Macro Environment
Macro environment entails the key and uncontrollable elements that affect the way an organization makes a decision, its strategies, and overall performance. The features include the political factors, economic, legal, technological changes, and social conditions.
Social Conditions
Samsung is affected by social conditions in that despite its global image the company is forced to operate as a Korean company. As such, the firm had to change most of its global operations aspects per the local social conditions. Therefore, Samsung operates locally in many of its emerging markets. Further, the firm had to create variations in its products to match the swiftly changing customer preferences in particular markets (Haseeb, 2017). Samsung Company controls a market that is profoundly influenced by consumer’s preferences with different socio-cultural factors and, therefore, the firm has to reestablish its operations appropriately.
Technological Factors
Samsung is also influenced by technological factors besides been the leading global technology company. The firm enjoys advantages of technology over other companies and, thus, drives innovation aimed at a sustainable business advantage. The mission of the company is to lead in all the technological and innovation arenas (Haseeb, 2017). Therefore, the company ensures that it is the first to provide latest and unique products in the market with an aim to dominate competitors. The company changed its production strategy after it was accused of imitating Apple’s product design and, thus, Samsung makes sure that it is the first to develop new and latest products.
Economic Factors
Further, Samsung Company is influenced by economic factors in its day to day operations. By opening up emerging markets, the company takes close attention of the economic factors. The firm has to be aware of the continuing worldwide financial crisis as it makes efforts to enlarge its global track (Haseeb, 2017). Samsung has been forced to find practical resolutions in areas where reduction of the buyers’ purchasing powers is noted. Therefore, the firm has been adjusting its strategies since the market is full of uncertainties to ensure it remains competitive.
Political Factors
Samsung Company is also affected by political factors in that it had to adjust it strategic calculations to incorporate political instabilities. This is despite having less political influences in many of its markets. The strategic changes help the company bear with the political problems in some of its foreign markets such as India (Haseeb, 2017). Also, the firm experiences political pressures in many African and Latin American countries where its considerations for political instability help it survive.
Legal Factors
Additionally, Samsung is influenced by legal factors where it has to operate within legal frameworks. Failure to follow legal requirements leads to numerous lawsuits which are detrimental to a company. For instance, Samsung has spent heavily in trials over imitation of products as well as issues concerning copyrights and patents (Haseeb, 2017). As such, the firm had to alter its production strategy to ensure it leads to the innovation of new products to avoid repetition of such legal suits.
Analysis of Internal Environment and Capabilities of Samsung Company
Internal Environment
Internal environment analysis involves checking internal organization factors that affect how a company works. The factors include human resources, machinery, materials, money, innovations, market size, and demand and supply. The appropriate internal environment acts as a company’s asset and aids in increasing productivity and consequent growth chances. Samsung Company has strategically utilized its internal environment factors which have enabled it to stay ahead and become a worldwide market leader in technology.
Human Resources
Samsung has come up with ways to develop the human resources. The firm acknowledges the importance of employees working in a favorable working environment. Therefore, it has created a friendly working environment which incorporates team members’ participation in the development and improvement of ideas. The company has also sponsored its employees in educational programs which assist them to advance and develop their human resources capabilities. By doing this, the company boasts of a high number of skilled professions which results from its huge human capital investment (Michell, 2011). Samsung company has, thus, has managed its human resources so effectively which has impacted on the company’s high productivity and top-notch products and services.
Materials
Samsung Company uses low-cost materials in the production of its goods and services. This is as a result of the company’s low-cost strategy and the ability to negotiate with its suppliers. The company has recorded and earned several awards for the reliability and quality of their services and products (Michell, 2011). Therefore, the company is at an upper hand to agree on a low cost of materials from its suppliers who can even supply at a premium. Further, the company's high adaptation to the changing demand in the technology industry has made it become an aggressive reader in the market.
Research and Development
Additionally, Samsung Company has set up their research and development equipment in a central place which has enhanced it to remain competitive. Majority of Samsung competitors have their research and development facilities as well as their productions equipment located in various locations around the globe. The centralization of the facilities has given the company the opportunity to explore vast products and technology inventions and innovations persistently. As such, Samsung can facilitate its new products development which makes it be the first to invent a new product. Most of the company’s products innovations share the same design which help reduces the cost of getting a new end product (Michell, 2011). Moreover, the centralization makes the company avoid setting up new facilities when it needs to develop innovation and invention. As a result, the company enjoys high yields and low cost of production. The low production costs enable the company to offer their products at competitive prices to their consumers.
Application of Porter’s Five Forces Model to Evaluate the Competitive Forces of Samsung Company
Porter’s Five Forces Model
Porter’s Five Forces model is used in assessing and evaluation of the competitive position and strength of a business establishment. The model is laid on the concept that there exist five forces that direct the competitive attractiveness and intensity of a particular market. It helps in identification of power centers in business situations thereby facilitating the comprehension of a firm’s present competitive strength and the desired competitive position of an organization. The models five forces include; the threat of new entrance in the market, suppliers bargaining power, threat of substitute products and services, buyers bargaining power, and rivalry with competitors.
Bargaining Power of Suppliers
Suppliers act as the source of raw materials for companies and, thus, their bargaining power is a vital force influencing a company’s position. When suppliers have higher bargaining power, the competitive ability of a company is low, and the opposite is true. Samsung enjoys a higher competitive strength as its supplier's bargaining power is low. This is because Samsung has many small-sized suppliers who make their bargaining power to be low. Further, the suppliers are spread globally where Samsung can switch from one supplier to the other (Dudovskiy, 2017). Nevertheless, Samsung acts as the primary source of funds for its suppliers and, therefore, cannot switch to another brand. As a result, the company controls the suppliers where it gives rules and regulations to be followed by their suppliers besides making frequent follow-ups to ensure adherence to the regulations and rules.
Threats of Substitute Products and Services
Samsung is faced with high risks of substitute products and brands. The brand has various competitors such as Apple, LG, and SONY. Besides, other international and local brands create a threat to the firm. Therefore, customers have a variety of products and brands to choose from as the switching costs are far much low (Dudovskiy, 2017). Samsung uses its strong brand image and technological inventions and innovations to provide their customers with uniquely made products which reduce their possibilities of switching to related products and brands.
Threats of New Entrants
Samsung is not significantly affected by threats of new entrants as it has already built a large brand. The company has invested heavily regarding financial investment and marketing. Also, the firm has used a lot of resources to raise highly skilled human resources. Therefore, there are high barriers to entry as the well-established brands pose an intense competition to the developing brands (Dudovskiy, 2017). Further, there are regulatory policies which tend to deter new brands into the industry thereby creating a barrier to entry.
Bargaining Power of Customers
The rise of the rates at which customers are accessing information has contributed to the increase in the bargaining power of customers. Samsung’s customers have a great bargaining power due to the little switching costs brought about by many brands at the disposal of the customer. The top competition and the use of technology have led to the high influences of the industry by customers (Dudovskiy, 2017). Therefore, Samsung is engaging in intense marketing and promotions to acquire new customers. Also, the company has established a strong brand name as well as continuous engagement in innovation to provide its customers with new and unique products.
Rivalry among Existing Competitors
The electronics industry is faced with stiff competition due to the high number of brands. Samsung faces competition from other electronics multinational companies like Apple, LG, SONY, and Toshiba (Dudovskiy, 2017). Therefore, it has to position itself in the market to ensure it maintains a competitive advantage. Samsung has been able to keep its leadership position in the electronics industry due to its well-known brands which have unique factors besides ensuring that it is always on the lead in the production of new products.
Application of Theories, Concepts and Models to Interpret and Devise Strategic Planning for Samsung Company
Samsung continued success in the electronics industry can be attributed to its adequate strategic planning. The company has emphasized on the technological, design, human resources, and marketing improvements which are the main bases of the company’s strategic plan. Samsung uses Porter’s value chain model to measure and identify all the activities that are carried out in the firm’s value chain. The company takes excellent attention of its primary operations which enables the firm to offer high quality and competitive products (Jung, 2014). Further, the firm checks on its support activities which help it achieve the primary activities.
Human Resources Management
Samsung Company uses open management system in managing its human resources. The system involves respect the creativity and the independence of the employees as well as reducing the obstacles which might hinder competitiveness and efficiency. As such, the company promotes equal opportunity for all where skills are put first in the realization of human potential. It ensures opportunities are issued without bias and restrictions, and that promotion and compensation are offered depending on employee skills (Jung, 2014). Therefore, Samsung has risen as a successful global company due to its management philosophy of putting the employees first.
Branding and Marketing Strategies
Samsung uses unique branding and marketing strategies which have taken an essential role in its triumph. Firstly, the company has put in place a strong focus on customers which involves the comprehension of the wants and the requirements of customers as well as future needs. Secondly, the firm believes in the power of uniquely designed products and services. It is through the design that Samsung can provide emotional and functional interests. Thirdly, the company has an excellent design ideology which is efficient, intuitive, and simple (Jung, 2014). It aims to develop eco-friendly designs besides appealing products. Lastly, the company intends to create models which can incorporate the customer’s lifestyle and their interaction with the products. Therefore, Samsung not only targets to develop unique products but also to interact and engage with the customers. As such, the company identifies the strength of a strong brand and consistently maximizes its growth via new products launching and getting into new markets.
References
Dudovskiy, J., 2017. Samsung’s Porter’s Five Forces Analysis. Available at < https://research-methodology.net/samsung-porters-five-forces-analysis/> (Accessed 2 March 2018)
Haseeb., 2017. PESTLE Analysis of Samsung. Available at (Accessed 2 March 2018)
Jung, S.C., 2014. The analysis of strategic management of Samsung Electronics Company through the generic value chain model. International Journal of Software Engineering and Its Applications, 8(12), pp.133-142.
Michell, A., 2011. Samsung Electronics and the struggle for Leadership of the Electronics Industry. Wiley Publishers. Available at (Accessed 2 March 2018)
