1.

Background Information

Samsung Electronics is a subsidiary of Samsung Group and the world's largest

information technology company. Samsung Electronics focuses on developing and

producing most of its parts in-house and offering better products at lower costs to

attract customers. By 2017, Samsung Electronics had become the world's leading

semiconductor manufacturer and had gradually entered new growth areas, such as

autonomous driving and Internet applications.

2. Strategy Analyzing - External environment

2.1 Five Forces Model of Industry Competition

2.1.1 The Threat of New Entrants

The entry of the technology industry has a high demand for capital and technology

patents, and it is difficult for start-ups to raise large amounts of capital to operate

businesses and develop innovative technology products. It is difficult for new entrants

to build a reputation in the tech industry to attract customers in the short term and

pose a threat to Samsung Electronics.

2.1.2 The Threat of Substitute Products and Services

The threat of substitute products is medium for Samsung Electronics. Substitutes

cannot completely replace all the features that Samsung Electronics products offer,

such as a TV for watching movies; Samsung Electronics holds many patents

restricting other companies from copying and manufacturing substitute products

(Team, 2024). On the other hand, Samsung Electronics' software technology Tizen is
not as good as Google's Android and iOS (Dess, McNamara, et al., 2023). The

operating system Tizen only runs on Samsung's devices, and Samsung's smartphones

also rely heavily on Google's Android operating system. While it is difficult for

Samsung Electronics' products to be completely replaced by substitutes, Samsung

Electronics' software features will be replaced by other operating systems.

2.1.3 The Bargaining Power of Suppliers

The bargaining power of suppliers is low. Samsung Electronics has certain advantages

in supply chain management. It has a large selection of suppliers worldwide such as

China, Japan, etc. Many suppliers rely on Samsung Electronics for much of their

revenue. Suppliers largely immune don't stop supplying raw materials because of

price issues, they cannot afford to risk Samsung Electronics' wrath (Team, 2024).

Also, the Company will produce its chips, displays, and processors as a supplier of its

products to reduce its dependence on other external suppliers.

2.1.4 The Bargaining Power of Buyers

Samsung Electronics customers have medium to high bargaining power. Although

individual customers have limited ability of bargaining power to influence Samsung's

selling price and revenue, customers have a lot of collective bargaining power. When

consumers have a variety of brands and goods to choose from in the market, their

bargaining power may be forced to lower prices or offer more discounts, which may

affect profit.
2.1.5 Competitive Rivalry

Regarding Competitive Rivalry, Samsung Electronics is threatened by other

technology companies at a moderate to high level. While smaller tech companies find

it difficult to compete with Samsung Electronics, many strong competitors exist in the

technology industry. For example, Xiaomi provides the same functionality at a lower

cost in the mobile phone market, and Apple and Google produce high-end hardware

(Team, 2024). These companies continue to introduce innovative products, which

could erode Samsung Electronics' market share.

3. Strategy Analyzing - Internal environment

3.1 Primary Activities

3.1.1 Inbound logistics

Samsung Electronic has approximately 2,500 suppliers worldwide, most of which are

in Asia (Edrawsoft, n.d). The Company maintains strong relationships with raw

material suppliers to ensure a reliable supply chain. Also, Samsung Electronics has

developed an advanced inventory management system to handle internal diversion,

which can optimize inventory utilization, reduce costs, and improve efficiency.

3.1.2 Operations

According to Boardmix (n.d), Samsung has about 61 factories in 34 countries, helping

to optimize production and supply chain efficiency. The company also has research

and development (R&D section) to produce better and newer products. In addition,

Samsung Electronics has automated and robotic production efficiency and product
quality.

3.1.3 Outbound logistics

Samsung Electronics uses an advanced logistics system that enables real-time tracking

and management of product delivery. The system ensures timely delivery of products

to various markets and strengthens Samsung Electronics' distribution network.

3.1.4 Marketing and Sales

Samsung Electronics invests heavily in marketing to enhance its brand influence and

image, emphasizing product innovation and quality. Samsung Electronics spent $3.9

billion on advertising in 2016 (Research-Methodology, 2017). Companies hope to use

advertising to increase customer awareness of the brand and learn about the

company's latest products. Also, Samsung Electronics offers a diversified product

portfolio, such as offering a wide range of products from smartphones to home

appliances and hopes to cater to different consumer groups to increase sales.

3.1.5 Service

Samsung Electronics offers comprehensive customer service, such as troubleshooting

and product repair. It also has a support platform that provides 24/7 assistance to help

customers solve problems. Good customer service can increase customer loyalty and

satisfaction, which helps build a good reputation.

3.2.1 General Administration

Samsung Electronics' corporate structure is divided into five divisions: headquarters,

electronics, semiconductor, display, and home appliance. The headquarters is mainly

responsible for the company's strategic planning, financial management, etc., while

other departments are responsible for R&D, production, and sales of products. By

dividing the different operating departments, resources can be allocated according to

the needs of each department, improving the efficiency of resource use and reducing

operating costs.

3.2.2 Procurement

Samsung Electronics strengthens the cooperative relationship with suppliers through

open communication. This helps ensure a stable supply of raw materials and a

smoother production process.

3.2.3 Technology Development

Samsung Electronics invests heavily in technology development to keep its products

technologically advanced. According to Nationthailand (2022), Samsung invested

$17.7 billion in R&D in 2020, including artificial intelligence, 5G, and other

technologies in its product. Technology development can consolidate its technological

dominance and increase customer interest in its products.

Samsung Electronics employs approximately 260,000 employees worldwide and

provides them with ongoing training and development programs (Young, 2024). This

prepares them for their careers by upgrading their skills and mastering the company's

operations.

4. Strategy Formulation: Business-level Strategy

4.1 Overall Cost Leadership

Samsung Electronics has created and maintained competitive advantages within its

overall cost leadership strategy. First, the Company develops and improves their

cutting-edge technologies to simplify production processes such as using automated

production technology to save labor costs.

Second, Samsung Electronics has a large production scale reducing the average cost

per unit. Samsung Electronics has a wide range of products including computers and

smartphones. Increasing efficiency through mass production to reduce fixed costs. For

example, using the most amount of product to spread factory rent and electricity costs

can reduce the production cost per unit of product.

In addition, Samsung Electronics has efficient logistics and distribution channels to

reduce costs. Through sophisticated logistics and inventory management to minimize

transportation costs. Samsung Electronics’ overall cost leadership strategy is to

provide products at competitive prices to maintain the company's competitive

5. Strategy Formulation: Corporate-level strategy

5.1 Acquisitions

Samsung Electronics has repeatedly acquired other companies to develop innovative

technologies and expand the market area. In 2011, Samsung Electronics acquired

Grandis Inc., a supplier of spin-transfer torque random access memory (STT-RAM),

which focuses on developing next-generation memory to contribute to Samsung

Electronics' memory technology (Dylan, 2011). Furthermore, Samsung Electronics

announced the acquisition of LoopPay, a mobile wallet provider in 2015 (Samsung

U.S. Newsroom & Samsung Newsroom U.S., 2019). LoopPay utilizes contactless

Magnetic Secure Transmission (MST) technology to make payments. This innovative

technology can bring consumers a safe and secure mobile wallet experience. Samsung

Electronics R&D of innovative technologies will help Samsung Electronics enhance

its technology and the competitiveness of its products and expand its market share.

5.2 Joint venture

Samsung Electronics is expanding its distribution channels through joint ventures

with other companies. In 2024, Samsung Electronics will form a joint venture with

Lennox, innovative climate solutions for the Heating, Ventilation and Air

Conditioning (HVAC) industry (Samsung U.S. Newsroom & Samsung Newsroom

U.S., 2024). The company will sell Samsung Electronics tubeless products and

Lennox branded products in the United States and Canada to expand the company's
distribution channels. In addition, the two companies will work together to develop

innovative technologies to produce ductless and variable coal flow HVAC systems,

providing customers with outstanding trade union and refrigeration solutions; and

strengthening the company's position in the North American HVAC market.

6. Conclusion

Samsung Electronics is a leading global technology company with brand recognition

and market competitiveness. For the analysis of the Five Forces Model, the risk of

threats posed by new entrants and suppliers to the company is low; The risk to the

substitute is medium; Customers and competitors pose a medium to high threat to the

business. Companies can enhance their competitive position in the global market by

optimizing each of the primary and supporting activities of the value chain. In

response to the threat of competitors, Samsung Electronics has achieved overall cost

leadership by reducing production costs through technology research and

development and production scale. Also, Samsung Electronics has diversified its

acquisitions and joint ventures to enhance its technology and market competitiveness

to ensure that the company maintains its leading position.

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