This document discusses Samsung's changing strategy in the smartphone market. As competitors like Huawei and Xiaomi produce capable low-cost phones, Samsung will be forced to lower prices and accept lower margins. This is because Samsung, like its competitors, relies on the Android operating system. While Samsung remains the largest smartphone maker, Apple earns the majority of industry profits. Samsung plans to launch more premium and more affordable phones, but analysts believe it cannot compete with Apple on hardware alone without major innovation. Samsung must flexibly adjust prices and launch more low-cost phones to boost sales and market share against growing competition.

1. · Resource attributes for sustainable competitive advantage
(VRIO)
· Valuable – Resource should be of strategic value to firm
· Rare - Resource should be rare in the industry
· Inimitable – high level of causal ambiguity for competitors;
difficult to imitate
· Organization support – firms should be consistently organized
to be able to reap returns from the resource
· The Purpose of a Business-Level Strategy
· Business-Level Strategies
· Are intended to create differences between the firm’s position
relative to those of its rivals.
· To position itself, the firm must decide whether it intends to:
· Perform activities differently or
· Perform different activities as compared to its rivals.
·
·
· Five Business-Level Strategies
· Strategy clock (2)
· Strategy clock – hybrid
Seeks to simultaneously achieve higher benefits and lower
prices relative to those of competitors.
Hybrid strategies can be used:
· to enter markets and build position quickly
· as an aggressive attempt to win market share

2. · to build volume sales and gain from mass production.
A classic example is IKEA.
· Corporate-level Strategy
·
Specifies actions taken by the firm to gain a competitive
advantage by selecting and managing a group of different
businesses competing in several industries and product markets.
· Deliberate and emergent strategy development
· Deliberate strategy
Deliberate strategy involves intentional formulation or
planning.
Deliberate strategy can come about through:
· Strategic leaders
· Strategic planning mechanisms
· External imposition
· Strategic planning systems
Strategic planning takes the form of systematic analysis and
exploration to develop an organisation’s strategy.
But is it this straight forward?
http://www.bloomberg.com/news/videos/2015-01-30/should-
amazon-spin-off-its-growing-cloud-business-
· Stages of strategic planning
· The role of strategic planning
Strategic planning may play several roles:
·
Formulatingstrategy: a means by which
managers can understand strategic issues
and decide future strategy
·

3. Learning: a means of questioning and
challenging current strategy and future
strategic options
·
Integration:co-ordinating business-level
strategies within an overall corporate strategy
·
Communicatingintended strategy and
providing strategic milestones.
· Externally imposed strategy
Strategies may be imposed by powerful external stakeholder:
· Government - public sector (e.g. schools).
· Government - regulated industries (e.g. public utilities).
· Multinational companies - host governments
· Business units may have their strategy imposed by head office
(e.g. part of a global strategy).
· Venture capital firms may impose strategy on companies they
buy into.
· Emergent strategy
An emergent strategy: Strategy is not a ‘grand plan’ but a
developing pattern in a stream of decisions.
Top managers draw together emerging themes of strategy from
lower down the organisation rather than direct strategy from the
top.
· Emergent strategy development processes
· Logical incrementalism
Logical incrementalism - the development of strategy by:
· experimentation and learning
· partial commitments rather than through global formulations
of total strategies
· Strategic direction from prior decisions

4. · Implications for managing strategy development
· Multiple strategy development processes –
· There is no one right way!
· The context can be important
· Need to adopt flexibility
· Understand dynamics at different organizational levels
· Organisational configurations
· Structures and systems
· Structuresgive people formally defined roles, responsibilities
and lines of reporting. The structure is like the skeleton of an
organisation and creates its basic framework.
· Systems support and control people as they carry out
structurally defined roles and responsibilities. Systems are like
the muscles of an organisation that provide movement and
coherence.
· Structural types
· The functional structure
The functional structure divides responsibilities according to
the organisation’s primary specialist roles such as production,
research and sales.
· Functional structure
Advantages
· Chief executive in touch with all operations
· Reduces/simplifies control mechanisms
· Clear definition of responsibilities
· Specialists at senior and middle management levels.
Disadvantages
· Senior managers overburdened with routine matters
· Senior managers neglect strategic issues

5. · Difficult to cope with diversity
· Coordination between functions is difficult
· Failure to adapt
· Multidivisional structure
The multidivisional structure is built up of separate divisions on
the basis of products, services or geographical areas.
· Multidivisional structure
· The matrix structure
The matrix structure combines different structural dimensions
simultaneously, for example product divisions and geographical
territories or product divisions and functional specialisms.
· Matrix structures
Advantages
· Integrated knowledge
· Flexible
· Allows for dual dimensions
Disadvantages
· Length of time to take decisions
· Unclear job and task responsibilities
· Unclear cost and profit responsibilities
· High degrees of conflict
· Transnational structures
The transnational structurecombines local responsiveness with

6. high global coordination.
Key advantages include:
· Knowledge-sharing
· Specialisation
· Network management.
· Project-based structures
A project-based structure is one where teams are created,
undertake the work (e.g. internal or external contracts) and are
then dissolved.
· Mergers and Acquisitions (M & A)
The combination of two (or more) organisations.
· An acquisition - purchasing a majority of shares in a target
company.
‘Friendly’ acquisitions - where the target’s
management recommend accepting the
acquirer’s deal.
‘Hostile’ acquisitions - where the target’s
management refuse the acquirer’s offer.
· A merger – the combination of two
previously separate organisations to form a new company.
· Strategic motives for M&A
Strategic motives can be categorised in three ways:
· Extension – of the reach of a firm in terms of geography,
products or markets.
· Consolidation – increasing scale, efficiency and market power.
· Capabilities–enhancing technological know-how (or other
capabilities).
· Financial gains – increased leverage, access cash
· The acquisition process
· M&A strategy over time
Mergers and acquisitions are rarely one-off events for an

7. organisation:
· Serial acquirers – make multiple acquisitions (often in
parallel). This enables them to build up M&A expertise.
Examples include Cisco Systems and IBM.
· Divestment (or divesture) – the process of selling a business
that no longer fits the corporate strategy. Unless the parent can
provide a ‘parenting advantage’ the business should be sold off.
· Strategic alliances
Where two or more organisations share resources and activities
to pursue a strategy.
· Collective strategy is about how the whole network of
alliances, of which an organisation is a member, competes
against rival networks of alliances.
· Collaborative advantage is about managing alliances better
than competitors.
· Strategic alliances
Where two or more organisations share resources and activities
to pursue a strategy. Types of alliance ownership:
·
Equity alliances involve the creation of a new
entity that is owned separately by the partners
involved. (Joint ventures, Consortia)
·
Non-equity alliances are typically looser
alliances, without the commitment implied by
ownership. (Franchise, Licensing,
subcontracting)
· Key success factors
Key elements in managing M&A and alliances:
· Strategic fit
· Organisational fit
· Correct valuation
· Integration

8. · Co-evolution
· Appropriate exit strategies
· Evaluating strategies
· Gap analysis
· The SAFe criteria of evaluation
· Suitability
Suitabilityis concerned with the overall rationaleof the strategy:
·
Does it exploit the opportunitiesin the environment and avoid
the threats?
·
Does it capitalise on the organisation’s strengths
and avoid or remedy the weaknesses?
· Some examples of suitability
· Suitability – screening techniques
There are several useful techniques:
· Ranking
· Screening through scenarios
· Screening for bases of competitive advantage – using the
VRIO criteria
· Life-cycle analysis
· Acceptability
Acceptabilityis concerned with whether the expected
performance outcomes of a proposed strategy meet the
expectations of stakeholders.
· Risk
· Return
· Stakeholderreactions.
· Reaction of stakeholders
Stakeholder mapping (power/interest matrix) can be used to:
· understand the political context of
strategies

9. · understand the political agenda
·
gauge the likely reaction of stakeholders to
specific strategies.
If key stakeholders find a strategy to be unacceptable then it is
likely to fail.
· Feasibility
Feasibility is concerned with whether a strategy could work in
practice, i.e. whether anorganisation has the capabilities to
deliver a strategy.
Key questions:
·
Do the resources and competences currently
exist to implement the strategy effectively?
·
If not, can they be obtained?
· Feasibility
Need to consider:
· Financial feasibility – funding and cash flow
· People and skills – competences, knowledge and experience
· Integrating resources – obtaining and integrating new
resources.
· International strategy refers to a range of options for operating
outside an organisation’s country of origin.
· Global strategy involves high coordination of extensive
activities dispersed geographically in many countries around the
world.
N.B. Global strategy is just one kind of international
strategy.

10. · Porter’s Diamond – explainswhy some locations tend to
produce firms with competitive advantages in some industries
more than others.
The four drivers :
· local factor conditions
· local demand conditions
· local related and supporting industries
· local firm strategy, industry structure and rivalry.
The global–local dilemma relates to the extent to which
products and services may be standardised across national
boundaries or need to be adapted to meet the requirements of
specific national markets.
· Zara in China
· Coke and Pepsi
· Home replication / Export strategy– emphasizes duplicating
home-country competencies in foreign markets
· Low cost efficiency
· Low local responsiveness
· Wal-Mart in Brazil
· Localization strategy (multi-domestic) – emphasizes each
foreign market as distinctive
· Low cost efficiency
· High local responsiveness
Zara
· Global standardized strategy – emphasizes standardization of
products and services across international markets
· High cost efficiency
· Low local responsiveness
· HP
· Transnational strategy – attempts to simultaneously link cost
efficiency and local responsiveness via learning
· High cost efficiency
· High local responsiveness
· GM and Daewoo

11. Competitive characteristics
Country markets can be assessed according to three criteria:
· Market attractiveness to the new entrant
· The likelihood and extent of defender’s reaction
· Defenders’ clout – the relative power of defenders to fight
back.
· Export - standard products in different international markets –
Garments manufacturers
· Franchising/ License –
· Pizza hut
· Insurance firms
· Wholly-owned by Multinationals - Lack of dependence on
local; Green-field investments
· Toyota in USA
· Joint ventures - Complementary resources, Political
acceptance, shared risk
– BP in Russia !
· Innovation dilemmas (1)
Technology push or market pull
· Technology pushis the view that it is the new knowledge
created by technologists or scientists that pushes the innovation
process (i.e. the outcomes from R & D labs).
· Market pull is the view that it is the pull of users in the market
that is responsible for innovation. ‘Lead users’ are of particular
importance. In contrast, ‘frugal innovation’ isalso important –
sensitivity to the real needs of poorer consumers (e.g. Tata’s
Nano car).
· Innovation dilemmas (2)
Product or process innovation
· Product innovationrelates to the final product (or service) to
be sold, especially with regard to its features.
· Process innovation relates to the way in which a product is
produced and distributed, especially with regard to
improvements in cost or reliability.

12. · Product and process innovation
· Innovation dilemmas (3)
Open or closed innovation
· ‘Closed’ innovation
–the traditional approach to innovation
–relying on the organisation’s own resources
–Innovation is secretive, copyrights
–avoid competitors free-riding on their ideas.
· ‘Open’ innovation
–the deliberate import and export of knowledge
–likely to produce better products more quickly.
– Open exchange of ideas
· Platform leadership
Platform leadership refers to how large firms consciously
nurture independent companies through successive waves of
innovation around their basic technological ‘platform’.
- Microsoft and Sony (in the video games - Intel (in the
computer industry)
- Dyson ?
· Innovation diffusion
Diffusionis the process by which innovations spread amongst
users. This can vary with respect to both speed and extent.
· Innovators and followers
· Evaluating strategies
· Gap analysis
· The SAFe criteria of evaluation
· Suitability
Suitabilityis concerned with the overall rationaleof the strategy:
·
Does it exploit the opportunitiesin the environment and avoid
the threats?
·

13. Does it capitalise on the organisation’s strengths
and avoid or remedy the weaknesses?
· Some examples of suitability
· Suitability – screening techniques
There are several useful techniques:
· Ranking
· Screening through scenarios
· Screening for bases of competitive advantage – using the
VRIO criteria
· Life-cycle analysis
· Acceptability
Acceptabilityis concerned with whether the expected
performance outcomes of a proposed strategy meet the
expectations of stakeholders.
· Risk
· Return
· Stakeholderreactions.
· Reaction of stakeholders
Stakeholder mapping (power/interest matrix) can be used to:
· understand the political context of
strategies
· understand the political agenda
·
gauge the likely reaction of stakeholders to
specific strategies.
If key stakeholders find a strategy to be unacceptable then it is
likely to fail.
· Feasibility
Feasibility is concerned with whether a strategy could work in
practice, i.e. whether anorganisation has the capabilities to
deliver a strategy.

14. Key questions:
·
Do the resources and competences currently
exist to implement the strategy effectively?
·
If not, can they be obtained?
· Feasibility
Need to consider:
· Financial feasibility – funding and cash flow
· People and skills – competences, knowledge and experience
· Integrating resources – obtaining and integrating new
resources.
Case study
Available at
http://www.reuters.com/article/2015/08/04/us-samsung-elec-
smartphones-idUSKCN0Q906L20150804
Samsung glamour days over as it fights to save mobile market
share
For four years Samsung Electronics Co Ltd (005930.KS) has
basked in the success of its Galaxy smartphones, making
billions of dollars competing with Apple Inc (AAPL.O) in the
premium mobile market.
The coming years are set to be more sombre for the South
Korean tech giant, as it is forced to slash prices and accept
lower margins at its mobile division in order to see off
competition from rivals including China's Huawei Technologies
Co Ltd [HWT.UL] and Xiaomi Inc [XTC.UL] in the mid-to-low
end of the market.
Behind Samsung's reality-check is the fact it is stuck with the
same Android operating system used by its low-cost
competitors, who are producing increasingly-capable phones of

15. their own.
"The writing has long been on the wall for any premium
Android maker: as soon as low end hardware became 'good
enough,' there would be no reason to buy a premium brand,"
said Ben Thompson, an analyst at Stratechery.com in Taipei.
Margins at Samsung's mobile division fell to 10.6 percent from
15.5 percent a year earlier during the second quarter of 2015,
despite the April launch of its critically acclaimed Galaxy S6
range.
It remains the world's biggest smartphone maker but it is Apple
that is reaping most of the rewards.
While the U.S. giant's smartphone sales in its last financial
quarter fell short of market expectations, it is still estimated by
some analysts to earn 90 percent or more of the industry's
profits. Samsung said last week that it will continue trying to
maximise profitability and market share, disclosing plans to
launch new larger-screen premium phones as well as more
bargain-priced handsets
Investors and analysts say the group is right to dig its heels in
for a business that continues to generate piles of cash and drives
sales for its components divisions.
But they say Samsung will not be able to compete with Apple in
the premium market based on hardware and will continue to
trail the U.S. firm in the absence of a major technological
breakthrough.
"Some still seem to think that a well-made product will sell
well, but the Galaxy S6 showed that assumption is wrong," said
IBK Securities analyst Lee Seung-woo, who predicts Samsung's
mobile division margins will fall to 9.3 percent this year - the
lowest since before the first Galaxy S phone launched in 2010.
PRICE CUTS
Acknowledging the headwinds, the South Korean firm said last

16. week it will "flexibly adjust" prices of its flagship Galaxy S6
and S6 edge models to boost third quarter sales. Samsung cut
the retail price of S6 edge smartphones in South Korea by
around 100,000 won (55.80 pounds) during July.
The company also plans to launch more price-competitive
products in the mid-to-low end of the market. Nomura analyst
C.W. Chung says Samsung still has the economies of scale to
outlast rivals, adding the smartphone industry will face a
consolidation similar to the one in the memory chip industry
that the South Korean firm now dominates.
"The ones that ultimately survive will then have plenty to be
happy about," said Chung.
Nomura forecasts the smartphone market will grow from $276
billion last year to $315 billion (177 billion pounds) by 2017,
far larger than the DRAM and NAND memory chip markets
where Samsung competes. Further, the mobile division will
remain an important client for Samsung's components
businesses. Use of its own Exynos mobile processors and
organic light-emitting diode (OLED) displays in premium
devices like the Galaxy S6 boosts its chip and display sales and
serves as an advertising billboard for potential customers.
"When everybody comes out to dig for gold, jeans and pickaxes
are what make money; that's what Samsung's semiconductor
business is doing through the smartphone market," said
Nomura's Chung.
(Reporting by Se Young Lee; Additional reporting by Jeremy
Wagstaff in Singapore and Julia Love in San Francisco; Editing
by Tony Munroe and Rachel Armstrong)
Assignment overview

17. Report format -50% of module marks
•2,500 words excluding tables, charts, diagrams, and
bibliography
•Good report writing style with analysis
•Follow the assessment brief
•Researchreliable information sources
–BBC, Financial Times, Economist, Google Books, Industry
reports, journal papers
–Analyse the currentpicture and evaluate options
Tasks to be completed:
Marks
1. Analyse the current position of the organisation in relation to
its competitors using the five forces framework
20%
2. Evaluate the strategic options now available to the
organisation using relevant concepts and frameworks
40%
3. Recommend the strategic route forward and the methods for
implementation of your chosen options.
40%
Assessment Structure
Three tasks that are interrelated
•Follow the tasks to structure the report
•Task 1 then task 2 and task 3
•Investigate a given organisation –Samsung to analyse its
current position, evaluate the strategic options available, and
recommend the strategic routefor its mobile business.

18. •Analyse, evaluate and recommend.
Some analytical considerations
Apply the framework to Samsung’s situation
•For example, what Five forces, or VRIO issues are relevant for
Samsung and how?
–Which strategic resources should be most important for
Samsung in the next few years and why?
–What sort of competitive advantage this firm has?
–What sort of competitive advantage should this firm seek?
Same or different?
–Which strategies are currently used and should the firm
continue or change in some way vis-à-vis competitors in
different markets?
Task 1 -1. Analyse the current position of the organisation in
relation to its competitors using the five forces framework
(20%)
–Five forces
•Understand the framework
•Collect relevant data for different forces –be specific
•Write the five forces analysis
•Identify the threats and any opportunities based on your
analysis
•Important to consider few products and some key markets –US,
UK, Europe, Far East Asia,

19. Task 2 -Evaluate the strategic options now available to the
organisation. (40%)
–Assess the resource position of the firm
•Threshold resources & capabilities
•Distinctive resources & capabilities
•Analyse the distinctive resources & capabilities for their VRIO
potential
•Assess if some individual resources can provided sustained
competitive advantage or some resources combined will result
in sustained advantage?
–Assess the change readiness of the firm
•Forces pushing for change vs. forces pushing against change
Compare different strategic options for each of the following
and discuss their advantages or disadvantages for Samsung
–Corporate strategic directions –should the firm continue with
same or new products ? In same markets? Or firm should
diversify in other business areas?
–Business strategies for existing and new product lines
•How to best utilize strategic resources and market position
•Innovation –how and which product areas?
–Internationalization approach

20. •International strategy -Which countries currently? Which
additional countries to explore? What products can be more
suitable for different countries
–Analyse how much successful against competitors with
existing strategies
–Analyse which strategic options are needed to be successful in
medium and longer time frame to sustain or achieve competitive
advantage?
–Compare strategy options for their advantages and limitations
–Use evaluation techniques to compare options
Task3-
Recommendthestrategicrouteforwardandthemethodsforimplemen
tationofyourchosenoptions.(40%)
–Basedonyourevaluationofstrategicroutesintask2,recommend the
strategic route best suited to provide Samsung with best
competitive performance interms of corporate direction,business
strategy and internationalization.
–
Alsorecommendclearlyhowtoimplementthestrategicrouteinshorta
ndmediumtermtimeframes–
organizationalstructureandrelatedactions
Task: Investigate the given organisation to analyse its current
position, evaluate the strategic options available, and
recommend the strategic route.
Samsung – Smartphone giant facing challenges
You have been provided with some initial background
information of Samsung’s recent market situation. This provides

21. you with foundational information, which you should develop
through other sources. You will find commentary relating to
this company via the financial press (such as the Financial
Times). You should complete a detailed search for further
information, which will support your use of strategic models for
analysis.
You are to produce a report to compete the following tasks:-
Tasks to be completed:
Marks
1. Analyse the current position of the organisation in relation to
its competitors using the five forces framework
20%
2. Evaluate the strategic options now available to the
organisation using relevant concepts and frameworks
40%
3. Recommend the strategic route forward and the methods for
implementation of your chosen options.
40%
There should be an appropriate balance of analysis for each of
these tasks dependent upon the circumstances surrounding the
organisation. You should clearly answer each task in a separate
section. The maximum word limit is 2,500 words (+ / - 10%)
excluding tables, charts and diagrams. This work accounts for
50% of the marks available for this module (50% from exam).
Do not spend time describing, you are asked to analyse,
evaluate and recommend.
Follow good report writing style. Use a 12 point font, with
double line spacing and clearly print a copy of the report in
order for you to check its readability before submitting on
Turnitin. Clearly mention name on the front page of report.