Introduction
The purpose of the report is to examine the key external factors affecting Samsung Mobile’s position in the emerging markets, and to identify the opportunities and challenges faced by Samsung Mobile in India.
India is one of the most populous and the most emerging markets on a global level in all the sectors, in view of the potential the country presents from a business perspective. The recent visits of the Prime Minister of India Narendra Modi, showcases the importance the country holds regionally and internationally.
The current population stands at a massive, 1,323,619,375, as of Tuesday 19th April, according to the latest United Nations estimates (Worldometers. 2016).
The economic trends are all on the positive side and the country is expected to the new growth king, as illustrated in an article in Fortune, stating that the IMF expects the growth in the Indian economy at 7.3% in 2016, and the year will prove to be the key for India to surpass China as the fastest growing large economy globally (Matthews. C, 2015).
The key industry sectors in India start with the Technology sector (IT), besides, the other sectors that are playing a vital role in the growth and expansion of India are: Automobile and components, Aviation, Biotechnology, Construction, Electronics systems, Media and Entertainment, Tourism and Hospitality, Wellness, Renewable Energy to name a few, thus the environment is dynamic to grow and evolve as a business (Sectors, 2016).
PESTEL framework and key drivers of globalization
Every era is shaped by a key trend and we are living in an era of Globalization that has connected the world with immense technological advances. In view of the global economy suffering from a severe recession, many companies are resisting entering new markets and the companies that are already operating globally are suffering, however, the emerging markets with countries like India, Indonesia and China still have ample opportunities to help companies carve a niche in these markets in a profitable manner (Bremmer).
The company selected Samsung Mobile is a global giant that has revolutionized the technological market with innovative products and services and is one of the major player in emerging markets such as India, China and Indonesia.
Samsung is an achiever in the mobile sector and this can be illustrated by the fact obviously pointed in the IT & Mobile communications section (2016) on the website, stating that, technological innovation is the key for Samsung mobile to lead change on a global level, and to be able to produce approximately 400 million mobile devices is an evidence to Samsung’s remarkable smart phone technology.
The following is the PESTLE analysis of Samsung Mobile in India.
Political
The Indian political system has constituted effective policies that govern the taxation system, trade freedom and most importantly autonomy in trade; making the India fastest growing large economy globally and the liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector (IBEF, 2016).
Economical
The Indian economy is on a consistent rise and it is estimated that the growth rate will be 7.5% expected in 2016 and 2017 (PTI, 2016).
Social
The social opportunity is immense in view of the disposable income available; besides, the impact of the social media has helped in making the mobile phone the most popular lifestyle feature, from statistics shared on IBEF (2016), urban region accounts for 58.58% of telecom subscriptions and remaining taken from the rural regions.
The social acceptance of the mobile market can be gauged from the following statistics that India's mobile subscriber base is expected to cross 500 million subscribers by the end of FY2015 from 453 million subscribers at the end of FY2014 (IBEF, 2015).
Technological
In recent times, the technology has improved visibly and with the introduction of 3g and 4g services is evidence of the advancement of the telecom sector.
Being the second largest telecommunications market in the world and a strong growth in the last 15 years suggests to a strong technological system that has enabled India to grow significantly in a global level (IBEF, 2016).
Environmental
The Indian consumers are very much aware of the international happenings that may affect their thinking since; social media is leading the popular lifestyle, culture, it is imperative for companies to operate within the bounds of ethics and to avoid issues that may impact the brand image.
If the production is being done in India by the companies, they need to make sure to follow the environmental policies implemented in India.
Legal
The legal standpoint starts with the system in India, and it is not transparent enough to match the developed countries, however, with the government actively supporting the investments from companies and especially providing large scale incentives to manufacture mobile phone locally, the companies are mostly covered from a legal standpoint (Aulakh. G, 2015).
Opportunities and Challenges
In view of the aforementioned PESTEL analysis, the biggest opportunity for mobile companies is to be part of the biggest and fastest growing mobile sector; the shipment of smart phones in India surged to 44%, i.e. 26.5 million in the second quarter of 2015, so the Indian mobile market presets the biggest potential for business expansion (Aulakh. G, 2015).
Another opportunity is to connect with another major sector of India, i.e. Media and Entertainment, since the passion of movies is unmatched, it presents an opportunity to create new revenue streams in the market since mobiles are used for streaming videos, movies and sports, and what better to connect with a sector that provides the content.
The biggest threat is the overcrowded market of vendors in the Indian market, and this has brought the market to a saturation point as mentioned in Aulakh’s article.
Another major threat is the domestic companies such as Micromax and Intex, since they have redoubled their efforts to provide cheaper mobiles and take advantage of the local market knowledge.
Impacts of future external challenges on the growth and development of Samsung Mobile
The impact of external environment on Samsung mobile starts with the competition, producing low cost products that will cut into Samsung mobiles profit and with a dynamic mobile sector in India, it is imperative to showcase the technological advancement by churning out low cost products with an advantage of the brand’s name credibility in the minds of the consumers.
Another external factor that may impact the growth and development of Samsung Mobile is the political volatility recently due to terrorist attacks and that may offset any growth patterns regionally in India.
The mobile market has the potential to grow, but with so many vendors being attracted the saturation point will affect Samsung’s profitability and that may impact the growth of the company across India.
Conclusion
The mobile subscriber growth and with the second largest telecommunication sector, and an evidently positive legal and environmental factors, Samsung mobile will be able to carve a strong niche in the Indian market.
The aforementioned analysis is complemented by the article shared in the reputed Wall Street Journal (2016) that talks about Samsung’s push in the emerging market and the subsequent success by overcoming odds, as mentioned in the report.
The Indian sector is a goldmine and the full potential of the market is still to be realized, it is thus, imperative for Samsung to keep pushing in terms of launching new products and most importantly, extend the brand to save the brand from being saturated in the future.
The globalized world is an ever changing environment and contingency plans are vital for any business to be able to succeed and Samsung as a leading globalized brand needs to keep working on the emerging market to not only sustain but generate new revenue streams.
References
Aulakh, G. (2015). Why Indian Smartphone’s market is attracting super competitive vendors from around the world. The Economic Times. Retrieved from http://economictimes.indiatimes.com/tech/hardware/why-indian-smartphone-market-is-attracting-super-competitive-vendors-from-around-the-world/articleshow/49201149.cms
Bremmer, I. (2014). The New Rules of Globalization. Harvard Business Review. Retrieved from https://hbr.org/2014/01/the-new-rules-of-globalization
IBEF (2016). Telecom Sector in India.
Retrieved from http://www.ibef.org/industry/telecommunications.aspx
PTI (2016). Moody's pegs India's GDP growth at 7.5% in 2016-17.
The Times of India. Retrieved from http://timesofindia.indiatimes.com/business/india-business/Moodys-pegs-Indias-GDP-growth-at-7-5-in-2016-17/articleshow/51035133.cms
Matthews, C. (2015). These 5 Trends Will Shape the Global Economy in 2016.
Fortune. Retrieved from http://fortune.com/2015/12/28/global-economy/?iid=leftrail
Sectors (2016). Make in India. Retrieved from http://www.makeinindia.com/sectors
Samsung (2016). IT & Mobile Communications.
Retrieved from http://www.samsung.com/sg/aboutsamsung/samsungelectronics/businessArea/businessarea_02.html
Worldometers (2016). India Population (Live). Retrieved from http://www.worldometers.info/world-population/india-population/
The Wall Street Journal (2016). 5 Things About Samsung’s Emerging Markets Push.
Retrieved from http://blogs.wsj.com/briefly/2016/04/07/5-things-about-samsungs-emerging-markets-push/
