samsung electronics case study

1. Samsung Electronics Case Study Analysis Group No. 6 Presented by : AmitTemurnikar( G 10066) Giri Shankar( G10076) ManavSagar Sharma( G10086) PrashantSahay(G 10096) SanjeevRanjan ( G10106) Tennison Jomy( G10116) HBS 9-705-508 by Jorden I Siegel and James Jinho Chang

2. OBJECTIVE To understand and analyze the growth story of Samsung Electronics in order to suggest strategies to counter the threat of Chinese competition.

4. Semiconductors were classified into two broad categories, memory chips and logic chips. Memory chips would be further classified into DRAM, SRAM, flash memory.

5. DRAM represent over 50 % of memory market and SRAM and flash memory represent 10% and 32 % respectively.

6. Share of DRAM has reduced from 80% to 67% due to saturation in PC segment.

8. Chinese firm with help of joint venture and agreements were in position to get license and technology for manufacturing.

10. Industry was experiencing fierce rivalry by increase in industry capacity and normal cyclical downturn.

11. Many Chinese firms were ready to enter the market.

12. Chinese competitors were willing to sacrifice profits for market share.

13. Suppliers:

14. With the growth of industry, supplier become more concentrated and would offer 5% discount on bulk purchases.

16. Buyers were largely OEM, with no one controlling more than 20% of global PC market.

17. OEM would negotiate hard for price as memory represented 4-12% of PC cost and 4-7% of mobile phone cost.

18. Buyers would pay 1% premium for reliability of product. Buyers were highly fragmented

19. Entry Barrier:

21. Samsung was market leader in memory chip technology and constantly remained ahead of its competitors.

22. Unlike competitors, Samsung tried to differentiate by creating new uses for DRAMs. Samsung had launched new DRAM products with product-specific applications in laptops and personal game players.

23. It enabled Samsung in creating new markets that were unavailable to its competitors by developing new applications of memory and latest better technology.

24. This had provided Samsung dual advantage of cost and differentiationover its competitors.

26. Actively collaborate with Chinese partners. Collaboration would provide access to local Chinese market which was growing rapidly and access to cheap resources and local talented engineers. Risk was to loose its unique culture and intellectual rights were not fully protected.