Samsung Electronics is a global South Korean company that holds a large part of the world’s technology market. It is one of the largest electronics manufacturers in the world, known for its high-quality products, and accountable for millions of loyal clients. The corporation specializes in the production of various devices, appliances, memory chips and integrated systems. The company is one of the most innovative enterprises that regularly releases new merchandises, subsequently challenging its competitors.
Samsung Electronics was founded in 1938; however, was initially specialized in grocery trading, exchanging certain products around the South Korean city further exporting them to China. The Korean War allowed Lee Byung Chull – the founder to expand the business into the textiles, opening the largest woollen mill in Korea. Industrialization became his ultimate goal, with the central purpose to help rehabilitate the post-war country.
During the 1970s, Samsung established new subsidiaries: Samsung Heavy Industries, Samsung Shipbuilding, and Samsung Precision Company. Precisely at this time, the company began its path in electronics industry rapidly growing during the next several decades. In the 1990s, Samsung was involved in multiple bribery and patent-infringement scandals, however, the organization continued to manufacture innovative technology worldwide, acquiring a place among top-five global market shares values. The beginning of the 2000s marked the birth of the company’s most famous product – Galaxy smartphones, which became Samsung’s best-known product. The last twenty year have been extremely successful for the corporation, continually acquiring top positions in the most prestigious business charts, and releasing innovative products among the first ones on the global markets.
Porter’s Five Forces
Porter’s five forces is a powerful tool for determining the competitive business environment of a company, which helps identify the future path of the enterprise’s strategy. Such a model recognizes all strength, weaknesses and opportunities for the enterprises. Porter’s model is universal for any industry, enhancing the long-term profitability of the business. Further, Samsung Electronics will be analyzed according to Porter’s Five Forces in terms of innovations.
Competition in the Industry
Competition of the electronic industry is exceptionally high; however, Samsung Electronics is one of the most successful companies in the market. The most significant rivals of the corporation are Apple, Huawei, Microsoft and several other large electronic enterprises, which are long established in the business. The rising demand for innovation, the easy substitution of a variety of electronic products and a constant battle for customer satisfaction, intensifies the competition of the technological industry.
An increasing variety of electronic products represents the relevant substitute for Samsung’s items. Such a high demand for new products on the market continually pushes Samsung Electronics to manufacture new devices in order to maintain the leading position as the world’s best-known tech brand, satisfying customer’s preferences. The considerably large size and global outreach of the competitive companies makes the rivalry among the firms stronger and more intense.
Potential of New Entrants into the Industry
The industry of technology has high barriers for entrance, due to large competitors that hold a significant part of the market. As Samsung is one of the top leaders in the technological business, the threat of potential new entrants is relatively low. It is nearly impossible to achieve the scale of economic growth similar to Samsung’s and other related corporations for the new rivals. Moreover, the cost of entering the market of technology is high, which identifies the new company’s weaker forces.
Strong product differentiation is one of the primary identifiers of leaders in this industry. Most of the top companies – Samsung Electronics rivals, sell a variety of products, not focusing on one specific innovation. Therefore, customers look for enterprises with differentiated merchandise, which makes a threat of new entrants a vulnerable force for the industry. Nevertheless, new rivals have access to a variety of distribution networks, which makes it easier for them to access the market and becomes a benefit for entering tech business.
Power of Suppliers
The operation process of Samsung Electronics is entirely dependent on its suppliers. The industry of electronics in which Samsung operates contains many distributors who deliver the product to the companies, meaning they have low control over prices, which subsequently weakens their power. Additionally, such a wide variety of provisioners makes it more accessible for enterprises like Samsung Electronics to switch from one to another in case of slight dissatisfaction. Due to a globalized nature and the power of this specific company on the market, distributors do not require bargaining power. In case if no substitute for the details can be found, then suppliers gain control over the enterprise.
Samsung has always maintained a reliable relationship with its providers through effective communication. The corporation builds a connection with the suppliers through transparent strategies with the periodical assessment that minimize the risks (Samsung, 2019). Such models of cooperation demonstrate that the relations with the purveyors in the electronics industry are crucial and closely related to the business’ operational success. Subsequently, suppliers must provide best quality products to be able to compete for the spot on the company’s distributor’s list, decreasing their power.
Power of Customers
The complete digitalization and high availability of the information significantly increase the strength of customers in all industries. The concentration of the information and wide availability of products create difficulties for the customers to find alternative services, which weakens their power in the industry. Electronics enterprise reaches the clients from each socioeconomic group, which makes a particular group of customer’s price-sensitive and decreases their influence in the industry.
When talking about Samsung Electronics, the bargaining power of the consumers is relatively high, due to the raised prices of the company’s products. Switching cost to the purchasers is low; therefore, they may easily obtain cheaper alternatives and switch to other similar brands. Attracting new customers through innovative marketing strategies must be the company’s main priority to continue being a competitive corporation with advanced technology.
Threat of Substitute Products
There are a number of substitutes to Samsung’s products; however, the diversity of its merchandises does not let the competitors overrun the corporation. Moreover, the quality of the company’s goods is high, which most of the businesses in this industry cannot compete with. Such factors conclude that there is no limit to the maximum profit that technological industry enterprises can earn, where Samsung Electronics operates. High rates of tech advancement in the trade can rapidly create new products that as a result, may substitute Samsung’s, therefore, the company must constantly implement innovations to their products and attract new customers. The change in consumer’s preferences can be a threat to the corporation, increasing the risk of substitute commodities.
Samsung Electronics Innovations
The era of digitalization sets high goals for technological companies. The inability to adapt to the fast-changing environment may be a threat to the businesses. Kodak – the film camera manufacturer failed to create innovational products, and as a result, lost its leading positions on the market (Jang et al., 2019). Nevertheless, Samsung Electronics manages to effectively utilize the innovations and implement them into various new merchandises, which ensure their leadership in the industry.
For a successful competition in the dynamic technological enterprise, corporations must continuously innovate and release products that correspond to the current advancements on the global market. Samsung Electronics gained and kept its title of the largest electronics firm through successful implementation of innovative products. Through the creation of research institutes, the lead in the development of next-generation technologies, Samsung is one of the first companies to present breakthrough inventions through their products.
As stated in Porter’s Five Forces, the cost of entering the market is remarkably high, which does not allow many competitors. Moreover, existing companies must invest in risky innovation projects; as otherwise, they may remain low value and face bankruptcy. Recent projects initiated by Samsung were focused on extensive fundings of artificial intelligence (AI) and 5G. Such a strategy, as stated by Samsung, will propel technology innovations and allow prevention of antagonistic business environment, encouraging new growth and potential on the market (Garikipati, 2019). Such strategies of dispatching the threat of being outrun by the opponents allow Samsung to surmount business challenges amid declining prices on the global market.
As a worldwide company, Samsung has a strong focus on human-driven innovations that as a consequence shape the future of the corporation and the delivered products. In recent years, Samsung Electronics has been moving towards connecting all their produce, so they could operate as one. In the interview with Samsung CMO Younghee Lee, she ensured of the company’s plan to continue presenting new experiences to the clients through advanced intelligence aptitudes. It applies beyond modern connectivity with the help of AI and Internet of things (Interbrand, 2018). With progressions that once seemed impossible, Samsung Electronics defines barriers for competitors and creates a seamless ecosystem that ensures its chief position on the market.
The corporation executes innovations not only concerning technology but also in the marketing sphere. The recent updates of the firm state that they are shifting their centre to enhancing the customer journey that is transforming with the technology evolution (Samsung U.S. Newsroom, 2019). Such innovative strategy will increase the focus on digital marketing and consumer loyalty that subsequently refines the essence of the interaction between the brand and its clients.
Many factors contributed to the success of Samsung Electronics; however, modifications are driving the company in recent years. By harvesting and implementing innovative products and strategies, the corporation remaining the global leader of technology (Jang et al., 2019). Samsung adapts its development plans in a way that profits both the corporation and its consumers providing high-quality customer experience along with the most advanced, innovative products.
Samsung Electronics, as one of the most innovative and influential companies in the technology industry, has one of the most powerful development strategies. From the analysis of a competitive marketplace for the corporation, it is evident that Samsung has several pressing rivals; however, the threat of acquiring new ones is low. The power of suppliers is relatively low due to the interchangeability of the details; nevertheless, the consumer’s leverage is high due to the increased availability of alternative products. Overall, the competitive context of the Samsung Electronics operational field is high among close opponents.
Samsung is widely known for its implementation of innovative technology, which has been its primary focus for several years, due to the fast-changing environment of the industry. In their strategies, the corporation concentrates on implementing new models of customer-journey to enhance their experience with the company’s devices. Providing innovative products and experiences, Samsung Electronics remains the leading global company, rendering high-quality technology to people worldwide.
Garikipati, R. (2019) Samsung vows to expand investments in AI, 5G. Web.
Interbrand. (2018) Humanizing technology to enable seamless experiences: Q&A with Samsung CMO Younghee Lee. Web.
Jang, S.H., et al. (2019) Planting and harvesting innovation – an analysis of Samsung Electronics. International Journal of Quality Innovation, 5(1). Web.
Samsung. (2019) Responsible management of supply chain. Web.
Samsung U.S. Newsroom. (2019) Samsung Electronics ranks 6th in Interbrand’s Best Global Brands 2019. Web.