The market for smartphones is actively developing across the globe, and it is characterized by intense competition among such companies as Samsung, Apple, HTC, and Huawei among others. In the United Kingdom, Apple’s market share is about 50%, while the second-largest competitor is Samsung with a market share of about 30% (Appendix A). Thus the market for mobile phones and smartphones is highly competitive and dependent on implementing innovations to improve products and business strategies. Samsung’s mission in this area is to provide the most innovative devices to guarantee creative solutions for individuals. Samsung’s strategic business unit for marketing smartphones is focused on increasing Samsung’s market share in the UK in 2018, concentrating on launching new products and further promoting the Galaxy S8 and S8 Plus (Dunn 2017). The purpose of this report is to conduct a business environment audit for marketing Samsung smartphones in the UK, focusing on a macro-environmental PESTLE analysis and a micro-environmental industry competition analysis, as well as on a SWOT analysis.
To complete a business environment audit for Samsung and its smartphone unit, it is necessary to approach the macro-environmental analysis with the help of a tool such as PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analysis.
The political factors that influence the marketing of Samsung’s smartphones in the UK are associated with Brexit. To remain stable in the market, Samsung needs to adjust prices for smartphones depending on the observed political and market tendencies because of increased inflation rates (Sin 2016). In contrast to Apple, Samsung has not recently changed its pricing strategy for the market in the UK while becoming more attractive to customers.
The economic factors that affect Samsung’s strategy in the UK are also associated with Brexit and the increased inflation rates in the country that are causing Samsung to adopt a marketing strategy to avoid increasing prices (Dunn 2017). One more important factor is the changes in tariffs proposed by UK mobile networks, which might limit the use of mobile phones and smartphones and affect sales (Sharma 2017). Still, the impact of this factor is not currently significant.
In the UK, customers’ interest in smartphones is increasing each year, especially for models similar to the Galaxy S8 with its 5.80-inch display (Dunn 2017). The reason is that such smartphones are efficient alternatives to tablets because of their advanced options and technological functions. This factor contributes to increasing sales of Samsung’s smartphones in the UK market.
Samsung smartphones have such features as versatility and adaptability, their Android-based system is efficient and innovative, the devices can be used with many accessories, and they also apply biometric technologies. From this perspective, Samsung remains one of the pioneers in the sphere of technologies and innovations (Sharma 2017). As a result, technological changes in the UK smartphone market are unlikely to negatively influence sales of the devices.
The most important legal factors that influence the marketing of Samsung’s smartphones are changes in taxation and legal policies in the UK that limit operations of the company in the country, and lawsuits associated with patent issues. Apple, as the main competitor of Samsung in the UK, filed several patent infringement lawsuits against the company in response to Samsung’s introduction of innovative functions in their products (Samsung loses the latest Apple patent suit in UK 2013). These cases led to several trials in various countries and affected sales.
The key environmental factor that influences Samsung’s activities and marketing in the UK is the necessity of addressing UK environmental protection laws in the context of contracting with suppliers, following sustainability strategies, and recycling materials. The problem of recycling Samsung devices is urgent and actively discussed with reference to the case of 2016 when millions of smartphones were recalled (Dunn 2017).
Micro-Environmental Analysis and SWOT Analysis
The micro-environmental analysis for Samsung in the UK smartphone market is based on an industry competition analysis with reference to Porter’s Five Forces. It is also important to present a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. The purpose is to organize and evaluate information related to both macro-and micro-environmental areas.
Porter’s Five Forces
According to Porter’s Five Forces, suppliers’ bargaining power in the industry and in the market for smartphones in the UK is weak because hundreds of suppliers compete to work with Samsung. Furthermore, the company collaborates with a limited number of suppliers in different countries, but their services and products are interchangeable with those of other suppliers. Buyers’ bargaining power is moderate because there are risks of losing buyers who could be attracted to products from Samsung’s competitors, but there are also customers who are interested in Samsung’s smartphones and associated products in the UK market, as the company has the second-largest market share (Sharma 2017). The threat of substitutes is high, as smartphones produced by Samsung can be substituted with tablets, mobile phones, and other products produced by competitors popular in the UK, including Apple, Lenovo, HTC, and others. The threat of new entrants is low because of the high costs associated with producing smartphones, and this market is dominated by a few leaders in the technology and mobile phone industries (Stewart 2017). Still, in view of Apple’s, HTC’s, LG’s, and Lenovo’s positions, rivalry in the UK industry is high.
While discussing the strengths of Samsung’s strategy in the UK, it is important to mention its continuous focus on innovation and its ability to remain one of the leaders in the smartphone market. Furthermore, the production of innovative devices is substantially aided by its focus on investing in research and development (Sharma 2017; Stewart 2017). In addition, Samsung’s smartphones demonstrate a high level of usability and efficient integration of hardware and software.
There are some weaknesses in Samsung’s strategy in the UK, including the company’s focus on producing and marketing the Galaxy series. The level of diversification in the smartphone portfolio is low, which limits opportunities for competition. There are also legal and withdrawal issues that have influenced the company’s reputation in the country.
Samsung’s opportunities for further progress in the UK market include improving its position by launching innovative smartphone models and developing novel smartphone functions. Samsung might also potentially increase the number and quality of available applications. The future demand for smartphones is also forecast to be high (Stewart 2017).
Potential threats to Samsung’s strategy and smartphone marketing include intensified competition with Apple, more patent-related lawsuits, and possible decreases in sales because of reputation issues. Furthermore, the impact of Brexit on sales will be observed in the very near future. Other threats are associated with rivalry in the industry and rapid changes in technology and innovation.
Critique of Tools for a Business Environment Audit
PESTLE analysis as the main tool for conducting a macro-environmental analysis in business audits can be viewed as an effective way to determine the factors that might influence the marketing of Samsung’s smartphones in the UK, as well as to assess these factors’ impact. This analysis allows for focusing on specific tendencies in political, economic, legal, and other spheres that might directly affect the sales of smartphones, preventing Samsung from attaining high revenues in the UK or contributing to its winning a higher share of the market (Sharma 2017). The analysis conducted here is an effective way to identify major factors and trends, which are reflected as opportunities and threats in the SWOT analysis.
The micro-environment of Samsung and its unit focused on producing and marketing smartphones can be successfully analyzed with the help of the standard industry competition analysis based on Porter’s Five Forces. It is appropriate for demonstrating the extent of rivalry in the industry, with a focus on forces that can influence Samsung’s progress in the market (Stewart 2017). As has been found, the threat of substitutes is high, and the power of customers is relatively high. In combination with the intense rivalry in the market, this situation requires Samsung to focus more on investing in research and development and innovations.
The SWOT analysis for Samsung is also effective and useful because it makes it possible to depict strengths and weaknesses based on internal analysis and industry analysis, thereby identifying strategic opportunities and threats depending on the macro-environmental analysis. As a result, it is possible to determine weaknesses that prevent Samsung’s smartphone-oriented unit from becoming the leader in the market and identify strengths and opportunities to focus on. This analysis is representative and easy to use by managers.
The business environment audit for Samsung in the UK market for smartphones indicates that the company has the potential to become the dominant force in the industry if more attention is paid to the promotion and to a resolution of patent and reputation issues. Facilitating the resolution of key patent infringement issues and developing an alternative series of modern smartphones in addition to the Galaxy series are recommended. The focus should remain on the flexibility and availability of smartphones, and more attention should be paid to the diversification of Samsung’s portfolio to address the threat of substitutes.
Dunn, J 2017, The Galaxy S8 arrives as Samsung’s hold on the smartphone market is slipping, Web.
Market share of leading mobile device vendors in the United Kingdom (UK) from 2010 to 2017, Web.
Sharma, P 2017, Apple & Samsung dominate UK smartphone market in 3Q17, Web.
Sin, B 2016, ‘Yes, Brexit will impact smartphone prices’, The Forbes, Web.
Stewart, T 2017, ‘iPhone continues to edge out Samsung in the UK smartphone market, but only just’, Mobile Marketing Magazine, Web.