Samsung and Toshiba - a Competitive Advantage

Diagnosis:

The company's single biggest problem in 2005, with a competitive advantage of a unique company culture and holding tremendous market share is the threat of Chinese entrants who were attacking the DRAM market in a similar fashion that Samsung did 20 years ago. In terms of performance, foreign competition will eliminate market share, dissolve suppliers access and with the anticipation that China would become the second largest purchases of semiconductors after the U.S. partners would look to expand joint investments with China as oppose to Samsung. The Chinese firms have much more funding too. The long-term impact can be detrimental to Samsung. As written, China seems to be very innovative in their approaches as oppose to Samsung who meets market needs/demands and moves forward.

Analysis:

Porter's Five Forces is applicable to this case due to the industry's extensive competition and threat of Chinese entrants. In terms of rivalry among existing firms, a number of firms are addressed as major competitors thus making the threat high. A number of innovative competitors throughout Asia, Germany and even Boise, Idaho position themselves as direct competitors. In addition, companies currently like Apple, Nokia and Sony are competitors because they make similar products.

Other companies, high because Samsung's products are interchangeable with those make the threat of substitute in terms of products or services. There are multiple choices for consumer's to purchase other brands like Phillips, Kodak or Panasonic however Samsung stood infront of those brands in 2004 but the competition does exists.

As mentioned previously, a tremendous issue for Samsung is the threat of new entrants - in this case speaks to the power of the Chinese entering the market. Currently, for Samsung it is low. To tap into the technology market is very difficult and requires a tremendous amount of capital.

The power of suppliers to Samsung is low, after some research, Samsung supplies nearly all of its own raw materials.

The power of buyers to Samsung is high from a business to consumer perspective, meaning consumers can choose from a wide range of similar products. However, from a business-to-business such as in this case with the semiconductor industry, the bargaining power of buyers is low Samsung is the leader in most types of products.

Recommendation:

Samsung had two options in this situation and they were to collaborate actively with a Chinese partner, however that had a number of disadvantages. The second being to increase its investment in cutting-edge memory products for new niche markets. A mixture of the two strategies would best suit Samsung. Samsung should have decided to partner with a Chinese firm for some production due to low labor