The name “Samsung” according to the founder of the group Lee Byung Chull a migrant of a large land owning family in Uiryeong county to a city called Daegu where he founded Samsung Sanghoe explained that it means “tristars” or “three stars”; the word “three” represents something big, numerous and powerful. The “stars” represent “eternity”. Samsung has undergone lots transformation before being the giant Samsung it is today and it has proven to withstand the test of time where most Asian companies have dissolved during the Asian financial crisis.
Its first product was a black-and-white television set. In the 50’s, when the Korean War broke out; Lee was forced to leave Seoul and start a sugar refinery in Busan[->1] named Cheil Jedang[->2]. After the war, in 1954, Lee founded Cheil Mojik and built the plant in Chimsan-dong, Daegu. It was the largest woollen mill ever in the country and the company took on the aspect of a major company. After the founder’s death in 1987, Samsung Group was separated into four business groups – Samsung Group, Shinsegae Group, CJ Group and Hansol Group.
Shinsegae (discount store, department store) was originally part of Samsung Group, separated in the 1990s from the Samsung Group along with CJ Group (Food/Chemicals/Entertainment/logistics) and the Hansol Group (Paper/Telecom). Today these separated groups are independent and they are not part of or connected to the Samsung Group. In the 1980s, Samsung Electronics began to invest heavily in research and development, investments that were pivotal in pushing the company to the forefront of the global electronics industry.
Our main purpose in this section is to declare what kind of tools we are going to use to analyze the competitive advantage of one of Samsung Group’s subsidiaries – Samsung Electronics. Any company in the business world would want to maintain and achieve competitive advantage if it intends to really survive the scheme of its rivals. One of these ways is to conduct a strategic analysis of the company. This enables us to adjust and monitor the position of the company, exploit new opportunities, and prepare for rainy days.
There is one way of doing that- conducting a strategic evaluation of the company. According to Peter Drucker “unless strategy evaluation is performed seriously and systematically, and unless strategists are willing to act on the results, energy will be used up defending yesterday. No one will have the time, resources, or will to work on exploiting today, let alone to work on making tomorrow”. In other words, strategic evaluation gives the company a feel of or connection to the business environment it is operating in. Strategic evaluation is vital to the organization’s well being.
Strategic evaluation includes three basic activities: examining the underlying basis of a firm’s strategy, comparing expected results with actual results, and taking corrective actions to ensure that performance conforms to plans. Samsung Electronics is the world’s largest mobile phone maker[->8] by 2011 unit sales and world’s second-largest semiconductor chip maker[->9] by 2011 revenues (after Intel Corporation[->10]). It has been the world’s largest television manufacturer[->11] since 2006 and the world’s largest maker of LCD panels for eight consecutive years. It has the largest market share worldwide in memory chips[->12].
The company is the world’s largest vendor of smart phones[->13] since 2011. Samsung has also established a prominent position in the tablet computer[->14] market, with the release of the Android[->15]-powered Samsung Galaxy Tab[->16]. This section of the paper is meant to access and assess the strategies they have been applying since their existence and to advise them on the strategic options available to them now and in the future. In this paper we would use the following analyses: SWOT analyses, PEST analyses, Porter’s Five Forces, Strategic Group and the VRIO model analyses.
SWOT is the acronym for strengths, weaknesses, opportunities and threats surrounding the business in its environment. In other words, it guides you to identify the positives and negatives inside and outside your organization. SWOT analysis is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. Its key purpose is to identify the strategies that will create a firm specific business model that will best align an organization’s resources and capabilities to the requirements of the environment in which the firm operates.
In other words, it is the foundation for evaluating the internal potential and limitations and the likely opportunities and threats from the external environment. The strength and weaknesses give you an insight of your internal advantages relative to other companies and disadvantages relative to other companies, in other words, it measures the competitive advantage. They are usually the factors that you have control over. The opportunities and threats are considered to be the external factors that you have no control over; it could be technological change, legislation, socio-cultural change, etc.
The opportunities and threats give you an insight of the factors that the organization can exploit to it advantages and the factors that could cause trouble for the business. Pestel is an acronym for political, economical, social, technological, environmental and legal analysis. It describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. ·Political factors are basically to what degree the government intervenes in the economy.