Samsung is one of world’s largest producers of memory for all types of digital cameras, game players, PCs and other electronics devices (Siegel, Jordan and James 1). Under the leadership of Kun Hee Lee, who is the chairperson of the company, there have been some improvements in the enterprise compared to the past years. Lee uses most of his time studying the strategies of his competitors by examining the designs and quality of competitors’ products. In 1987 Samsung used to be a bit player, meaning that it used to produce only one type of memory (Siegel, Jordan and James 1). Some of its competitors like the Japanese companies used to lead in the production of the memory. It was in 2003 when the Samsung introduced different types of memories, which were large than those of its competitors.
The amount derived from the sale of the various types of memories was used to fund the production of other electronic devices in the company. In the beginning, the cost used in the production of a single 64K DRAM chip was $1.30 while the selling price in the market was $1.00 in the Samsung. That did not discourage the Group from making further investments and the Group had hope that it would succeed in its investment. Initially, Samsung outsourced the technology from the U.S based Micron company to be taught how to produce 64K DRAMs. Indeed, the company has experienced many challenges but still has built its name from those challenges.
As it is evident from the financial analysis listed for the company and its main competitors, the revenues of the Samsung Company are much high compared to those of its competitors. The production cost of Samsung is also very high, but the amount of net income received by the Company is far much higher than that of its competitors. The company has also introduced new designs for its products; this has added an advantage over its competitors. The differentiation advantage of Samsung is critical although it is hard to sustain it, especially if the company lacks enough funds.
Maintaining Samsung’s position is hard for most companies. The fact that Samsung has managed to survive from an environment full of competitors shows that some factors do contribute to this; for example, good leadership and resources. The amount borrowed by the Company is greater than any of its competitors. Much of its expenses are met by the finance borrowed. Despite the many challenges that faced Samsung, for example the threat from the Chinese entrant in the market of DRAM, it has still maintained its reputation (Siegel, Jordan and James 2). The chairperson’s decision of comparing the design and quality of products from different companies assisted Samsung Company in inventing more products that are better than the competition (White 756).
In conclusion, the differentiation advantage, and the cost advantage of Samsung is very important. It is from those advantages that the Company has survived in the competitive environment. It is easier for the company to grow if it is possible for it to have resources required and enough funds to meet all the expenses. The act of a group investing in innovative technology means that there is a great probability for it to maximize its profit. As highlighted by the case of Samsung, for a company to prosper, it must learn the methods used by its competitors and come up with better strategies to survive.
Works Cited
Siegel, Jordan I, and James Jinho Chang. Samsung Electrons. 1st ed. Harvard Business
White, Colin. Strategic Management. Basingstoke, Hampshire: Palgrave Macmillan, 2004.
Internet resource.
