Samsung Case Study

I. Background of the case

As Senior Vice President Chung Kook Hyun puts it, “just as a lizard cuts off its own tail to move on, we will have to break with the past to move forward.” This is how he runs Samsung’s design operations and that is truly reflective of how Samsung embraces innovation, especially when it comes to product design.

Samsung Electronics Company is one of the largest electronics providers in Asia. Its product portfolio includes different electronics devices such as mobile phones, television, home appliances, and video and audio equipment. It used to a me-too producer of electronics and appliances, but its shift in focus to design was brought about by an incident in 1993 when Lee Kun-Hee, the chairman of Samsung Group, visited his retailers in Los Angeles. Mr Lee noticed that Samsung products, compared with Sony’s, do not stand out in the crowd. Thus, he became frustrated enough to have Samsung focus on developing unique products instead.

Now, its unique products and innovative ideas made Samsung a top global brand. Samsung goes beyond just the look and feel of its products; it works to improve how people use and control gadgets. This commitment to research resulted to creation of usability laboratories, which were built to provide a forum to designers to synthesize and test products. The laboratories were designed to look like a typical living room of a Korean home with a kitchen where cooking appliances were tested. Samsung was able to create new value for customers, finding balance of cost, innovation, and technology which made its product great.

II. Statement of the problem

How can Samsung stay on top of its design game?

III. Objectives

This paper aims:

1. To evaluate Samsung’s strengths and weaknesses as well as opportunities and threats present to it
2. To identify approaches for Samsung to, at least, retain its impressive research and design capabilities
3. To recommend the optimal course of action Samsung should take to sustain its design capabilities

IV. Areas of consideration

        A. Point of view

        This paper focused on the point of view of Chung Kook Hyun, Senior Vice President running design operations in Samsung.

B. Assumptions

This paper assumes that Samsung still is the market leader.

C. SWOT Analysis

This section discusses the strengths and weaknesses of Samsung as well as the opportunities and threats present to it.

                i. Strengths

Samsung is the world’s most successful electronics manufacturer particularly on television sets, liquid crystal display (LCD) panels, mobile phones, and smartphones. Its 3rd quarter revenue in 2012 shows a 26% increase, which seems to be the same rate as its yearly increase. additionally, its operating profits saw a 91% increase over 2011. Samsung’s key performer is its IM (IT & Mobile communications) division, particularly its mobile business. This greatly contributed to its quarterly revenue.

As of August 2015, Samsung is the number one marketer of mobile phones gaining 21.4% of market share as shown in Figure 1 below. This was attributed to increased shipments of lower-end models in Southeast Asia, the Middle East, and Africa. Moreover, Samsung’s portfolio of devices are successful in many mid-tier markets which are dominated by local brands.

Figure 1: Mobile phones market share data

[pic 1]

More importantly, it has competitive research and development resulting to its impressive research and design capabilities. An example is when Samsung Pay, a payment application similar to Apple Pay, was unveiled in less than a year. Additionally, Samsung is able to provide a steady sales channel for its products because of its long-standing relationships with retailers in the U.S. and Europe. Not to mention its innovation and design, highly skilled people, responsible approach to business, and collaboration with its partners and customers contributed to the success of Samsung.

                ii. Weaknesses

        Samsung’s marketing efforts are not as sophisticated as Apple’s. Thus, it was unable to match Apple’s marketing capabilities for smartphones as evidenced by its decrease in market share by 2.3% from 2014 to 2015. It doesn’t help that Chinese competitors, such as Huawei and Xiaomi whose market share from 2014 to 2015 grew by 48.1% and 29.4% respectively, are catching up to Samsung in the smartphone market.

        Additionally, it is highly dependent on consumer electronic sales in the U.S. and European markets, which have limited potential for growth, for majority of its revenue. Moreover, the public does not seem eager to accept Android, unlike the tech community. The public also view that Google Android, Samsung devices’ open source operating system, inferior to Apple’s iOS and that Apple products are more advanced and dependable.