DIAGNOSING THE CHANGE: GOOGLE AND SAMSUNG
Introduction
Google is a company that primarily engages in online advertising products. It obtains revenue from the sale of ads. On the other hand Samsung specializes in the production of end user electronic products.
The 7S model is built on seven core elements namely; strategy, structure, shared values, style, systems, staff and skills. According to (Waterman, 2004), these components are interconnected and affect each other in determining the overall effectiveness of an organization.
Samsung has incorporated business practices from the western world into its originally Japanese way of doing business. This way it has been able to combine its strength in the production of low-cost products with the capability to come up with high quality products. This strategy has helped Samsung’s products to swiftly access markets all over the world. The compatibility of these two systems has proved very advantageous to the organization as it focuses on continuous improvement of its processes. In addition Samsung has focused on innovation with the motive of improving the performance and hence the productivity of its workforce. To achieve this, the company introduced foreigners who knew nothing about the culture of the company and also adopted the system of promotion and pay increment on the basis of merit. This saw quite young people rising to higher levels of authority compared to the less productive senior employees.
According to the company report (2012), Samsung is one among the leading electronics brands globally. It boasts of a large market presence and strong brand value. On the other hand Google dominates the market as the leading search engine.
GOOGLE SWOT ANALYSIS
Strengths
According to Google Inc. company report (2012), Google has a large market share. This is made possible by the fact that the search engine of the company is technologically advanced. The innovation of the PageRank which is a technology for ranking web pages has made it the best search engine. Other competitors have been unable to match Google’s search accuracy as the index and PageRank are recalculated continuously. This has kept its popularity always high.
Another strength is the position of Android in the mobile market. The increasing demand for smart phones has led to the success of Android in the market. There are much more devices in the mobile using the android operating system as compared to those using the competitor operating systems such as Apple, Microsoft, and Research In Motion. Android can work on a variety of phone unlike other operating systems that must be used with their original phones. In addition Google enjoys an increase in revenue share from its websites as well as from the reduction of traffic acquisition costs. Revenues from adverts on its own websites have exceeded those from ads on its members’ websites.
Weaknesses
The android market gets a low share in mobile apps. This can be attributed to its late entry of its in-app purchasing into the market as compared to others such as Apple. Due to this disadvantage, most of the android apps on the market are downloaded free at first for customers to try before they buy them in-app with the additional content. This has greatly reduced Google’s competitiveness against Apple in the app market.
Google’s reliance on mature search content has made it lag behind in its competition with facebook which enjoys dominance in the social media. Google has a weak strategy in social networking content with its dependence on the quite mature search advertising. As a result Google enjoys less user engagement and loyalty.
Opportunities
The company is bound to have sustainability in search advertising. With the evolution of the digital economy, a shift from offline advertising to online advertising is a sure thing. Estimates indicate that a tenth of the money spent in the US would be accrued to Google.
Google’s display and mobile advertising is focused to grow significantly with its domination of search advertising. Estimates indicate that in 2014 Google will have overtaken facebook in terms of market share. Google is also hoped to grow through mobile advertising due to its strength in the mobile ad space as the mobile advertising industry grows.
The mobile phone market poses another area of growth for Google with its value and volume increase. The demand for Smartphone handsets especially those using the android operating system is on an all time increase.
Threats
Google acquired Motorola which faces several lawsuits by such companies as Microsoft, Apple and Gemalto. This could have dire repercussions on Google especially after the landmark ruling in 2012 whereby Motorola lost a patent dispute against Apple. In the future Apple threatens to enforce the patent against the three major android device manufacturers. Since android has not yet manufactured its own handsets, this could affect the marketing of the android applications incase these handset manufacturers were to collapse following the result of the law suits. In addition the company is also under investigation over claims of anti competitiveness and antitrust .this investigation will show if Google abuses its internet search dominance to increase mobile phone advertising revenue in the market.
The results of all these claims could adversely affect Google through restriction of its operating flexibility as well as reduction in its popularity. It could also lead to enormous losses through settlements and damages.
Another threat to Google is competition. It faces stiff competition other social networks such as Facebook which is enjoying a great increase in the number of users due to its cost effectiveness. This might affect Google’s market share a great deal.
Google is also threatened by Motorola’s poor performance since its acquisition and this could affect the performance of the whole company (Google Inc. Company report, 2012)
SAMSUNG SWOT ANALYSIS
Strengths
The company has a strong share in the electronics market as well as a great value for its brand. It is the leading company in memory products globally. It also enjoys a large market share for other electronics such as refrigerators, cameras etc. its position in the market shows the extent to which its products appeal to customers. The brand’s strength ensures easy penetration into different global markets.
Another strength is Samsung’s emphasis on research and development. It invests a lot in the research to come up with new products based on customer preferences. To add on, Samsung practices in-house manufacturing whereby 90% of the products are made by the company. This gives the competitive advantage through quick adaptation to market changes.
Weaknesses
The company has recently face patent law suits that have impacted on its profits. A good example is in August 2012 when Samsung lost to Apple prompting Samsung to pay a large sum of money to Apple.
Dependence on hardware differentiation only is another weakness for Samsung. While other companies like Apple rely on both hardware and software differentiation, Samsung relies on only hardware and design changes to differentiate their products while using Android operating system as the only software in all its products.
Opportunities
The expected growth in the market for tablets and smartphones is a great opportunity for Samsung as it holds a leading share in this market. There is also a high likelihood of increased demand in the PC market in the near future and this will benefit the company from its strong brand value. The expected growth in the Smart TV market is another area of growth for the Samsung Company as it has a strong presence in this market segment.
Threats
The mobility market is highly competitive and this poses a great danger to the company especially because it is competing with very prominent companies such as Apple, Nokia and Microsoft among others. This is bound to reduce Samsung’s market share as well as its profitability through price reduction. Samsung also has a weakness in the fragility of the world economy. This affects the spending patterns of consumers and in return may affect the demand for the company’s products. (Samsung electronics company report, 2012)
Comparison between the changes
Both companies have made significant changes in over time some of which have been quite beneficial to the growth of the companies. Samsung’s strategy to bring in outsiders and let-out insiders helped eradicate redundancy of staff. Also the decision to promote staff and increase their pay on merit basis ensured that each and every member of staff worked towards a goal and provided a competitive environment. This in return led to improved productivity hence increased revenues to the company.
On the other hand the decision by Google to acquire Motorola has had quite an adverse effect on the company. This is due to the many litigations involving Motorola coupled with its weak performance. From this, the company faces the threat of losing a large sum of its profits to damages and settlements.
Potential areas of resistance
One of the areas where resistance may occur is for example in the change in Samsung involving promotion on merit, some of the employees may be prompted to play dirt and in the process take credit which is not due. This can be avoided through ensuring careful supervision of staff and motivation.
Another area of resistance is in the reliance of the Google Company on external manufacture of hardware. This could result in great loses to the company if the manufacturers were unable to deliver. To curb this, the company could employ the strategy of in-house manufacturing of some of these handsets that use its Android operating system.
References
Google Inc. Company report, (2012), Google Inc. SWOT analysis: 2012 issue, Marketline
publishers, London.
Michalski, A (2011), The McKinsey 7-S Framework: Invented in the 1980s and Still a Possibility
for Success Today: GRIN Verlag publishers.
Samsung Electronics Ltd. Company report, (2012), Samsung Electronics Co. Ltd. SWOT
Analysis: 2012 issue. Marketline publishers, London.
Tarun, K, Jaeyong, S, and Kyungmook, L (2011), The Paradox of Samsung's Rise: Harvard
business School publishing.
