Analysis Samsung with Five-Force Model and Protein Model

1Apparel Chemicals

Consumer electronics Electronic components

Medical equipment precision instruments

Semiconductors Ships

Telecommunications Equipment

No.2 in the 2013 Brand Finance Global 500No.1 in the Electronics, Electrical Equipment group of 2013 Fortune 500…

Brief of SAMSUNG

Samsung started as a trade firm which founded by ₩30000 Main business were export the vegetables and fruits to Peking and Man-Chou-Li.Samsung Electronics founded at 1969

Starting: 1938-1969The financial crisis depressed the whole Samsung, the debt ratio was 365%.Samsung sold its secondary firms, reduced about 50000 staff made the debt ratio to 148%

Financial crisis:1997-1999

Owning about 20 kinds of No.1 share products in global market.

New digital age: 2000~Started to shipbuilding, chemistry, heavy industry.Started to taking on world.

Expanding: 1970-1990

Samsung restarted with New management and Quality first ideas.

Challenge and opportunities:1990-1997

(≈HK$220)

1Apparel Chemicals

Consumer electronics Electronic components

Medical equipment precision instruments

Semiconductors Ships

Telecommunications Equipment

Consumer electronics

No.2 in the 2013 Brand Finance Global 500No.1 in the Electronics, Electrical Equipment group of 2013 Fortune 500…

Brief of SAMSUNG

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Marketing Analysis

The performance of whole smartphone market

Various possibilities of market in this field

As a player, SAMSUNG got a huge success in Smartphone

Why we choose the Smartphone as our topic?

250,231,700 – 171,652,700 = 78,579,000

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Marketing Overview

250,231,700 – 171,652,700 = 78,579,000

Main players

ManufacturerSamsung Apple Lenovo Nokia HTC

Google Coolpad ZTE HUAWEI …

Mobile carriers

HK HKBN PCCW HGCH Wharf T&T NWT I-CABLE

Mainland China Telecom China Unicom China Mobile

SAMSUNG

1/ Market leader 30.4%2/ 74 types of new products

5 more types than NOKIA 32 more types than Motorola in 2010.

3/ smart phone and 3G.4/ Mainly Android system Tizen Limo system future

APPLE

1/ NO.1 competitor2/ Targeting high level consumers3/ Hunger marketing4/ “smartest” phone5/ ios

Lenovo

1/ international competitiveness2/ PC advantages3/ Low and middle end4/ Saturation strategy ( 機海戰術 )

GOOGLE

1/ 2011 brought Motorola with 12.5 billion2/ Cooperate with manufacturer3/ First Nexus in 2010 4/ Competitiveness ： Price, Google service

optimization

NOKIA

1/ 2012, world's 2nd-largest mobile phone maker with a global market share of 18.0%.

2/ 2013 Q2 only 3.2% market share lost 40% revenue 3/ 2013.09, Microsoft brought Nokia mobile business4/ Windows operation system

Chinese market

COOLPAD

1/ Shenzhen in 1993. 2/ 2nd market share in China.3/ 9th largest smartphone maker in Q1 20134/ 2013 overtaking BlackBerry and Nokia.

Fixed Carriers

Fixed Carriers in Hong Kong

Fixed Carriers in Mainland China

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Brief of Technology

/ Visual( 視 )/ Optics( 光 )/ Voice( 說 )/ Payment( 付 )/ Sensor( 感 ).

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Visual( 視 )

Overall phone appearance: Rounded shapes, more fashion and cute Fit to plastic material → why plastic?

Display screen: visual quality AMOLED screen

Resolution Pixel density

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Optics( 光 )

Camera performanceIndicators:

Pixel Flashlight Anti-vibration Zoom

Ultra-thin Vs. Camera quality

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Voice( 說 )

S Voice Voice recognition Exclusive in Galaxy & Note

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Payment( 付 )

Near field communication (NFC) a NFC smartphone can be a

credit card Samsung + Visa

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Sensor( 感 )

Sensor types: User friendly & intelligent gravity acceleration distance fingerprint 3-axis gyroscope electronic compass ……

Brief of RM

Principles: High investmentHigh turnoverHigh revenue

Direct Revenue: Mobile Device Distribution Mobile Accessories

Long-term revenue: Vertical Integration Patent Brand Equity

1/ Mobile Device Distribution

Samsung has 49 matching mobile products.Especially , GALAXY S and GALAXY Note, which achieve Samsung’s leading place in the market.

Channels for distributing

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Partnerships : a total of 12 Samsung in HK.Retailers: such as BROADWAY, FORTRESS SmarTone, i-CABLE etc..Distributor: KENTECH ， SYNERGYNetwork operators share: cooperate with 6 main players

2/ Mobile Accessories

Bluetooth HeadsetChargerBatteryCover, PouchCar KitOthers

4/ Long-term revenue

Vertical Integration PatentsBrand equity—— intangible assets

Hardware Vendor

Software Vendor

Accessory Vendor

OEM/ODM

Mobile Phone

Manufactures

Hardware Vendor

Hardware Vendor

Software Vendor

Software Vendor

Accessory Vendor

Accessory Vendor

Design-house

Direct Supply

Distribution /Agent

Telecom Operator

E-commerce

Retailer

Custom

er

Com

ponent Distributor/A

gent

Front-end Logistics Back-end Logistics

Smartphone supplier relationship table(Samsung smartphone)

Ecosystem

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Industry Chain

Upstream/downstream

industries

Single product

EcosystemA device

group with OS at the core

Hardware(with OS),

Cloud

Ecosystem

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Global China

ECO

Cloud

OS

Hardware

Chips

Kernel

Samsung

Apple

HTC

LG

Nokia

華為聯想

中兴OPPO

小米TCL

魅族

Android Ecosystem

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Samsung Vs. Google

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Samsung Vs. Google

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Tizen

TizenPhone

SamsungApp store

Background

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1. Google acquired Motorola/ Microsoft acquired Nokia2. Two-horse carriage in smartphone market, so IP war is

inevitable for Samsung

The Apple-Samsung cases

Who stared?In mid-April of 2011It was Apple that firing the first shot.


What does Apple claim Samsung is copying?

1.Design patents: appearance, layout, feeling and style of Apple’s product.

Trade dress , the elements of a product design that clearly indicate what brand or company it came from

“Apple’s black rectangle problem”


2. Utility patents (functionality)User-Interface effects Pitching Zooming Scrolling


What does Samsung claim Apple is copying?Two Standards patents

FRAND terms (fair, reasonable, and non-discriminatory )

US Patent7,675,941

Covers e-bit technology associated with the 3GPP standard.

US Patent7,447,516

Covers using power limiting technology to reduce interference under the 3GPP standard.


The other three Samsung patents

Emailing photos from a camera phone; Multitasking with music playing in the

background; Switching between a live camera shot

and a photo gallery.


Reasons for lawsuits Seeking an injunction that would confine the import and sales of

rival’s products into the markets For Apple, they seems to seek compensatory and punitive damages

to demonstrate the cost of coping. Result of Lawsuits

Apple won Samsung owes Apple $930 million


Comments and Thoughts Little had been done to protect innovators and inventors The very concept of design patents should not have been

encoded into the law. “It is his supposition that Apple attacked Samsung in the courts

out of a feeling of betrayal by a partner, more so than a defense of intellectual property.” (Dediu, 2013)

Future Trends

HardwareMobile terminals will merge, it is hard to distinguish Tablets, Phones and Computers, and maybe other new kinds of products.

Future Trends

SoftwareHardware market will over saturated, software market will be a new digital battleground. Also, digital product will be old fashion in mobile terminal, smart is a new concept, and it will occupy the future market.

Competitive Rivalry

within an Industry

Bargaining Power of Suppliers

Bargaining Power of

Customers

Threat of New

Entrants

Threat of Substitute Products

1/ Threat of Entry (Low)

Barriers to entry

1. Supply-side economies of scale

2. Demand-side benefits of scale

3. Customer switching costs

4. Capital requirements

5. Incumbency advantages independent of size. 6. Unequal access to distribution channels7. Restrictive government policy.

Expected Retaliation

2/ Exist competition (High)

Finger War + Price War

2/ Exist competition

Finger war

Iphone shipment 28935,000 <Samsung

Operating Profit Ratio 47.4% > Samsung 13%

2/ Exist competition

Price war

OEM OEMMiddle level competition

Price Strategies High-end Strategies

3/ Substitute ( Low)

Tablet

Voice call & text message Vs. OTT Apps

Screen size: tablet is a complement

↓

Low level thread

4/ The bargaining power of suppliers (Low)

Internal supply lines

Powerful ability of supply chain management “Samsung model” industrial park Rapid response system of supply chain Establish a credit relationship with the suppliers.Competition with Apple

5/ The bargaining power of buyers (Middle)

Individual customerLow switching cost High brand identitySmall size Mobile Phone Operators High volume

Suggestion

StrengthsFast production Vertical integration Aggressive marketing Innovation and design

WeaknessesLack its own OS and softwareMain competitors are also largest buyersLow profit marginFocus on too many productsPatent infringement

SAMSUNG/Ecology

Advantages Marketing strategies Multi-line products Supply chain Vertical integration

Disadvantages Innovation bottleneck Missed internal targets Price and promotion cost

Analysis Samsung with Five-Force Model and Protein Model

Education

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