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samsung case study
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- 2. Case Summary G r o w t h:S e m ic o n d u c to rIn d u s t r yh a s1 6 % o fg ro w thr a t e O na v e r a g e,1 9 6 0-2 0 0 0 Crisis : 2001 – 2002 Semicondu ctor Indust r y C ri si s R e c o ve r y:S a m s u n gs u r viv e d c r isisw it ht h e irc o m p e t e n c ya n d B r a n d i n gs t r a t e g y 2 0 0 5 1 9 6 0 S a m s u n gG r o u ps t a r t e dE le c tr o n i c s in d u s t r yinte le vis io nm a r k e t 1 9 7 4 1 9 8 0 2 0 0 4 1 9 6 9 1 9 9 2 K o r e aS e m ic o n d u c to r c o m p a n yfo u n d e d ,b e g a n w ithW a f e rp r o d u c t io n . A n da c q u i r e db yS a m s u n g la tte r ly 1 9 8 0 s ,S a m s u n gG r o u p m o refo c u so nE le c tr o n i c s m a r k e ta n dfo u n dS a m s u n g E le c tr o n i c s ,m a n u fa c tu r in g inS o u t hK o r e ab u i lt S a m s u n gB r a n db e in g lis t e da s2 1 s tv a lu a b l e b r a n d sinth ew o rldb y In t e r b r a n dC o r p . 8 ”W a fe rte c h n o l o g y d e v e lo p e d ,d r a m a tic a lly s h i fttoS a m s u n gof p r o d u c t io nc a p a c it y
- 3. FLASH 32% Mobile devices SRAM 10% Server &Workstation DRAM 58% Desktop Logic Chips S a le s=$ 1 6 6 .3B illio n s Memory Chips S a le s=$ 3 3 .7B illio n s Industry Summary S e m ic o n d u c to rIn d u s try A v g .G ro w thrate=1 6 % Sales=$200B illio n s (1996–2000) M ark e tS izeต ล า ดD R A Min2003($19.5B illio n ) 896.4 672.8 535.3 521.5 68.2 Samsung Micron Infineon Hynix SMIC M ark etS hareต ล า ดD R A Min2 0 0 3 33% 25% 20% 19% 3% Samsung Micron Infineon Hynix SMIC Production Volume in million unit 256 Mbit equiv. EXHIBIT 4
- 4. Industry Summary D R A MP ro d u c ti o n Electronics designtools; Samsung develop in-house Wafers; Samsung owned technology to produce DRAM with the largest wafer (more production capacity) Materials; Semiconductor (Silicon and Germanium) are costly in production process and has a few suppliers System Firms; Samsung can customize to met customer requirements
- 5. Past Strategy • KunHee Lee’s Strategy is learn from competitors, Samsung invests in DVD and Video products for billions, Less priority in quality control (sampling for quality check will be done in some parts for a product), concentrate with high volume production • Economies of scale production, propose low price products, Line stretching marketing strategy and Variety of electronics products Overall Low-Cost Provider is the main strategy of Samsung Past Strategy and Challenge
- 6. Challenge Strategy • Samsungfocused more on niche market and low price strategy still be a main strategy for protecting their market shares from China's companies • Once Samsung targeted on niche market, new products development needed while a pricing shall be strongly considered to competitive in the market Best-Cost Provider become to the main strategy for next growth of Samsung Past Strategy and Challenge
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- 8. Macro Environment Analysis Politicalfactors (+) The industry is on focusing in several countries, more government supports for technology development (+) South Korea has strong relationship with others General economic conditions (-) Economics regression of the world (-) Instability of Exchange rates (-) Interest rates volatility (-) Perfect competitive market coming Social force (-) Environmental Conservatism’s Resistance Natural environment (-) Products is more sensitive with climate Technological factors (+) Technology market is moving fast (+) No trends of new substitute technology Global force (-) Labor cost is trendy higher Difficult to Survive
- 9. Analysis result : Semiconductorindustry is unattractive market for new entrant Rivalry among Existing Competitors : (-) High competition (-) Market moving fast (-) Price is competitive factor Industry Analysis Bargaining Power of Suppliers : (-) Critical materials (-) A few of suppliers (-) the most suppliers is larger company Bargaining Power of Buyers : (-) Commodity Products (-) more provider in the market (-) Low switching cost for buyers Threat of New Entrants : (+) High Investment required (+) High Production Technology (+) High Switching cost Threat of Substitute Products : (+) No substitute technology Samsung differentiate the market by proposes products customization, Products can be customized to meet customer’s preferences Samsung overcome the factor with good suppliers relationship management
- 10. Competitor Analysis andComparison Analysis Result
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- 12. Internal Analysis Firm Infrastructure: Adaptability culture organization Human Resource Management : Acquire Korean global talent Technological Management : Products development competition Procurement : Economies of scale purchasing, Focus on potential suppliers Marketing Services : & Sales : Customize to customer demands Operations : Focus on quality, high capacity and low defect Inbound Logistics : Focus on time to market, Volume, consistency Outbound Logistics : Focus on time to market, consistency Variety of products, older-tech. promotion Support Activities Primary Activities Relationship with Suppliers Relationship with Buyers
- 13. Relationship with SuppliersRelationship with Buyers ,h S ido tl r Un e ive n rsig ty.t Ah ll ris ghts ir n eserS vea d. msung’s Value Chain Internal Analysis Human Resource Management : Acquire Korean global talent Technological Management : Products development competition Procurement : Economies of scale purchasing, Focus on potential suppliers Marketing Services : & Sales : Customize to customer demands Operations : Focus on quality, high capacity and low defect Variety of products, older-tech. promotion Support Activities Primary Activities
- 14. Resource, Capability andCompetency Resource Capability Tangible • Financial : Cash flow and Capital • Organizational : 5 Business units • Physical : Fab Manufacturing • Technological : High capacity production line • Innovative products • High capacity • Varity of products • Best quality • Customize to customer’s demand Competency Intangible • Human Assets : Recruit promoted successor scholarship • Brands : Value $12.6 billion (21stof the world) • Company : Reward outstanding performance Culture do not punish failure • Excellence HRM • Effective procurement by volume • Creativity human capital • Effective production technologies
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- 16. SWOT Analysis STRENGTHS • Processexcellence • High competency • Strong researcher team • Good Organization Structure WEAKNESSES • Low quality of brand image • International cultural lacking • Inter-cultural crashing OPPORTUNITIES • Market being growth • No substitute technology • High demands • Government supports THREATS •China competitors •Social resistance, environmental effects
- 17. Strategic Analysis Market Growth 20% 0% Relative MarketShare 0.1X 10X ? DRAM SRAM Flash Flash DRAM SRAM • DRAM - Less profits, reduce investment •Flash - More invests in R&D, gains market share is critical strategy • SRAM - Maintains the market
- 18. Strategic Group Analysis Products Development High Low AverageSelling Price High Low Sized by revenue •Continuous product improvement is very importance •Small company needs partners for more competitive advantage to survive in the market •Less competitive advantage / less margin (low price strategy needed)
- 19. Narrow Market Target Focused Differentiation Strategy inthe Future Differentiation Strategy Broad Market Target Cost Leadership Strategy Focused Low-Cost Strategy Broad Differentiation Strategy Past and Current Generic Business Strategy Analysis Overall Low-Cost Provider Strategy in the Past Best-Cost Provider Strategy in the Present
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- 21. • Sub-branding forpenetrate to high-end market, higher positioning as high quality products provider • Build valuable brand / Communicate values to customer and more focus on flash memory products • More promotion and selling campaign for DRAM products, preparing for price war coming of China competitors • Develops new products with green technology, less energy consumption and toxic materials Business Strategy
- 22. • Forward verticalintegration for expanding business to downstream, utilizes strength of technology expertise, manufacturing resources and a large scale electronic materials provider to be a electronic devices manufacturer • Build up business in China, for blocking growth of China competitors and gain cost advantage from low cost manufacturing (lower labor rate) Corporate Strategy
- 23. Implementation Strategy • Preparesorganization that suitable for international business especially in China, recruits Chinese employee for faster familiar with china’s culture and market behaviors • Clearly formulation of forward vertical integration strategy, what business units should to do (e.g. computer, cellphone, data storage) • Keeps investment on R&D to be leader in innovation, technology and cost advantage production • Communicate vision and missions needed to employee • Align goals of all related business sections to consistent with corporate goal