The article Samsung Makes Aggressive Play for Emerging markets by Jonathan Cheng appeared in the wall street journal on April 6, 2016. This article addresses the steps that Samsung has made to stay ahead of its competitors in the global market, and especially within the Asian continent from where Samsung products are manufactured. The electronic company is winning back customers by cutting down most of its products prices. The South Korea's tech giant has focused more on cheaper gadgets to reach a wider market. The company has set out to compete favorably with Micromax Informatics Ltd, an Indian company that offers cheap electronics, and with Xiaomi Corp in China. Samsung, according to Cheng has been adding more features to its low-end phones to attract a larger customer base. The introduction of the Galaxy 7 series and the Galaxy S series together with the implementation of data saving features has seen to it that the company rakes billions of profits through sales ("Samsung Makes Aggressive Play for Emerging Markets," 2016). Analysts, however, dispute the lowering of prices citing it a short –term solution to the company's selling strategy. Moreover, the company has sought to lower the production costs by cutting down on materials, and reducing the numbers of smartphones produced, a move that allows for the low electronic costs. These strategies have enabled the Samsung Company to gain its lost market share in the Asian market.
The article is a revelation of the current state of affairs within the Samsung Company. This article portrays several concepts in business as addressed below.
Competitive intelligence
This refers to the process of closely monitoring an organization's market through gathering and analyzing information about customers, competitors, and products in order to make strategic decisions for the organization. As mentioned in the article, Samsung has come up with strategies to change the manner in which they run their business based on the information they have gathered regarding the prices offered by their competitors. The lower prices by Micromax Informatics has resulted in Samsung lowering its prices as well. Moreover, the company has also analyzed its previous performances and noted a decline in sales. Concerning the decline, the decision to lower prices and increase features is strategic and aims at drawing in more customers.
Demographics
Demographics is concerned with the study of a population based on factors such as economic status, sex, age, income level and the level of education. The Samsung Company targets low-income earners as well as high-income earners. It specializes on a variety of phones, which range in prices to match their consumer demands. The current cut down in prices is specifically aimed at reaching out to its low-income earners within the Asian region.
Porter's 5 Forces
Porters 5 forces were established by Michael Porter. These forces identify the competitive forces within each industry with an aim to determine the strengths and weaknesses of the industry. These forces include
Competition in the industry
This entails the number of competitors that Samsung has and the threats that such competitors pose to the company. The power of Samsung depends largely on the number of its competitors and the products they offer (50MINUTES.COM. Minutes, Cadiat, & Probert, 2015). The Xiaomi Corp of China offers the most competition to Samsung since it produces similar products to Samsung and sells them at a lower price. India's Micromax Informatics also offers a similar competition to Samsung.
Potential of new entrants into the industry
Samsung is threatened by the entry of new companies into the industry. The ease at which new companies spring up is made simpler since they ape what Samsung has already manufactured, only offering it at a lower price. Samsung has opted for options that make its products marketable in the case of this factor.
Threat of substitute products
The phone industry, and particularly the Samsung industry has been faced with a lot of incidences of substitute products. Here, competitors make products, which are look-alikes of the original Samsung products and sell them at a lower price (Bolstorff & Rosenbaum, 2007). The article addresses the substituting case in the Xiamo Corp in China, a company that specializes in substituting phone designs in the market.
Power of suppliers
This refers to the power that suppliers have which enables them to control the prices of goods and services. The Samsung Company has more power over its suppliers, and this has helped in arriving at a consensus with them, hence allowing it to obtain manufacturing materials at a lower price.
Power of customers
The ability of customers to influence prices by having a higher bargaining power and reducing prices to match their expectations. Samsung's customers have apparently managed to bring down prices as seen from the changes in pricing that the company has recently indulged in.
Value Chain Analysis
This is a business tool, which aims at creating the best value for customers. A value chain can be arrived at through a better differentiation of a particular product as well as a lower cost. Samsung has managed to arrive at a cost, which is effective for its customers. Its additional features for its phone models provides a value for money for its customers.
Resource Based View
Here, a firm used the resources, which are at its disposal to achieve an objective. These resources are such as employees, financial as well as technological resources. The Samsung Company has, according to the article utilized its technological resources to provide its customers with updated versions of its products to satisfy the constant demand for new products in the market.
Balanced Scorecard
This strategic planning system is used in organizations to align the business activities to the goals and objectives of the organization. The Samsung Company uses a balanced scorecard to ensure that its activities match with its vision, which is to avail its products to a wider customer base (Lee, 2016).
Human Capital
This refers to the knowledge, skills, attitudes and other intangible assets that an individual possesses which enables him/her to perform activities, which have an economic value. Samsung has maximized more on competent individuals who possess the traits needed for the organization to perform better (Lee, Lee, & Heo, 2015). Its technological staff is highly knowledgeable to keep up with the ever-changing trends.
Social Capital
This refers to the connections between people who live and work in a specific society, enabling the society to function effectively and appropriately. Samsung thrives on the connections that it has with its customers from all over the world. Its professional base is composed of a variety of individuals who are well connected for a common purpose.
Practical managerial implications
The management of Samsung has to come constantly up with strategic decisions to stay ahead in the phone and electronic industry (Robbins & Coulter, 2005). Technological and price adjustments make the most of Samsung's strategies. The management also has to come up with relevant strategies on how to better maintain their leading position in the market. Innovation plays a key role in the Samsung Company as the management promotes innovative minds which ensure that the company avails something new in the market regularly, and in so doing achieves a greater competitive advantage over its competitors.
References
50MINUTES.COM. Minutes, 5. Cadiat, A., & Probert, C. (2015). Porter's Five Forces. Primento Digital.
Bolstorff, P. & Rosenbaum, R. (2007). Supply chain excellence. New York: AMACOM.
Lee, J. (2016). Samsung Sees Seventh Straight Profit Decline. WSJ. Retrieved 13 May 2016, from http://www.wsj.com/articles/samsung-sees-seventh-straight-profit-decline-1436227146
Lee, J., Lee, K., & Heo, J. (2015). Supplier Partnership Strategy and Global Competitiveness: A Case of Samsung Electronics. EJBM, 3(4), 1-12. http://dx.doi.org/10.15604/ejbm.2015.03.04.001
Robbins, S. & Coulter, M. (2005). Management. Upper Saddle River, NJ: Pearson Prentice Hall.
Samsung Makes Aggressive Play for Emerging Markets. (2016). WSJ. Retrieved 13 May 2016, from http://www.wsj.com/articles/samsung-makes-aggressive-play-for-emerging-markets-1459997969
