By-

Anuj, Srishti,
Lokesh, Sagar,
Saurabh, Syed

Samsung Electronics had emerged as a leader

in the global electronics industry.

Goal of Samsungs New Management:

To develop and market superior products and
services for a better global society.

TOP PRIORITIES :
1) Quality
2) Globaliation
!) "ultifaceted integration

Samsung Electronics #as founded in 1$%$ in Su#on&

South 'orea as Samsung Electric (ndustries& originally
manufacturing electronic appliances such as T)s&
calculators& refrigerators& air conditioners and
#ashers.

1$*1 + The company had manufactured over 1,

million black and #hite T)s.

1$** + (t merged #ith Samsung Semiconductor -

.ommunications.

Samsung Electronics is the global market leader in

more than %, products& including semiconductors such
as /01" & S/ 01"& 2ash memory and hard drives&
digital displays such as 3./ displays& plasma displays
and 43E/ displays & home electronics such as T)s&
/)/ players&

/espite spectacular performance for more than

t#o decades& Samsun could not ignore the
emerging dark realities of the 1$$,s.

'orea had a poor record of intellectual property

rights protection.

Global electronics leaders became

apprehensive.

Samsung started facing di5culty in accessing

advanced foreign technology and high labor
cost.

2,,6 + Samsung surpassed 7apanese rival Sony for

the 8rst time to be rated as the ne# leading and
most popular consumer electronics brand in the
#orld by (nter9brand.

2,,: + Samsung Electronics; handset division

overtook 1merican rival "otorola & making it the
#orld;s second9largest mobile phone maker.

1t the end of 2,,: + Samsung Electronics

e<ceeded the =1,, billion mark in annual sales for
the 8rst time in its history.

This achievement places the company& along #ith

Siemens of Germany& (>" of the ?.S. and @e#lett9
Aackard of the ?.S.& among the #orld;s top three
companies in the electric appliances and
electronics industry.
Today& Samsung brand is the best kno#n
South 'orean brand in the #orld and in
2,,*. >usiness #eek rated Samsung as
21st on the Top 100 Best Gloal B!an"s
#00$. Samsung overtook 7apanese rival
Sony as the #orld;s leading consumer
electronics brand.
g
history
Weakness
Focus on mass market
instead of niche market, this
hampered the growth of the
company.
High investment in R&D.
Increasing competition.
STRENGTH
Spotted the need of changing market
scenario at the right time.
High market share that continues to
grow !o"i#e phones and memory
chips$and %&D.
'he de"t to e(uity ratio continuous#y
improved from)**+ in ,--* to .**+in
,--).
&ompany/s vision was strong and a#oud
to stretch it/s product #ine in a specific
market segment of e#ectronics and
instrumenta# products, in order to meet the
consumer/s needs.
Opportunity
Increase in in e#ectronic consumer
market.
0rowing demand of innovative
products.
0overnment faci#itating the private
companies and #i"erating the ru#es.
High + of younger popu#ation,
which is e1pected to "e the future
market.
Threats
2 #ot of e#ectronics
companies emerging day "y
day.
%ow cost &hinese producers
eroding profita"i#ity.
3ew techno#ogies #ike nano
techno#ogy may rep#ace the
e1isting Samsung/s drum
techno#ogy.

&'4

DR2!

&'4

DR2!

Consumer electronics,

Telecommunications

Information system

Consumer electronics,

Telecommunications

Information system

Fish, fruits flour meals

and machines

Fish, fruits flour meals

and machines

Semiconductors

emory !roducts

Semiconductors

emory !roducts

In 5u#y ,--,, 06I initiated economic #i"era#i7ation.

Reforms such as de#icensing of industria# investment, deregu#ation of

industries reserved for pu"#ic sector and encouragement to FDI.

!olitical

8o#itica##y unsta"#e environment.

India9pak issues.

:ureaucratic issues.
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5
10
15
20
25
30
35
40
Services Manf. Industry Agro GD!"#

!idd#e c#ass purchasing power emerged.

!ore options, and greater e1poser to the wor#d .

Sectors #ike automo"i#es, foods, consumer e#ectronics products,

financia# services and computers.
%I&E %OR'ES MO(E)
R*+al!, w*t-*n *n"ust!,:
(ndustry #as e<periencing 8erce rivalry by increase in industry
capacity and normal cyclical do#nturn.
"any .hinese 8rms #ere ready to enter the market.
.hinese competitors #ere #illing to sacri8ce pro8ts for market share.
Suppl*e!s:
Bith the gro#th of industry& supplier become more concentrated and
#ould oCer 6D discount on bulk purchases.
T-!eat of Sust*tute+ There #as no eCective substitute for memory
chips.
%I&E %OR'ES MO(E)
R*+al!, w*t-*n *n"ust!,:
(ndustry #as e<periencing 8erce rivalry by increase in industry capacity and
normal cyclical do#nturn.
"any .hinese 8rms #ere ready to enter the market.
.hinese competitors #ere #illing to sacri8ce pro8ts for market share.
Suppl*e!s:
Bith the gro#th of industry& supplier become more concentrated and #ould
oCer 6D discount on bulk purchases.
T-!eat of Sust*tute+ There #as no eCective substitute for memory chips.
%I&E %OR'ES MO(E)
R*+al!, w*t-*n *n"ust!,:
(ndustry #as e<periencing 8erce rivalry by increase in industry capacity and
normal cyclical do#nturn. E
"any .hinese 8rms #ere ready to enter the market.
.hinese competitors #ere #illing to sacri8ce pro8ts for market share.
Suppl*e!s:
Bith the gro#th of industry& supplier become more concentrated and #ould
oCer 6D discount on bulk purchases.
T-!eat of Sust*tute+ There #as no eCective substitute for memory chips.
%I&E %OR'ES MO(E)
R*+al!, w*t-*n *n"ust!,:
(ndustry #as e<periencing 8erce rivalry by increase in industry
capacity and normal cyclical do#nturn.
"any .hinese 8rms #ere ready to enter the market.
.hinese competitors #ere #illing to sacri8ce pro8ts for market
share.
Suppl*e!s:
Bith the gro#th of industry& supplier become more concentrated
and #ould oCer 6D discount on bulk purchases.
T-!eat of Sust*tute+ There #as no eCective substitute for
memory chips. %I&E %OR'ES MO(E)
R*+al!, w*t-*n *n"ust!,:
(ndustry #as e<periencing 8erce rivalry by increase in industry capacity and
normal cyclical do#nturn.
"any .hinese 8rms #ere ready to enter the market.
.hinese competitors #ere #illing to sacri8ce pro8ts for market share.
Suppl*e!s:
Bith the gro#th of industry& supplier become more concentrated and #ould
oCer 6D discount on bulk purchases.
T-!eat of Sust*tute+ There #as no eCective substitute for memory chips.
FI"E F#RCES #$E%
Riva#ry within industry;
Industry was e1periencing fierce riva#ry "y increase in industry
capacity and norma# cyc#ica# downturn.
!any &hinese firms were ready to enter the market.
&hinese competitors were wi##ing to sacrifice profits for market
share.
Supp#iers&
<ith the growth of industry, supp#ier "ecome more concentrated and
wou#d offer =+ discount on "u#k purchases.
'hreat of Su"stitute; 'here was no effective su"stitute for memory
chips.
FI4> F6R&>S !6D>%
:uyers;
:uyers were #arge#y 6>!, with no one contro##ing more than ?*+ of g#o"a#
8& market.
6>! wou#d negotiate hard for price as memory represented )9,?+ of 8& cost
and )9@+ of mo"i#e phone cost.
:uyers wou#d pay ,+ premium for re#ia"i#ity of product. :uyers were high#y
fragmented
>ntry :arrier;
>ntry "arriers were high. It invo#ves high capita# investment and comp#e1
techno#ogy.
0>3>RI& S'R2'>0I>S and :%A> 6&>23
Samsung offered over ,?** different variations of DR2!.
Samsung was market #eader in memory chip techno#ogy and constant#y remained
ahead of its competitors.
An#ike competitors, Samsung tried to differentiate "y creating new uses for
DR2!s. Samsung had #aunched new DR2! products with product9specific
app#ications in #aptops and persona# game p#ayers.
It ena"#ed Samsung in creating new markets that were unavai#a"#e to its
competitors "y deve#oping new app#ications of memory and #atest "etter
techno#ogy.
'his had provided Samsung dua# advantage of cost and differentiation over its
competitors.
It was #ike creating :#ue 6cean in every few years.

Samsung faced rising factor costs in Korea.

Retaining a high operating profit margin was

becoming difficut.

!ntense competition in ow"end segment of

both domestic # goba markets.

$igh rate of increase in abor cost.

%nti &''( go)t. reguated wages, but in &''*

due to abor mo)ement, wage negotiations
were eft to the management # empoyees.

Labor cost component in Korea was twice to

that of South Asian products and four times
high as that of +hinese products.

,o)t. cut back on subsidies and e-port

credits.

+ost of goods sod increased by .'.'/ and

genera administrati)e e-penses rose by
0&../.

1arket penetration of Korean goods in %.S.

market fe drasticay.

1arket share2in %.S3 decined from 0.4/ in

&''( to ..5/ in &''5.

Korean market was dominated by 0 payers"

Samsung, L.,. # 6aewoo.

Samsung ost market eadership position to L., in

&''0.

7ntry of foreign firms ike Sony, Sanyo, Sharp,

8hiips, ,7, 9hirpoo made situation worse.
Compan
y
1989 1990 1991 1992 1993 1994
Samsung *5.& *5.: *:.: **.& *&.& *(.;
L, 0;.' *..4 **.* *..* *..; *&.:
6aewoo &:.: &(.; &(.& &0.* &5.& &4.4

There was a need to sought new suitabe

sites to set"up goba manufacturing units.

8anning group shortisted four countries to

Kim" !ndia, <ietnam, Spain # =ra>i.

Kim was intrigued to do business in !ndia as

!ndia was fifth argest economy in word,
third argest ,68 in Asia, second in eading
emerging nations and offered high prospects
for growth.

7conomic iberai>ation in &''& faciitated entry of

pri)ate and foreign in)estors in many industries.

Specia support was gi)en to promote seected

industries to boost e-ports and de)eop
infrastructure.
81-90 90-91 91-92 92-93 93-94 94-95
,68 at ?+ :.: :.* (.; :.& :.( :.0
Agricuture 0.* 0.; "..0 5.& 0.0 *.'
!ndustry 5.' 4.. "&.0 *.& *.. ;.0
1anufacturin
g
4.. 5.& "0.4 *.& *.0 '.(
Ser)ices 5.5 :.. *.' :.& 5.; 5.(

?oreign e@uity participation was increased from *(/

to :&/ in &''&.

!ndia appro)ed %SA&.0 biion in ?6! in &''*"':.

!ndia introduces ibera pant ocation poicy.

!ndia had third argest poo of scientific and

technica workforce in word.

%nempoyment and underempoyment made

unskied # semi"skied abor easiy a)aiabe at ow
cost.

9as the time appropriate for entryB

9oud it be easy to gain a foothod in !ndian

market amidst tough competiti)e scenarioB

9hat shoud be appropriate mode of entry at

initia stage" e-port, joint )enture, technica
icensing or fuy owned subsidiaryB

9hich segments shoud be targetedB

9hat woud be the right positioning and

marketing"mi-B
Issues in Korea:
&"Samsung first issue was it was difficut to retain its high operating profit margin as it was
facing twin pressures of intense competition in the ow"end segment of both domestic and
goba market.
." +ost of goods sod increased by .'.'/ and seing administrati)e e-penses aso rose by
0&../.
0"the poitica reforms process by &''* in Korea, it resuted in rising abor cost as abor
unions demanded better working en)ironment and wages.
*"Cew 7ntries of foreign payers in Korean market which was the resut of dereguation by
&''5.?oreign firms ike Sony, 1utsuhito, Sanyo, Sharp, 8hiips, ,7, Siemens ,9hirpoo and
Loa- were buiding their market infrastructure to impro)e saes ser)ice.
Solution for Korea Maret:
&" +ompany tried to e-pore new opportunity. !t tried to set up goba manufacturing units
from where it coud ser)e a major markets, e)eraging economies of scae to undermine the
competiti)e strength of domestic payers. To do so !t e-panded its goba business in !ndia
and other arge economy nation which had great potentia for growth.
." Samsung estabished its business in de)eoping countries ike !ndia, <ietnam, Spain, =ra>i
9ith eectronics goods ike coor tee)ision, <+Rs, washing machine and air conditioners.
0"!ndia ooked particuary bright for home appiances and coor tee)ision and they did
e-periment with ow price high @uaity product in the !ndian market.
Issues in In!ian Maret:
&"!ndian domestic market was highy competiti)e and price sensiti)e.
."?oreign payers ike L,, 8anasonic, ,rundig and 6aewoo were panning to enter the !ndian
market.
0"=uying beha)ior of !ndian consumers were different as per )ariety in demographics rura,
urban, ow per capita income consumers etc.
*" 8oitica uncertainty in !ndia was high and ack of stabiity of !ndian go)ernment.
Solution
&"!ndia was fifth argest economy in the word, had third argest ,68 in Asia and was second
argest among emerging nation. !ndia had high prospect and earning potentia in practicay
a areas of business. So Samsung did e-periment initiay in !ndian market with its +oor T<
in both rura and urban market.
."=uying beha)ior of !ndian consumers were different but rura consumers were brand oya
than urban. A study conducted by 8hiips in Tami Cadu re)eaed that amost an entire )iage
owned a singe brand of tee)ision such as <ideocon.
0"Aggressi)e ad)ertisement and promotiona efforts, impro)ement in distribution channes
and post sae customer ser)ice increased the market share of samsung in !ndia.
*"Samsung focused on e)ery eectronics goods in !ndian market for e-ampe +oor T<,
9ashing machine, <+Rs, refrigerator, microwa)e, computers.
&" Samsung product were ess costy than Dapanese brands manufactured in
japan and they ost the cost ad)antage o)er Dapanese brands produced in
South Asian countries and aso +hinese brand. They shoud set up pant in
!ndia where abor cost is ess and manufacture product at ow price and high
@uaity and use economies of scae in broader way.
."Samsung shoud focus on rura market of !ndia more than the urban market
as urban market is saturated and demand word cass product at cheaper
price whereas rura customers are more brand oya, need specific features in
the product and ask for )aue for money.
0" Samsung shoud impro)e its post sae ser)ice for the customers and aso
estabish ser)ice center in both urban and rura areas and aso in)est money
in high ad)ertisement and promotions.
*"Samsung shoud use marketing mi- in more efficient manner as !ndian
market is highy competiti)e, )ery much price sensiti)e and ask product
which are )aue for money.

?aced 8robems in positioning of its products

Korean market and !ndian market difference

+ost management was a big probem

Lost most of its market

=oom in mobie

Lost its =A6A

+apitai>ed on android

Again osing its position