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TERM PAPER

OF
STRATEGIC MANAGEMENT
ON

BCG MATRIX (SAMSUNG)

SUBMITEED TO SUBMITTED BY :-

Mr. Manish Kumar RAVINDER SHARMA

LECTURER IN LSB REG. - 10811504

LPU ROLL NO- R1807 A16

Group - 1

INTRODUCTION OF SAMSUNG

On March 1, 1938, founding chairman Byung-Chull Lee started a business in Taegu,


Korea with 30,000 won. At first, Mr. Lee's little business was primarily in trade export,
selling dried Korean fish, vegetables, and fruit to Manchuria and Beijing. But in just over
a decade, SAMSUNG - meaning literally "three stars" in Korean - would have its own
flour mills and confectionery machines, its own manufacturing and sales operations,
and ultimately become the roots of the modern global corporation that still bears the
same name today.

When we talk about businesses that have humble beginning, then the history of
Samsung can serve as the perfect example. It all started on March 1, 1938 when Byung-
Chull Lee, the founding chairman of Samsung initiated a business in Korea with a
capital of only 30,000 won. The primary products of what was then Samsung were dried
Korean fish, fruits, and vegetables traded from Beijing and Manchuria.

For the etymology of Samsung, it has the root words "three stars." The business or Mr.
Lee expanded and it had acquired confectionery machines, increased its sales operations
and as we have known at present it has become a global corporation that is now offering
various brands, products, around the world. The Samsung Electronics that mainly
produces Samsung mobile phones and other mobile phone deals today is similar to the
Samsung Company that existed in the 1970s.

In the 1970s, the strategic foundations of Samsung became more established when it
engaged itself to various investments in petrochemical industries and in 1974 it
continued to expand its business as Samsung Shipbuilding Company. And then
Samsung entered the production of home electronics business apart from the
semiconductor manufacturing industry it acquired hereafter.

The Samsung Mobile Phones Kick Off

It has no doubt that Samsung became diversified when it comes to products and
services. However, the breakthrough of Samsung products became sensationalized when
it entered once again the telecommunications industry. It has become known for its
innovations and was proclaimed as the world's second largest vendor of mobile phones.

Though Samsung Electronics has gained corporate affairs in other business areas such
as the digital media, the semiconductors, the LCD, and the digital appliance, the
telecommunication network business area of Samsung became a record breaker.
Samsung has been producing cellular devices that include mobile phones, PDA phones,
and the most innovative of them all the Mobile..
1969
Dec SAMSUNG-Sanyo Electronics established (Renamed SAMSUNG Electro-
Mechanics in March 1975 and merged with SAMSUNG Electronics in March 1977)
Jan SAMSUNG Electronics Manufacturing incorporated (Renamed SAMSUNG
Electronics in February 1984)

1968
Nov Koryo General Hospital opened (Renamed Kangbuk SAMSUNG Hospital in 1995)

1966
May Joong-Ang Development established (Known today as SAMSUNG Everland)

1965
Oct Saehan Paper Manufacturing acquired (Renamed Chonju Paper Manufacturing in
August 1968 and no longer affiliated with SAMSUNG)
Sep SAMSUNG launched Joong-Ang Ilbo newspaper (No longer affiliated with
SAMSUNG)
Apr SAMSUNG Foundation of Culture established

1963
Jul DongBang Life Insurance acquired (Renamed SAMSUNG Life Insurance in July
1989
DongHwa Department Store acquired (Known today as Shinsegae Department Store
and no longer affiliated with SAMSUNG)

1958
Feb Ankuk Fire & Marine Insurance acquired (Renamed SAMSUNG Fire & Marine
Insurance in October1993)

Bcg strategies---

The author would like to thank Dieter Ernst (University of California, Berkeley), Sung-
Tack, Park (Korea Institute for Industrial Economics & Trade), Mike Hobday and Keith
Pavitt (University of Sussex), S. J. Nicholas (University of Melbourne), Ken Iijima and
Dennis Tachiki (Sakura Institute of Research), Ian Vertinsky (University of British
Columbia), C. A. Bartlett and D. J. Collis (Harvard Business School), John Cantwell
(University of Reading) and Tetsuo Abo (University of Tokyo) for their helpful
assistance and comments. Special thanks go to Peter Drysdale, Hal Hill and Mark
Dodgson (The Australian National University) for their special guidance and kind
support. The author is also grateful to Tack-Myong Kim and Chang-Sik Yoon for their
assistance. The author is indebted to Samsung Economic Research Institute and
Samsung managers interviewed in China, Korea and Southeast Asia. The views
expressed, and any remaining errors, are solely the responsibility of the author.

Marketing Strategy Of Samsung Mobile


Objective
To study the marketing strategy and gain an insight on Samsung Mobile India

Samsung Group
The Samsung Group is South Korea's largest company or chaebol and the world's
second largest conglomerate by revenue, leading several industries in the world. It is
composed of numerous international businesses, all united under the Samsung brand,
including Samsung Electronics, the world's largest electronics company, Samsung
Heavy Industries, one of the world's largest shipbuilders and Samsung Engineering &
Construction, a major global construction company. These three multinationals form
the core of Samsung Group and reflect its name - the meaning of the Korean word
Samsung is "tristar" or "three stars".
The Samsung brand is the best known South Korean brand in the world and in 2005,
Samsung overtook Japanese rival SAMSUNG as the world's leading consumer
electronics brand and became part of the top twenty global brands overall. It is also the
leader in many domestic industries, such as the financial, chemical, retail and
entertainment industries.
Background

Samsung Group is South Korea's largest company and exporter and the world's fifteenth
largest conglomerate.[3] Currently helmed by Lee Soo-bin, CEO of Samsung Life
Insurance, it has been run by generations of one of the world's wealthiest families,
formerly by chairman Lee Kun-Hee, the third son of the founder, Lee Byung-Chul.
Samsung Group is recognized as the most prestigious firm in South Korea, attracting
many of the country's most intelligent and talented pupils, with 25% of its employees
having a PhD degree or equivalent. Samsung Group also owns the Sungkyunkwan
University, a major private university in South Korea, with many of its graduates being
employed by Samsung Group affiliates. South Korean Samsung employees are also
highly loyal to the company, working for very long hours with no weekends or holidays
until they retire.

Strategic Analysis

"The word "Google" plays an important role on the word googol, which was created by
Milton Sirotta, nephew of American mathematician Edward Kasner. Google's use of the
term reflects the company's mission to organize the immense, seemingly infinite
amount of information available on the web. The company founders, Larry Page and
Sergey Brin, were not terribly affectionate of each other when they first met at Stanford
University as graduate students in Computer Science in 1995. Their strong opinions and
divergent viewpoints would eventually find common ground in a unique approach to
solving one of computing biggest challenges: retrieving relevant information from a
massive set of data. By January 1996, Larry and Sergey had begun collaboration on a
search engine called BackRub, named for its unique ability to analyze the "back links"
pointing to a given website. In 1997, this link analysis was earning BackRub a growing
reputation among those who had seen it.
In 1998, the search for a buyer started; Larry and Sergey continued working to perfect
their technology. Meanwhile, Sergey set up a business office, and the two began calling
on potential partners who might want to license a search technology better than any
then available. Andy Bechtolsheim, one of the founders of Sun Microsystems, was the
one that took a look at their demo and he knew that Google will be a success. Sergey
tells "We met him very early one morning on the porch of a Stanford faculty member's
home in Palo Alto. We gave him a quick demo. He had to run off somewhere, so he
said, ‘instead' of us discussing all the details, why don't I just write you a check?" It was
made out to Google Inc. and was for $100,000. But since there was no entity known as
Google Inc. they had the check sit for a couple of weeks. Sergey scrambled to set up a
corporation and locate other founders among family members and friends. After that
happened, they bought in a total initial...

What Is BCG Growth-Share Matrix

The Boston Consulting Group (BCG) developed a portfolio analysis tool that helps
managers develop organizational strategy based on market share of businesses and
the growth of markets in which businesses exist.
Strategic Business Units (SBUs)

The first step in using the BCG Growth-Share Matrix is identifying the
organization’sstrategic business units (SBUs). A strategic business unit is a significant
organization segment that is analyzed to develop organizational strategy aimed at
generating future business or revenue. Exactly what constitutes an SBU varies from
organization to organization. In larger organizations, an SBU could be a company
division, a single product, or a complete product line. In smaller organizations, it might
be the entire company.1 Although SBUs vary drastically in form, they have
some common characteristics. All SBUs are a single business (or collection of
businesses), have their own competitors and a manager accountable for operations,
and can be independently planned for.

Categorizing SBUs

After SBUs have been identified for a particular organization, the next step
is to categorize each SBU within one of the following four matrix
quadrants:
Stars – SBUs that are “stars” have a high share of a high-growth market
and typically need large amounts of cash to support their rapid and
significant growth. Stars also generate large amount of cash for the
organization and are usually segments in which management can make
additional investments and earn attractive returns.
Cash Cows – SBUs that are cash cows have a large share of a market
that is growing only slightly. These SBUs provide the organization with
large amounts of cash, but since their market is not growing significantly,
the cash is generally used to meet the financial demand of the
organization in other areas, such as the expansion of a star SBU.
Question Marks – SBUs that are question marks have a small share of a
high-growth market. They are dubbed “question marks” because it is
uncertain whether management should invest more cash in them to gain a
larger share of the market or deemphasize or eliminate them.
Management will chose the first option when it believes it can turn the
question mark into a star, and second when it thinks further investment
would be fruitless
Dogs – SBUs that are dogs have a relatively small share of a low-growth
market. They may barely support themselves; in some cases, they actually
drain off cash resources generated by other SBUs.
strategic management or marketing text appears to be complete without
the inclusion of the Boston Consulting Group (BCG) growth-share matrix.
When used effectively, this model provides guidance for resource
allocation. And despite its inherent weaknesses, is probably one of the
most widely used management instrument as far as portfolio
management is concern. For instant, each SBU (strategic business unit)
of large companies such as General Electric, Siemens,
and Centrica require different strategies to compete effectively and
efficiently. It is not a question of one strategy fits all SBUs since the
likelihood for each of them experiencing the same market growth rate,
industry-threats and leverage is very slim. This is where the BCG model
comes into play as a management analytical tool. The ensuing examines
the underpinnings of the model, for what it is used, how to use it and why
it is used.

WHAT IS THE BCG GROWTH-SHARE MATRIX?


To begin with, BCG is the acronym for Boston Consulting Group—a
general management consulting firm highly

respected in business strategy consulting. BCG Growth-Share Matrix (see


figure 1) happens to be one of many of BCG's strategic concepts
the organisationdeveloped in the late 1970s, and is being taught at
leading business schools and executive education programmes around
the world.

It is a management tool that serves four distinct purposes (McDonald


2003; Kotler 2003; Cipher 2006): it can be used to classify product
portfolio in four business types based on four graphic labels including
Stars, Cash Cows, Question Marks and Dogs;

it can be used to determine what priorities should be given in the product


portfolio of a company; to classify an organisation’s product portfolio
according to their cash usage and generation; and offers management
available strategies to tackle various product lines. Consider companies
like Apple Computer, General Electric, Unilever, Siemens, Centrica and
many more, engaging in diversified product lines. The BCG model
therefore becomes an invaluable analytical tool to evaluate an
organisation’s diversified product lines as later seen in the ensuing
sections.

WHAT ARE THE MAIN ASPECTS OF THE BCG GROWTH-SHARE MATRIX?


The BCG Growth-Share Matrix is based on two dimensional variables:
relative market share and market growth. They often are pointers to
healthiness of a business (Kotler 2003; McDonald 2003). In other words,
products with greater market share or within a fast growing market are
expected to wield relatively greater profit margins. The reverse is also
true. Let’s look at the following components of the model:

Relative Market Share


According to the proponents of the BCG (Herndemson 1972), It captures the relative
market share of a business unit or product. But that is not all! It allows the analysed
business unit be pitted against its competitors. As earlier emphasized above, this is
due to the sometime correlation between relative market share and the product’s cash
generation.

This phenomenon is often likened to the experience curve paradigm that when an
organisation enjoys lower costs, improved efficiency from conducting business
operations overtime. The basic tenet of this postulation is that the more an
organisation performs a task often; it tends to develop new ways in performing those
tasks better which results in lower operating cost (Cipher 2006). What that suggests is
that the experience curve effect requires that market share is increased to be able to
drive down costs in the long run and at the same time a company with a dominant
market share will inevitably have a cost advantage over competitor companies
because they have the greater share of the market. Hence, market share is correlated
with experience.

A case in point is Apple Computer’s flagship product called the iPod, which occupies a
dominant 73% share the portable music player market (Cantrell 2006). Analysts
believe it is the impetus for Apple's financial rebirth 40% of Apple's sales is attributed
to the iPod product line (Cantrell 2006). Similarly, Dell’s PC line shares the same
market dominance theory as the iPod. The PC manufacture giant occupies a
worldwide market share of 18.1%, which is commensurate to its large market revenue
above its competitors (see figure 2).
Figure 2

Market Growth
Market growth axis, correlates with the product life cycle paradigm, and predicates the
cash requirement a product needs relative to the growth of that market. A fast growing
market is generally considered attractive, and pulls a lot of organisation’s resources in
an effort to increase gains. A case in point is the technological market widely consider
by experts as a fast growing market, and tends to attract a lot of competition.
Therefore, a product life cycle and its associated market play a key role in decision-
making.

Cash Cows
These products are said to have high profitability, and require low investment for the
fact that they are market leaders in a low-growth market. This viewpoint is captured by
the founders themselves thus:

The cash cows fund their own growth. They pay the corporate dividend. They pay the
corporate overhead. They pay the corporate interest charges. They supply the funds
for R&D. They supply the investment resource for other products. They justify the debt
capacity for the whole company. Protect them (Henderson 1976).

According to experts (Drummond & Ensor 2004; Kotler 2003; McDonald 2003), surplus
cash from cash cow products should be channelled into Stars and Questions in order
to create the future Cash Cows.

Stars
Stars are leaders in high growth markets. They tend to/should generate large amounts
of cash but also use a lot of cash because of growth market conditions. For
example, Apple Computer has a large share in the rapidly growing market for portable
digital music players (Cantrell 2006).

Question Marks
Question Marks have not achieved a dominant market position, and hence do not
generate much cash. They tend to use a lot of cash because of growth market
conditions. ConsiderHewlett-Packard’s small share of the digital camera market,
behind industry leader Canon’s 21% (Canon 2006). However, this is a rapidly growing
market.

Dogs
Dogs often have little future and are big cash drainers on the company as they
generate very little cash by virtue of their low market share in a highly low growth
market.
Consider Pfizer’s Inspra (Gibson 2006):

“Pfizer launched this drug in Q4 2003 and continues to pump money into this problem
child, despite anaemic sales of roughly $40 million in the $2.7 billion heart-failure
market dominated by Toprol-XL (metoprolol). It was thought to gain market share and
become a star, and eventually a cash cow when the market growth slowed. But,
according to industry’s experts, Inspra is likely to remain a dog, despite any amount of
promotion, given its perceived safety issues and a cheaper, more effective
spironolactone in the samePfizer portfolio. Because Pfizer invested heavily in
promotion early on with Inspra, the drug's earnings potential and positive cash flow is
elusive at best. A portfolio analysis ofPfizer's cardiovascular franchise would suggest
redeploying promotional spend on Inspra to up-and-coming stars like Caduet
(amlodipine/atorvastatin) or torcetrapib to ensure those drugs reach their sales
potential.”

HOW TO DEVELOP GOOD BCG GROWTH-SHARE MATRIX


OF A COMPANY?
SBUs or products are represented on the model by circles and fall into one of the four
cells of the matrix already described above. Mathematically, the mid-point of the axis
on the scale of Low-High is represented by 1.0 (Drummond & Ensor 2004; Kotler
2003). At this point, the SBU’s or product’s market share equals that of its largest
competitor’s market share (Drummond & Ensor 2004; Kotler 2003). Next, calculate the
relative market share.

Conclusion
Over the next decade SAMSUNG global reach should give it the edge in the
regions that offer the greatest growth. Moreover, Pepsi's success with snack foods
may prove harder to maintain as consumers worry more about salt and fats.None of
this means SAMSUNG is a bad stock. But its strengths are widely recognized,
while SAMSUNG's prospects get little recognition. In fact, analysts still project
lackluster earnings growth for SAMSUNG, despite the company's recent
successes.

As a result, SAMSUNG shares yield nearly a percentage point more than


SAMSUNG's and trade at a lower P/E. Either company makes sense as a defensive
pick. But I figure that the stock Wall Street is underestimating today is the one you
want to own for tomorrow.

To SAMSUNG, reputation of one brand of


world become limit" burden" of development space too, Chang the situation that
faced a difficult choice. Because they have really few and pitiful incomes, there are
only small profits and quick turnover in SAMSUNG, putting out 2 or 3 milliliters
great packed. those on behalf of the culture became the SAMSUNG's promotion
theme, it have gotten approval of the Chinese consumer. Promotion
strategy:SAMSUNG' advertisement promotion is prepared and implemented by the
local company; Difference of culture background of each country might cause
difference of content and time of advertisement.

REFRENCES
 Source:- CLSA Asia-Pacific Markets

 WWW.SAMSUNGPRODUCTS.COM/

 www.Ibef.org

 vww.ssrn.com

 www.findarticle.com

 www.thestatement.net

 www.jstar.org

 www.sagepub.com

 economictimes.indiatimes.com

 www.wikipedia.com

 seekingalpha.com/author/bespoke-investment-group/articles/...

 Magazines :-
 Outlook money

 India Today

 Newspapers
 Economics times

 Times of india

 Business line

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