Samsung Competitive Strategy - Case Study Example

Samsung Competitive Strategy Analysis Name: Institution. : Samsung Competitive Strategy Analysis 1. Introduction Samsung is a South Korean based company that is specialised in production of various forms of electronics devices. A range of products is produced by the company for the purpose of meeting customer demands. The main flagship products produced by the company included Samsung electronics (SEC), semiconductors, cellphones, TVs and LCD panels. This was followed by diversification of the company into other services such as machinery, shipbuilding and chemicals. The company ventured into global operations in 1987 when Lee Kun-Hee took over as the chairman of the company. The company faced high competition from other companies in Japan in production of cameras and audio-equipment. Due to the present global competition, the company has been forced to enhance its global presence by understanding customer demands and ensuring they are met while competitors do not attract its loyal customers. Samsung products accounts for a fifth of products exported from South Korea (Clinton and Graves, 1999, p. 65). The company has become a flagship in the South Korean economy and it has been involved in various forms of innovation to improve the competitiveness of its products. This paper illustrates the strategies used by Samsung to maintain a competitive advantage and compete favourably with its competitors. 2. Key Product Streams of Samsung In the production of digital media devices, the main products produced by Samsung include CTVs, monitors, DVDs, VCRs, camcorders, printer and Personal Computers. In the sales of digital appliances, the main products produced by Samsung include refrigerators, air conditioners, microwave ovens, washing machines and vacuum cleaners. In the sales of semiconductors, the main areas of specialization include the sales of SDRAM, flash memory devices, display driver and DDR (Daidj, 2015, p. 83). In addition, Samsung involves in the sales of telecommunication devices such as cellular phones, systems for communication through mobile phones, furthermore, Samsung is involved in production of LCD products such as cellular phones, mobile communication network systems and optical cables. The company is also involved in production of mechatronics. 3. An Analysis of Design and Nature of Samsung’s Operations 3.1. Key Processes that Exist An example of a key process used by Samsung to maintain a competitive over its competitors is the leadership technology by conducting massive research and development in areas where improvements need to be made in the provision of its products to customers. An example of an area where research has been enhanced to improve competitiveness of Samsung is the suitabilitity of GE’s Six Sigma in management of its processes. this strategy has been found to fit well in the process of improveing continuous tasks of the company. In addition, more research has been conducted on the suitability of profit-sharing program that enables all employees as well as managers become eligible for bonuses as a percentage of their salaries. This is aimed at ensuring the company implements a culture of all-inclusiveness in the process of meeting the welfare of its employees. In the effort to prevent free-fall, the company plans to create reforms in the product line-up and considerably enhance product competitiveness for each product. The company plans to use new materials and technologies that include metal frames and flexible displays so that its devices can be set from rivals. The company is also working on differentiated software and the use of components that reduces the cost of phones produced. The company does not intend to scrap the old designs but it will think strategically to ensure products are differentiated for various prices. For instance, the company intends to provide a wide range of devices that can be afforded by various consumers. A number of models have been developed for release such as galaxy S5 Active and Galaxy S5 Sport. Other variants include Galaxy S5 Mini and Galaxy K Zoom that has a camera as well as the ability to access the internet at a high speed. Furthermore, more research is being conducted on development of software such as processors and screens in addition to hi-tech features such as curve displays. This is aimed at attracting more loyal users of the mobile handsets produced by the company. In addition, more investments have been made in software, hiring a number of new engineers as well as starting operations that include Media Solutions Center. In addition, the company has invested in partnerships with tech leaders with the aim of ensuring there is a shift in perception from value-brand to premium brand (Delios & Singh, 2013, p. 53). For instance, Samsung has partnered with Yahoo, Time Warner Cable and IBM. In its partnership with Time Warner Cable, the company has formed strategic alliance for interactive broadcast service. In addition, Samsung has developed the strategy of increased research and development in provision of high quality electronic devices. The company invested $9 billion in 2011 in research and development activities. The company is also submitting patents, which will ensure it has the exclusive rights of distributing its branded products and services. Samsung has been able to secure a number of patents through partnerships with organizations such as IT companies that produce mobile phones and other digital products such as cameras. the partnership has enabled Samsung obtain a number of basic rights related to MS operating systems and technology synergies has been generated in development of mobile phone products. for instance, in 2011 the original technology of STT (Spin-Transfer Torque) RAM that enables generation of various forms of semiconductors was acquired by Samsung through the acquisition of Grandis, a company that produces the semiconductors. in addition, the company has obtained patents rights for the production of medical device manufacturers of Medison and Prosonic. The main areas of research and development include creation of products that are satisfactory to customers based in customer perceptions. The company has also developed a unique philosophy of design. This is where an emotional journey is created that puts more focus on integrating a complex lifestyle, versatile convenience and emotions from customers so that a more exciting consumer reaction is achieved. Furthermore, Samsung uses the strategy of improving quality of its products by promoting quality awareness and ensuring the culture is implemented in the organization. The company has come up with a new slogan called ‘Perfect in Quality beyond your imagination’. This slogan is focused on ensuring Samsung provides quality products in various parts of the world so that it can take pride in leading customer satisfaction (Gong, 2013, p. 155). To achieve this objective, the company has developed a code of conduct that includes: Customer Centric, Professionalism and quality Services among others. For instance, in 2009, the company came up with the Suwon Plant that targeted defects and addressing complaints raised by customers. The centre is currently under use in an effort to reinforce the mind-set of employees regarding the commitment of the company towards provision of quality products. In the leading in quality technology management, the company has set up a lab where possible quality defects can be eliminated and reliability of the products is improved. There are analysis equipment that enables development of safe products from the first stage of development. The company also focuses on activities that eliminate inconveniences during the use of its products and ensure customer insight is incorporated (Ireland, Hoskisson & Hitt, 2008, p. 255). This is achieved by operating an evaluation lab that creates a residential environment to determine the real-life situations and difficulties that face those who use its products. The company also recruits home makers and students to participate in consumer review to enable an understanding of the ease of use of its products. 3.2. Sources of the processes Samsung uses various sources for the processes it is involved in during improvement of its competitive priorities. An example of a method used is benchmarking. This is the process where a company observes the strategies used by competitor companies and developing similar strategies in provision of its products and services (Michell, 2010, p. 203). In Samsung, the benchmarking strategies that have been implemented include methods of creating apps that are pleasant to customers as well as ensuring the right methods of advertising of its products and services are used. Another source of the processes is increased research in the internet. This is where the right strategies of creating a competitive advantage are developed so that the company can provide more competitive products and services that meet the needs of customers. For instance, the company conducts research on the latest technologies that can be applied in the manufacture of its mobile handsets as well as televisions and other forms of electronics. Another source of the processes use by Samsung is customer survey that is conducted by a team of experts appointed by the company. The main survey involves conducting studies on the extent to which customers are satisfied with the products and services of Samsung (Clinton and Graves, 1999, p. 322). The company is also involved in devising methods tailored towards each product and customer characteristics in a particular region to provide high level of customer satisfaction. This involves conducting customer surveys in various parts of the globe each year. The outcome of the survey is implemented in taking actions to improve the products and services offered by the company. 3.3. Strategies for Handling Competitive Priorities The main strategy for handling competitive advantage used by Samsung is provision of excellent customer service through various methods such as engineer training. This is where field repair engineers are provided with training that enhances their competences and skills. The main areas where the programs are focused include interactive training through the web and overseas training (Daidj, 2015, p. 52). The main activities done by the engineers include: designing the mobile phone devices so that smaller devices can be created, upgrading cameras and differentiating their functions to meet particular user needs and making the devices more competitive in terms of price. The engineers are also involved in conducting research on the relevant software that can contribute to customer satisfaction and loyalty. The engineers are also provided with competence in the areas of error prevention and engineers are provided with internal certification and consultants in various parts of the world have been contracted to provide additional support in improvement of the qualities of products sold by Samsung. The company also provides various services that are delightful to customers. For instance, the company provides free after sales services for broken electronics that have been bought by the customers. The company has been ranked number one in TV, mobile phone and refrigerator services in the United States. The company is also involved in domestic activities where it mainly focuses on management of products, bonus point provision for loyal customers and warranty on products of the company. There has also been an upgrade of Samsung Electronics website so that customers are able to access it and see the contents of the website. Furthermore, the company is involved in provision of logistics services by enhancing its activities in such areas as product inspection and product delivery installation. During the peak season for air conditioner installation, the company has been involved in preparation of checklist for inspection as well as making follow-up phone calls. Furthermore, Samsung is involved in logistics services by providing value that goes beyond installation and delivery. The company also provides a follow-up service that enhances customer experience after delivery and installation (Delios & Singh, 2013, p. 33). The company is involved in prevention of defective work through self-inspection as well as making follow-up phone calls. As a result, it has been possible to eliminate customer complaints and customer loyalty has been achieved. There are also various forms of after sales services offered by the company so that customer enquiries can be addressees. The company offers a differentiated after sales services aimed at responding to the interests of customers. For instance, the company provides a 30-minute service and a one day express service. In addition, Samsung has implemented a strategy aimed at addressing the issues affecting customers of the company followed by offering training of engineers in the areas of customer service. The repair process has also been enhanced through introduction of engineer-manned centres and opening service centres in major locations and management of call customer inquiries. Another area where the company puts more emphasis is management of customer complaints. For instance, in 2009 a total of 49 million inquiries were received by the company in the areas of product purchase, repair and use. This is estimated to be about 10% increase compared with 2008 where 44 million complaints were received (Gong, 2013, p. 402). The company has taken swift action to handle the enquiries through regional contact centres and the website. In order to achieve a systematic management of complaints and enquiries from customers, the company has established an integrated customer management system for various subsidiaries in other parts of the world. This has been important in gaining valuable insight into the needs of customers as well as offering product planning information and development of sales and services. Furthermore, various subsidiaries are operating response networks aimed at addressing potential product safety accidents in a swift and effective manner. Each subsidiary of the company operates a response network aimed at addressing the potential product safety accidents in a safe and effective manner. Samsung electronics also put more emphasis on providing quality products to its customers. This involves testing all elements that have the potential to compromise the safety of the product through consideration of particular product use in real life situations (Ireland, Hoskisson & Hitt, 2008, p. 241). Tests are conducted by directing the operations of Samsung internationally through accredited bodies in 12 other countries. This implies that electronic products from Samsung are safe and accepted in various parts of the world due to its high quality standards. This is an illustration that Samsung electronics have proven potential in product safety as well as ensuring the needs of customers are satisfied. 4. Strategies that would be most Suitable according to Hayes & Wheelbright’s Product-Process The Product-Process suggested by Hayes and Wheelbright provides a strategy that can be used by Samsung to enhance its competitive advantage. Structurally, the concept can be represented by rows and columns; where the columns represent the product structure that includes low volume standardization of a product followed by multiple products in low volume, then fewer products that are produced in high volumes and finally high volume products that are produced in a standardized manner (Michell, 2010, p. 132). The rows represent the structure taken during execution of the processes. For instance, it involves jumbled flow that takes place at the job shop, disconnected line flow that involves production activities that take place in batches and connected line flow that involves assembly wire. The last process in these activities includes continuous flow that is mainly suitable for larger companies but it is relevant in this case. Diagrammatically, natural flow is a matrix that is sloppy from the top corner to the bottom right (Clinton and Graves, 1999, p. 259). However, this is not restricted and some companies have been observed to deviate from the line. During the movement of a company from the diagonal, it is an illustration that the company is dissimilar from its competitors. In particular circumstances, this can be advantageous to a company. On the other hand, if a company is not able to exploit the advantages that exist in a particular niche, it is likely to be vulnerable to losses due to high competition from its competitors. In order for Samsung to apply this concept, it is recommended that the company needs to recognize its Distinctive Competence. This is where the company determines areas where it is strong in comparison with its competitors as well as areas where they are less competitive compared with their competitors. This ensures the company avoids competition in areas where they are less competitive. In the case of Samsung, this stage involves establishing products and services that are more profitable to other similar companies and less profitable to it and reducing the level of concentration in areas where it is less competitive. Another issue that must be observed when applying this concept is the process of selecting the right combination of product-processes. During the undertakings of various products and processes, the management must understand the association between these elements that acts as a determining factor for the tasks to be performed. For instance, during the process of assembly of mobile phones, the company needs to determine the processes that are suitable to produce a high amount of mobile phones at a reduced cost and labour within a particular time. The third stage that can be implemented by Samsung is organizing the operating units through organization of different units within the company to enable specialization in various portions of the overall manufacturing activities as well as ensuring coordination. A number of examples exist that can be used as illustrations of these issues. For instance, the company can use the strategy of producing fewer products in a standardized manner. This ensures processes are predetermined and the company is able to use assembly methods that ensure a high volume of products are produced with little incorporation of human effort. It also ensures most operations are mechanized so that high volumes of products are produced with high level of consistency. Conclusion This paper shows the areas where Samsung has a competitive advantage in production and marketing its electronic devices since its formation. The company has been involved in continuous improvement to overcome a number of challenges such as increased software development and production of mobile phones of various designs that meet the needs of consumers. In addition, this paper discusses areas where the company has acquired patent so that it has exclusive rights to performance of some mobile phones production activities. There is also a continuous improvement of its products to comply with consumer preferences and the company has invested immensely in research and development activities. Furthermore, this paper explains that Samsung is able to combine various processes and products that ensure it performs its production effectively. This is illustrated by the relevance of Hayes & Wheelbright’s Product-Process in the activities of the company. When the company applies this concept, it will be possible to select the right combination of products and processes so that efficiency is achieved in terms of volumes of production and consistency and reduced cost of production due to waste. However, the paper shows that the strategies used by Samsung in the production of its products are relevant and the company is likely to remain competitive in the production of its products. References Clinton, B. D. and A. H. Graves. 1999. Product value analysis: Strategic analysis over the entire product life cycle. Journal of Cost Management(May/June): 22-29. Daidj, N. 2015. Developing strategic business models and competitive advantage in the digital sector. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=878601. Delios, A., & Singh, K. 2013. Strategy for success in asia mastering business in asia. Hoboken, N.J., Wiley. Gong, Y. 2013. Global operations strategy fundamentals and practice. Berlin, Springer. Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. 2008. Understanding business strategy: concepts and cases. Mason, OH., South-Western Cengage Learning. Michell, T. 2010. Samsung Electronics and the struggle for leadership of the electronics industry. Singapore, Wiley. Read More