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We believe that Samsung has good chance to get success when global market is becoming more competitive. Samsung can create new trends in market in a fashionable way and using the recommended conditions which have been discussed, while it is backed up by core competency of marketing. We really believe that earlier advantage can be achieved despite Nokia has currently launched a new phone as their brand is driven by style and price. Samsung can launch a new product with a fashionable style and can build a new brand image that is not manufactured and launched by any other company.
Sustainability of this product requires new and up to date relevant technology which will keep it for long period. Technical and famous designers are used to make certain products at forefront of the new competitive global and fashionable industry. Technology used is the key role player to change the traditional trends in industry and this technology is incorporated into the Cell phone to make best use of it for the potential sales.
Strategic Information Management of Samsung
3.1 Background and Assumptions
Samsung Group of companies was found in 1938 and major leading company to provide manufacturing and financial services. Since 1980 it has made enormous development in semiconductor and electronics industry. Samsung has made remarkable growth in net profits since last two decades. This is regarded as the ways of Samsung conducts the business and strategic information management is the pillars of the entire business at Samsung.
For a long period relationships between corporate strategy and information systems; Top management of the firms were not much interested. Information management systems are to be thought as same to corporate data processing and support the daily routine functions (Rockart, 1979). Information management systems based on computer based response to any type of interaction whether at transaction level and supply levels etc. Although Samsung is a much consolidated company but it requires more strategic development planning system to identify more future projects to compete its sister companies in the world. Shipping of products and the best use of strategic information management can enhance the capabilities of the managers to identify the achievable targets of selling of new products of fashionable mobiles by installing the new information management systems. Supply Chain Operations need more development to improve Samsung's global business operations.
For the strategic decision making organizational analysis is much important and business units concerning to organization's objectives which require accountability must be clearly defined. Stakeholders must be satisfied with these new strategic decisions (Joyce and Woods, 2001). The Samsung requires a corporate culture and ethics when implementing new strategies whether this strategy is adequate and can be implemented within firm. Top Management of the Samsung takes strategic decisions to become important player in the Phone Industry. All units within Samsung are responsible to CEO. The CEO of the Samsung is setting a separate unit to foster the start up and meeting the requirements of the customers as well as generating more revenue for its share holders. The CEO of the Samsung has set these goals to take advantage of wealth of shareholders to ensure that Samsung will remain more profitable within market. In this way Samsung mobiles will be an independent unit driven by the goals of Samsung as it is functioning within Samsung firm and its revenue will be rewarding to Samsung's shareholders.
5 Remote Environment
For any firm market based view is very important to understand the external environment before they make any strategic choices. Many factors must be addressed which influence the industry and these factors include as PESETEL analysis, Porter's Five Forces and Globalization drivers (Partridge, 2005).
6 PESTEL analysis
6.1 Political ---- Due to that as markets are regulated so both manufacturers and operators work in an environment free of government's invention.
6.2 Economic---- Increase in income makes the people to have more disposable income, which enables the user or customer to make selection among the best choice of mobile cells. Price is a key factor to be focused rather addressing the basic needs (messaging and calls) of the customers.
6.3 Social---- Due to rise in information society, telecommunication has become more important for consumers in terms of leisure and work. Electronic media provides the information about the new advancement in handset mobiles and consumers are aware of their best choice among these handset phones.
6.4 Technological--- Global technology advancement are as GPRS, GSM, WAP, Bluetooth, MMS and Cameras which are hallmark in mobile phone industry. European market is less technologically advanced than their counterpart Asian market i.e. in Asia 90% phones with cameras while in Europe just 4% phones had handsets with cameras (Johnson and Scholes, 2001).
Environment--- Mobile phones have hazardous affects on human health due to waves which are emitted by these handsets and also cause potential tumors (BBC, 2004). Immense wastage created by the disposable handsets which are also non-ecological.
Legal - It is very difficult to patent the mobile phones designs.
7 Porter's Five Forces
A company needed as many as possible to neutralize the five forces to generate a well competitive advantage. Porter's forces (Porter, 1998) are used basically for the attraction of industry and searches sources of its competition. These forces are dependent on each other and Samsung like industries must know the connection between these forces.
7.1 Entry Barriers
Change in the technology makes the entire industry to invest more in development and research, which is carried out by the firms to keep up to date that which firm has latest technology featured handsets. Companies in the same mobile phones are in competition to release a similar or better product than other company. Many Asian small manufacturing companies copied the design of these products and grabbed the share in market in 2002. Samsung already has good access to its supply and distribution channels but it requires more channels to spread the Samsung's products more successfully. Due to globalization the cost of products is decreased. Entry barriers are resurrected to make the marketing more effective focusing upon fashion and exclusively.
Buyer's power is very economically beneficial for the manufacturing companies as operators purchase the products in bulk and large sum of money is invested to keep their constant demand of good quality products. This large sum money provides necessary funds to research and develop to satisfy the customers with their demands. It shows the buying power of the customers which is a cyclic process and favors the operators. Consumers of Samsung's products are divided into two groups, one of them group wants to purchase the product based on price, style and quality while other people living in China and Philippine pay higher prices than their counterparts living in European countries. Users in Britain and Germany get mobile phones subsidized while people in Asia and Italy purchase the phone at full price. Buying power for the Samsung's products is seen as powerful due to user's loyalty towards the new fashionable products.
Better technology in future can be the best alternative of the mobile phones. PC based application are possible substitutes for messaging through Yahoo Messenger and people always return to mobile phones call as the call charges escalates. Because mobile phones provide very massive convenience so less alternative of mobile phones are available.
Suppliers are high in numbers and therefore switching costs is low. Suppliers have very feeble power having very limited bargaining supremacy.
8 SWOT Analyses
Samsung is one of largest group based in South Korea that works worldwide as subsidiaries. Company has focused on electronics products and service activities. Samsung Electronics is a major manufacturer of random access memory chips and mobile cells as a whole sets.
8.1.1 Credit rating's Improvements
In 2002 company made a tremendous increase in credit rating as it also made previously in 1996. This shows that Company has recovered from the financial crisis and raised the corporate image of the Samsung Company.
Company has made continuous transformation of diversification through its entire business. This is achieved due to competitive pricing of mobiles phone products and catered the premium demand. This has forced the competitors to expand its shares in market.
New products of mobiles phones with advanced features (cameras, voice dialing and color screens) are added to its sale. Handset mobiles increased its sale up to 48% in 2002 and have become one of the largest mobile phone manufacturers in world.
Prices of the memory chips has fallen which constitute a major portion of its revenue collection.
Due to fluctuation in telecommunication demands and technology issues has impacted on the revenue collection. A slump in demand can be averted by the competitor's improvement in fashion and new designs.
Mobile phone business requires Samsung's more investment to protect its market shares and stability. Other areas of company which require more attention are the fast SCM.
Samsung has invested heavily in marketing and internal research and development products during last 10 years. Company wants to build a system for research and development that will stimulate the demand and SCM.
A number of affiliated companies are sold in recent years in order to build it and reduce its debts.
Samsung has restructured its business to surpass the Hyundai to become the largest company of the South Korea.
Samsung is now building itself in Easter Europe and India market to build a globally integrated business administrative system to improve its international network infrastructure.
8.4.1 Strong Competitors
LG and SK groups are the competitors of the Samsung in South Korea and also other major companies across all areas of its entire business. Samsung's competitors in electronics include the Micron Technology, Sony and Matsushita. Nokia is also major competitors in the area of the mobile phones production.
8.4.2 Safeguarding the Property Rights
Samsung is manufacturing and marketing new products each year. Samsung is facing the problem of safeguarding the property rights which are crucial to retain its competitive edge.
9 Alternate strategic approaches
Samsung's rival companies may produce good designed mobile phones with better technology to make difference with other companies. Smaller companies are using this trend in China's market and copied the products of major companies. Using Samsung mobile phones, user can perceive the quality and style of the manufacturing company. Technology used is the potential of the Samsung to compete other companies in the market and generate more revenue. Customers will find it more comfortable when product is not potentially out of date up to a year in terms of its functionality. It could increase the demand and prove ultimately cheaper.
What are the strategic options in future to grow more economically the Samsung? It can be seen as
The price of the Samsung mobile phones must be in approach of common users ensured with quality and services. This will encourage the customers to increase the demand of products.
Supply Chain Management must ask its retailer to display the products in highly fashioned apartments and stores, which will impact the brand image of products.
Europe, Asia and America are the major world markets. European countries are wealthier than other countries, so Samsung mobile phones must reach there with advance features.
Operators and retailers have high power of buying these products. They know the degree of the price of the end-consumers. Operator can sell these products very efficiently.
9.5 Brand Marketing
Samsung mobile products are very crucial because new brands have been added to already list of mobile phones sets. Marketing of these products must be in fashion world and role models are very significant.
10 Competitive advantages / CSF's
Critical Success Factors CSFs measure the existing strengths and advantages in Samsung. Rockart (1979) has defined the critical success factors being in the limited areas for a business with satisfactory results, that ensures the competitive performance of an organization. CSFs are critical factors which represent many things in a firm and must go in right direction to flourish the business. CSF basically discusses the objectives of the business that is under review. This technique is used by the people and its value is lost when used below the third level in an organizational hierarchy (Ward, 1990, p.164). Samsung has improved its ability to recycle the sources and developed the cell phones more plausible for users. Strategic transformation of R&D center has altered the organization and progressed the business unit value (Park, Sangmoon,Gil, Youngjoon, 2006). Samsung is providing best customers services in following areas
Samsung facilitates best and costs valuable solution
It provides unique service at homes without any change of mobile terminal and provides automatic installation and remote operations for user's feasibility
Value creation for End Users is a great advantage of the Samsung. It provides voice service, fast data service and wired/wireless service to its customers.
Samsung's efforts are proving to be fruitful because their SCM six sigma program is very useful to produce talented specialists. It is expected that six sigma will play a vital role for global optimum. Branding strategy of sponsoring big events like Olympics and placements of its products at festivals is a good move of Samsung. Transition from 2G to 3G technology that emphasizes on multimedia is good change in technology strength. However new changing technology can solve many technology issues and can bring key driver changes in the Samsung's mobile phone industry. Currently market is dynamic and if Samsung goes away of this it could damage the sales.
After the external and internal analysis it is required that strategic issues in Samsung must be addressed immediately. Best information management system can resolve these strategic issues by implementing the current strategy to retain the long term competitive advantages. Samsung being the key driver of technology transition of mobile phones industry can sustain its continuous and new competitive advantages. Samsung is not likely to fail because mobile phones are relevant to customer's demand and up to date. Samsung has focused much upon the brand marketing because global market is highly competitive and dynamic. Sigma program is key factor to develop the Supply Chain System. On the one hand Samsung is very optimistic to facilitate the end users with best quality services and on the other hand it is generating more revenue for its shareholders. Finally Samsung mobiles are designed by talented designers; it ensures that products are displayed at best events of the world and remain forefront at the fashion industry.