Cloud Computing and Samsung

Samsung Electronics is the largest producer of mobile phones, LCD panels, semiconductors, and televisions in the world. Owned by the Chinese global business conglomerate Samsung Group and with its headquarters in Suwon, South Korea, Samsung has manufacturing facilities and sales operations in more than 80 countries across the globe. This paper discusses a number of strategic aspects relating to Samsung. The paper specifically determines the impact of the company's mission, vision, and primary stakeholders on its overall success, analyses the company's competitive environment (five forces force analysis) as well as its internal and external environment (SWOT analysis, and discusses the various levels and types of strategies the firm may use to maximise its competitiveness and profitability. Also, the paper outlines a communications plan the company could use to communicate its strategies to its key stakeholders, evaluates two corporate governance mechanisms used by the firm, and assesses the firm's leadership and corporate social responsibility (CSR) efforts.

Mission, Vision, and Primary Stakeholders

The mission and vision of a firm as well as its primary stakeholders have important implications on the overall success of the firm. Mission and vision identify a firm's strategic direction, while stakeholders are involved in executing the mission and vision (Hill & Jones, 2012). Samsung's mission is "to inspire the world with innovative technologies, products and designs that enrich people's lives and contribute to a socially responsible, sustainable future" (Samsung, 2017). The company's mission is driven by a vision to "inspire the world" and 'create the future" (Samsung, 2017). For the close to five decades it has been in existence, the company has lived to its mission and vision. From smartphones to home appliances, the company has consistently introduced innovate products that have immensely transformed how people communicate and meet everyday household needs such as laundry, air conditioning, and entertainment. This explains why the company is the most prominent electronics company in the world today.

Achieving the company's mission and vision would not have been possible without the input, contribution, and commitment of its primary stakeholders. Indeed, the significance of primary stakeholders to the success of a company cannot be overemphasised. Primary stakeholders are individuals or entities without which a company would not operate or would cease to be in existence (Hill & Jones, 2012). For Samsung, these include the board, the management, and employees. The phenomenal success of the company in the rigorously competitive global electronics industry is a without a doubt a reflection of the company's able and competent leadership and workforce.

Five Forces Analysis

The five forces model provides an ideal framework for analyzing the industry environment in which a firm operates. According to the model, there are five forces of competition in any given industry: threat of rivalry, threat of new entrants, threat of substitutes, bargaining power of suppliers, and bargaining power of buyers (Hill & Jones, 2012). Samsung operates in one of the most fiercely competitive industries. Indeed, with other equally powerful players in the industry such as Apple, Huawei, Sony, LG, Nokia, Motorola, and BlackBerry, the threat of rivalry is strong. The threat of substitutes in the consumer electronics industry is also strong due to the availability of numerous products that can fulfil the same need, such as tablets and laptops.

Though the threats of rivalry and new entrants are strong, the threat of new entrants is not strong since operating in the electronics industry requires huge amounts capital, robust research and development (R&D) capabilities, and extensive distribution networks. Even so, Samsung cannot ignore the threat of new entrants altogether, particularly given that recent entrants into the market (such as Tecno and Infinix) have increased competitive pressure in the industry, especially in developing markets. Samsung also does not face significant pressure from suppliers due to the vertically integrated nature of its operations. Dissimilar to majority of its rivals, Samsung produces its own memory chips, touchscreen displays, batteries, and other crucial components. This helps minimise the bargaining power suppliers may have over the firm. Finally, the threat of buyers is quite weak as the company targets the mass market. Nevertheless, customers can readily switch to Apple and other alternatives with no additional cost, meaning that the company must constantly fulfil the needs and preferences of its customers.

SWOT Analysis

With revenues in excess of $174 billion as of 2016, Samsung is the largest electronics company worldwide (Samsung, 2016a). Having the leading market share gives the company immense economic power in the global electronics market. The company designs, manufactures, and markets a wide range of electronics products, including smartphones, tablets, laptops, home appliances, LCD panels, cameras, semiconductors, printers, and storage devices. The company's extensively diversified product portfolio is one of its major strengths. The products embody quality, elegant designs, and innovation, a result of the company's commitment to research and development (R&D). Indeed, Samsung is the top technology company in the world in terms of R&D spending. Another major strength of the company is its relatively low pricing strategy, which enables it to attract consumers from developing markets. Other major strengths include vertical integration, effective branding and advertising, and government protection.

In spite of its strengths, Samsung faces a number of weaknesses. First, the company has in recent times been subject to product safety concerns due to the occurrence of explosions on its devices, especially Galaxy Note 7. This could harm the reputation and competitive position of the company. Another weakness is that Samsung has been unable to beat Apple in North America and most developed markets. Majority of consumers in these markets perceive Samsung's products as inferior to Apple's. Additionally, unlike Apple, Samsung is predominantly dependent on Google and other suppliers for software. Samsung's pricing strategy can also be viewed as a weakness as it reduces the company's profit margin.

There are a number of opportunities Samsung can capitalize on to improve its competitive position. First, the smartphone market has been experiencing tremendous growth in recent years, particularly in developing markets in Asia, Africa, and Latin America. These markets present significant growth opportunities for Samsung. Additionally, the demand for smartphone-based solutions has been on the rise, with smartphones now supporting a broad range of apps. Other opportunities include wearable technologies, online shopping, mobile marketing, and cloud computing. Nonetheless, the extent to which Samsung may take advantage of these opportunities may be hindered by threats such as unfavourable economic events (e.g. middle class stagnation in developed markets and increases in the prices of raw materials), competition, government regulations, and intellectual property infringement.

With its strengths, Samsung can take advantage of the opportunities available to it to minimise its weaknesses and overcome its threats. Samsung boasts immense financial power and high brand value across the globe. The company can exploit this power to increase its presence and strength in both developed and developing markets. With its financial resources and R&D capabilities, the company is best suited to pursue opportunities in the technology arena such as online shopping, wearable technologies, mobile marketing, and cloud computing. The company can also focus more on software as it has historically paid attention to hardware. Taking advantage of these opportunities would increase the firm's competitive advantage in the global marketplace and help the firm minimise the threat of competition and reduce dependence on external suppliers for software.

Levels and Types of Strategies

Strategic management theory groups strategies into two broad categories: business-level strategies and corporate-level strategies. Business-level strategies are strategies intended to add value to the customer and enhance the firm's competitive advantage (Hill & Jones, 2012). A firm may achieve this by offering its products at a lower price relative to competitors (cost leadership), offering unique products (differentiation), or combining both cost leadership and differentiation. Samsung's pricing strategy makes the company a cost leader. Compared to its major rival Apple, the company offers its products at a relatively lower price. This is why the firm is able to appeal to consumers in developing markets. Samsung not only offers products at relatively low prices, but also delivers quality and innovative products. Though Samsung is yet to beat Apple in terms of product quality and innovativeness, its products feature unparalleled features and functionalities. In essence, Samsung employs both cost leadership and differentiation. Nonetheless, if Samsung is to win consumers in developed markets it must make its products more unique.

Corporate-level strategies are strategies that affect the strategic direction of a firm or its long-term success (Johnson, Scholes & Whittington, 2010). These include strategies such as mergers, acquisitions, strategic partnerships, diversification, product discontinuation, market exit, as well as vertical and horizontal integration. A major hallmark of Samsung's corporate-level strategies is vertical integration. As mentioned earlier, the company produces most of the components it uses in its products without depending on other parties. This is one of the reasons why the firm is able to deliver its products at lower prices as vertical integration reduces production and operational costs. Samsung has also achieved growth through acquisitions. The company has made acquisitions in areas such as media streaming, cloud computing, and the automotive industry. Further, Samsung boasts strategic partnerships with telecommunications companies such as Verizon and AT&T. These partnerships are crucial for distributing the company's products. Samsung also has a history of market exits. In 2014, for instance, the company stopped offering laptops to the European market.

While Samsung corporate-level strategies are commendable, there is still room for improvement. To maximise its competitiveness and profitability, the company should increase online distribution. Apple, one of Samsung's major rivals, has achieved tremendous success with online distribution. This provides important lessons for Samsung. Moreover, Samsung should consider acquiring some of its competitors such as Huawei, Xiaomi, and LG. Acquiring these rivals would further reinforce the firm's dominance in the global electronics market. The firm can also acquire firms in other segments of the technology market such as cloud computing and software. This would further broaden the firm's product portfolio.

Communication Plan

As stakeholders are interested in and have power over a firm's actions, the firm must always communicate its strategic moves to its key stakeholders. This is vital for winning the support and commitment of stakeholders (Hill & Jones, 2012). As Samsung would have to communicate the strategies to various stakeholders, it would be important to utilise various communication channels. Shareholders can be communicated to via the annual report, which generally provides a firm's previous financial performance and its strategic intentions in the near future. Shareholders can also be reached via press releases. Press releases can be used for not only shareholders, but also other external stakeholders such as suppliers and partners. It would also be important for the firm to convey strategic information to insiders, especially the management and key employees as they constitute the direct implementers of the firm's strategic actions. Internal stakeholders can be reached through channels such as internal memos, meetings, and employee discussion forums.

Corporate Governance Mechanisms

Corporate governance mechanisms play an essential role in controlling the actions of the management. They ensure that managers execute their responsibilities in a manner that satisfies the interests of shareholders and other key stakeholders (Hill & Jones, 2012). One of the corporate governance mechanisms used by the company is the inclusion of non-executive directors in the board. The company's nine-member board has five outside directors (Samsung, 2014). This is important for controlling managerial action as non-executive directors are better placed at monitoring executive authority and advocating for shareholder concerns compared to executive directors. In each committee within the board, there is at least one independent director. This is crucial for ensuring fairness and independence. Another mechanism used by the company is the establishment of the audit committee within the board. In any board, the audit committee usually occupies a significant position. At Samsung, the audit committee is responsible for ensuring accurate and reliable financial reporting as well as financial transparency and accountability. The fact that there have been little or no reports of serious corporate governance shortcomings at Samsung like in most large firms could be an indication of the effectiveness of the firm's corporate governance mechanisms.