1.0 smarter lifestyle. On being operational in the
Samsung is a multinational
Korean electronics company engaged in designing, manufacturing and marketing
mobile communication and other media devices, as well as related software,
accessories and third-party applications. They are one of the most well-known
electronic brands in the world. According to Mintel (2017), Samsung is still
the world’s number one smartphone vendor and along with Apple they dominate the
smartphone market with 66% of the market share. Samsung currently operates in relatively
84 countries and have hired more than 320 million employees working for them.
In the recent period, it has been focusing on making products that help people
lead a better and smarter lifestyle.
On being operational in the
global market, Samsung has been subjected to various kinds of pressure.
Therefore, the focus of this report is show while formulating an international
strategy how Samsung should take both environment factors into consideration
that will shape their business approach. The analytical business tools namely
PESTLE and Porter Five Forces will be used to understand the micro and macro
environment drivers of Samsung’s strategy.
2.0 PESTLE (Macro Environment)
This business tool is used as a
strategy to explore the macro environment of Samsung and identify how future
trends in the political, economic, social, technological, environmental and
legal environments might have impacts on their organisation on a global scale.
In the UK, in terms of Brexit effects,
inflation has lead general prices to escalate, in part due to the weakening
pound which has fallen against the US dollar. Though, Samsung has not been much
influenced much as their prices have stayed the same. But in the near future
there is a probability of falling behind as their rival Apple have already
raised their prices on its UK App Store by almost 25%
Nevertheless, due to the ongoing Samsung’s
home country tension with North Korea, Samsung has faced powerful political
instability but also the threat of a military conflict in the Korean Peninsula.
Overall Samsung has a quite low political risk as they are geographically
diversified and their administrative representation is measured with strategic
calculations. Samsung’s business is
spread over 84 countries and any kind of geopolitical turmoil in any of the countries
will result in a loss.
The Economic environment in
which Samsung is operating is based on riskiness and volatility making sure
that the company enhances its strategies appropriately. Also due to Brexit, a
quick depreciation in Great Britain Pound was noticed. This has lead Samsung
develop an encroaching push into the emerging markets in order to compound for
the lost business from the advanced world.
Due to the rapid transitions
taking place in the markets with high volatility in the emerging stock markets as
well as invariable fluctuation in exchange rates has had an important impact on
the world economy. Samsung has sales over KRW 200.7 trillion (South Korean
Won). To this we can say that, Samsung on one side is impacted by economical
forces and on the other they have an essential impact on the total world’s
economy. To such a degree, the rising economic activity can be highly
profitable for businesses like Samsung and vice versa. The electronics market is experiencing an increase in sales due
to the high spending power among individuals.
According to Mintel (2017), there is a
behavioural shift in the way consumers are buying phablets as they are more
inclined to use phones which can perform more complex tasks, such as gaming or
online shopping, thus explaining the decline of tablet sales for Samsung.
Samsung operates in a fast-moving consumer market
that is strongly persuaded by the lifestyle preference of consumers and keeping
in mind that socio cultural factors are different in each country, so thus
Samsung noting its brand image has to take care of the cultural element and re-strategize
itself in each market accordingly. Also, the trend of marketing via social
applications implicated by Samsung has boosted the consumption of their mobile
In order to understand the gravity of the
consumer culture and market, Samsung has invested 7% of their total revenue
into research and development.
Technological factors are regarded to be the
key force in an electronic industry. Samsung
acquires advanced technology that enables the company creating latest
innovative smartphones. Samsung has always been progressing beforehand
of its rivals in making new developments in smartphone technology in terms of
more features, versatility and adaptability (Mintel 2017). The distribution
channels used by Samsung for sales are diversified to supply every need of the
customer, with online shopping as well as in store options available. They have also invested nearly 14.8 KRW (Korean won) trillion
in research and development. Samsung’s technological position has improved by
hiring best designers and engineers that help them in creating innovative
products and achieve remarkable performance.
Samsung has an advantage of harnessing power
of innovation, driving technology and a vision to dominate competitors with being
first to lay down latest products in the market. Technology has helped Samsung to maintain effectively in
On a large
scale, Smartphone-based virtual reality headsets and wireless charging
technologies are highly in demand among the present generation consumers.
for Samsung has been quite big and severe. From a long time, the patent
infringement suits by Apple have lead Samsung unbinding billions of dollars in
damages and resulting in huge loss for the company. Also, Samsung has been accused of violating
rules & and regulations at workplace by abusing their workers and not
paying them on time. There could be a possibility that these individuals
working for Samsung would then join the rival companies, risking the leakage of
innovative ideas and thus placing the firm’s reputation at stake.
had a very enduring PR team in UK making them able to wriggle out of the legal
web in the developed market.
Businesses are compelled by national and
international standards to conduct their operations in a manner which limits
their negative impact on the environment (McWilliams & Siegel, 2001). It
means that companies shall ensure that the working conditions cannot be
compromised in making the final product.
After the downfall of Galaxy Note, Greenpeace
had scrutinized Samsung for failing to address how they will be disposing
millions of those recalled phones around the world. Over the period, Samsung
with the has taken firm steps towards importance of environmental
sustainability. For example, Samsung’s LED TVs are now manufactured without the
use of mercury which could be dangerous to the environment. They are moving one
step ahead to recycle and produce eco-friendly product.
3.0 PORTER’S FIVE FORCES (Micro Environment)
This business tool is used to
explore the analytical framework from five individual forces that shape the overall
extent of competition in the industry.
3.1 Bargaining power of Suppliers
Samsung’s success story could be defined by their profit
margin products as they cheaply manufacture their components from the Asian
Market. They have the high capacity of developing software on their own, like
how their rival Apple develops the IOS system.
3.2 Bargaining power of Customers
Samsung considering that customers have abundant
choices to purchase a smartphone have put forth an aggressive pricing technique
by investing a huge sum of amount on marketing to target all divisions. Samsung
can strengthen their bargaining power by building customer loyalty, to bring a
situation they can overcome customers unwilling to change their purchasing
decisions from one brand to another.
3.3 Rivalry among existing firms
As mentioned earlier, the electronic industry has been
fierce than ever, yet Samsung was able to capture most of the market share. However,
Samsung is not able to match Apple’s marketing capability. They have made a great
investment in R to keep them up producing with the latest technology innovative
products which differentiate their products from others.
3.4 Threats of new entrants
Xiaomi smartphones have been produced through mastered quality
techniques as well as being cheaper giving them a competitive edge over
Samsung. They have been producing android devices that have similar specifications
that of Samsung, reflecting in a new threat.
Threats of substitute products of services
There are many brands in the market apart from Apple
that operate low but at a possible current competition to Samsung. The threat
of substitute is comparatively low, but new substitutes may be created in the
future as technology develops quickly.
Samsung is a global leader in the consumer electronics market, the
company reputation, including their ethical behaviour, from human resources to
other can have a large impact on the environment and it can influence to their
From the analysis in Samsung’s industry
using the business tools PESTLE and Porters Five Forces, it was able to
conclude that the current micro and macro environment has given us an insight
about how Samsung faces competitive pressures and battles for dominance in the
electronics market. Samsung has faced many political and legal scandals which
resulted in hurting their economic cash flow structure. Samsung have been
complemented by their investment in research and development facilities in order
to strategize adapting globalisation. The company is prepared to expand its
global footprint as their current practices are in line with the demands and
realities of the consumers. However, the competition is fierce but the ethical
behaviour of Samsung has helped them to increase their revenue each year by
launching innovative and tech-savvy products at a compatible price.