ABOUT SAMSUNG:

1) Company background
Name Industries served Geographic areas served Headquarters Current CEO Revenue Profit Employees Parent Samsung Electronics Co., Ltd. Consumer electronics, Telecoms Equipment, Semiconductors, Home Appliances Worldwide South Korea Lee Kun-hee 201.103 trillion (2013) 23.845 trillion (2013) 221,726 (2013) Samsung Group Apple Inc., Nokia OYJ, Intel Corporation, LG Display and LG Electronics, Sony Corporation, Texas Instruments Inc., Lenovo Group Limited, Hewlett-Packard Company, Sanyo Electric Co., Ltd., Toshiba Corporation, SK Hynix Inc., Western Digital Corporation and others.

Main Competitors

Samsung Electronics Co., Ltd. is the largest worlds technology company in terms of revenues. It is the largest mobile phone maker and television manufacturer and second largest semiconductor chip producer.

2) Mission and vision:

Mission: To be the best digital company. Vision: To lead the digital convergence movement.

3) Crucial Variables:
Weakening Global Scenario and tending towards recession From the start of 2008, the global and economic scenario has been very weak with falling stock market, rising interest rates, rising oil prices, weakening and then strengthening dollar all leading to decline in profitability, consumer spending and very tough time across industries. This scenario is tending towards recession which would be a very bad situation for a company like Samsung with its revenues and profitability being affected very badly.

 Demand for design and innovation There is a huge demand for products that are on
the cutting edge of innovation and design as has been demonstrated in the case of the Apple I-pod and the Apple I-phone. Even in a market that is very price sensitive and intensely competitive, consumers are willing to pay a premium for a product that is different and can solve a latent consumer need.

Lower spending on consumer goods in major markets With regard to the weak
global scenario, there has been very low consumer confidence and consumer spending across categories which have been in its lowest in some of the biggest markets in the world such as that of the United States. Consumer confidence and low spends directly impacts all segments of the industry such as retail and also the producers of durables and luxury items such as high end and innovative products as consumers generally cut down their spending on luxury items during this time.

Companies like Apple, Dell, HP etc actively entering consumer electronics markets
Apple and Dell, who till 2005-06 had been competing primarily in the computer hardware, due to the extreme levels of competition and market maturity in that industry has entered the consumer electronics markets with their related diversification strategy. They have had good amount of success as well due to their instant brand recognition and their reputation in the market. They have entered the television, LCD panel, music players market in a big manner and are expected to do well giving tough competition to the incumbent players in this market such as Samsung.

Good demand in higher value added products From the annual report, we can see
that even though there is stagnation in the commoditized products per se, there is very high demand in the higher value added products such as the bigger LCD monitors, phones that have more capability and features etc. Samsung should try to focus on research and design that would ensure that products that are innovative, margin rich are produced.

4) Samsung SWOT analysis

Strengths 1. Hardware integration with many open source OS and software 2. Excellence in engineering and producing hardware parts and consumer electronics 3. Innovation and design 4. Focus on environment 5. Low production costs 6. Largest share in mobile phones and 2 place in smartphones sales 7. Ability to market the brand Opportunities 1. Growing Indias Smartphone market 2. Growing mobile advertising industry 3. Growing demand for quality application processors 4. Growth of tablets market 5. Obtaining patents through acquisitions 1. 2. 3. 4. 5. Weaknesses Patent infringement Too low profit margin Main competitors are also largest buyers Lack its own OS and software Focus on too many products

Threats 1. Saturated Smartphone markets in developed countries 2. Rapid technological change 3. Declining margins on hardware production 4. Breached patents 5. Apples iTV launch 6. Price wars

STRENGHTS Hardware integration with many open source OS and software. Samsung is focused on producing devices which can be integrated with most of the software and OS. This gives Samsung products an edge over Apples (its arch rival) devices, especially as Android and other OS are gaining market share when iOS and OS X are losing it. Excellence in engineering and producing hardware parts and consumer electronics. Samsung is the number 1 by market share in televisions and mobile phones sales and some of the hardware parts (processors, memory chips, etc.). This was largely achieved due to excellence in engineering and both efficient and effective production.

 Innovation and design. In 2011, Samsung ranked second on the list of US top patent assignees. More patents strengthen Samsung position among its competitors. The firm also won many awards for the design of its products, proving the superior advantage over the competitors. Focus on environment. Samsung focuses on producing environment friendly products that are free from PVC and BFRs (currently only MP3 and mobile phones). It also develops various recycling programs that are awarded for their success. Thus, Samsungs focus on environment gives it an edge over its competitors in the eyes of its customers. Low production costs. The company has set up its production facilities in low cost countries. This allows producing goods with low production cost and benefit Samsung as it can offer lower price and earn higher margins. Largest share in mobile phones and 2 place in smart phones sales in the world. Samsung Electronics have achieved large market share in many products they sell, especially in mobile phones, smart phones, semiconductors and television sets. Large market share has its advantage, bargaining power that Samsung can use to further reduce costs and demand for better contract conditions. Ability to market the brand. Samsung is named as top rising brand by Interbrand and is the 9th most valuable brand with value nearly $33 billion. It has risen by 40% from 2011 to 2012. This was mainly achieved due to companys ability to market the brand in sporting events and social contributions. WEAKNESS: Patent infringement. Samsung is infringing Apples and some other firms patents, thus, damaging its reputation and having to pay a huge amount of money in damages. Too low profit margin. Samsung Electronics is the largest technology business in the world in terms of revenues but it has a low gross profit and net profit margins. Although its smartphones business is quite profitable, Samsungs profit margin is low due to its semiconductors sales and aggressive price cuts. Main competitors are also largest buyers. Apple, Sony, Dell, HP are the main buyers of Samsung Electronics products as well as the firms main competitors. Such situation would be favorable to Samsung (if competitors could not find complementary products and would

form relatively low share Samsungs revenues) because it could use its bargaining power over competitors. Due to reverse conditions (competitors can find complements and they form a relatively high share of firms revenues) Samsung cannot use its bargaining power over competitors as it can easily lose its customers and sales. Lack its own OS and software. Software and OS production has a high profit margin, can increase integration of companys products and brand loyalty. Without strong software and OS Samsung is at disadvantage over its competitors. Focus on too many products. Samsung Electronics serves 4 different industries with many different products in them. Samsung is at disadvantage over its competitors because it loses a focus when competing in too many industries and too many products. OPPTUNITIES: Growing Indias smartphone market. Indias smartphone market is one of the least penetrated among Asia/Pacific countries. Samsung has a strong presence in Indias market and could use this opportunity to expand its sales. Growing mobile advertising industry. The company could develop advertising platform for its mobile devices and significantly benefit from this lucrative market. Growing demand for quality application processors. Samsung is one of the key manufacturers of application processors for smartphones and tablets. The growing demand for these products requires more best quality application processors that only Samsung provide. Growth of tablets market. Tablets market is expected to grow in double digits over the next few years. Samsung business has a strong position in tablets market and could expand it by introducing newer, better quality tablet models, such as its current galaxy line. Obtaining patents through acquisitions. The key to Samsungs competitive advantage is the large portfolio of patents. Patents can be discovered by engaging in costly R&D or through acquisitions of other firms. THREATS: Saturated smartphone markets in developed countries. Smartphones market in the developed economies is saturated and the sales will not be growing at a high rate.

 Rapid technological change. The serious threat that Samsung and the other tech companies are facing is a rapid technological change. Companies are under the pressure to release the new products faster and faster. The one that cannot keep up with the competition soon fails. This is especially hard when the business wants to introduce something new, innovative and successful. Declining margins on hardware production. Samsung is the second largest semiconductors producer where the profit margins are very thin, thus weakening the whole company's figures. Breached patents. Samsung Electronics has many patents which are often used by its many competitors. Such situation makes it hard to find out which companies benefit from Samsungs technology but do not pay for the rights to use it. Apples iTV launch. Apples iTV is the next big lunch from Apple, which may hurt Samsungs TV sales. Price wars. Samsung has a very low gross margin on many of its products and is already selling some of them with significant price cuts. Competitors could follow price cutting strategy too and induce price wars, which would erode Samsungs profit margin to 0%! 5) Samsungs Strategic Objectives

Samsung Electronics Strategic objectives are: Secure best cost competitiveness and speed management structure Secure customer and market oriented optimal process Create a competitive IT infrastructure To create both qualitative and quantitative growth and deliver competitive value to all stakeholderscustomers, partners and shareholderswhile maintaining profitability.

6) Samsung Corporations Strategic focus of 2014: Improved software and new technologies. One of Samsungs first steps on the software front will be exploring options beyond Android.

7) How Samsung become market leader as we look today:

Just a few years ago Samsung was struggling to catch up in the smart phone market. Now it makes more of them than anybody else and has Apple on the back foot, in addition to being the world's largest technology company by revenue. The heavily hyped launch of its flagship Galaxy S4 smart phone is the latest step as it tries to overtake Apple, and they've gone all out with a massive screen and impressive new features. Here are some of the core pillars of Samsung's strategy. The ultimate fast follower Samsung is better than anybody else at learning from its competitors. A market reader is sort of the classic fast follower and Samsung did so by following competitors like Nokia, Apple etc. It doesn't mean they ignore their customers, but they're very attuned to what competitors are doing and what other people are bringing to market first and observing what seems to be gaining traction, then very rapidly coming up with their own version of that innovation." Samsung's aggression has gotten it into trouble in the past, losing a high profile case to Apple for imitating its design. But the reputation hit and the fine were a small price to pay. The company pivots and produces quickly, coming out with a variety of devices. It sees what the market responds to, pushes successes, and kills failures. And now, rather than just providing a cheaper and lesser iPhone, it's differentiated itself with larger screens, different features, successful marketing, and delivering what consumers want. The Note is a perfect example. The company found through market research that Asian-language speakers in particular wanted a device that they could hand-write on, because drawing characters is easier with a pen. The result was a combination phone/tablet ("phablet") that's been an unexpected hit.

The company combines market research and unparalleled execution with, despite its reputation, a lot of innovation of its own. Samsung was second only to IBM in the number of U.S. patents filed last year, and filed 150 patents related to the new technology in the Galaxy S4. Supply chain and distribution Samsung is so much more than a Smart phone-maker. It is a conglomerate, a manufacturer, and the world's largest chip-maker. It makes many of the components that go into its smart phones giving it a cost advantage and allowing it to be much more flexible in terms of what it produces and when. Apple, on the other hand, though it has a diverse, well-managed, and futuristic supply chain, relies on external partners, which can lead to delays and difficulties. And though Apple is trying to move away from Samsung chips, the company's smart phone competitors still have to buy them. In a way, they help finance its cost advantage. As Christopher Mims at Quartz points out, the company also has a huge advantage in distribution. The company's new Galaxy S4 will be available on 36 percent more carriers and in 55 percent more countries than the iPhone 5. Samsung's in more places than Apple with a brand new phone, as well as lower end options for the developing world

8) The future of Samsung:

The key test of whether Samsung can move from a close-and-gaining second to becoming truly dominant is whether it can deliver products that are truly game-changing. To really start pulling customers away from iPhones in droves, it needs to differentiate itself beyond marketing and a bigger screen. It's aggressively investing in Silicon Valley with several big campuses to help it start to lead in software as it already does with hardware.