A strategic Analysis of Samsung Corporation

The Effect of the Firm’s Primary Stakeholders, Vision, And Mission on Its Success 

The vision of the company is to keep on innovating technologies, solutions, and products that will inspire communities around the world. Since its establishment, it is notable that Samsung has strived to be a global leader in the industry of information technology. In fact, according to the firm’s corporate website, it now owns and manages over 200 subsidiaries that are located all over the globe (Samsung Corporation, 2017). The company, according to its vision, has a total commitment to innovate products, which is why the management has opted for the adoption of a multipronged approach to help manage such innovations. For instance, the firm strategy that helps it to keep abreast of all innovations is composed of worldwide consortiums, which help in the resolving of critical issues related to innovations and technologies. In addition, the approach is composed of top universities around the world, which ensures that the firm controls value for its future products. There is also the approach of synergy with vendors of equipment and material, which ensures that the company controls the manufacturing process in the best way as well as research centers established in overseas destinations to raise the volume of research necessary for the production of new devices (Samsung Corporation, 2017). 

The mission statement of the company can be subdivided into two separate goals, which are qualitative and quantitative. The quantitative part of the mission is easy to measure since the firm hopes to attain a total revenue of $400 billion, which also translates to being the best in the information technology sector around the globe (Samsung Corporation, 2017). Because of such a mission statement, it should be noted that the firm the company has been growing its volume of sales by approximately 17.45 percent each year for the last five years. Such levels of growth have resulted in the firm realizing a total annual revenue of more than $170 billion as of 2016 (Forbes, 2017). Should the company keep the same pace in terms of growing its revenues, they will be able to meet the projected revenue volume by 2021. It should be noted that the company was able to move from the 49 th position in 2008 to 14 th in 2016 in terms of the volume of sales around the world. The firm now has a reputation of being the tenth most valuable business brand. This means that the firm is a step closer to stabilizing its position as one of the best brands in the world in its industry since data reports that it once featured on the top five global list in 2012 (Samsung Corporation, 2017). 

The company has ventured to establish strong relationships with its shareholders while targeting each segment of such shareholders using a different approach. For instance, the corporation periodically meets its shareholders on such occasions as when there is a need to make critical decisions. Among such occasions are when there is a need for the establishment and operation of research centers, the development of strengthened compliance organizations among others. It should also be noted that the company is in direct contact with its clients as well as employees. They are reported as being involved in conducting surveys on their clients so that the management can revolutionize their experiences with the company. The company also strives to ensure that its employees have the best working conditions. The company also engages the entire community from which it operates through participating in events listed on its corporate social responsibility strategy. One of the best examples of such a scenario is when the company collaborated with governmental policy makers in Korea to help in the construction of systems of energy management that lowered the rates of energy consumption by as much as 10 percent (Samsung Electro-Mechanics, 2017). Through such actions, therefore, the company has been able to develop and sustain a strong relationship with its stakeholders, which has resulted the development of a strong brand reputation. It is the strong brand reputation that the company has been able to grow its revenues and establish itself as one of the best companies in the world. 

Porter’s Five Forces of Competition and Their Effects on the Company 

The bargaining power of consumers relates to performance of a company that is affected mainly by the purchasing behavior of its clients (Porter, 1974). Within the information and technology sector, products from different companies are not quite differentiated, which allows the consumers a freedom to transform from one brand to the next at little cost (Samsung Electro-Mechanics, 2017). The case study of Samsung Corporation indicates that sixty percent of its revenues result from hand held devices, which means that the firm prioritizes the consumers (Samsung Electro-Mechanics, 2017). It should be noted that the clients of the company demand that the firm offers them high quality products at low costs. This force from the customers explains why the firm strategy to raise its revenues has mainly been through lowering the prices of its products. The strategy has paid off for the company since reports indicate that the firm was able to grow its revenue from hand held devices by two percent. 

The company further operates in an industry that is characterized by high levels of competition. This factor is why the competitive force of the rival companies affects the nature of the firm’s activities. Some of the companies have been watching out for the technologies that Samsung invents into the market and used them to produce their own products. For instance, the launch of the smart watch by the company saw a rapid adoption of such technology leading in the production of as many products as possible (Pegoraro, 2017). For this case, the management of the firm has been motivated to keep inventing technologies and products, which is why it has managed to sustain a reputation as one of the most innovative companies in the world. 

Studies indicate that there exists a very low threat to entry of new companies into the industry. The reason given for this conclusion is the fact that new entrants are required to develop their products in terms of quality as rapidly as possible to keep at the same pace with the rest of the companies. In addition, Samsung enjoys a relatively large market share, and it has been devoted to ensure it grows it even further. The new companies that enter the further match the strategies of marketing as those used by Samsung. On its part, the firm has been striving to keep the standards of quality in terms of innovation and production as high as possible to avoid chances of new products matching its quality. 

In relation to the bargaining power of the suppliers, it is of critical importance to note that the company experiences as low pressure as possible. The reason given for this fact is that Samsung manages its own supply chain, controlling the production of mobile devices and semiconductors (Williams, Ayres, Heller, 2002). Semiconductors are useful in the production of mobile devices because they are critical component required for such a process. Lastly, in relation to the threat of a substitute product, Samsung does not have such pressure since it uses the latest technologies in the manufacture of its products. In addition, the company has a significant level of investment in research that enables it to be at per with the most innovative organizations such as Apple Inc. 

A SWOT Analysis of the Company 

SWOT analyses are useful in determining the internal capabilities of company through a critical analysis of its strengths, weaknesses, opportunities and threats. Concerning the threats of the firm, it is critical to note that the market for the main product of the company is flooded. This means that the sales of the company are not projected at the highest rates possible both in the short and long term. Companies that have to be the most competitive in the industry have to engage in a serious price war and those that will offer the cheapest prices at the highest quality will survive. In addition, it is noted that the technologies used within the industry rapidly change meaning that the company risks operating on obsolete unless they engage in rapid innovations. In relation to this argument, it is noted that the launch of new products has always been followed by rapid developments in technology to add better features that would make the initial invention obsolete (Lundvall and Borrás, 2005). It is also of critical importance to note that the firm is a holder of more than 100000 patents within the field of technological development (Samsung Electro-Mechanics, 2017). This makes it quite difficult for the management of the company to determine who is using them, which risks the privacy of such patents. 

Concerning the opportunities, literature reports that the developing markets such as those of India and other now present one of the biggest opportunities of profitability because they have not been exploited as much as those of the developing world (Cuervo-Cazurra and Genc, 2008). Samsung has prioritized some of such markets, which includes India. The large population size of the country means that the company stands a chance of benefiting from low levels of competition. Therefore, Samsung has a real opportunity of raising its profitability from the developing markets. This advantage will even work to the advantage of the firm considering that it has a reputable brand name. in addition, it is of critical importance to understand that the company has sustained strong competition for the fact that it owns many patent rights. An advantage in this is that it can use such patents in the acquisition of new firms that will help it increase its product portfolio. 

Concerning the weaknesses of the company, Samsung does not own its operating system for the mobile and other devices. The firm relies on Android and Google platforms as its operating systems. The situation might compromise the performance of the company greatly especially considering that Google is one of its major competitors in the information technologies industry. It is also worth noting that Samsung operates on a very low profit margin since it ventures in the production of high quality products at low prices. The company is only able to make profits for the fact that it have high volumes of sales (Dunkan, 2012). In fact, as Kantar (2013) reports, this is among the reasons that the company has been engaging in aggressive campaigns to increase its market share. 

An analysis of the company also suggests that the firm’s strengths lie in its strong brand reputation that is derived from innovative production technologies. Brand reputation is one of the factors of the development of strong competitive advantages of companies, which explains why the corporation has been as successful as they are in comparison to most of its competitors. Outsourcing production technologies has also been one of the strengths of the company since it allows it to use relatively cheaper technologies, which then transit in the low prices and high quality in comparison to some of its close competitors such as Apple Inc (Kim, 1998). In addition, Samsung manages its own supply chain, which means that it is able to control the production process in accordance with the needs of the market. 

Types and Levels of Strategy that the Company May Use for Improvement 

Samsung should consider the development of its own operating system for its smartphones. First, the company has a well-equipped team of more than 50000 researchers as well as engineers that operate in more than 42 centers of research located around the world ( Samsung Electro-Mechanics, 2017 ). This team could be of a critical importance in the development of a novel operating system that he firm will then adopt for its products. This move will be useful in ensuring that the business corporation stops relying on other companies for the provision of platforms of operating systems. 

The company should also consider launching new developing systems in the developing world because of the potential that such markets have. For example, one of such markets would be that of India, which has an average of eighteen percent of the population of the entire world, yet unexploited technologically. This way, the company will be able to capture the opportunities of low-cost production, little competition, and the potential for high volumes of revenue. 

The chosen strategies for improving the company consist of both business and corporate level strategies. For instance, adoption of the strategy means that the company would be adopting cost leadership and product differentiation at the business level. In this process, the company will be able to engage activities as well as support functions that enable it to produce products at the highest levels of quality that will be differentiated from those of its competitors. On the contrary, at the corporate level, the firm will still be in a position to continue operating at moderately high levels of diversification while adding new products. The newly developed operating system will mean that the company will be in a position to increase its range of products while managing the existing ones. 

Communications Strategy that the Company May Adopt 

The company should first consider the development of a communications plan for its stakeholders. This plan refers to a public relations plan that could be used in the process of advertising as well as marketing the firm as a way of winning the support of its stakeholders (Ulmer et al., 2013). Effective plans of communication can be useful in enabling companies attain their goals, increase the levels of effectiveness in their operations, improve their relationship with stakeholders as well as deliver better results on its brand reputation. In this plan, the firm needs to describe the objectives of the changes they wish to undertake. In this case, the objective of the firm will be raise the volume of sales through increasing the market share enjoyed by the organization. The management of the company should then consider the best ways of communicating to their stakeholders, which could be through the shareholder meetings or the frequent interactions with their clients as it has been doing in the past. 

Strategies of Corporate Governance Used by Samsung 

The management of the company is made up of the boards of directors and board committees. This means that the company has a top-to-down system of management that ensures that decisions on what the company engages in doing are centralized, and that they flow from the top to bottom. The company considers technology and transparent management as the core pillars that support its system of management ( Samsung Electro-Mechanics, 2017 ). Within this system, therefore, the employees of the company are reminded to be as creative as possible to help in invention of new technologies that have been the cornerstone of the competitive advantage that the company enjoys presently. Secondly, the firm has adopted a horizontal model of decision making at departmental level. In this approach, managers incorporate the views of their junior employees in the decisions they make concerning the production process as well as other activities undertaken by management and employees ( Samsung Electro-Mechanics, 2017 ). This approach is an inclusive one, which enables a combination of ideas, a model that encourages workplace diversity. 

Effectiveness of Leadership at the Company 

The corporate governance strategies identified above highlight elements of the system of management at the company. For instance, it is understood that while the company has adopted a centralized decision-making strategy, it has substantial elements of an inclusive workplace. The top management is in charge of making critical decisions upon consulting with the board. In addition, the junior managers are in charge of coordinating the activities of the firm at departmental levels, which is why they incorporate views of the rest of employees in the decision-making process. As much as this system could be effective in ensuing that managers make informed decisions, there might be difficulties in making decisions since the board does not meet as frequently as it may be required to make as many decisions as it may be needed to effect change. Therefore, it is recommended that the company adopts an inclusive system that would stop over relying on the board for all decisions, which will be critical for brainstorming solutions during emergencies. 

Corporate Social Responsibility of the Company 

Samsung devotes to the production of products that eco-friendly. Specifically, the company banks on energy-saving technologies that save energy, which is one of the most common strategies for companies that venture in its industry. The mobile phone devices, fridges, and the rest of the electronic devices are energy friendly, which helps their users to minimize on the costs of energy used to power them (Samsung Corporation, 2017). This plan is one of the sustainable energy strategies that the company has adopted. In addition, the company resolves to give back to the society in which it operates. One of such strategies has been an investment in the projects of clean power production for the community. Other programs involve philanthropy in issues such as the construction of libraries, donation of books and construction of technical schools for children and other categories of students. Such undertakings have been undertaken as a part of the idea that businesses out to take care of the environment in which they operate, including the immediate communities. 

References 

Cuervo-Cazurra, A., & Genc, M. (2008). Transforming disadvantages into advantages: developing-country MNEs in the least developed countries.  journal of international Business Studies ,  39 (6), 957-979. 

Forbes . (2017). The World’s Biggest Public Companies. Retrieved 11 September 2017, from https://www.forbes.com/companies/samsung-electronics/ 

Kim, Y. (1998). Technological capabilities and Samsung Electronics' international production network in Asia.  Berkeley Roundtable on the International Economy . 

Lundvall, B. Å., & Borrás, S. (2005). Science, technology, and innovation policy. In  Oxford handbook of innovation  (pp. 599-631). Oxford University Press. 

Pegoraro, R. (2017). Apple Watch faces smartwatch competition from Fitbit, Garmin and Samsung at IFA . (2017).  USA TODAY . Retrieved 11 September 2017, from https://www.usatoday.com/story/tech/columnist/2017/09/03/apple-watch-faces-smartwatch-competition-fitbit-garmin-and-samsung-ifa/629740001/ 

Porter, M. E. (1974). Consumer behavior, retailer power and market performance in consumer goods industries.  The Review of Economics and Statistics , 419-436. 

Samsung Corporation (2017). Samsung Engineering . Retrieved 11 September 2017, from http://www.samsungengineering.com/sustainability/corporate/eco/suView 

Samsung Electro-Mechanics . (2017).  Corporate Governance . Retrieved 11 September 2017, from http://www.samsungsem.com/global/ir/management-structure/index.jsp 

Ulmer, R. R., Sellnow, T. L., & Seeger, M. W. (2013).  Effective crisis communication: Moving from crisis to opportunity . Sage Publications. 

Williams, E. D., Ayres, R. U., & Heller, M. (2002). The 1.7 kilogram microchip: Energy and material use in the production of semiconductor devices.  Environmental science & technology ,  36 (24), 5504-5510.