Vikas (59), Shantanu (49), Rachit (39), Junaid (29), Himadri (19), Ankit (9)

SAMSUNG ELECTRONICS

Porter Model + PEST

Industry Competition- Micron, Infineon, Hynix, SMIC. As of now Samsung

is the clear market leader

- Moderate

Entry Barriers-High Capital Requirement.

- Govt. ApprovalsVery High

Threat of Substitutes- No major substitutes. -Nanotechnology based memory still not ready.

Low

Buyer Power- Chips sold to PC n Mobile

makers.- Moderately price

sensitive consumer.Medium

Political-Chinese Govt. provides all

sorts of assistance for setting up a plant

Economic- Very High investment for

setting up R&D centers and Fabricating Plants

Social- Consumers (PC, Mobile

companies) very well informed- Customers ready to try other

options

Technological- Very high use of innovation

and technology.

Supplier Power- Few Vendors

-Samsung is a very large buyer

Medium

Core Competency Model

SamsungExpertise in Electronics Innovation

Flash Chips

Memory Chips

Value Chain

Infrastructure

Human Resource

Management

Technology Development

PRIMARY ACTIVITIES

Has a state of art R&D facility and a fabricating unit in Seol.

Strong vendor relations

Lowest Raw Material Cost in

the Industry

Values human resources a

lot

Excellent R&D work

High Technology based operations

Recruitement

Very strong Brand. Known for its

Quality. Rated in the top 20 brands

of the world

Competitive Pay scales

New Products Introductions

Customer Oriented

Inbound Logistics

Operations Outbound Logistics

Marketing / Sales

Service

SU

PPO

RT A

CTIV

ITIE

S

Central computer

linked with vendors

Self Distribution

Analysis – Samsung• Economies of scale in semiconductor production.• High Investment in R&D• R&D Facility & Fabricating unit at single site.• Innovative human resource policies, performance

based promotions.• Wide range of customized end products for meeting

customer demands.• Reliable Product- Very high brand value.

VRIO Resource Is it

valuable?

Is it Rare?

Is it difficult to imitate?

Is it difficult to organize?

Competitive Consequences

Performance Implications

Technological Expertise

Yes Yes Yes Yes Sustainable Competitive Advantage

Above Average Returns

Brand value Yes Yes Yes Yes Sustainable Competitive Advantage

Above Average Returns

Samsung’s cost advantage

• Low labor cost at Korea.• Higher capacity utilization, lower depreciation

cost• Raw Material, Labor, Depreciation, R&D,

SG&A- these cost are substantially higher for competitors.

Major Challenges

• China is a major upcoming threat• Major chip producers are partnering with

Chinese company i.e. Infenion, Elpida signed agreement with SMIC.

• Chinese are desperate in gaining market share at the cost of losses.

• Chinese Govt is ready to provide cheap finance to set up JV.

Conclusion

• Samsung is ahead in Learning curve- emphasis more in R&D works.

• Play on “legacy” and “specialty” product.• May collaborate with Chinese partners to

expand joint investments. Probably a better option…..• Produce low end product in china, high end

product in Korea.• Ensure better control over Intellectual Property