Assignment based on Strategic Management
Strategic Management involves identifying the scopes and analyzing the important aspects of business and work towards the goals and objectives of the organization by mapping out a clear strategy. Strategy involves leaders and managers to identify strength, weakness, opportunities and threat of a business and take steps to capitalize on strength and opportunities to take organization forward for successful accomplishment of goals and objectives. Mission and vision of an organization are long term aspects of an organization which is realized with proper implementation of strategies at various levels. Strategies are different from goals and objectives and should not be confused with them. In simple terms, an organization takes strategy to accomplish goals and objectives during its course of business and management operations and building strategy is a never ending process. A proper strategic management reflects leaders’ and managers’ awareness of all the important aspects of business and effective integration of resources to work towards goals and objectives. Strategy may change from time to time as per the requirements depending on the current and future market; managers need to keep themselves apprised of every business aspects and pro activity is the essence of strategy. The key factors lie in determining the essentiality of sustaining existing customers and forecasting changes in future to be ready to take steps when the changes arrive.
The story of Samsung success is a perfect example of how an organization should keep itself updated with the changing market dynamics and build its strategy at every step to counter ever-growing competition and stay competitive in today’s business world (Co., 2014).
Samsung Electronics based in South Korea is a manufacturer of electronic devices; it mainly manufactures television and mobile phones for consumers all over the world and its products are full of varieties meant to serve consumers at different economic levels. In 2011 Samsung Electronics occupied the numero uno position to be regarded as the largest technology company by displacing Apple Inc. and it has been maintained that position since then. In recent years its main revenues come from manufacturing of variety of smart phones catering to consumers around the globe at every economic level. Its flagship products are series of Galaxy smart phones and Tablets. Besides all these it also manufactures semiconductors, chips, lithium ion batteries, flash memory and hard drive for its own product and also for Apple Inc and other mobile phone companies (Shaughnessy, 2013). Below is the organizational structure of Samsung.
Samsung Electronics targets individual consumers as well as business consumers all over the world. Recently Samsung Electronics have been targeting various government agencies throughout the world including white house members as they are contemplating to switch to other mobile phone company. Samsung Electronics also serves television consumers with wide range of products all over the world. In 2011 when it overtook Apple Inc to become the largest technology company it spent over $400 million in advertising which was $75 million more than Apple’s advertising expenditure. In the year 2013 it sold around 70 million units which is reflected from its first quarter sale alone. Recently it has launched its high cost galaxy note book devices which are touted as the next big thing in the technology market. It aims to grow further and sustain its numero uno position. Along with that it continues to be main supplier of Apple Inc’s subsidiary products which generates further revenue and profit for the company (Shaughnessy, 2013).
Current and Desired Position
As per 2015 first quarter report Samsung Electronics’ shipped 83.2 million smart phones whereas Apple Inc’s Shipment was 61.2 million. The 2015 report announced that Samsung regained its position as the number 1 supplier of smart phones after losing its major chunk to Apple Inc’s i-phone 6 innovation. The smart phone market all over the world is getting intensely competitive and many players such as Lenovo, Motorola, and MI are making a huge dent in its market share and giving it a tough fight. Samsung has plans to penetrate business organization market along with replacing Blackberry as the supplier of smart phones to White House officials. It strives to sustain its position as the largest supplier of Smart phones and increase its market share and revenue which have been on the lower side (GSM Arena, 2015).
The management of Samsung is based on Value Chain Model which was popularized in the year 1985 by Michael Porter after he proposed value chain model as the set of primary activities and secondary activities. The primary activities have a direct relation with products or services that the company intends to sell to its customers. Under secondary activities are those which are performed within the infrastructure of the firm to carry out primary activities. Following pictorial representation would give a clear idea of what actually are primary activities and what are secondary activities (Jung, 2014).
Both primary activities and secondary activities are interrelated and performing the secondary activities is a must in order to perform the primary activities. Samsung encourages its employees by introducing Open HR system where there is no discrimination and everyone is encouraged to perform and innovate. It provides pay package and promotes its employees on the basis of performance giving up earlier ideas of seniority. Its technical team consists of well equipped engineers and researchers who are dispatched to several parts of the world to learn and accumulate knowledge on technical aspects essential for technological innovation. Below is the pictorial representation of Samsung’s HR model adopted specifically for 21st century global market.
Samsung invests heavily on research and development and in the year 2015 alone it spent nearly $14 billion dollar and was second only to German Auto maker Volkswagen. This aggressive spending is aimed at future market innovation in technological aspects are supposed to play a crucial role in sustaining its position as the global market leader in technology. Samsung’s immediate rival Apple Inc often comes with upgrade version of its smart phones and Samsung is a master in customizing innovations of other companies and make it suitable for its own avoiding infringement adhering to patented rights. Although recently Samsung is under severe criticism for copying Apple’s model of i-phone 6 innovation in which it largely came out unscathed. The following figure shows how Samsung aggressively spends in advertisement.
Marketing and Design
Samsung’s marketing strategy is based on extensive market survey where it gives innate preference to what customers want and understands the needs of consumers all over the world. It emphasizes to build reputation and cater to customers designing products of both high cost and low cost. It is evident that in the era of smart phones and tablets Samsung haven’t stopped producing elegant traditional mobile phone products. Its smart phones are of various ranges and providing satisfaction and efficiency to smart phone consumers of both high cost and low cost. Samsung’s designs are elegant and its display is the most elegant which appeals to its consumers. Consumers of Samsung connect to its product emotionally and customer loyalty is more evident among them. Moreover Samsung phones are cost effective as compared to Apple’s phone which provides it with a massive advantage.
Samsung’s management system is hybrid management where it gives due importance to both American style of management and Japanese style of management maintaining a proper tradeoffs between both of them. It specifically gives importance to both internal and external markets and focuses to improve its products and services through R&D along with innovation, marketing as well as design. It maintains long term relationships with its competitors by supplying them with crucial chips and other products thereby promoting critical competition. It still is the major and valued supplier of Apple Inc’s despite the entire law suit episode regarding patented rights for the last two year.
The business model innovation of Samsung is based on integration of ideas and it pursues integration of technological ideas along with marketing ideas. This innovation enables Samsung to adopt and customize ideas in line with the market requirements which helps it to stay ahead of others. It is evident how Nokia which was the most prominent mobile phone providers across the world suddenly disappeared from the market as due to lack of efficient model. Samsung along with serving current customers also gives importance to future opportunities keeping track of all the developments in the consumer smart phone industry (Jung, 2014).
The following diagram would give us the overview of Samsung Strategic Management
Environment and Ethical Standard
Samsung release Environmental and Ethical report every year mentioning the activities taken to ensure sustainability and maintain a eco friendly image. The reports are issued under the headings of people, society, environment and guidelines of business conducts to apprise of its environmental and ethical standard (Samsung, 2016). However in the year 2013 it admitted that fallacy in its supply chain where it used tin components danger for sustenance of tropical forests in Indonesia. Company also vowed to take measures in order to control it and maintain clean environmental image. Its human resource reports are also excellent where every employees and labor are paid aligning with the rules and regulations of its state of operation (Foeeurope, 2013).
The strength of the Samsung lies in its vast resources; human and technological assets which helps it to engage in capital generation for its future endeavors to remain ahead of others. Its chips, semi conductors are considered its valued assets the supply of which enables it to extract revenues from reputed firms like Apple, Lenovo, and Sony.
However the company is labeled more as followers rather than innovators, Apple could not win the law suit filed after alleging infringement of patented rights but has managed to dent Samsung’s image severely in the eyes of consumers which have branded it as followers of Apple’s technological innovation. The company needs to come with clear image and some radical technological innovation can play a crucial role in that.
There are large opportunities opening up for smart phone markets in developing countries and Samsung’s over reaching R&D can make bigger impacts.
The ever growing low cost smart phone companies are threat to its existence as the global leader.
Samsung case is a perfect example of why having a clear cut strategy for each and every organizational aspect is important for successful accomplishment of goals and objectives. Proper strategy management reflects transparency in each and every affairs of day to day business. For an organization like Samsung which faces intense competition from every small and big firm, it is essential to avoid every possibility of manipulation by other firms as scope of error is very minute to say the least. Samsung needs to come up with some radical innovation to dent its image after the law suit episode. Though it holds advantage in overall resources and comes with customized innovation at proper time, it needs to do something and must do it quick to deliver at least one radical eye catching innovation to shed the tag. Overall, the Samsung story is an example of how an organization should build its strategy and maintain healthy competition to at the topmost level.
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Co., G. R. (2014). Strategic Management Theory: An integrated approach. Cengage Learning.
Foeeurope. (2013, 04 25). Friends of the Earth Europe. Retrieved 08 25, 2016, from http://www.foeeurope.org: http://www.foeeurope.org/Samsung-admits-forest-trashing-tin-220413
GSM Arena. (2015). GSM Arena. Retrieved 08 25, 2016, from http://www.gsmarena.com: http://www.gsmarena.com/gartner_samsung_retains_smartphone_leadership_in_2015_with_over_20_market_share-news-16723.php
Jung, S. C. (2014). The Analysis of Strategic Management of Samsung Electronics. International Journal of Software Engineering and Its Applications , 133-142.
Samsung. (2016). Samsung. Retrieved 08 25, 2016, from http://www.samsung.com: http://www.samsung.com/us/aboutsamsung/sustainability/sustainabilityreports/
Shaughnessy, H. (2013). Forbes. Retrieved 08 25, 2016, from http://www.forbes.com: http://www.forbes.com/forbes/welcome/?toURL=http://www.forbes.com/sites/haydnshaughnessy/2013/04/26/samsung-rises-to-nearly-double-apples-smartphone-sales/&refURL=http://www.forbes.com/forbes/welcome/?toURL=http://www.forbes.com/sites/haydnshaughnessy/201