International Strategic Management Project Overview

International Strategic Management Project

Overview of Samsung Electronics

Samsung initially started as a trade corporation whose core business was imports and later exports back in the mid-70's. Samsung started trading in electronics through mass production emphasis; follow the leader strategy; support from government and reliance on foreign technology Kugot and Zander U (1993)

At the onset, Samsung Electronics used a strategy of imitating its competitor's with an aim to become an integrated vertically as an electronic firm. Samsung electronics displays a firm's ability to dynamically interact with production networks internationally. This was necessitated for technology and marketing needs serving as a bench mark for the corporation's growth Barney J.B. And Hesely W.S (2008)

. To further be able to meet it desire for international operations, Samsung chooses low cost peripheral areas for bases of production and distribution. This was necessitated by it inadequate capacity for mass production in a wide range of firms.

Kugot and Zander U (1993)

have argued; the key to successful international operation is combining home acquired knowledge with the adaptations of knowledge acquired in foreign grounds. This is seen in Samsungs international operation strategies deployed to ensure that it grows. Further it observed Samsung technologies rely on economies of scale pegged on vertically integrated systems. Vertical integration includes adaptation technology from other firms and acquiring firms with the capacity to produce and distribute in the location. Danger of imitation strategy taken up by Samsung is that the upgrading of a product designed may not be foreseen.

Samsung initiated its trade in electronics back in 1969 a time which it manufacture Black and white television sets Barney J.B. And Hesely W.S, 2008.

It is observed by Barney J.B. And Hesely W.S (2008)

the success Samsung has come to embraced is pegged squarely on management of the company. The emphasis for superior design on products and efficiency in the process is made by leaders at Samsung technology. This according to Barney J.B. And Hesely W.S, 2008()

has made the corporation a leader in personal computers, digital cameras, game players and phone technology productions.

International Strategy Used by Samsung Electronics

Samsung uses four drivers given by Yip, 1989()

in its international strategy which include market, government, cost and competitive drivers.

Yip (1989)

discusses market drivers as those forces which influence homogeneity needs, base of global customers, transferable marketing and the global channels that are available. Essentially this incorporate all aspect of the market in which Samsung electronics considers in it internationalization policy. Basically, Samsung electronics analysis of the global market considers what the market they intend to float their product needs. Transferability of its marketing procedures in to the prospective market is also considered. Assessment on how effective marketing used in one market can be used in the prospective market is looked into Yip, 1989()

In looking at the government drivers, Samsung electronics considers the policies and regulation in place. To be successful in the internationalization, corporations have to deal and comply with border regulations. The considerations of government driver ensures to corporation activities are in line with the mandates set by government for compliance purposes. Regulations such as taxes and cost of labor will influence heavily on operations and considerations must be made.

Cost considerations are made in terms operational feasibility considering profitability and sustainability of the venture. According to Yip (1989)

, cost drivers analyses include: cost differences in countries, learning (understanding), economics of scale and scope, trends of experience, skills available and cost of developing a product. Cost drivers assess the suitability of a location/country considering the aforementioned areas in comparison to other location. It is observed that Samsung electronics strategy would drive it towards countries with ready available skill that can be tapped. This helps the corporation to advance in technology that best fits its potential market. An assessment of what additional knowledge the country is expected to have for the corporation is considered.

Competitive drivers involve the assessment of what level of competitiveness will be added to the corporation. Samsung Electronic considers this driver in the market with as many competitors as they need to stay ahead of the competitor. Example the decision to set up base in Asian market was to reach more clients in the market considering competition they face. Operation in new unexploited markets gives an internationally oriented corporation ahead of its competitors through originality Yip, 1989.

Internationalization to Samsung has the notion of making their products universal and that is why the corporation considers competitive drivers.

Entry Mode Strategy and Core Components of Samsung's Global Strategy

Product Diversity

Samsung electronics positions itself in the global market as the company with the widest variety of electronic products. This gives the company an edge in branding its products. Kugot and Zander U, 1993()

argue the company is ranked top in different categories of electronics. The diversity of their products is hinged on human resource, corporate strategy and technology.

The human resource aspect looks at the ability as opposed to their back ground. This ensures that the company does not lock out talent and ability which has potential to contribute significantly to its growth Barney J.B. And Hesely W.S (2008)

. Further, acquiring able human resource will require little coaching to make them suitable to the companies employees' profile. This also cuts down costs to the corporation in terms of training. A human resource with the ability to research innovatively and participate in production of consumer durables is ideal for a wide range of products.

Corporate strategy adopted by Samsung focuses on efficiency and consumer focused production. The strategy focused on finding solution to each and every electronic aspect of consumer livelihood. In the international arena, the strategy helps the corporation not to focus on providing one basic solution for a particular section of people. Rather, it ensured that the company has a touch with the consumer differentiated needs.

Technological innovations through imitation and acquiring firms with the technology assisted them to diversify. The product diversity offered at Samsung is not easily replicated since it is coming from different sources. Other than creating barriers to entry, this ensures that internationally, Samsung maintains a variety of products compared to competitors.

Commitment to community needs

As an international producer in electronics industry, Samsung puts community interests in to considerations. This makes it easier for the community accept the company and embrace its business Vida et al., 2000.

Samsung traditions are pegged on the fact the community serves a great deal to provide man power and end products consumer on products Baxter, 2007.

Emphasis is placed that the company embraces and honors the community immensely as well as learns the most it can from them. The goal sought in this instance is to understand the community technological needs and benefit from satisfying them Lim et al., 2006()

Differentiation of products

Product differentiation at Samsung Corporation is based on the firm-customer relationship, product attributes and linkages at the firm. Samsung electronics concentrates on product differentiation for customer loyalty since there are many competitors in the electronics market, (Moon 2008). Since electronics have different features, Samsung electronics adds in different features - (example adding a pod cast feature into head set) - in this customer have more functions on their head set than those provided by competitors. Product differentiation at Samsung is also achieved by acquiring other companies (example, acquisition of Phoenix Secure Core). This gave the corporation headway to produce firmware for its electronic devices.

Assessment of potential market

There are different regulations in different regions which are complicated further by cultural diversities in the regions. To avoid conflict with the regulatory boards and the cultures, Samsung electronics assesses the environment and determines the adequate measures. Example where there are regulations of certain technology and exploitation of resources, the corporation will opt to use the location only as an out let rather than set up a production Unit. The corporation will also use formal and informal contact to understand the needs of the community. It will also form relation with governing bodies to try and penetrate new grounds. This will help in guaranteeing their continued stay and ease of operations.

Ideal Staff

Emphasis on workforce overlooking innovation, branding, sale promotion and technological advancement is of absolute importance according to Baxter, 2007.

Baxter says that a labor at the right place with the ideal skills significantly influences performance of the global company. Labor force stands as a backbone to success of any organization and will stand to contribute to growth. Rather than going for labor force coming from a particular area, Samsung electronics goes for the labor force that will have contribution and impact to its own venture.

Cost leadership

This is achieved through operational strategy whereby, instead of having many production locations, the corporation set up a manufacturing unit where costs are minimized. The drive for cost leadership is reinforced further by the corporation's policy to devote human resource and technology leadership and create products and services that are superior and cost effective Ricart et al., 2004.

To come up with cost effective technology works as barriers to competitors and also protects the interest of consumers. It also creates consumer loyalty thereby ensuring dominance in the international market.

Branding

Branding helps to create consumer attachment to products Myers H., 2004.

Samsung electronics gives more meaning to products and customer through branding its products. Branding according to Rumelt (1991)

brings in the aspect of trust, loyalty and excellent value to customers. To venture in the international market branding is important for sustainability and survival Finch P., 2004.

It is also an innovative way of improving the customers' experiences in using products and reserving identifying with the products. Branding by Samsung has ensured that customer identification of the products is easy and they can easily accord a value on the product.

Overview of Samsung's Strategy

In choosing its preferred internationalization strategy Samsung electronics deploys emphasis on three major aspects. These aspects give a summary of strategies discussed earlier. They include Adaptation, Aggression, arbitrage (AAA triangle).

Adaptation is concerned with specific market condition where aspects of culture, regulation and needs for the market are incorporated Ricart et al., 2004.

Samsung electronics uses adaptation to obtain an edge in market penetration and add value to the market.

Aggression works on ensuring the economies of scale are within bounds of operations. It entails standardization of products and brings the activities of the corporation together. Samsung embraces aggression through marketing, branding and producing its products in a standardized manner.

Arbitrage involves assessing the differences and exploiting them for economies of scale and product development Ricart et al., 2004.

The assessment entails determining the suitability of using one location to source for raw materials and another to develop technology based on suitability. Samsung uses arbitrage to determine whether it is viable to locate a production plant in a particular country or just exploit the market. In arbitrage factors such as local knowledge of technology source of raw material and government regulations are put in mind Ricart et al., 2004()

Lessons learned by Samsung Corporation

Increased competition means a decrease in profits and market share to Samsung owing to high supply and decreased sales. Competitors in the electronics international market will bring in lower prices and segregate the market proportion enjoyed by Samsung. Competition will also bring in the aspect of technological advancement and thus higher cost to Samsung. The elevated costs will be due to the need for innovations required to match the international competition. Other issues facing Samsung are discussed below.

Threat to entry

Samsung faces great threat is a company dealing in the international arena take up to produce a variety of products just as it does. Though it is not easy to open up a wide range production such as the one run by Samsung technology, should such development occur the corporation faces a grave danger of threat.

Rivalry

Rivalry in the electronics market is very high. Firms have not only to be on level with technology but also, track the developments of their competitors. Rivalry is heightened by introduction of new products in the market (Barney and Hesterly, 2008). It is even worse where the competing firms are not in a position to technologically differentiate products. Failure to keep up with trend development in the market of electronics will lead to loss of customers.

Suppliers

The supplies of electronics are a formidable force to reckon with where competition is volatile. Suppliers can easily form partnership with producing firms. Since this are the linkages to the market and consumer Samsung faces more threat if they fail to ascertain they are in good relations with the suppliers. Suppliers will keep with companies whose future is promising Rumelt (1991)

Buyers

This is the greatest threat among all since they consumer is the back bone of every production activity. Consumers decide what and where to buy the products and since the electronic products are based on need and want of the consumer the threat is great. This threat comes in when the producer fails to consider the needs and wants of the consumer and also does not keep trend with technology advancements.