Samsung Electronics is rolling out from a company that was insignificant on the globe stage, and known for producing cheap, poor products, to a global leader in gadgets. It has recently become the number 1 owner of smart phones on earth, exceeding the sales of its most important competition, Apple Inc. This survey examines the strategic technology and innovation that is present at Samsung Electronics and considers the way that the company has positioned itself within the industry and the final results of this placement. The discussion targets the smart phone and mobile device component of the organisation, as it has been a particularly important region of growth within the last decade.
Samsung Consumer electronics Co. , Ltd. is an internationally consumer electronics company founded in 1938, with its head office in South Korea. Along using its subsidiaries, Samsung Consumer electronics is responsible for the production, circulation and deal of an array of devices and electronic products throughout the world (Bloomberg Businessweek, 2012a). The products that Samsung Gadgets produces are developed both for individual consumers as well as for industries, and the business is also responsible for the development of network systems (Bloomberg Businessweek, 2012b). In '09 2009, Samsung Gadgets had been running a business for 40 years, and was positioned number one in conditions of sales for those global information technology (IT) companies for the first time. Currently, Samsung Electronics provides around 20% of the global market share for smartphones, and has seen growth in other markets also. The business strives to attain a sustainable progress, and has achieved two times digit progress in 2011 (Samsung, 2012d).
Samsung Consumer electronics is also renowned for its innovation, receiving 30 Advancement Awards at the Consumer Gadgets Show in 2012, which is considered to be the most significant consumer technology tradeshow. The company is focusing on continued progress and hopes to be the first choice in the global IT industry (Samsung, 2012d). Samsung Gadgets faces significant challenges in the present, as well as in the future, including patent litigation from Apple, and a highly competitive IT market. Therefore, it is essential the Samsung Consumer electronics develops a scientific position and strategy that effectively makes use of innovation to maintain a strong position within the market and to get around challenges that it is confronted with.
The reason for this report is to comprehensively look at the scientific position and technology strategy that is utilized at Samsung Electronics, maintaining a strong give attention to the development of the company. Due to the wide range of different products that are produced by Samsung Electronics, this statement will consider one specific business field that may be technologically separated from the rest of the products made by Samsung Gadgets. This field is the mobile marketing communications division. This section consists of mobile phones, including smart phones, as well as computer tablets and MP3 players often collectively referred as mobile computing devices.
Technological Position and Strategy
The technology strategy of any company is based on two key types of information. These are exterior information and inner information. Exterior information is based on the potential of systems and what technologies are worthwhile for the business to acquire and develop. The inner information is targeted on the functions and resources of the business, and considers what potential a business must acquire and excel at particular systems. This section considers a few of the exterior and interior information that's available on Samsung Electronics, and examines what these details means for the technological position and strategy of the company.
Market Show and Approach
Samsung Consumer electronics breaks its mobile communications department into two distinct types of products; they are cell phones and smart phones. The company maintains a comparatively consistent market talk about of mobile phones, moving from a market show of 19. 8% in '09 2009 to 21. 2% in 2011. In contrast, Samsung Gadgets represented only 3. 7% of the smart phone market share in '09 2009, but was in charge of 19. 9% of the marketplace talk about by 2011, which is the very best market talk about out of any company (Samsung, 2012d). This indicates the strong focus that Samsung Consumer electronics has placed on smart phones as an enterprise direction.
The organisation targeted to develop an enterprise that was vertically integrated, so that the products were developed from components and product that the organisation created, somewhat than those sourced from suppliers. Samsung Gadgets' approach to the market significantly evolved in the 1990s, and the business went through significant organisational reform and internalisation, which engaged the introduction of research and development (R&D) within the company, as well as growing strategic alliances. This approach was a substantial step from the initial strategy of the organisation, that was to mimic the products of rival companies. In doing this, Samsung Electronics could differentiate itself from rivals, and begin to build up products that were ground breaking in their own right (Kim, 1997).
Political: Samsung Gadgets markets its products across the world, and because of this, it encounters many political risks in some of the countries in which it operates. In some countries, such as Africa and South East Asia the political environment is turbulent and hostile, which makes it difficult for Samsung Electronics to use. Likewise, the Southern Korean political environment is frequently unstable. In contrast, within India and China, the politics environment is more predictable and conductive to Samsung (Yu, 1998).
Economic: In recent years, the world has been experiencing a worldwide economic crisis, which includes had many impacts on countries, including lowers in job availableness and in the amount of available money that consumers have available to spend. For example, in 2011, consumer spending in america dropped. This is the first time that this acquired occurred within two years, and is thought to be related to the economical crisis, the limited number of careers available, stagnant salary and a reduction in household assurance (Chandra, 2011). A reduction in consumer spending can harm companies like Samsung Electronics, as it can lead to a reduction in sales. Many businesses and individuals are also experiencing increased costs, scheduled to increases in the price tag on fuel. This has resulted in a sizable volume of businesses minimizing their forecasts for profits and sales (Chandra, 2011).
Socio-Cultural: As technology has prolonged to develop and improve, telecommunication has become an essential element of business and entertainment for people throughout the world. This has created a society that is highly receptive to innovations in technology, and has a higher degree of demand for gadgets devices and devices. In the United States, the proportion of folks that own a smart mobile was 16. 8% at the end of 2009 and 27% twelve months later. There's also been a reliable growth in users of data ideas (ComScore, 2011). Consequently, the socio-cultural environment is highly aligned with Samsung Gadgets' seeks and technology.
Technological: The use of smart phones and other devices has resulted in the development of a technical environment that firmly supports the utilization of these kind of mobile devices. Within america and many other countries, for example, there's a well-developed cellular network infrastructure. This infrastructure is critical for making certain data and tone transfers occur proficiently and that there are no delays. However, there are restrictions to the infrastructure. The foremost is that the grade of the infrastructure is not consistent across areas or countries. For example, in rural regions of america, it could be difficult to get a signal or even to transfer data. Similarly, in less developed countries where Samsung Electronics offers its products, the infrastructure may be much lower, resulting in limited services. A second limitation would be that the infrastructure is at the mercy of environmental influences, so extreme weather, such as a hurricane or a surprise can limit or disable the network.
Environmental: The make of Samsung Electronics' products, like the products of most sectors, gets the potential to significantly impact the environment. Samsung Electronics places a solid focus on controlling its processes so that they hold the lost effect on the environment possible. This consists of a significant reduction in the amount of greenhouse gas emissions that are made by the business (Samsung, n. d. ). This concentration allows Samsung Consumer electronics to improve its performance in this area. That is also a positive aspect in terms of obtaining consumer support, as much consumers are concerned about the environment and are more likely to get from a firm that seems to care for the surroundings.
Legal: The legal environment for Samsung Gadgets has been sophisticated due to differing viewpoints bordering the patents used by Samsung Consumer electronics, and one of its main rivals, Apple Inc. Both Apple and Samsung Electronics develop a range of products, including smart phones and other gadgets. Patent litigation has been occurring in many countries across the world between these two companies, with Apple claiming that Samsung Gadgets has infringed its patents in the introduction of their smart phones, and seeking to have a lot of Samsung Consumer electronics' devices blocked from the market (Aljazeera, 2012). This signifies a significant obstacle for Samsung Electronics, and the outcome of the majority of these situations is not yet known.
Porter's Five Forces
Rivalry among Competitive Organizations (High). There exists a big amount of rivalry within the existing industry, specially the large and influential companies, which includes both Apple and Samsung. Competition between these two companies is specially intense, because the products that they develop are similar to one another in appearance and function. The rivalry has led to numerous lawsuits between your two companies, which are reviewed later in this article. Because of the importance of the rivalry between these two firms, and also other businesses within the industry, Samsung Consumer electronics must constantly be aware of the strategies of its competitors, and try to increase is brand recognition, devotion and market share.
Threat of New Entrants (Medium). Samsung Consumer electronics exists in an extremely competitive industry, where companies are competing against one another for not only in conditions of the price of their products, but also their development and uniqueness. New entrants in to the industry would need to producing customer knowledge and branding, which could be difficult, because the current brands are very popular, and there are many proven mobile companies. Companies such as Samsung and Apple produce products that are perceived to be advanced and top of the market, while any new company would need to quite happy with being perceived as a 'knock-off' and low quality. Nevertheless, the history of Samsung Electronics itself implies that it is possible for a business to go from being recognized in this way to a worldwide leader (Samsung, 2012d). Therefore, the largest risk for Samsung Consumer electronics in terms of new entrants into the industry, who have the potential to build up products that are considerably different than those already offered.
There a wide range of barriers to entry into the industry, including the need to build up a strong customer platform and brand acknowledgement quickly, the actual fact that lots of consumers display strong brand loyalty, the capital requirements involved in coming into the industry, federal rules and retaliation by the companies that currently dominate the industry. Samsung Electronics needs to be aware of any new businesses that are developing within its industry, and screen the strategies any new companies that develop.
The Bargaining Ability of Customers (High). The number of opponents present within the mobile device industry reveals consumers with a sizable amount of options. While innovation is a significant aspect for many consumers, price also remains important. It really is relatively easy for consumers to switch from one company to another based on that provides better options and lower costs. Companies within the industry are all appealing to the same group of consumers, gives consumers a substantial amount of bargaining vitality.
One factor that limits the bargaining electricity of consumers is the types of products that can be purchased within the industry. Consumers will not buy a huge number of electric items at onetime, and therefore, each purchasing decision is made based on the options that are available at the time. Strong brand commitment means that many consumers may allow higher prices and fewer services than they could demand usually. Samsung Electronics needs to remain aware of the requirements of the buyer, and the various options that are provided by its rival companies. This helps the company stay competitive, while being aware of how to use the best advantage of its market.
The Bargaining Ability of Suppliers (Low). Inside the mobile industry, there are many suppliers of components, and consequently, it is easy for companies to change from one to some other if the prices of the products from one provider become too high. This reduces the bargaining electricity of suppliers, and allows Samsung Electronics not to be driven by the demands of its suppliers. In addition, unlike most other smartphone developers, Samsung Gadgets also produces ram chips, processors and displays. This creates the abnormal situation where Samsung Consumer electronics works as a company to its major competition. However, this does mean that Samsung Consumer electronics is able to source many components to itself, without relying on an external dealer and the changes in prices that are associated with this (Lee, 2012).
The Probable Development of Alternative Products (Low). Smart phones have been becoming increasingly popular as a tool, offering consumers many functions, including speech calling, applications and the ability to play music. The introduction of substitute products is harmful to Samsung Electronics, as it diminishes the ability of Samsung Consumer electronics to control the market, as consumers can transition to another product easily. Among the strongest factors restricting the development of substitute products is the patent centred aspect of the industry. Lots of the conditions between Apple and Samsung Gadgets have never been decided, however, if it's ruled that either Apple or Samsung Electronics voided patent legislation, then this will make it problematic for any others to develop substitute products, and could even lead to injunctions against some of the products made by Apple or Samsung Consumer electronics.
Substitute products include whatever carries out the same functions as Samsung Electronics' smart phones and devices. This consists of tablets, laptops, PDAs and non-smart phones ('dumb phones'). However, they are limited in their ability to act as a substitute. Tablets and laptop computers are bulky in comparison to smart phones, and they also lack the original functions of the mobile phone. Which means that they cannot be considered a direct substitute. PDAs are also limited, as this is not a location that is being extensively developed, & most PDAs lack the top features of a smart cellphone, or a cellular phone. Finally, a dumb cellphone has the advantage of being inexpensive, and having the calling capacities that exists in a good phone. However, these phones don't have many of the features a smart phone has, including almost all of the applications. Therefore, these do not act as effective replacement products.
Porter's Five Makes analysis is an efficient way of analysing the positioning of an organisation within its exterior environment. This examination demonstrates Samsung Electronics is subject to a sizable amount of competition from businesses that provide similar products, and that there is also a significant risk that new companies will type in this competitive environment. This may make it difficult for Samsung Electronics to continue to develop a competitive lead over other organisations within the industry. The PESTLE research reveals that Samsung Gadgets is a solid organisation which could face some difficulties in the legal and politics areas. The company has strongly centered on the development of smart phones and similar products, although it has also been involved with developing of components, including chips and screens. This gives it a competitive edge over Apple, because it doesn't need to rely on the way to obtain these components from a competitor.
Research and Development
Samsung Electronics firmly focuses on the utilization of R&D in order to ensure the company retains a competitive advantages in the market. By the end of 2011, the amount of investment that Samsung Consumer electronics placed into R&D was $165 Trillion KRW (~ $18 Billion NZD), which represented 6. 2% of the consolidated sales for that period. This number represents an increase from 5. 6% in 2009 2009 (Samsung, 2012c). This process helps Samsung to stay an innovative company, also to stay on the leading edge of new technology and products. Another element of R&D that Samsung Consumer electronics has been concentrating on is bringing together all the disparate the different parts of R&D within Samsung Electronics to within a single area, providing ways to concentrate the attempts of R&D and prevent redundancy between different the different parts of the business enterprise (Samsung, 2012d).
A final aspect of Samsung Electronics' technique for R&D is the introduction of a comprehensive R&D staff to assist in the introduction of new technologies. To do this, Samsung Gadgets has centered on the recruitment of new staff members into the R&D department. Because of this, the R&D team at Samsung Consumer electronics covered 55, 320 workers in 2011, an increase of more than 10% from 2010. This physique represents 25% of all employees at the organisation. Samsung Electronics in addition has focused on the introduction of a comprehensive academia-based support program, which seeks to align the R&D needs of the company with the introduction of encouraging students within academics areas (Samsung, 2012c). While this process does not immediately increase the R&D of Samsung Gadgets, it does provide the potential for increased R&D and innovation in Samsung Consumer electronics in the foreseeable future, as the sponsorship of Samsung Consumer electronics helps it be a well-known name among students expressing skills in the mandatory areas.
Patent Litigation between Samsung Gadgets and Apple
Samsung Gadgets' ability to build up and use technology is tightly related to to the patents that this has available. With a variety of patents, Samsung Consumer electronics has the potential to effectively develop various technologies, while limits in patents hinder their ability to get this done. One significant concern that has limited the business is Apple, which developed a range of products prior to Samsung Gadgets or at the same time that contain many similarities. The two companies will be the most significant competitors within the marketplace for smartphones mobile computing devices (Aljazeera, 2012). Apple feels that lots of of Samsung's devices have infringed its patents which has led to patient infringement instances throughout the world. These conditions have concentrated on cases that Samsung possessed copied the look of Apple's iPads and iPhones in the development of Samsung's smartphones and tablets.
The patents that Apple owns may probably make it very hard for Samsung Consumer electronics to develop new innovative technology and add it into the highly competitive mobile phone and traveling with a laptop market. Observers argue that the patents that Apple has gained are too standard to be fair and provide to stifle innovation. For instance, one of Apple's patents focuses on the design that is used to unlock the screen, while other patents consider design features, like the rounded edges that are present on the device itself and on the icons. The round edges feature is the one that Samsung Electronics uses in many of its products, and argues that Apple doesn't have the patent privileges over the general physical design of the iPhone and iPad, because these are logical designs (Aljazeera, 2012).
While Samsung Gadgets is facing issues with patents in a few areas, potentially restricting its ability to build up and sell some types of products, Samsung Consumer electronics does have a strong patent bottom part of its. One particularly important patent that Samsung Gadgets holds is because of its wireless technology. The occurrence of these patents has allowed Samsung Consumer electronics to counterclaim against Apple's statements, arguing that Apple has infringed on some of the cellular patents that Samsung Electronics supports (Aljazeera, 2012).
Consequently, in conditions of patents, Samsung is fixed in its potential to obtain and grasp many technologies, particularly those that are based on the Android operating system that was initially developed by Yahoo (Aljazeera, 2012). There are many litigation conditions that are being provided in courts throughout the world, which is likely these cases will continue steadily to seem as both Apple and Samsung Electronics continue steadily to produce new products. Furthermore, as the outcomes of these situations are decided, it is possible that a few of Samsung's products will be banned within america. Specifically, Apple is attempting to ban 17 different Samsung devices in a case that happens to be prior to the courts (The Telegraph, 2012). Lately, Apple has further escalated the patent war between the two companies by adding one new device and an operating-system onto the current lawsuit that is going through the courts (Bryant, 2012).
Samsung has recognized the issues that are central to the patent disputes and litigation that is happening with Apple and argues that patent disputes will probably become more common and fiercer, as the global market for smart devices persists to develop. To deal with this issue, Samsung Gadgets has reorganised its intellectual property portfolio, developed an active process of patent application to try and maintain a competitive border, and developed a fervent patent team (Samsung, 2012b). The patent request process has centered mainly on Korea and america, and Samsung Consumer electronics experienced around 100, 000 patent applications at the end of 2011 (Figure 1). This approach helps to protect the business against litigation, and builds up a secure base for the development and utilisation of new technology.
Figure : Range of patent applications created by Samsung Electronics, by country. Retrieved from Samsung (2012b).
Increasing the number of patents is merely one aspect of Samsung Electronics strategy. Another aspect that Samsung has been working extensively with is the development of partnerships to help secure the cross use of patents. These alliances have included Toshiba, Qualcomm, Microsoft and IBM (Samsung, 2012b). This enables the organisation to acquire the protection under the law to a variety of technology, which can be an important strategic way for the organisation.
Samsung Electronics could also benefit from rulings that suggest one of the patents that Apple has been given shouldn't have been given. This has occurred in part because the allocation of patents for software is often difficult, as creativity occurs in a step-wise manner, with one invention building on the prior one. Furthermore, the boundaries between different innovations can frequently be difficult to determine. Regarding Apple's patent, a re-examination by the patent office announced that the patent, which copyrights the 'bounce' feature that Apple devices use, employs an invention that once was developed, even although original innovation was not used for the types of devices that are produced by Apple and Samsung today (Lohr, 2012a).
Samsung Electronics has been growing in power as an organisation, from a position where it was not a significant threat within the market, to its current position today, where it is an important competition with Apple, the first choice within the smartphone and device market. In 2001, the business was rated 42 on the list made by Interbrand, which ranks global brands relating with their value. By 2003, Samsung was ranked 25th upon this level (Rusch, 2003), and in 2011, it was positioned 17th (Samsung, 2012d). This increase shows the way in which Samsung has effectively destroyed into a highly competitive electronics market.
A considerable challenge that Samsung has confronted as an company is just how that it's perceived as a brand. Although the business has been growing within the electronics market, and accepted as a significant competition, producing quality products, it has not necessarily been the truth. Recently, Samsung was regarded as producing products which were simply cheap copies of what was currently available on the market. Samsung products have migrated from being the middle of the range, to prime products that tend to be some of the most expensive products that are available. The high level of competition within the global market has meant that it is no more effective for organisations to compete with one another based on price together. Differentiation has turned into a critical facet of developing and keeping a competitive benefits, and this is particularly true areas where patents prevent products from being too similar. The rise in sales in Samsung Electronics' smart phones is tightly related to to brand development, the presence of strong software and hardware designs, as well as an comprehensive network of global syndication (Chansanchai, 2011).
As an company, Samsung Electronics is at a considerable downside in comparison to its main competition Apple, as Apple has dominated the marketplace for a long time and has a large variety of patents in place. However, in 2011, Samsung Electronics got the best market share in the sales of smart phones, and in 2012, the sales of the Samsung handset Galaxy S3 overtook the sales for Apple's fourth generation iPhone (Griggs, 2012). While this data has an indication that Samsung is increasing a foothold over Apple, your competition between your two companies remains strong. It is believed a significant area of the reason Samsung has seen increased sales over Apple is that the sales of fourth era Apple iPhones got decreased while consumers were looking forward to the next generation of the telephone to be released (Chansanchai, 2011).
Technological Position and Strategy
The previous sections show that Samsung Electronics is rolling out from an company that was identified to produce inexpensive and low quality products to a high quality producer of digital products that competes head-to-head with one of the giants of the industry. Samsung Gadgets' technological position and strategy has been strongly centred on the development of smart phones, making use of Android's operating-system and creating something that is superficially similar to the products developed by Apple. By using proper alliances and R&D within the organisation, Samsung Electronics has had the opportunity to differentiate itself from its opponents, and create a strong patent foundation, which allows it to continue to innovate and develop services. Furthermore, the vertical stratification of the organisation gives it a competitive benefits in the marketplace, as the organisation doesn't need to count on suppliers approximately other organisations.
A significant part of Samsung Gadgets' technology strategy is the utilization of advancement and the way that the company manages technology. Samsung is a South Korean company and although it has now expanded across the world, its roots remain in South Korea and the ethnic influences of the region are essential for the company's prior and current development. Many successful brands that contain developed from within this culture, including Samsung Electronics. One significant social beliefs that has affected companies has been the school of thought of moving from imitation to creativity (Kim, 1997, pp. 85-90). This point of view is noticeable in many of the products that Samsung Gadgets has produced, especially in the similarities that can be seen between many of Samsung Consumer electronics' smart phones and the Apple iPhone and iPad devices.
Innovation is a significant part of Samsung Consumer electronics' strategy, and is designed to offer consumers an array of choice. This approach has been especially common within the tvs that are produced by Samsung Electronics, and also other pieces of technology. For example, Samsung Electronics is rolling out Smart Television set models, which contain a slot at the trunk that enables consumers to remain up-to-date with technology as it boosts with no need to purchase a fresh television model each and every time. Another aspect of these tvs is the utilization of a web browser on the tv screen, which users are able to control using their hands, alternatively than use a physical mouse (Cherrayil, 2012). However, this same level of innovation has not been seen within the smart phone market, where Samsung Gadgets has remained mostly within the techniques used by other companies, specifically Apple.
Despite a strong focus on creativity, Samsung Electronics does indeed still have organisational factors that limit the effectiveness of innovation. One issue that the business focuses, is that the departments involve in the production of products are not often mixed up in early stages of any new product. Furthermore, the products that the business develops are often chosen for the impact these will have in the short-term, rather than any long-term outcomes (Kin, 1997).
Currently, Samsung Gadgets is accepted as the 17th best brand internationally, and the 38th most admired company, which really is a position that Samsung Consumer electronics hopes to improve. The organisation is designed to reach electronics sales of $400 billion USD by 2020, a target that is more than double their current level of sales. In addition, the company also aims to be one of the very best five global brands, and top in the most popular companies, also by 2020 (Samsung, 2012d). Although Samsung Gadgets is growing as a firmly competitive electronics firm, that is contending with businesses such as Apple, the business enterprise still has significant progress it need to make before it is counted within the top five or top ten brands worldwide.
Develop an activity force evaluating the similarities and variations between challengers' products and products by Samsung Electronics.
Use the info gathered in this technique to ascertain key the different parts of Samsung Consumer electronics' products that are similar to other products
Determine techniques these aspects could be altered to avoid violating copyright. For instance, one patent struggle has focused on the 'bounce' feature developed by Apple, when users over scroll on these devices. To get around this, Samsung Consumer electronics has removed this feature from their recent devices and replaced it with a blue shine (Lohr, 2012b). This is one of these of the procedure, but it requires to be employed more often and in a more uniform manner
Focus on the development of new, impressive technology that are significantly unique of products developed by competitors
Samsung Gadgets' smart phones are often seen as similar or effectively similar to the smart phones developed by Apple, plus some versions show up almost identical when put next side by side. Differentiating the merchandise of Samsung Gadgets may prove to be a substantial competitive advantage for Samsung Electronics
This allows Samsung Gadgets to retain its competitive position within the industry even if Apple is victorious all or the majority of the patent litigations that are occurring throughout the world
Develop a solid marketing strategy that helps bring about the distinctions between Samsung Consumer electronics and similar companies
This really helps to create the image of Samsung Electronics instead of Apple and others, and an alternative that offers different advantages and disadvantages
Samsung Electronics has developed into a solid global company, despite once being regarded as producing cheap 'knockoffs' of products, somewhat than anything high quality of their own. Through the reorganisation with their company and a concentrate on R&D, Samsung Gadgets is rolling out into a strong make within the gadgets industry, and became a global innovator in the smartphone market. Although Samsung Electronics has experienced significant growth, it still encounters challenges in the foreseeable future. One of many challenges that Samsung Consumer electronics is experiencing is the patent litigation that is occurring between Samsung Consumer electronics and Apple, and the lack of differentiation between your companies. The very best way that Samsung Electronics could take for future years is to attempt to differentiate itself from Apple, and also to create products that do not associated risk infringing on the patents that Apple already has in place.
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