Prepared for En.Mohammad Said Bin Othman

INTERNATIONAL BUSINESS MANAGEMENT(CSEB3102)

FINAL PRESENTATION PROJECT

Aziza Zaldarriaga Z(CEA100708)- Phillipines

Cian W’O Brien (NEE130235)- Denmark

Chaymae Samir (NEC130215)-Morocco

Dominik Wagner (NEC130217)-Germany

Firmansyah Shidiq W(CEB110723)-Indonesia

Haya Shadab Ali (CEB110702)-India

Overview, The Current Global Performance of Samsung & The Business Models

Comprehensive Strategy Formulation Stage 1 (Input Stage)

Comprehensive Strategy Formulation Stage 2 (Matching Stage)

Comprehensive Strategy Formulation Stage 3 (Decision Stage)

Analysis of Business Strategy, Cultural Aspects of Strategy & Organization Culture

Politics of Strategy Choice & Governance Issues, Current Challenges & Conclusion

1.1 OVERVIEW OF SAMSUNG

Understanding Tomorrow's Market and Consumers

- Robust Market and Consumer focused market sensing capabilities

- E.g. vibration reduction tech, French door refrigerators

Collaborating For Greater Synergy

- Close collaboration between each department: from manufacturing and

development to Marketing and Purchasing

Thinking out of the box

R&D

Arriving first with speed and delivery

Consistently developing technology and shipping products ahead of the rest

Connecting with consumer Lifestyle

Develop products which fit the consumer lifestyle

Making Smart Choices that Grow Market

Taking Risks in investing in new technology

SAMSUNG’S UNIQUENESS

Research and Development & Pricing

-R&D: 7% of total revenues

Overseas Partners : Joint R&D Projects, Technology

Transfer Agreements, Joint Investments

-Deliver Product at Cheapest Rate & Target

Mass Market

Tie Up with Start Ups

- One of the top 4 conglomerators of the

World

Invested $ 1,2 Billion in Startups , takes of up to 29.9 % in 80+ startups

Recently invested $5 million in Startup named

stoke (4G company)

Business Innovation & Brand Value

SCM and Six Sigma: two pillars in business innovation

Wide Range of Products: new Product launch every year,

• Hardware Products

• Employees

• Management

KEY RESOURCES

• Supply Chain

• - Brand

• - Innovation

• -SCM and SIX SIGMA

VALUE CREATION

• Manufacturing

• Research and Development

• Investing in Start-up

KEY ACTIVITIES

• Cutting Edge Technology

• - GREAT DESIGN

• - Cheap Prices

• - Green Products

VALUE PROPOSITION

• Manufacturing Cost

• - Research and Development cost

• - Distribution cost

• - Marketing and Advertisement cost

COST STRUCTURE

• Selling Products

• Information and communication services

• - Financial Services

REVENUE STREAM

• Customer Channel

• - Distributer

• Customer Segment

• - MASS MARKET

• - Corporate Buyers

CUSTOMER CHANNEL & SEGMENTATION

• Shining Koreans through by expanding Chaebols & Entertainment sectors

Land of Opportunities, Trading & Business

2.1 INTERNAL FACTORS EVALUATION MATRIX

Strengths Weight AS TAS

1 Diversified Portfolio 0.14 4 0.56

2 Global Enterprise 0.10 4 0.40

3 Largest technology-based firm in terms of revenues 0.18 4 0.72

4 Ability to market its brand 0.10 3 0.30

5 Low production costs 0.07 3 0.21

Weaknesses Weight AS TAS

1 No leads in new category (loss of first mover advantage) 0.07 3 0.21

2 Main competitors are also largest buyers 0.13 2 0.26

3 Low profit margins compared to industry 0.05 3 0.15

4 Too many new products 0.03 1 0.03

5 Declining margins on hardware production 0.06 3 0.18

6 Saturation of smart phone in developed nations 0.07 2 0.14

TOTAL 1 3.16

2.2 EXTERNAL FACTORS EVALUATION MATRIX

Opportunities Weight AS TAS

1 Increase in trend of personal gadgets 0.10 3 0.30

2 Increase in global market share 0.12 4 0.48

3 Value creation through social contribution 0.08 3 0.24

4 Plants in low cost countries 0.13 2 0.26

5 Ease of import/export 0.05 2 0.10

Threats Weight AS TAS

1 Litigations 0.12 3 0.36

2 Safety issues 0.20 4 0.80

3 Viral marketing through attacking competitors 0,07 2 0.14

4 Price wars 0.10 4 0.40

5 Failure of one product impacting others dues to linked

product lines 0.03 3 0.09

TOTAL 1 3.17

2.3 COMPETITIVE PERFORMANCE MATRIX

Samsung Apple Dell Inc.

Critical Success Factors Weight Rate Weighted

Score Rate

Weighted

Score Rate

Weighted

Score

Advertising 0.23 4 0.92 4 0.92 3 0.69

Product Quality 0.16 3 0.48 4 0.64 4 0.64

Management 0.07 4 0.28 2 0.14 3 0.21

Financial Position 0.09 4 0.36 4 0.36 4 0.36

Customer Loyalty 0.14 3 0.42 4 0.56 2 0.28

Global Expansion 0.10 3 0.30 3 0.30 3 0.30

Market Share 0.13 4 0.52 3 0.39 2 0.26

Product Capacity 0.08 3 0.24 3 0.24 3 0.24

TOTAL 1.00 3.52 3.55 2.98

Strengths

1. Strong brand image and reputation in the

society

2. Product Diversification

3. Innovative Product Design

4. Affordable Price accepted by consumers

5. Controlling and Creating Big Global Market in

the society especially technological sectors

6. Strategic Partnership with Well-established

companies (Google)

Weaknesses

1. The Products Supply which can not

meet the over amount of demand

2. A Lack of Customer Service

Management

3. Limited Coverage of Products

Distribution (only in several partner

and strategic countries)

4. Limited Operating System Product

Update and Package which makes

people become reluctant to purchase

Opportunities

1. The Strong Purchasing Power of

Middle Class People with regards of

market change

2. Provision of cutting edge technology

3. Widespread Branches which are

located in their strategic countries

4. A Powerful Capability of Making its

Own Hardware

SO Strategies

1. Adding as The (S4, O1)

2. Conducting The Creativities of Online Event by

using the Samsung Application itself (S6,O5)

WO Strategies

1. Product Demand Expansion & Related

Diversification (W1, O3)

2. Management Training (W2, O4)

3. Market Development (W3, O1)

Threats

1. The People’s Brand Loyalty and

Dependence about other

competitors’ products

2. Water Shortage Crisis

3. A Strong and Competitive

Competition in Market

ST Strategies

1. Designing New Innovative Products (S3, T2)

2. Providing Products Diversification which are

distinguished from competitors and affordable by

customers. (S2, T3, T4)

WT Strategies

1. Forward Integration (W4, T4)

2. Strengthening and Empowering

Competent Human Resources Pools

(W2,, T3) 15

3.1 SWOT MATRIX

Internal Strategic Position External Strategic Position

FINANCIAL POSITION, FP STABILITY POSITION, SP

Cash Flow +4 Technological Changes -4

Revenue Stream +3.5 Competitive Pressures -3

ROI +4 Pricing Challenges from Competitors -3

EPS +3.5

AVERAGE 3.8 SP AVERAGE -3.3

COMPETITIVE POSITION, CP INDUSTRY POSITION, IP

Service Quality -3 Profit potential +2

Customer Loyalty -2 Market Penetration +4

Quality of Product -3 Emergence and Growth of Gadget Industry +3

Technology Utilization for New

Innovation of Product

-3

AVERAGE -2.75 SP AVERAGE 3.0

SP Average is -3.3 IP Average is 9/3=3.0 x-axis: 0.5

CP Average is -2.75 FP Average is 3.8 y-axis: 0.3

3.2 SPACE MATRIX

16

(0.5 ; 0.3)

aggressive

• Backward, forward,

horizontal integration

• Market penetration

• Market development

• Product development

Best Recommendation: • Product Diversification

• Market Development for both its

software and hardware.

• Strengthening The Market

Penetration

• Pull Strategy by Samsung

SPACE Matrix (cont’d)

17

Directional Vectors:

x-axis : (IS, CA) = (3.8) + (-3.3) = (0.5)

y-axis : (FS, ES) = (-2.7) + (3.0) = (0.3)

3.3 INTERNAL-EXTERNAL (IE) MATRIX

Internal Factor Matrix Weighted Score (X-Axis) = 3.16

External Factor Matrix Weighted Score (Y-Axis) =3.17

S

3.4 MATERIALITY MATRIX

3.5 GRAND STRATEGY MATRIX

Quadrant 1

Market Development

Market Penetration

Product Development

Product Diversification

Rapid Market Growth

Slow Market Growth

Weak

Competitive

Position

Strong

Competitive

Position

4.1 QSPM-INTERNAL MATRIX

STRATEGIC ALTERNATIVES

KEY FACTORS Creating new and unique

products

Creating supply and

catering to demand

Strength Weight AS TAS AS TAS

1 Strong brand image 0.08 0 - 0 -

2 Quality diversification 0.10 4 0.40 0 -

3 Innovative product design 0.06 4 0.24 0 -

4 Biggest market share 0.04 0 - 1 0.04

5 Partnership with other co. 0.09 2 0.18 0 -

Weakness

1 Not enough ready stock 0.07 0 - 4 0.28

2 Availability of products 0.08 0 - 2 0.16

3 Limited OS updates 0.06 0 - 0 -

4.2 QSPM-EXTERNAL MATRIX

STRATEGIC ALTERNATIVES

KEY FACTORS Creating new and unique

products

Creating supply and

catering to demand

Opportunities Weight AS TAS AS TAS

1 Buying ability and high public

response on market changes 0.09 3 0.27 4 0.36

2 More advanced technology

and hardware 0.08 4 0.32 0 -

3 Many ways for easier access 0.07 0 - 4 0.28

Threats

1 Litigation 0.06 3 0.18 0 -

2 Competitor’s goods are

cheaper 0.04 4 0.16 2 0.08

3 Competitive market 0.09 3 0.27 3 0.27

TOTAL 1.00 2.02 1.47

increase budget on R&D

to avoid further litigations

to help retain customer loyalty

4.3 SUGGESTION TOWARD QSPM OF SAMSUNG

Create more new and innovative products

5.1 SAMSUNG’S CORPORATE CULTURE (1993-

now)

1. A Western Culture in Asia: The “Frankfurt Declaration

1993”“Change everything besides your wife and kids” – Lee Kun

Hee, Frankfurt, 1993

2. The “I&I-way”

5.2 HOFSTEDIAN ANALYSIS OF SAMSUNGS’S

CORPORATE CULTURE

1. Korea scores high (world ranking) on Power Distance (28),

Collectivism (43), Masculinity (41), and Uncertainty

Avoidance (16)

2. Western Countries as US and Germany scores low on Power

Distance (40/35), Collectivism (91/67), and Uncertainty

Avoidance (46/86), but high on Masculinity (62/65)

3. In Samsung these values have been merged: Asian-Western

Western: Low Power Distance, and Uncertainty Avoidance

Asian: High Collectivism, and Masculinity

5.3 SAMSUNG’S CULTURAL STRATEGY

1. Focus on People

2. GWP (Great Work Place)

6.1 POLITICS OF STRATEGY CHOICE & GOVERNANCE ISSUES

1. Revenue and market value

• Strategies are always ambitious

• Samsung hopes to double its revenue between now and 2020 and grow to a market value of $400 billion

2. Products

• More choices are better than less choices

3. Stakeholder orientation

• Expanding the market leadership of core businesses

• Securing competitiveness by consistently recruiting experts in software and R&D

• Corporate citizenship that’s committed to social improvement

6.1 POLITICS OF STRATEGY CHOICE & GOVERNANCE ISSUES

Governance issues:

1. Abuse of market power

2. Authoritarian and reckless leadership

6.2 CURRENT CHALLENGES OF SAMSUNG

1. Innovation driven company • Risk of losing edge during downtime

2. Ongoing series of lawsuits against Apple • More than 30 patent and design lawsuits globally

3. Conflict of interest • Supplier/competitor relationships

6.3 CONCLUSION

1. General:

• South Korea’s most important Chaebol

• Wide range of products with annual updates

2. Strategy recommendation:

• SPACE Matrix: Market development, product diversification, pull strategy

• Grand Strategy Matrix: Strong competitive position and rapid market growth

• QSPM Matrix: R&D, avoid litigations, customer loyalty

3. Culture:

• Collectivistic and masculine

• Great Workplace (GWP) program

REFERENCES

1. Hofstede’s Cultural Values by Nation found in:

Robbins, S.P., and Judge, T. A., Organizational Behaviour, Fifteenth Edition,

Pearson Education Ldt, 2013, p. 186

2. Description of Hofstede’s Cultural Values found in:

Hill, C. W. L., Wee C., Udayasankar K., International Business – An Asian

Perspective, McGraw-Hill, 2012, p. 109

3. Cultural Strategy from 1993-now found on:

http://www.businessinsider.com/how-samsung-became-the-biggest-electronics-

company-in-the-world-2013-3

http://hbr.org/2011/07/the-globe-the-paradox-of-samsungs-rise/

4. Present cultural strategy found on:

http://www.samsung.com/us/aboutsamsung/sustainability/integritymanageme

nt/download/building_a_creative_corporate_culture.pdf

5. The I&I-way http://www.scp.samsung.com/company/comCulture.asp

Group 2B

Class Presentation

Week 13 (9th December 2013)