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Samsung business strategy: from fast-follower to first mover, can they make the change?

The document outlines Samsung's strategic transition from a fast-follower to a first-mover in the tech industry, emphasizing their strengths in leadership, research and development, and a diverse product portfolio. Financial performance indicates significant growth but warns of challenges such as dependency on rare minerals and market competition. The recommendations include enhancing design capabilities and addressing weaknesses to maintain a competitive edge and ensure sustainable growth.

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SAMSUNG:! FROM FAST-FOLLOWER TO FIRST MOVER, CAN THEY MAKE THE CHANGE? Business Strategy! Allie Bocon Dante Clemons Joey Lam Michelle Wescott
Agenda •  Company Overview! •  Leadership! •  Corporate Culture! •  Company Value Chain! •  Financial Analysis! •  Market Analysis! •  Current Strategies! •  Recommendations!
New Technology Vision 2020 Innovative Creative Products Solutions Inspire the World, Create the Future.
Indirect/Direct Benefit = $22.2 Billion
800 Samsung high-tech products
Food processing and textiles
Largest global conglomerate in the world
Digital Media • Semiconductor • Telecommunication • LCD Digital
“Change everything ! except your wife and family” Lee Kun-hee Samsung Electronics, Chairman
Corporate culture
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
Financial Info ! Strategies! •  Strong Leadership! •  Shift from Cost to Quality + Oriented Management! •  Restructure R&D! !
Financial Info ! Strategies! •  Strong Leadership! •  Shift from Cost to Quality + Oriented Management! •  Restructure R&D! ! Results (from 1997-2006)! • Increased Operating Profit x5! • Increased Total Sales x3 !
Financial Info 2008: Reduced margins! Gross Profit Margin •  Gross profits! 30% •  Operating profits! 29% 28% 29% •  Net profits ! 28% 27% Due to falling prices and! 26% 26% 25% demand for products! 24% 2007 2008 2009 within their! Source: 2008 & 2009 Samsung Annual Report • Semiconductor ! • LCD divisions ! Current Ratio ! 1.70 1.65 1.65 Ability to pay off current! 1.60 1.55 1.52 1.50 debt is steadily! 1.45 1.40 1.41 increasing! 1.35 1.30 1.25 2007 2008 2009 Source: 2008 & 2009 Samsung Annual Report
Financial Info Available internal funds to: ! Working Capital •  Pay off their current 30,000,000 liabilities! 24,350,053 25,000,000 20,000,000 ! 16,761,486 15,000,000 12,105,038 •  Invest capital into R&D ! 10,000,000 ! 5,000,000 0 •  Invest in expanding into 2007 2008 2009 new businesses! Source: 2008 & 2009 Samsung Annual Report
Financial Info Record Breaking Numbers 4th quarter 2010 Stats! ! •  Revenue $137 billion (↑13% year on year)! ! •  Net income $14 billion (↑65% year on year)! ! •  Operating profit $15.4 billion! !
Apple Design Innovation Intel Samsung Sony Nokia Technical Innovation Key: Size of circle = price point (larger the circle, the more expensive the products) Source: Interbrand 2010 and Datamonitor 2010
STRENGTHS WEAKNESS Robust market position supported by strong Product recalls reflect poorly on the brand brand equity image – loose customer confidence Constant focus on research and development Weak presence in high end smartphones Diversified business portfolio across multiple Weak presence in cheap models for emerging product categories countries OPPORTUNITIES THREATS Strategic partnerships Highly competitive business industry Initiatives to dive deeper into emerging markets Patent lawsuits such as India Weakening liquid crystal display (LCD) flat Initiatives to go into emerging markets such as screens market high end smartphones China’s control over rare minerals Launched Galaxy Tab in emerging PC tablet market
STRENGTHS WEAKNESS Constant focus on research and development Weak presence in high end smartphones OPPORTUNITIES THREATS China’s control over rare minerals Launched Galaxy Tab in emerging PC tablet market
External factors that may shift strategies
Samsung’s Strategies! for Vision 2020 Utilize strengths in Leadership,! Operational Efficiency, and R&D! ! •  Gain a Competitive Edge on their existing products! ! •  Expand into Lifecare related products (biotech medical devices etc.)! ! •  Strengthen CSR and seek after environmentally friendly business practices!
SAMSUNG VALUE CHAIN: DESIGN DRIVEN (recommended) Supply Design Research + Sales & Service Profit Chain Development Manufacturing Distribution Marketing Margin Management Fuel Usabiliity Computer Purchase Order Warehouse Dealer/Distrib. Technical Asst. Software Processing Advertising Energy Research Development Order Process Promotion Buyer Inquiries Warehousing Raw Material Software Technology Shipping Market Maintenance + Metal Research Inventory Research Repair Glass Hardware management Delivery Ops Nickel Design Dealer + Spare Parts Firmware Samples Dealers/Distrib Distributor Parts Testing B2B Support Plastic Inspection B2C Silicone Receiving Storing Inspection Inventory Systems Development Human Resource Management Legalities Real Estate Management Financial Management *source from research team
Recommendations •  Continue to elevate design as a core competency to help overcome the company’s reliance on rare minerals! •  Example:! Use design competencies to build products with materials that can be disassembled and reused in new innovative products !
Can They Do it? •  Strong presence in global market ! –  Brand Equity! –  Financial Backing! •  Leadership that spearheads change! –  R&D drives the value chain! –  Shifting towards design! ! + !
Can They Do it? •  Strong presence in global market ! –  Brand Equity! –  Financial Backing! •  Leadership that spearheads change! –  R&D drives the value chain! –  Shifting towards design! ! + Yes they can!! If they! –  Continue Current Strategies! –  Use design skills to strategically address weaknesses and threats such as their dependency on rare minerals!
Thank You!

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Samsung business strategy: from fast-follower to first mover, can they make the change?

  • 1.
    SAMSUNG:! FROM FAST-FOLLOWER TOFIRST MOVER, CAN THEY MAKE THE CHANGE? Business Strategy! Allie Bocon Dante Clemons Joey Lam Michelle Wescott
  • 2.
    Agenda •  Company Overview! • Leadership! •  Corporate Culture! •  Company Value Chain! •  Financial Analysis! •  Market Analysis! •  Current Strategies! •  Recommendations!
  • 3.
    New Technology Vision 2020 Innovative Creative Products Solutions Inspire the World, Create the Future.
  • 4.
  • 5.
  • 6.
  • 7.
  • 8.
    Digital Media •Semiconductor • Telecommunication • LCD Digital
  • 9.
    “Change everything ! exceptyour wife and family” Lee Kun-hee Samsung Electronics, Chairman
  • 10.
  • 11.
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
  • 12.
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
  • 13.
    Financial Info ! Strategies! •  StrongLeadership! •  Shift from Cost to Quality + Oriented Management! •  Restructure R&D! !
  • 14.
    Financial Info ! Strategies! •  StrongLeadership! •  Shift from Cost to Quality + Oriented Management! •  Restructure R&D! ! Results (from 1997-2006)! • Increased Operating Profit x5! • Increased Total Sales x3 !
  • 15.
    Financial Info 2008: Reducedmargins! Gross Profit Margin •  Gross profits! 30% •  Operating profits! 29% 28% 29% •  Net profits ! 28% 27% Due to falling prices and! 26% 26% 25% demand for products! 24% 2007 2008 2009 within their! Source: 2008 & 2009 Samsung Annual Report • Semiconductor ! • LCD divisions ! Current Ratio ! 1.70 1.65 1.65 Ability to pay off current! 1.60 1.55 1.52 1.50 debt is steadily! 1.45 1.40 1.41 increasing! 1.35 1.30 1.25 2007 2008 2009 Source: 2008 & 2009 Samsung Annual Report
  • 16.
    Financial Info Available internalfunds to: ! Working Capital •  Pay off their current 30,000,000 liabilities! 24,350,053 25,000,000 20,000,000 ! 16,761,486 15,000,000 12,105,038 •  Invest capital into R&D ! 10,000,000 ! 5,000,000 0 •  Invest in expanding into 2007 2008 2009 new businesses! Source: 2008 & 2009 Samsung Annual Report
  • 17.
    Financial Info Record Breaking Numbers 4th quarter 2010 Stats! ! •  Revenue $137 billion (↑13% year on year)! ! •  Net income $14 billion (↑65% year on year)! ! •  Operating profit $15.4 billion! !
  • 18.
    Apple Design Innovation Intel Samsung Sony Nokia Technical Innovation Key: Size of circle = price point (larger the circle, the more expensive the products) Source: Interbrand 2010 and Datamonitor 2010
  • 19.
    STRENGTHS WEAKNESS Robust market position supported by strong Product recalls reflect poorly on the brand brand equity image – loose customer confidence Constant focus on research and development Weak presence in high end smartphones Diversified business portfolio across multiple Weak presence in cheap models for emerging product categories countries OPPORTUNITIES THREATS Strategic partnerships Highly competitive business industry Initiatives to dive deeper into emerging markets Patent lawsuits such as India Weakening liquid crystal display (LCD) flat Initiatives to go into emerging markets such as screens market high end smartphones China’s control over rare minerals Launched Galaxy Tab in emerging PC tablet market
  • 20.
    STRENGTHS WEAKNESS Constant focus on research and development Weak presence in high end smartphones OPPORTUNITIES THREATS China’s control over rare minerals Launched Galaxy Tab in emerging PC tablet market
  • 21.
    External factors thatmay shift strategies
  • 22.
    Samsung’s Strategies! for Vision2020 Utilize strengths in Leadership,! Operational Efficiency, and R&D! ! •  Gain a Competitive Edge on their existing products! ! •  Expand into Lifecare related products (biotech medical devices etc.)! ! •  Strengthen CSR and seek after environmentally friendly business practices!
  • 23.
    SAMSUNG VALUE CHAIN:DESIGN DRIVEN (recommended) Supply Design Research + Sales & Service Profit Chain Development Manufacturing Distribution Marketing Margin Management Fuel Usabiliity Computer Purchase Order Warehouse Dealer/Distrib. Technical Asst. Software Processing Advertising Energy Research Development Order Process Promotion Buyer Inquiries Warehousing Raw Material Software Technology Shipping Market Maintenance + Metal Research Inventory Research Repair Glass Hardware management Delivery Ops Nickel Design Dealer + Spare Parts Firmware Samples Dealers/Distrib Distributor Parts Testing B2B Support Plastic Inspection B2C Silicone Receiving Storing Inspection Inventory Systems Development Human Resource Management Legalities Real Estate Management Financial Management *source from research team
  • 24.
    Recommendations •  Continue toelevate design as a core competency to help overcome the company’s reliance on rare minerals! •  Example:! Use design competencies to build products with materials that can be disassembled and reused in new innovative products !
  • 25.
    Can They Doit? •  Strong presence in global market ! –  Brand Equity! –  Financial Backing! •  Leadership that spearheads change! –  R&D drives the value chain! –  Shifting towards design! ! + !
  • 26.
    Can They Doit? •  Strong presence in global market ! –  Brand Equity! –  Financial Backing! •  Leadership that spearheads change! –  R&D drives the value chain! –  Shifting towards design! ! + Yes they can!! If they! –  Continue Current Strategies! –  Use design skills to strategically address weaknesses and threats such as their dependency on rare minerals!
  • 27.