SAMSUNG Business Strategy

Samsung is one of the world’s largest electronic corporations. Over the past 70 years, the firm has specialized in digital appliances and television. The group was established in 1938, with its main industry being trade in exports. However, over the course of its 70-year history, it has expanded into the electronics industry. Its headquarters are located in Seoul, South Korea. The corporation is both a multinational and a conglomerate, with over 30 branches that comprise its group structure (Simonin 1). Samsung’s operations have now been more internationalized, necessitating a multinational market approach. Venturing into the worldwide market offers new opportunities for companies but also presents challenges. A multinational conglomerate is faced with the task of creating an international business strategy that is relevant to all the individual markets. The strategy will also have to address issues like counterfeiting and competition which may be more dynamic than those in the domestic market.

A global business strategy will have to address several issues. The product or service, its market, how the company will produce or offer service, sources of funding open to the company, and competition, are some of these issues (Diaconu 141). Samsung develops some of the leading products in the global market like electronics, and the problem of counterfeiting can reduce its revenues of the company significantly. The company also faces stiff competition from other global players in the market such as Apple, IBM, Sony among others. These corporates are also huge conglomerates with significant global presence. The competition can also present itself through small local players in specific markets. This paper examines Samsung’s global business strategy and how it addresses some of the aspects including counterfeit products and competitiveness.

Samsung Group

The Samsung group is composed of about thirty affiliate companies and subsidiaries. Most of them use the Samsung brand. The company is in the business of supplies, manufacturing, electronics, insurance, and heavy industries. The Samsung subsidiaries are some of the most significant players in their industries, for example, Samsung Electronics is the second largest information technology company, and Samsung Heavy Industry is also among the most prominent shipbuilding company in the world (Simonin 1). The paper will be based on Samsung Electronics as the group’s subsidiary because of the position of the business in the global electronics industry. In addition to the level of counterfeit products and competition in the industry has become a matter of concern for the primary producers in the industry.

A Brief Overview Samsung Electronics

Samsung Electronics (SE) is the flagship company of the Samsung group. The company is the most profitable in the group and accounts for approximately 70% of the group’s revenues (Simonin 1). The company is involved in the production of mobile phones, TVs, Microwaves among other electronics. It also produces chips, batteries, and memory disks for other electronics companies like Apple, Sony, and HTC. SE is the world leader in mobile phones production due to the popularity of its Samsung Galaxy Brand. The company is also an industry leader in the manufacture of televisions.

Samsung Electronics Global Business Strategy

Samsung entered the electronics market in the 1960s and had grown its share of the market in the industry to become a global leader. The company has used various techniques to advance its growth in this space. Its strategy can be examined from four different angles; market penetration, market development, product development, and diversification. These perspectives may be grouped into a product-market combination where the first two represent the market, and the others are for the products. The combination will allow a complete analysis of the company’s global business strategy relating to counterfeiting and competitiveness.

Market Penetration and Market Development

Samsung Electronics aims to achieve global growth through market penetration. Market Penetration involves the entrance into new markets and also continuously increasing its share of those that it is already present. The company is already a leader in market penetration as it is the second largest Information Technology Company regarding revenue and the fifth in size based on its global market share (Woyke n.p).

The company’s entry into new markets has been carried out in three dimensions since the 1980s (Simonin 2). Samsung uses the how-where-and-when approach when it comes to entry into a new market. The company will choose a market where another company has already established itself. The demand factors for that competitor will determine whether Samsung will set shop in that country. The potential growth and how the customers will pick up or receive their products must also be analyzed before market entry. SE will also invest considerable amounts in retail and distribution in the bid to overtake the competition. An example of this strategy is when Samsung waited for Apple to launch the iPhone V1 and V2 before launching their galaxy brands. The intention was for Samsung to gauge the customers’ reception of the new products (Simonin 3). SE’s strategy on market penetration and market development are to take advantage of being an early mover while at the same time avoiding the disadvantages of being the leader in a market.

Counterfeiting and Competition in Market Penetration

Competition in the electronics industry is high. The market is saturated by big conglomerates and small industry players. Samsung’s entry into markets as an early mover and not a leader pits the company against significant competition. The primary strategy used by SE is the rapid entry into the market. The company will invest cash into the process, even from other entities in the group, to ensure that it gains ground over its competition. Samsung’s policy of entry into new the markets after a significant competitor also enables it to replicate some of the viable marketing strategies and product attributes used by them. However, this approach has led to cases being filed against Samsung on intellectual property infringement (Associated Press n.p). SE also uses joint ventures and partnerships in market entry and development. The company will establish strategic alliances with competitors and other tech companies to develop the innovations and products that it feels will give it a competitive edge. Joint ventures have the advantage of acquiring new technologies and also securing talent. In the Information Technology industry, a combination of technology and talent is critical with most players striving to obtain both.

Samsung is faced with the challenge of counterfeit products with entry into new markets Entry into emerging markets like China where counterfeiting of products is rife only makes the problem more significant (Chang 105). One of the strategies that Samsung uses to manage this is by standardizing its products to make it easier to recognize counterfeits (Simonin 4). The company also teams up with local authorities and online retailers to crack down on the counterfeit trade of its product. In the first quarter of 2014, Samsung teamed up with the Indian police to conduct raids in Hyderabad where over $500,000 worth of counterfeit goods were recovered (Woyke n.p). The issue of counterfeiting is still a significant challenge to the business. The fake products reduce the value of the brand in other markets by adversely impacting on the perception of the customers on the quality of its products.

Product Development and Diversification

Samsung also develops products to meet its international business. The company will develop products to cater to its existing customers and also to provide for new markets. Product development is riskier than increasing the company’s share or market development. Samsung operates in different markets and has a wide array of products. This enables the company to have access to various technologies and expertise. The combination of these factors leads to synergy in product development. Efficiency in product development is also enhanced by Samsung vertically integrating its process. This entails controlling the phases of production from manufacture to retail and distribution.

The company also uses different experiences to enhance product development. An experience in one market will inform the decisions made in another one. For example, the company had issues in implementing AC machines in Australia and the lessons learned from this business informed the decisions made when they rolled out the product in Thailand (Simonin, 5). The company’s primary goal is to meet their customer’s needs through the development of innovative products that will enhance their brand in the global market.

Counterfeits and Competition in Product Development

One of the primary challenges that SE faces is competition in developing new products. The best product to analyze regarding competition is the smartphone. An overcrowded smartphone market has been a significant cause of stalling SE profits (Cipriani, n.p). The company has also lost ground in emerging markets like China where the company’s market share has dropped by 50%, and other smartphone manufacturers like Apple and Huawei have gained ground. Samsung’s strategy involves the development of products that have differentiation to suit the clients need in the different market they operate in. The difference in consumer’s taste and preference play a critical role in product development. SE will try to meet this demand while attempting to maintain some specific standards that minimize the overall costs (Simonin, 6).

The company also innovate products that match up to competition. The Samsung Galaxy phone which is the company’s flagship product has competed with Apple’s iPhone brand since both groups launched their smartphones. Samsung has continuously improved their products. A good example being the continuous upgrade of its Galaxy series, the S6, and S6 Edge launched in 2015 was said to be similar to the iPhone 6 than they were similar to the previous Samsung smartphones.

Counterfeiting is also an issue in product development and diversification. Counterfeit products imitating Samsung products are in the market. A report shows that over half of the smartphones sold in China are pirated versions of Samsung and Xiaomi. The counterfeits are developed in such a way that they imitate the interface and operating system. The only difference is that they are sold for a fraction of the price that original products are sold for (Soo, n.p). One of the ways to fight counterfeits is the use of verification codes. The device will have a verification code that consumers can use to verify if the product is genuine by checking online on the company’s website.

The other option available to Samsung is partnering with authorities in the different market they operate in. The crackdown on counterfeits reduces the number of knocks offs in the market although this strategy is a hit or miss. The strategy is pegged on the willingness of authorities to curb counterfeiting. The company also partners with online retailers like Alibaba and Amazon. These companies will ensure that counterfeits are not sold on their platforms by putting in place stringent measures that cub counterfeiting.

Conclusion

Samsung Electronics has put in place measures to deal with counterfeits and competition. Replication of Samsung brands has become more enhanced. Samsung, therefore, needs to improve their global business strategy to counter these two issues. Companies with global presence have to have global business strategies that enable their products to penetrate international markets. The dynamics of the international markets are more complicated than the local ones. Counterfeiting and competition are two of the main issues that global conglomerates have to deal with. The rapid growth of the Information Technology industry has increased the magnitude of these two issues. Competition has grown primarily in the smartphone industry that has seen the growth of Chinese smartphone companies to match the seasoned players like Samsung and Apple. The standardization of Operating Systems like Android that is used in most of the smartphones has led to the worsening of the counterfeit issue.

Works Cited

Associated Press. “Apple wins’ lawsuit against Samsung, as jury awards $1b for patent infringement”. Fox News, http://www.foxnews.com/tech/2012/08/24. Accessed on 23/11/2017

Chang, Sea-Jin. Multinational Firms in China: Entry Strategies, Competition, and Firms Performance. Oxford: Oxford Press, 2013

Cipriani, Jason. ”Smartphone demand, competition behind another Samsung miss.” Fortune, http://fortune.com/2015/07/07/samsung-smartphone-market/. Accessed on 23/11/2017

Diaconu, Laura. ”Business Strategies of the Multinational Corporations.“ CES working paper, Vol 4, Issue 2 (2012) PP. 141-149

Simonin, Dimitri. The International Strategy: The Strategy of Samsung Group. Geneva: University of Geneva, 2014. Retrieved from https://www.researchgate.net

Soo, Zen. ”Xiaomi and Samsung are getting crushed by counterfeit smartphones in China.” Business Insider, http://www.businessinsider.com. Accessed on 23/11/2017

Woyke, Elizabeth. The Smartphone: Anatomy of an Industry. New York: The New Press, 2014