Samsung Electronics Case

COMPANY OVERVIEW

* Samsung Electronics Company was established in 1969.

* It is largest conglomerate in South Korea with net sales of $135 billion in 2004.

* The three core business sectors within the group were electronics, finance, and trade and services.

* Samsung includes five business divisions - Semiconductor, Digital Media, Telecommunications, LCD and Digital Appliances

* Samsung was the world's leading memory chip producer for electronic devices

* Samsung offered over 1200 variations of DRAM products - unprecedented in memory industry

* Its products ranged from cutting edge frontier products to legacy products.

* Samsung started to give more importance to high growth potential Flash memory business compared to DRAM

* The company funded MBA and PhD programmes and hence invested in employees technical and business skills, also It actively recruited foreign talent

* Samsung had created a global strategy group to solve problems at business unit level and prepare managers for important global positions

Analysis

* Competition threat from Chinese Companies

* Major memory competitors in 2005.

 Elpida Memory Inc. (J.V. NEC + Hitachi)

 Hynix Semiconductors, Inc. (Hyundai electronics)

 Infineon Technologies AG (Seimens)

 Micron Technologies (Texas instruments)

 Nanya Technologies (Taiwan based)

 Semicnductor Manufacturing International Corp. (SMIC, China)

Challenges to be addressed:

 Should the current business strategy of Samsung Electronics be modified in order to successfully combat:

- the challenges posed by the new Chinese entrants in the DRAM market

- the cyclical downturn expected in the memory chip industry, in 2005

 How to keep the employees motivated to strive for superiority in product design and process efficiency?

Industry Analysis by Porter's 5 force model

Buyers (Low)

* Powerful suppliers and price conscious customers . Intense competition among OEM's. Due to importance of memory chips, OEM's