sales, but the production was completely ended eventually. Still, regardless of that situation, Lee (2016) stated that for Samsung, with a market value of $235 billion and $69 billion in cash and equivalents at the end of June, the loss of sales of one model could be absorbed (para. 13).
The issue with Samsung Galaxy Note 7 became critical because it caused damage to peoples health and property. All in all, professionals indicated 92 incidents in the US, plus at least 17 in Korea, 1 in Taiwan and 2 in Australia (Hollister, 2016, para. 17). Even though these numbers do not seem to be statistically significant, they were indicated only during the first month on sale and prove that more people could have been at risk if there was no recall. Fortunately, the explosion of the battery did not lead to human deaths. However, some individuals got burns as they were holding the phone when it inflamed. For example, a man from the USA got a second-degree burn. His leg and thumb suffered, as he carried the phone in his pants pocket and then had to take it away (Kastrenakes, 2016). Similarly, the property of the owners was affected.
Even though Samsung Galaxy Note 7 explosions mainly had limited effects that affected its owners and their goods, this problem was claimed to cause environmental damage as well. Pham (2016) underlined that if Samsung decided to save money and dump its phones, it would harm nature. Inappropriate utilization of these devices would be as harmful as toxic waste because they are full of cobalt, tungsten, etc.
It cannot be denied that this issue led to the embarrassment of the company. Being known for high-quality products and having a lot of loyal clients, Samsung suddenly faced critics. Still, it admitted its responsibility and tried to respond to the problem so that peoples dissatisfaction can be overcome.
Companys Response
To improve the situation, Samsung promised its clients to:
The USA: offer a refund or another phone, give a gift card or credit, and obtain $100.
The UK: change this phone for Samsung Galaxy S7 or S7 Edge. A refund can be obtained totally or just for the difference in price between the models.
Australia: the same as in the UK.
Singapore: provide a refund or any other phone (Dolcourt, 2016).
Trying to protect its customers, the company encouraged them to bring their phones back to the places where they bought them, but some devices were not returned so that it is not clear whether they were thrown away or continue working properly.
Outcomes of the Recall
As the phones started inflaming, the clients addressed Samsung and even referred to the court (Kastrenakes, 2016). The US Consumer Product Safety Commission supported them. Still, the company realized its responsibility and accepted it without any resistance.
The recall of Samsung Galaxy Note 7 reduced the companys income and increased expenditures due to the necessity to get the product back, recycle it, and provide the customers with a refund. Billions of dollars were spent by the company to restore clients loyalty, but some of them decided to take a break with the brand.
Depending on the location, Samsung replaced Galaxy Note 7 with any other phone produced by the company or with particular items. The company was ready to offer an exchange or refund as long as it would take customers to bring them back (Dolcourt, 2016).
Personal Considerations
I would respond to this issue in the same way as the CEO of the company. I would emphasize that the lives of the clients are critical to me that is why I would encourage them to give the phones back. I would also offer a refund to satisfy those who are willing to take a break or another product for those who remain loyal. However, I would also try to maintain the same response strategy in different locations for the customers not to feel somehow discriminated or deprived. In addition to that, I would gather customers feedback regarding this situation so that they can see that I am highly interested in their considerations and want to use some of their ideas when developing the next product. Finally, I would emphasize what would be done to ensure future security (Griffor, 2016).
Conclusion
Thus, focusing on the case study of Samsung Galaxy Note 7, it can be seen that any product can have security and system risks that have an adverse influence on both customers and the organization. It is critical to respond to the problem efficiently so that the damages of the incident can be minimalized and the clients loyalty promoted. Utilization of an appropriate approach in this situation can save the company from losing its competitiveness completely.
Well established modern business organizations have increasingly been seeking to expand their operations beyond the boundaries of their mother countries. Consequently, at the international level we have a new kind of business known as international business.
Business organizations particularly from worlds major economies and the emerging Asian economies offering goods and services in different commercial sectors or industries are striving to establish a high profile presence in the international markets in an attempt to improve their profitability and remain competitive in an era of accelerated globalization.
Some of them are part and parcel of the business organizations known as multinational corporations (MNCs) or multinational enterprises (MNEs) which have operational branches in many stable nations world over.
There are various reasons that motivate a companys desire to expand to the international or foreign markets. Kurtz have identified four main reasons that usually motivates companies or business organizations seek to expand to international markets namely the desire to use current resources and access to new resources, seeking to expand or develop new markets, competitive rivalry and controlling core competences and learning (215).
These authors point out that companies search for economies of scale in the use of their existing resources by expanding in to new foreign markets. At times they enter international markets in order to reach certain valuable resources like raw materials, specialized knowledge or cheap labour.
As companies become well established in the domestic markets they begin searching for international markets in order to increase their revenue and gain more profits, enhance their competition with major rivals and influence further development of their core competencies Kurtz (215).The aim of this task is to analyze Samsung company in UAE.
Doing Business in UAE
United Arabs Emirates (UAE) is situated southeast of Arabian Peninsula in southwest Asia on the Persian Gulf. It borders Oman and Saudi Arabia and shares sea borders with Iran, Qatar, Bahrain, Iraq and Kuwait Communicaid (1).
Its a federation of Emirates ruled by Emirs and hence termed as the United Arabs Emirates Communicaid (1). According to Mina cited in Greenaway, UAE is a major player in world trade and that it has been the most significant Middle East trade partner for the European Union,US,Canada and Japan (61).
UAEs religious and historical influences combined with a progressive attitude and broad economic opportunities make UAE a most fascinating and unique place to do business Communicaid (1).Communicaid observes that a proper understanding of UAEs unique culture is vital for those wishing to profitably do business in the Emirates (1).
Samsungs International business strategies
Samsung Company originates from South Korea. The Samsung Group of companies is made up of many international associated businesses like Samsung Electronics, Samsung Heavy Industries, Samsung Engineering, Samsung C &T, and Samsung Life Insurance among others which are united under the popular Samsung brand.
Samsung began to rise as an international corporation in the 1990s.It is during this same period that Samsung changed its strategy from an emulating cost leader to a differentiator. Rowley and Paik notes that Samsung sold off ten subsidiaries downscale and amalgamated operations so as to concentrate on three sectors in order to form the groups core namely Samsung Electronics, Samsung Heavy Industries, and Samsung Engineering and construction (11).
Samsung Electronics is the worlds largest technology company in terms of sales volume. In fact, Samsung brand is particularly popular because of its consumer electronics brand. For example, Giudice, Peruta and Carayannis points out that Samsung has been the worlds most popular consumer electronics brand since 2005 and is the best known South Korean brand in the world. (P.66). Samsungs electronic products from mobile phones to smart TVs are popular in the UAE markets.
Even though there are numerous advantages that accrue from a companys expansion into international markets, proper international business strategies must be put in place by the management in order to reap the benefits of economies of scale.
As Samsung approached foreign markets against a background of the popular Asian money crisis in the 1990s, the firm underwent important strategic changes in order to stand a chance of succeeding in international business as well as domestic business Mathur (269).
The firm shifted from being a company driven by technology that was largely imported into a firm that was driven by the market. In its international business, Samsung has successfully embraced a market driven strategy that is receptive to change Mathur (269).
According to Mathur (269), Samsungs international business strategies have been guided by the firms endeavors to value creation and profitability, the need to become differentiable and one offering distinct value for money to its customers (269).
Its international business strategies have also included innovativeness for creating products and finding new foreign marketplaces, a better understanding of its market places and extensive use of R&D to develop new products for its customers whose taste and preference is constantly changing.
These strategies according to Mathur enabled Samsung to become a recognized international brand by the 2001 (269).Samsungs major competence has been its leadership in digital technology, digital displays and digital wireless since 1980s Mathur (269).
Samsung adapts its products for its different foreign markets. Kurtz argues that the main key to success in international markets lies in a companys ability to adapt its products to local inclinations and culture (216).For example, in order to satisfy its Chinas large and different population Samsung provides different models and price ranges on its electrical devices and electronics Kurtz (216).
Samsung marketers according to Kurtz understands that people who live in the hot and humid climate of Guangdong province require bigger refrigerators than those who reside in the northern parts of China (216).Samsung thus adapts its products to suit the preferences and ways of life for specific markets.
Even though Samsung has been the most popular consumer electronics in the world since 2005, it is bound to encounter stiff competition from other key players like Nokia in UAE electronics markets. According to Giudice, Peruta and Carayannis Nokia has been a first mover for long.
For example, by 2003 Nokia was importing more than five million devices while Samsung was shipping only a few hundreds. In addition, Nokia has been among the forerunners to venture in creation of smart phones and go the directions of foreign markets requiring low cost phones like China and India Giudice, Peruta and Carayannis (66).Samsung has to put on these competitive elements in order to trade profitably in UAE.
Difference between vision and mission in formulation of business strategies
Many people assume that business vision and mission are one and the same thing and even uses the two terms interchangeably. There is however a clear distinction between these two things in a business context. However, the two are integral parts of a business strategy.
According to Stark, a business mission is the unique undertaking or reason for which a company is intended or destined (130). A business mission clearly describes the purpose of the company. He argues that there is a big difference between a strategy and a mission. On one hand a mission describes a companys purpose while on the other hand a strategy describes the way to achieve goals of a company (130).
In a nut shell, a business mission identifies a desired destiny while a strategy describes how the company will reach that destiny. For example, Samsungs mission can be to provide the most superior affordable products for all people in different stations in life while its strategy for realizing that can be through innovation, economical and proper use of resources and skills.
Stark observes that a vision in a business context is a mental image of something in future. So that a business vision describes the desired future state of a company thus it is also different from a strategy that describes the way a company like Samsung will achieve its objectives Stark (130).
Conclusion
To sum up, business strategies are to a large extent universal in nature and even application especially in market economies. What make them different are essentially the diverse business environments of various world economies. So that what makes a firms international business strategy different from its national or domestic strategy is of course diversity in business environments.
Therefore, the most important question that is supposed to bother a firm like Samsung is not whether the market is foreign or domestic but whether there are differences in business environments of its target markets.
If there are no differences then its domestic business strategy need not to be changed in order to succeed in a foreign market but if the business environments are different, new international business strategies must be designed or its domestic business strategies must be adapted to suit its target foreign market so as to reap benefits of expanding into international markets.
Works Cited
Communicaid. Doing Business in the UAE | UAE Social and Business Culture. Communicaid.com.Web.2009. 5th May 2011.
Giudice, Manlio, Peruta, David and Carayannis, Elias. Knowledge and the Family Business: The Governance and Management of Family Firms in the New Knowledge Economy. New York, NY: Springer, 2010. Print.
Greenaway, Daniel. The World Economy: Global Trade Policy 2008. London: John Wiley and Sons, 2009.Print.
Kurtz, David. Contemporary Marketing. New York: Cengage Learning, 2009. Print.
Mathur, Charles. Global Business Strategies. New, Delhi: I. K. International Pvt Ltd, 2011.Print.
Rowley, Chris and Paik, Y. The changing face of Korean management. London: Taylor & Francis, 2009. Print.
The success of a business is determined by the quality of decisions that managers at different levels make. The decisions should be well thought and ensure that at any one point they can facilitate utilization of a companys strengths and it mitigates internal weakness.
The decisions should ensure that a company stands external threats as it takes advantage of opportunities offered by environment it is operating in. S.W.O.T. and T.O.W.S analysis are management tools used to interpolate external and internal strengths of a company. Samsung is an international electronic company with well known brands in the market (Samsung Official Website, 2010).
By undertaking an S.W.O.T. /T.O.W.S. analysis for the company, its stakeholders will understand its market standing. This paper takes a look at S.W.O.T./T.O.W.S analysis of Samsung Company.
Strengths
Samsung has is highly developed in technology; this assisted the company make products which are responsive to customers need all over the world. Its products are respected for their reliability and quality. This has made the company gain a strong brand name.
Customers have become loyal to the company as they are aware and guaranteed quality. In every five months, the company undertakes its level of technology evaluation and aims at being the leader in technological development in line with its mission statement. It also has a well developed art-crafts infrastructures.
The company has a pool of experienced employees who are able to make unique products which the customers want. In decision making, employees are included to give their contributions. This move that has assisted the company improves its products with time. This has created customer satisfaction and helped the company command a large market. The company focuses at ensuring their end customer satisfaction.
Increased population with better lifestyles has created a demand for electronic goods. This results to an increased market that can be tapped by the company.
Weaknesses
The company lacks an innovative mind to make new products; rather it focuses on improving its current products. This hampers its products differentiation since they are similar to those in the market with few improvements. This is a competitor attack approach which may not always work to the good of Samsung.
The company enjoys economies of scale which from a psychological point of view acts to the disadvantage of the company. The large market enables the company to sell its products cheaply, however people tend to think that low cost goods are low quality. This affects the companies market negatively.
As a result of massive investment in technology and products improvement, the companys products are ahead of the level of technology that people in the world have. This has resulted to products which are not user friendly (Goold & Campbell, 2002).
Opportunities
Globalisation has facilitates the movement of goods and services across different countries. If the company is able to differentiate its products, the opened economies offer an opportunity for large markets. It should also aim at offering artefact variation. When this is affected, the company is able to enjoy a larger market share than it currently enjoys.
The company already enjoys customer loyalty, it can further the advantage by offering product variation. At-least it has a base that it can lay foundation for future products developments on. If it aims at increasing the type of products it produces as it improves the current brands, the company is likely to enjoy an increased customer base.
The demand for mobile phones has drastically increased. This is an opportunity that the company should take advantage of. It should venture in the areas more aggressively and aim to produce commodities that satisfy the needs of all classes of customers since phone are bought across the board (Fred, 2008).
Threats
Electronic industry has a number of strong players; they include Sony and Nokia Company. This high competition limits Samsung in attaining its goals and objectives. Competition with these well developed players requires an aggressive management team which makes products which are responsive to the needs of customers.
Some companies like Nokia have concentrates in one area of production; phones, this has made their products quality to be higher than those of companies dealing with more than one category of products. Competing with such companies offers Samsung a problem.
Samsung advertising and marketing methodologies are not excessive; however its competitors have excessive advertising. This threats that the company may lose its existing customers.
The world is recovering from economic crisis which occurred from end of 2007. This is offering a threat to businesses since market has gone down and not predictable (Esquerre, 2005).
Conclusion
Understanding a companys strengths, weaknesses, opportunities and threats is important as it assists management and stake holders in making various decisions regarding the company. Samsung enjoys a high level of technology which results to customer satisfaction; however the company lacks products differentiation.
The external environment offers opportunities for more businesslike in mobile phone segments but the challenge that the company has is high competition from established players. To ensure that the company remains competitive, its management should embrace aggressive marketing and innovations methodologies.
Bibliography
Esquerre, B. (2005). Have You Done Your S.W.O.T Today? Fitness Business Pro, 21(12), 24. Retrieved from Business Source Complete database.
Fred, D. (2008). Strategic Management: Concepts and Cases. New Jersey: Pearson Education.
Goold, M. & Campbell, A. (2002). Do you have a well-designed organization? Harvard Business Review. 80(3). 117-124.
Paley, N. (1999). The managers guide to competitive marketing strategies. New Jersey: CRC Press.
Globalization has resulted in an improved trade among different countries. There is movement of goods and services from one country to another. The policies of comparative and absolute advantage are economic tools which have facilitated the development in international trade. Electronic industry is drastically changing with many phone making industries on the increase.
This has resulted in making of different models of phones, laptops and other electronics. One of the world leading electronic makers is Samsung. It is located in Samsung Town, Seoul, South Korea, and forms the worlds largest conglomerate company by revenue. The main products by the company are Television sets, Radios, phones, Camera tape recorders, and recently it has diversified to a growing laptop market.
The idea to have such a company was coined in 1969 by Lee Byung-chull and started as a small electronic workshop. The companys main mission is to inspire the world to create a better future for human species. The company aims to introduce its laptops to Australia. Australia is the worlds smallest continent but Samsung has not tapped the market with its new development.
This paper evaluates the decision to venture in Australian market, the focus on developing/forecasting options for 2025. It will also undertake this task by evaluating social, economic, political situation of Australia. In the last pages of the report, it will give recommendations on the leadership style to be adopted in the venture.
Brief background of Samsung
Samsung is an international South Korean company which was established in 1969 in Daegu, South Korea as a small electronic shop. The first venture of the company was to manufacture Television sets, radios, Calculators and other home electronic appliances like refrigerators.
This was in the era of black and white T.V. sets and in 1981, the company had made over 10million black and white T.V.s. as opportunities arose the company diversified to other electronic ventures and in 1988 merged with Samsung Semiconductor & Communications. This merger was the door to modern products of the company.
To remain competitive in the changing electronic world, the company has ventured in massive technological development where it has made products aimed at satisfying the end customer. One of the strongholds of the company is technological innovation and development of its products. It also enjoys a large market and thus it can sell its products at relatively low prices.
This move has enabled the company target all classes of population in its countries of operation. Internally the company has a strong working team which it ensures that they are given a good working condition to facilitate innovation and creativity among them. The company understands that the area that it is operating in should benefit from its operations and thus it has embarked on massive corporate social responsibilities.
These responsibilities include tree planting, scholarships, and health programs. In the international market, the company operates in terms of branches of the main company and it has also franchised its name to marketers and sales company but all products manufactured are centrally controlled (Samsung Official Website, 2010).
The following chart shows the core values held by the company;
Diagram 1
In 2009, the company made revenue of $117.4 billion. This was the highest in Conglomerate Company in the world. The major competitors of the company are other electronic companies like Sony, Nokia and LG.
The target market
The company aims to venture in Australian market where it aims to sell laptops. The company already has a branch in Australia; however the branch does not sell laptops. The reason where the venture has not been facilitated is the perceived competition in the country; however as trend in social, economical, and political environments change, by 2025, the company aims to have ventured and dominated the market.
One of the countries that it imports to is Asia. Despite that it has opened its borders for trade, there are supply logistics, which are procedural that must be undertaken when a company is importing into Australia. The move has been attracted by the following factors which exist in Australia.
Population and Economic Trends in Australia
Australian population and the world population are on the rise where the numbers of youths who are enlightened is growing considerably. Australia, the worlds smallest continent with a population of 22,431,468 (Australian bureau of Statistics, 2010), involves itself in international trade to ensure that there is a wide range of products for its population.
On the other side, office spaces are becoming limited and an existence of briefcase companies on the rise. These people however need to communicate with each other and do business. One of the ways of doing this is the use of laptops. On its side laptops will need to be charged, the technology of solar changing can be the solution to this. It is cheap to use and efficient clean technology.
The world is continuously facing an increased population. The numbers of youth and young families, who are continuously adopting modern lifestyle, are on the rise. As a result there is increased demand for laptops. With the rate of population growth, the number of people in the country is expected to double. The increase will offer Samsung adequate market to support its operations and remain afloat in the country.
On the other hand, the company has good relationship with other countries which makes it an international market destination. This will assist Samsung to tap more international customers as they trade in Australia.
The economic growth rate according to World Bank reports is expected to grow at a rate of an average of 4% in the next decade. On the other hand, the after world cup effect will oil to the machinery of economic growth and thus the future of the country can be predicted to be bright as the days go by. As the economy expands, the costs of carrying out business will highly be reduced.
The labor market is composed of both locals and international people living in the country. There are both private run jobs and those that the government has. According to the Australian bureau of statistics in April 2010, the rate of unemployment stood at 5.4% up from 4.4% in the year 2007 survey. There is a minimum wage rate that is determined by the grade that the employee is. This is provided by the labor laws in the country.
The federal minimum wage is of $14.31 per hour and $543 per week (before tax) since October 2008. The largest population of the working class is the youth and students. Each state is given the freedom to set some of the laws that govern them regarding labor. Some of the general rules are that for an immigrant to get a job, he or she must have a Job permit. The economy is a 24 hour economy and thus the workers work in shifts.
The country recognizes the trade unions that are under the bracket of Australian Council of trade Union. The labor unions are the ones that fight for the rights of the employees in areas like wages, weekend, and leave policies. The trade unions have reduced the incidences of strike in the country and of late there is no reported national wide strike.
The employment rate, technological development, and increased living standards that are continuously increasing in the country will create a demand for Samsung Laptops. When people are learned, they understand the need for information and will buy laptops.
By 2020, the country aims to have at least 95% of its population connected to the internet. This move will offer market to Samsung products. To ensure that the company is able to tap the market, it should use the existing branch to introduce the product. Already the company has a strong brand name in Australia
Proposed Expansion Project
The expansion will be to Australia. Samsung will introduce its new product (laptops) in the Australia market. The program will incorporate the following process;
Undertaking a research and market analysis to establish the best way to enter and remain competitive in the market
Expanding Australian Samsung Company; the expansion will be aimed at accommodating the new development
Training managers who will directly be involved in the implementation
Setting targets and strategies to attain them
Samsung have a strong brand name in Australia and its respected for its advancement in technology. The products will enter the market through Samsung branch in Australia. It will also work with Australian local telecommunication companies where it will offer laptops to these companies for sale at a discounted cost.
Information about development or advancing across cultures: A Comparison of Country cultural issues likely to influence the project
Different countries have different culture which can influence the implementation of Samsungs products. In Australia, there are different cultures which are influenced by the origins of various ethnic groups in the country.
Since late 17th century, the culture of Australians can be defined as Anglo-Celtic Western culture, however with globalization this culture has been eroded and only thin streams of it exist. Today, there is a move to the American culture and British culture.
Most of earlier visitors to Australia were Muslims from east Indonesian archipelago. In the 19th and 17th century, most visitors were fishermen and traders. They arrived through the islands of the Malay Archipelago and New Guinea (Caldwell, 1987). The main area that they inhabited was northern coasts of Western Australia, the Queensland and Northern Territory.
They were Muslims who traded with local Indigenous and fished for sea cucumber which was nicknamed, trepang. These early coastal interaction led to intermarriage of Makassar-ese and locals. In the late 17th century, Muslims from African countries which British had concurred came to Australia as sailors or convicts.
The early significant number of Muslim immigrants was in 1800s when Afghan camel drivers arrived from the Indian sub-continent. The different ethnic groups have different perceptions towards Samsung products. Those who originate from countries which have good trade relations with Korea are likely to embrace the move faster and easier than those who originate from countries which are not in good trade terms with Korea.
One of the major breakthrough that globalization has brought is enhancing movement of people from one region to another. Persons of different cultures interact. It is appreciated that human beings develop a certain mode of behavior from factors arising from socialization right from childhood to adulthood. Our values, beliefs and morals are largely influenced by the society we live in, culture, and hereditary factors.
Societies have different mechanisms that are geared to re-enforcing certain behavior deemed acceptable. However, as human beings interact with each other, change their lifestyle or are compelled to change their mode of belief whether consciously or not, a behavior modification, which in most cases conflicts with previously instilled values, occurs. Globalization has enabled people to interact with each other.
They have different culture and the emergence of a global culture is starting to be experienced. Such leads to acquisition of new ways of doing things and cultural exchanges; of the greatest it influence the information and technologys role in enhancing cultural effects.
The consolidation of the media such as the television, the internet, radio, magazines and newspapers from one country find their way to another because of the opened interaction between nations, consequently influencing peoples way of life.
As Australians interact with other countries, they change their kind of lifestyle. The new culture which has been born by interaction as a result of globalization will offer a good trade platform to Samsung as it will reduce the effects of negative ethnicity (Moran, 2005).
Leadership styles needed
For a start, the company should be supported by the head office and the branch. There should be a number of employees who work directly in the local Australian Samsung Company and focus specifically on the promotion of laptop business.
The company will embrace two leadership styles; they are
Distant Leadership
This is a style of leadership where a leader is not with the team but operates by giving instructions from a distance. Samsung head office is the one which will use the approach. Top management of the company will be mandated to use the leadership structure. In this style the leader ensure that he has a well structured team which can be run alone without much control.
He may also operate via micro team leaders who are answerable to him. This kind of leadership has one advantage over other styles in that it offers team members a chance to undertake decisions without always consulting the leader.
They are trusted with programs and thus given a chance to exercise their talents and potentials. The success of this approach in Samsung Company will be dependent on the qualification of the managers of Australian branch.
The weakness of this kind of leadership is that the leader has no control over the actions of team members they may involve in unacceptable conduct with the ignorance of the leader. On the other hand, the style does not create close link between the leaders and the team this hinders loyalty to man the team. Finally, the leader lacks in-depth understanding of issues affecting a team and thus could make uninformed decisions.
Close leadership
The approach will be adopted by the managers on the ground in Australian Samsung Company. This is leadership where the leader is in close proximity with the subordinates. He is with them at all stages and goes through different experiences with them.
He understands problems that his team is undergoing through and participates in decision/solution finding not from a told point of view but an in depth understanding angle. Close relations lead to a team that fully understand each others strengths and devised means of creating efficiency (Williams, 2009).
Managers of Australian branch will be the one to advice and formulate policies to be used in Australia for marketing Samsung New products.
Business communication-development
Business communication is vital for success in all businesses. For an effective marketing and adverting, Samsung must ensure that it understands the most effective internal and external communication strategies to adopt in Australia. Success in this context means, being able to accomplish a particular task or to achieve a specific objective.
Good business communications in relationships either with fellow staffs or customers is needed in order to prosper. Business success can be measured in terms of the practicability of business relationships which is directly proportional to the quality of communication.
Four communication weaknesses or barriers at Samsung are overload of messages, failure to share information among major stakeholders, failure to include employees in decision making processes, and personal attributes. Organizational culture is complex with varied definitions. It includes custom, knowledge, belief, morals, and personal capabilities; it affects the communication efficiency in a company.
Examples of variable that can shape an organizational culture are value, gender, norms and morals which are held by the organization members. Values are the basic principles that make up an organizational culture. Scholars argue that, it is likely that, one can scrutinize the values that are apprehended in a particular organizational culture and make some modifications.
In most cases organizational values are stable and many people disagree with the fact that such values can be changed. Every organization holds different views when it comes to gender. Some view that, men should be given more responsibilities than women while others belief that men should be paid more than women.
Norms are the accepted social rules that guide the behavior of a certain group of people in a particular situation. It is the corporate responsibility of organization executives to posses as well as exercise the ability to shape organizational morals in order to make the organizational culture effective (Guffer & Almonte, 2009).
Conclusion
Samsung is an international South Korean company which was established in 1969 in Daegu, South Korea. It is located in Samsung Town, Seoul, South Korea, and forms the worlds largest conglomerate company by revenue. The company aims at developing an additional expansion which will be responsible for selling laptops in Australia. The move will target to make the company the leading laptop provider in Australia.
It attracts investments due to the following factors; high population growth rate, multicultural practices in the country, strong brand name of Samsung existing products in the country and strategic positioning of the country.
When the move has been implemented, the company needs to have a two stage management, this is where there will be distance leadership (this will be controlled from head office) and close leadership (this is control from local branch). They will aim at developing appropriate market entry and dominance strategy.
Reference List
Australian Bureau of Statistics.(2010). Australias Population. Retrieved from https://www.abs.gov.au/
Caldwell, J. C. (1987). Chapter 2: Population . In Wray Vamplew (ed.). Australians: Historical Statistics. Broadway, New South Wales, Australia: Fairfax, Syme & Weldon Associates. pp. 23 and 26. ISBN 0-949288-29-2.
Guffer, M. E. & Almonte, R. (2009). Essentials of Business Communication. New York: Cengage Learning.
Moran, A. (2005). Australia: nation, belonging, and globalization. London: Routledge.
