INTERNATIONAL BUSINESS
Samsung smartphones
Contents
Abstract ......................................................................................................................................................... 2
1.
International business Environment ..................................................................................................... 3
a)
Technological .................................................................................................................................... 3
b)
Threats & Opportunities for Samsung .............................................................................................. 4
Recommendation...................................................................................................................................... 5
2.
Global Supply Chain Management (GSCM) .......................................................................................... 6
1)
Supply chain management of Samsung ............................................................................................ 6
2)
Weaknesses in SCM of Samsung ....................................................................................................... 7
3)
Role of SCM in competitive advantage of Samsung ......................................................................... 7
3.
Corporate Social Responsibility (CSR) ................................................................................................... 9
a)
Current activities and plans of Samsung CSR.................................................................................... 9
3.1.
Waste management .................................................................................................................... 10
3.2.
Communities ............................................................................................................................... 10
3.3.
Staff treatment............................................................................................................................ 10
b)
Impact of Samsung CSR policies on stakeholders of Samsung ....................................................... 11
Conclusion ................................................................................................................................................... 13
References .................................................................................................................................................. 14
1
Abstract
This report has discussed in detail the competitive advantage of Samsung in Smartphone
industry. This report has discussed the importance and contribution of technological
advancement for maintenance of competitive advantage of the company. The report has stated
that the major factor which contribute in effective technological regime include technological
advancements of rivals and increasing demands from customers.
The report has also discussed supply chain management (SCM) of Samsung in order to gain
competitive advantage in its respective market. SCM of Samsung relies majorly on six sigma
strategy for its effective functioning. The report has also discussed corporate social responsibility
measures taken by Samsung and its impact on its stakeholders.
2
1. International business Environment
Samsung is a South Korean Conglomerate which has been leading smartphone industry since
decades all over the world. It has been established in 1938 and started its electronics subsidiary
in 1960s (Janrain , 2017). Due to intense competition in global market due to American
smartphone company Apple and Chinese smartphone brand Huawei, it requires continuous
developments in its products to retain customers (Gmoser & Flanagan, 2015). Due to major
failures like Samsung Galaxy Note 7 blast incidents, the market share of the company has gone
drastically down. The company’s micro and macro analysis states that in order to overcome
technical issues and to cope up with technological demands of customers, it is essential to
improve the technological operations of the company.
a) Technological
The future international and national business strategy of Samsung should be flawless in terms of
its technology. Customers in smartphone industry require new and innovative ideas to keep them
updated and connected in different forums. For this purpose, it is necessary that Samsung should
keep on introducing new and novel features in its smartphones to keep customers satisfied
(Dennison, 2015). The factors which play a major role in technological advancement of Samsung
include technology used by rivals, customer demands, budget allocated to research and
development etc.
Technology used by rivals
In order to keep pace with changing trends in technology, the business strategy of Samsung
should track the advancements made by rivals in technological terms. Apple Inc. has introduced
a paradigm shift in the age of advancement by introducing latest models of IPhone, IPads and
other smart gadgets. On the other hand the crisis of Galaxy Note 7 blast has resulted in 7%
sudden dive in share prices of Samsung (Farrell, 2016). Customers considered it a major
loophole in technological security of the company.
Samsung is required to address such loopholes in order to avoid any such future incident.
Huawei has also introduced latest smartphones on low prices worldwide making it a major rival
of Samsung besides Apple (Auchard & Jiang, 2017). Samsung business management should
3
keep a track of technological advancement of its customers to ensure same level of technological
development.
Customer demand for latest technology
In smartphone industry, customers want latest features and low prices to enjoy maximum
benefits of their gadget. Despite of brand consciousness customers prefer smartphones which
offer maximum features with lowest possible price. Due to this factor, customers are rapidly
choosing Huawei as smartphone brand due to its launch of mate series. Mate 9 has offered state
of the art features with lowest possible price (Auchard & Jiang, 2017). The Chinese company is
competing on cost leadership.
Samsung business strategy should offer the same benefit to customers to keep them loyal with
the brand (Dudovskiy, 2017). In case the company charges high prices for its smartphones, the
differentiation strategy should be employed to offer highly competitive features which its rivals
don’t offer. For this purpose, the Samsung should majorly focus on its technological
advancement.
Budget for research and development
In order to improve technological advancement of Samsung, it is necessary to spend huge budget
on research and development of smartphones. In 2017, Samsung allocated $12.7 billion whereas
Apple allocated $10 billion (Statista, 2017). The spending on research and development of new
technologies for facilitation of customers will help the company to regain its competitive
advantage in global market which was lost due to effective marketing and business strategies of
Apple and Huawei.
b) Threats & Opportunities for Samsung
Due to intense competition in market, Samsung has been facing several challenges. Some factors
have helped it to offer products to customers whereas some weaknesses has turned out as major
threats for its survival in short and long term. The major threats and opportunities faced by
Samsung based on its technological analysis are discussed as follows
4
Threats
The major threat faced by Samsung is cost leadership of Huawei and differentiation strategy of
Apple. Both rivals have created intense strategic challenges for Samsung to survive in its
domestic and international market. Due to technological challenges, the company is also facing
increased disruption in the pipeline of new products (Dudovskiy, 2017). The company is also
facing major issues due to rapid change in Dollar on international platform. The increasing
innovation from competitors is a major risk countered by the company leading to patent
infringement lawsuits.
Opportunities
Besides several threats to be countered by Samsung due to several weaknesses, it has major
opportunities of business in local and international market. Samsung has invested $2.7 billion
more than Apple Inc. being is biggest rival in smartphone industry (Statista, 2017). The company
has opportunity to utilize this research and development budget in cloud business segment.
It can also help the company in niche business by targeting several emerging markets worldwide.
The investment in research and development sector will not only improve technological regime
of the company (Dudovskiy, 2017). But it will also help in improve its brand value. It may also
compensate the company to regain its leadership in worldwide smartphone industry.
Recommendation
In order to take advantage of opportunities available and to avoid threats to be countered by
Samsung, it is necessary to launch new gadgets in market to retain customers in long term. The
business strategy of the company should be mix of cost and differentiation strategy to meet
demands of all kind of customers.
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2. Global Supply Chain Management (GSCM)
The distribution of products and services of a company is the integral factor in its success. In
order to keep customers satisfy and meet sales targets, it is essential that the supply chain
network of a company is flawless and intact. The GSCM of Samsung has become of the integral
factors in its success. The company has maintained synergy between its SCM and six sigma in
order to ensure fastest supply chain network of the company.
1)
Supply chain management of Samsung
The supply chain of Samsung has been improved through multiple and effective SCM solutions
through innovation processes. Still in 2004, Samsung management identified room for
improvements to provide quality supply to customers worldwide (Yang, et al., 2007). In order to
improve the effectiveness and functionality of Supply chain management of Samsung, it has
focused on four key areas for effective functioning. The factors which contributed in success of
Samsung in global industry include:
Project discipline
The processes devised for smooth and effective SCM contributed in its effective functioning in
short and long term (Dudovskiy, 2017). The defined objectives and key performance indicators
of SCM of the company resulted in improvement of its operations. The Six sigma employed for
effective functioning of SCM helped in increasing the credibility of the company through timely
deliveries of products.
Sustaining results
For desirable outcomes, the SCM of Samsung employed systemization factor. The automation of
supply chain management helped in improving its functionality (Hunbiased, 2015). These
systems also helped in smooth adaption of behavioral and process changes for rapid functioning.
Well established HR framework
The staff members of procurement department of Samsung are expert enough to deal with any
kind of pressure and meet deadlines (Yang, et al., 2007). The employees are trained to hunt
reliable and trust worthy suppliers. Due to support of reliable suppliers, the company has
maintained a momentum of speedy functioning of SCM worldwide.
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Quantitative strength
SCM of Samsung employed five design parameter to deal with changes in supply chain
management of the company (Hunbiased, 2015). These parameters have helped in
synchronization of company’s value chain, inbound logistics and customer service department.
The Six sigma program for improving functionality of SCM of Samsung has resulted in increase
in growth and innovation of the company.
2)
Weaknesses in SCM of Samsung
The supply chain management of Samsung is highly competitive and unbeatable. Still there are
several things which are required to be addressed in order to retain its competitive advantage in
long term. Due to exploding of Samsung Note 7, the supply chain management strategies of the
company have shown several flaws despite of synergy created using six sigma strategy (Buist,
2016).
The quality control of large network of suppliers have to be taken into account to ensure that no
such incidents happen in future. The disaster recovering plans introduced by the company
seemed flawed and resulted in loss of billions for the company. The quality control of suppliers
should be addressed properly using several checks to ensure that customers are offered defect
less phones and other products.
3)
Role of SCM in competitive advantage of Samsung
The supply chain management of Samsung has been contributing a major role in its effective
functioning and gaining wide market share worldwide. The SCM of the company has several
features which have enabled it to gain and retain competitive advantage in short and long term. It
has been contributing in optimized marketing, high demand satisfaction and increased market
response ability (Hunbiased, 2015). It has also helped in integration of sales, logistics and
marketing department of the company. The major factors involved in effective functioning of
SCM of Samsung which contributed in competitive advantage of the company involve:
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Operational Excellence
Supply chain management of Samsung has shown following characteristics resulting in its
operational excellence.
Source: (Hunbiased, 2015)
The company has maintained synergy between all major departments including development,
procurement, manufacturing, logistics and sales. It resulted in synchronized functioning of each
department. The flow of processes through synchronization process resulted in meeting desired
objectives within timely manner.
SCM of the company has maintained a momentum of speed and flexibility. The speed factor
included several constraints. Weekly decision making, production flexibility (CELL) and global
logistic hub contributed in maintaining speedy functioning of the supply chain (Hunbiased,
2015). On the other hand flexibility of the supply chain depends on customer collaboration and
retail & channel SCM of Samsung.
Smart Logistics
The supply chain management of Samsung has realigned it structures into six areas. These areas
include smart town, smart manufacturing, smart convergence, smart security, smart logistics and
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smart ICT (Dudovskiy, 2017). The major contribution in SCM management is through smart
logistics of the company. Smart logistics have resulted due to supply chain logistics consulting,
supply chain logistics solution (Cello) and overseas logistics IT service.
Effective enterprise resource planning (ERP)
The ERP system of Samsung has been contributing in real time access to suppliers and
customers. The data of the company globally is managed on one system at any time. The Global
ERP of the company has been contributing effectively in smooth functioning of SCM of the
company.
It helps in real time information sharing among suppliers, customers and employees of the
company (Janrain , 2017). It also helps in fast response towards global business environment
changes. Due to effective functioning of ERP of Samsung, the highly innovative smartphone
ideas are generated leading to increase in demand of the company’s products in market. It has
resulted in increasing the competitive advantage of company in market.
3. Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) includes the measures taken by a company to ensure safe
treatment to the environment. It also focuses on active compliance with the spirit of law, ethical
standards and international norms.
a) Current activities and plans of Samsung CSR
Samsung has been an active player in CSR measures to ensure safe practices for betterment of
society and communities. Samsung America has recently won the competition of CSR initiative
program named “Solve for Tomorrow Contest”. Under this program the company has put its
focus on improving living standard of children by facilitating them through STEM education
program (Ellett, 2013).
Samsung has also taken strict measures to ensure safe environmental practices by through its
participation in several programs such waste management, charity & donation etc. some of the
strict measures taken by CSR management of Samsung have discussed as follows:
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3.1.
Waste management
The company has devised budget and systems in order to collect 2.26 million tons of waste
material from 2009 to 2015. Till 2020 Samsung CSR management aims at collecting 3.8 million
tons of waste material for safe environmental practices. Besides waste material the collective
recycling of plastic involved reuse of 6.3% of total plastic used in its activities. It comprised of
34,322 tons of plastic to be recycled (Dudovskiy, 2017). For carbon emission problem, the
company has introduced eco-management and plant first programs. The company has used
effective programs which helped in reduction of greenhouse emission by 70% from 2009 to
2015.
3.2.
Communities
Samsung has taken several initiatives to ensure independence and self-reliance among
community members. The company has started several vocational education programs aimed by
benefiting 39,659 solely in 2015. The SMART school program started by the company has been
contributing effective to meet up educational gap of children who can’t afford quality education
worldwide (Dudovskiy, 2017). In order to benefit people of third world countries, Samsung has
initiated 30 different health care programs in different regions of world especially in African
countries where healthy facilities are rare.
Samsung has also started Nanum village program to eradicate poverty through facilitating
disadvantaged segments of society. This program covers several basic necessities of life
including quality education, modern infrastructure, medical facilities, and facility of clean water
and establishment of community center for people.
3.3.
Staff treatment
Samsung has always prioritized its workers as it considers the importance of quality workers in
its global success. The company has ensure implementation of labour and human rights for
protection of its staff members. Samsung management has conducted 235 supplier inspections
for child labour protection in China in 2015 (Dudovskiy, 2017). The company introduced
employee benefits programs of worth 3.853 billion in Korea.
The company has also implemented training sessions of employees amounted to 78 hours per
employee during 2015. For personal development of its workers, the company has established
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career consulting centers. For secure practices for its employees and staff member, the company
has introduced several health and safety management systems such as compliance with OHSAS
18001 standard.
b) Impact of Samsung CSR policies on stakeholders of Samsung
Stakeholders are direct parties which get impacted by functioning of a company. All big strategic
decisions directly impact the functioning of the company (Akisik & Gal, 2010). Stakeholders of
a company include its customers, suppliers, employees, investors and government etc. The
corporate social responsibility measures taken by Samsung has a direct impact on its
stakeholders. The major impacts include:
Increased loyalty
Due to effective CSR activities undertaken by Samsung, the stakeholders of the company show
high commitment and increased loyalty. Customers get improved services and products which
leads to their long term commitment with the brand (Dudovskiy, 2017). The community is
offered several wellness programs which leads to high loyalty by community with the brand
name of the company in long term.
Higher satisfaction rate
Employees are offered safe work conditions and several benefit programs. Which leads to high
rate of job security and fulfilment. In case personal concerns of employees are completely met,
they feel satisfied. The higher satisfaction rate of employees leads to better customer services to
clients (Dudovskiy, 2017). Due to better customer services, the satisfaction rate of customers
also increase. It leads to increase in company sales and market share. The cycle continues
leading to improve market place for Samsung in global market.
Long term commitment
The safe environmental practices and several beneficial programs for employees, community and
customers lead to their long term commitment. Due to high satisfaction level both employees and
customers show long term commitment with the company (Ellett, 2013). Due to this factor,
Samsung has excelled from a conglomerate to a multinational company in global market.
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High reliance
Government is a major stakeholder in all type of companies and organizations. Samsung has
started several programs for benefit of communities and other stakeholders. It has also complied
with legal regulations resulting in high reliance of Korean government on its operations. The
conglomerate company has been offering huge GDP to the Korean government leading to
increase in balance of payment of the country (Janrain , 2017). It has resulted in increased level
of contribution by Samsung in earnings of Korean government. The states relies for its Gross
domestic product (GDP) on sales and profits of Samsung.
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Conclusion
This report concludes the importance and contribution of technological advancement for
maintenance of competitive advantage of the company. Samsung is a South Korean
Conglomerate which has been leading smartphone industry since decades all over the world. The
factors which play a major role in technological advancement of Samsung include technology
used by rivals, customer demands, budget allocated to research and development etc. The major
threat faced by Samsung is cost leadership of Huawei and differentiation strategy of Apple.
The report has also discussed supply chain management (SCM) of Samsung in order to gain
competitive advantage in its respective market. SCM of Samsung relies majorly on six sigma
strategy for its effective functioning. The quality control of large network of suppliers have to be
taken into account to ensure that no such incidents happen in future. The disaster recovering
plans introduced by the company seemed flawed and resulted in loss of billions for the company.
Samsung has been an active player in CSR measures to ensure safe practices for betterment of
society and communities. Samsung America has recently won the competition of CSR initiative
program named “Solve for Tomorrow Contest”. The report has also discussed corporate social
responsibility measures taken by Samsung and its impact on its stakeholders.
13
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