SAMSUNG ELECTRONICS

Vikas (59), Shantanu (49), Rachit (39), Junaid (29), Himadri (19), Ankit (9)

Porter Model + PEST

Supplier Power
Economic - Very High investment for setting up R&D centers and Fabricating Plants - Few Vendors -Samsung is a very large buyer Political -Chinese Govt. provides all sorts of assistance for setting up a plant

Medium

Entry Barriers -High Capital Requirement. -Govt. Approvals Very High

Industry Competition -Micron, Infineon, Hynix, SMIC. As of now Samsung is the clear market leader - Moderate

Buyer Power - Chips sold to PC n Mobile makers. - Moderately price sensitive consumer. Medium

Technological -Very high use of innovation and technology.

Threat of Substitutes - No major substitutes. Nanotechnology based memory still not ready. Low

Social - Consumers (PC, Mobile companies) very well informed - Customers ready to try other options

Core Competency Model

Flash Chips

Samsung
Expertise in Electronics Innovation

Memory Chips

Value Chain
SUPPORT ACTIVITIES
Infrastructure

Has a state of art R&D facility and a fabricating unit in Seol.

Strong vendor relations Values human resources a lot
Excellent R&D work

Human Resource Management

Self Distribution

Recruitement

Competitive Pay scales

Technology Development

Central computer linked with vendors

New Products Introductions

PRIMARY ACTIVITIES

Lowest Raw Material Cost in the Industry

High Technology based operations

Very strong Brand. Known for its Quality. Rated in the top 20 brands of the world

Customer Oriented

Inbound Logistics

Operations

Outbound Logistics

Marketing / Sales

Service

Analysis Samsung
Economies of scale in semiconductor production. High Investment in R&D R&D Facility & Fabricating unit at single site. Innovative human resource policies, performance based promotions. Wide range of customized end products for meeting customer demands. Reliable Product- Very high brand value.

VRIO
Resource Is it valuable ? Is it Rare? Is it difficult to imitate? Yes Is it difficult to organize? Yes Competitiv e Consequen ces Performance Implications

Technological Yes Expertise Brand value Yes

Yes

Sustainable Above Average Competitive Returns Advantage Sustainable Above Average Competitive Returns Advantage

Yes

Yes

Yes

Samsungs cost advantage

Low labor cost at Korea. Higher capacity utilization, lower depreciation cost Raw Material, Labor, Depreciation, R&D, SG&A- these cost are substantially higher for competitors.

Major Challenges
China is a major upcoming threat Major chip producers are partnering with Chinese company i.e. Infenion, Elpida signed agreement with SMIC. Chinese are desperate in gaining market share at the cost of losses. Chinese Govt is ready to provide cheap finance to set up JV.

Conclusion
Samsung is ahead in Learning curveemphasis more in R&D works. Play on legacy and specialty product. May collaborate with Chinese partners to expand joint investments. Probably a better option.. Produce low end product in china, high end product in Korea. Ensure better control over Intellectual Property