Menu

H J Heinz Weighted Average Cost Of Capital Harvard Case Study Help

Home >> Hrm >> H J Heinz Weighted Average Cost Of Capital

H J Heinz Weighted Average Cost Of Capital Case Study Solution and Analysis


Intro

Historically, the company's core clients consist of the Original Equipment Manufacturers (OEMs), which utilized to offer H J Heinz Weighted Average Cost Of Capital Case Study Solution products withtheir own brand name. Its customer circle consists of Original Devices Manufacturers (OEMs), who utilized to offer Samsung products with their own brand name. He rearranged Samsung as a global brand name and educated his divisional managers to comprehend marketing and its value.

Issue Statement

Samsung's shift from an item based to a marketing company is not going as efficiently as planned.Overcoming the hesitation of divisional managers to integrate marketing successfully is still a significant obstacle. Developing a consistent brand identity throughout the whole world and utilizing marketing methods that best fits the local culture is no simple task.

Situational Analysis

H J Heinz Weighted Average Cost Of Capital Case Study Analysis efforts for constructing its brand name throughout the world was started after presenting the "new management effort" by Chairman Lee in 1993. The objective was to transform Samsung from an inexpensive OEM to a high value-added product service provider. To make the vision of Samsung a truth, Chairman Lee appointed Yun as a vice chairman in 1997. Yun had a rather clear photo in his mind about how Samsung can transform from a low end to a high end product company. He understood that transformation can only be done through placing Samsung as a company offering high-end items and this could just be done through high level of marketing.

In spite of having a clear vision about how to develop Samsung brand name, with a prospective support of its executives, Yun faced several marketing difficulties in early years of its efforts.

One of the marketing difficulties for Yun was the perceptions of executives about the value of marketing. They considered marketing and selling as same tools and thought that quality products do not required marketing for increasing sales. As their focus towards marketing was quite low in their previous service practices, and the present marketing requirement was excessive high, the gap was too wider and to fill this gap with wrong perceptions about marketing was quite tough for Yun.

Along with it the item range of the business was increasing with the ripening of new item concepts by the R&D sector of Samsung. Yun had a challenge to perform marketing preparation and to produce marketing budget plans for existing as well as for brand-new products from the very beginning, and this would take a substantial time.

A big shift would be required in current marketing expenditures to develop the Samsung brand. This would result in increased marketing expenses for Samsung and could disrupt the administration relating to increased expenses, as they were unwilling to marketing expenditures formerly and a sudden big shiftwould make them disturb.

Internal Analysis
SWOT Analysis
Strengths


Samsung strengths depend on its substantial product portfolio. Samsung has largest variety of patents in the market with total number of 15499 patents approved in United States( USP). Big quantity of R&D costs has enabled the business to grow its product portfolio at a greater rate than its competitors. H J Heinz Weighted Average Cost Of Capital Case Study Solution spent about $13.079 billion on its R&D sector in 2016, which is 7.3% of its total revenues.

Another strength of H J Heinz Weighted Average Cost Of Capital Case Study Help is its ability to establish innovative products at a continuous rate. It major proves for the development and product designing of Samsung is that the business has actually gotten many awards for its development and item design.

Unlike Apple and other rivals, Samsung is concentrated on producing devices which can be easily integrated with any kind of open source Operating System (OS) and software application. This provides Samsung an edge over Apple gadgets.

Samsung's ability to produce high end items at low expense of production is likewise one of the major strength of Samsung as it makes it possible for the company to record more market by offering quality products with expense control.

Weak points

Samsung's weaknesses are hidden in the business's dependence on outsourcing software application for its gadgets due to company's inability in establishing software application, unlike Sony. H J Heinz Weighted Average Cost Of Capital Case Study Analysis also has low profit margins as compare to Apple due to huge difference in the prices of Apple and Samsung with a much lower difference in quality.

Opportunities

Opportunities for H J Heinz Weighted Average Cost Of Capital Case Study Help lie in the growing Mobile phone market and the business's efficiency in the market. Samsung presently runs in about 80 countries and the company has a chance to increase its geographical growth by moving towards more emerging markets outside Asia.

Dangers

The vibrant industry environment of innovation market posture a severe risk on Samsung's survival and require the company to invest much of its revenues share on R&D in order to make it through in the long run. The marketplace saturation in developed countries i.e. saturation of mobile business is also a huge risk for the company's growth in the existence of strong rivals like Apple.

4 P's of Marketing

Item

H J Heinz Weighted Average Cost Of Capital Case Study Analysis offers quality products and has a quite abundant portfolio which deals with various segments. The majority of the items remain in the top 3 of their particular industries. LCD and cellphones are the biggest items of Samsung, whereas DRAM is also not far behind in contrast of them. Following is the line of product of Samsung:

• LCD/ TV
• Laptops.
• Mobile phones.
• Ac system.
• Computer.
• Hard disks.
• Washing machines.
• Refrigerators.
• Cameras.
• Microwaves.
• Flash memory.
• DRAM.

Cost.

H J Heinz Weighted Average Cost Of Capital Case Study Help uses both market competitive and market skimming prices methods for its variety of products. In competitive pricing it adjusts the rate according to the competition in order to get advantage, whereas, it utilizes market skimming strategy where the product has actually an included value and by offering a couple of items it can reach break-even.

Place.

It has one of the very best supply chain networks, with retail suppliers, their own sole suppliers, E commerce channels like Amazon and so on. All its items are timely provided to the selling location/ provided to the consumers directly in case of online order.

Promotion.

It utilizes both offline & online channels of promotion to market their products. Paid product advertisements, social promo and digital advertisements are utilizes to develop awareness about Samsung items.

Worth Chain Analysis.

It's an analytical structure for identifying business activities that add worth or competitive advantage for the company.

Inbound Logistics.

For its inbound logistics it owns different logistics companies as it subsidiaries. It looks after its suppliers and develops an unified relationship with them and even lowered their payment cycles to increase this relationship even more which includes value to their chain network.

Operations.

Samsung's core proficiency is its mass producing it produces 90% of its products in-house. Divided into 3 different divisions its operations are particularly IT & Mobile Communications, Device Solutions and Consumer Electronic Devices. It is maintaining operation hubs worldwide to even more include worth to its value chain network.

Outbound Logistics.

Its outbound logistics system efficiency is one of the primary factors H J Heinz Weighted Average Cost Of Capital Case Study Help has the ability to compete with Apple. Samsung's own Electronic Logitec system plays a significant role in the outgoing logistics operations. It even carries out the tasks of collection of payment, settling insurance claims, etc. on behalf of Samsung.

Marketing and Sales.

Attracting target customer attention towards the item is done through marketing and sales to communicate with them the worth and competitive advantage the item offers. H J Heinz Weighted Average Cost Of Capital Case Study Solution marketing budget is constantly rising considering that they began their rearranging worldwide and will continue to do so as they are continuously seeking to expand and invest in high possible growth markets. The budget is spent on occasions, print and media ads, public relations etc.

Samsung put their customers at the leading and constantly make every effort to provide unmatchable consumer service standards. By including a direct assistance line to call them 24 hours they have actually even more increased the added value of Samsung service.

Division.

H J Heinz Weighted Average Cost Of Capital Case Study Solution has actually diversified market division, based upon its provision of wide range of products to large number of customers. Samsung target client segments can be divided into 3 categories i.e. H J Heinz Weighted Average Cost Of Capital Case Study Help IT and Mobile Communications, Samsung Customer Electronics and Samsung Device options.

Geographic.

H J Heinz Weighted Average Cost Of Capital Case Study Solution geographical division is based upon two requirements i.e. region and density. Samsung serves about 80 nations worldwide with its products offered to Urban in addition to Rural areas of the country. The Samsung is also growing its global presence and the business's versatility in locating its plants motivates worldwide expansion of Samsung.

Demographic.

Samsung produces items that can be used by both males and women. The target consumers for Samsung IT and mobile interaction items have an age variety of 18-65 with majority at a young or recently wed life cycle phase. Apart from it, Samsung Consumer Electronics are targeted to a client segment with an age variety of 25-65.

Psychographic.

The psychographic division of H J Heinz Weighted Average Cost Of Capital Case Study Analysis s based upon the social class and the life style of the consumer. Samsung target customers on the basis of social class are primarily upper middle, middle and working class clients, as Samsung offer items like cell phones very little less expensive i.e. Motorola along with not much costly i.e. Apple. It offers quality products to middle level customers at a slightly high price than others targeting the exact same section.

Behavioural.

H J Heinz Weighted Average Cost Of Capital Case Study Help bulk target clients have special behavioural attributes. It has clients with an enthusiastic, trendy and identified personality with moderate level of commitment towards the brand. Its clients have some degree of shift towards other prominent brand names i.e. Apple. The majority of Samsun consumers want quality along with expense control. They are drawn in towards Samsung since of its moderate rates with an extent of quality.

Quantitative analysis.

Sales of Samsung has increased remarkably from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net earnings of.48 billion $ to 5.9 billion $. It has likewise decreased its debt from 15 billion $ to 4.6 billion $. Digital media is the largest selling classification of Samsung with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales. Incomes/ sales are increasing but net revenue is not increasing accordingly due to the fact that of the high overhead expense. New expansions and employing's were the primary reason of the boost in the overhead costs, with china currently not offering any revenue to Samsung, however there is a lot capacity in the existing market with 75 % yet to be checked out.

Qualitative analysis.

Whereas, the core strength of the company is presently manufacturing however long gone are those days when excellent products were selling themselves. Kim has already started to enhance the marketing activities of Samsung and extremely soon it will end up being one of its core strength like producing if not better.

VRIO.

Value.

Samsung runs designs, produces and sell a vast portfolio of customer electronic devices. It operates in an incredibly competitive environment and has successfully placed itself as the maker of quality products. The response is yes.

Rarity.

As, said previously that H J Heinz Weighted Average Cost Of Capital Case Study Solution operates in a highly competitive environment, which suggests all the companies have comparable products. The answer for rarity is no.

Imitability.

Due to the nature of the industry, it is extremely easy for competitors to understand the performance of the items and easily make their own models. Yes, Samsung is only behind IBM in signing up new patents each year, but the advantage is very short-term in this market.

Company.

Chairman Lee has entirely turnaround Samsung, from going practically bankrupt during the Asian monetary crisis of 1997 to the top 25 company on the planet. Definitely yes there appertains company in the business and the results promote themselves.

External Ecological Analysis

PESTLE Analysis

Political

Being a multinational brand spread nearly in every country worldwide, bulk of the environments like USA, Europe, China etc., are extremely conductive for its operations. Nevertheless, it faces some political pressures in less developed nations where law and order scenario is bad. Latin American, African and some Asian countries fall in this category, where political instability do have an effect on H J Heinz Weighted Average Cost Of Capital Case Study Solution operations.

Economic

Purchasing power of customers is important for business like Samsung to grow and be successful. Emerging markets like India, middle-eastern nations and so on provide growth chances, whereas, due to economic crisis even the clients of industrialized countries suffer badly. For this reason it is extremely crucial for the business to watch on the continuous economic situation of the nation before getting in the marketplace.

Socio-Cultural

Multinational business need to deal with different social and cultural concerns throughout its operations in a foreign nation. Samsung has also faced lots of issues but have embraced to the regional environments of most of the countries incredibly well. It has customized its products, practices, policies and so on accordingly in order to achieve success.

Technological

With a yearly expenditure of 2.4 billion dollars in Research & Development, and with consistent innovative item launches, H J Heinz Weighted Average Cost Of Capital Case Study Solution is among the leading innovative companies of the world. With a clear objective to be ahead of the rest when it concerns technological developments, Samsung has risen to the no 25 of the top successful business of the world.

Legal

Each nation has their own laws and policies, being an international company Samsung need to strictly follow those laws in their jurisdictions. Failure to do so, will lead to severe legal consequences. So, it has to study or work with a regional law expert before starting its operations in a particular country.

Environmental

With the increasing awareness among customers about the environmental & ethical offenses of business, Samsung needs to ensure that it follows all the safety guidelines. Environmental damages, ethical misbehaviors are not appropriate and in some nations the consequences can be very serious. On the other hand it has to do some Corporate Social Duty practices to reveal the residents that it cares about their environment and people.

Porter's 5 Forces

Risk of Replacement

Danger of replacement for Samsung's each item classification is quite significant. Aspects for high risk of replacement for H J Heinz Weighted Average Cost Of Capital Case Study Help Smart device consist of the existence of high number of suppliers and Market saturation in developed nations, which make the expense of changing for customers nearly no. Along with it, Samsung printing solutions products are threatened by the increasing destination of clients towards cloud storage.

Rivalry Among Existing Companies:

The rivaly among Samsung and its close competitors is extreme. The major factor behind this is the approach of market saturation in various variety of item categories, requiring Samsung to introduce more innovative features in existing items and new innovative items to keep its growth. Other aspect for the intense rivalry among the rivals is the little product distinction amongst the products. The popular players in the innovation market are quite familiar with the importance of R&D costs for their survival and are encountering a race of marketing and R&D costs, to record the marketplace. The major rivals for H J Heinz Weighted Average Cost Of Capital Case Study Analysis samrtphones include Apple, Motorola, LG, Nokia, Huawei, OPPO and so on. High competitors rivalry results in the fluctuating market shares which can be seen in Exhibit F.

Bargaining Power of Suppliers:

H J Heinz Weighted Average Cost Of Capital Case Study Help has a large supply chain consisting of about 2700 suppliers across the world.( Samsung Sustainability Report, 2016) Supplier's bargaining power for Samsung is low as Samsung runs economies of scale and its orders are of potential size and worth. These substantial orders enable Samsung to work out rates with its providers. However, due to incapability of H J Heinz Weighted Average Cost Of Capital Case Study Solution to construct its own software, it has to outsource its software application advancement to Google, which becomes a possible supplier of software for Samsung, leading to high bargaining power of Google. In most of H J Heinz Weighted Average Cost Of Capital Case Study Help has a power to negotiate prices, however it provide considerable rates to its suppliers to build a strong supply chain and to have strong relationships with its providers.

Bargaining Power of Buyers:

Negotiating power of buyers for various variety of product classifications of Samsung is intense. One of the factor resulting in the intense bargaining power is the availability of large number of competitors in almost each item category i.e. competitors of Samsung Mobile phone, with a very little differentiation. The high schedule of providers of Mobile phones with minimum differentiation, make the changing cost for purchasers practically no, for this reason increasing the bargaining power of buyers. Market saturation in most of the item classifications likewise make the bargaining power of buyers more intense in for H J Heinz Weighted Average Cost Of Capital Case Study Solution. In spite of igh bargaining power Samsung is rather capable of selling its items at a higher cost than much of its rivals, due to high end quality product and a reasonable brand image.

Risk of New Entrants:

Hazard of new entrants for H J Heinz Weighted Average Cost Of Capital Case Study Analysis is rather low. Along with it, requirement of huge competence and research study and development expenditures for survival in the market likewise make brand-new entrants hesitant to go into in the market. Market saturation is also one of the barrier of entry in innovation market.

Competitive Analysis

Samsung's high item diversification offers it distinction from its competitors. It is among the 3 leading brands by market share. Unlikely to its close rivals including Sony, Intel and Nokia, who focus majority on a single product category with Sony concentrating on consumer electronics, Nokia on mobile phone and Intel on chips, Samsung had a huge R&D spending on all of its product categories which make it possible for the company to make potential revenue from sales of nearly all of its items. (See Display) Nevertheless, due to the wide product variety the business deals with high variety of competitors.

The company ranks initially in 4 product categories i.e. DRAM Chips, LCD Displays, Cinema Televisions and Microwave ovens, in terms of worldwide market share, among 8 different item categories. Samsung was the worldwide leader in producing DRAM, SRAM and NAND flash chips. Samsung revenues from chips was less than Intel however its profits from chips was growing faster than Intel and has actually grown close to the income levels of Intel, as provided in the case Display 2.

Along with the chips Samsung mobile market was likewise thriving at a high rate than its rivals i.e. Motorola and Nokia. Samsung's cellular phone's sales growth was 51% as compare to Motorola with just 4% and Nokia with zero sales growth. The major reson behind Samsung's high development despite of higher costs than Nokia and Motorola was the business's high-end quality cellular phone.

Samsung was also reaping the benefits from increasing market share of luxury LCDs as given up case Exhibition 3. The significant reason, making the business enable to get the chance is its mass production at low expense. Sony was the biggest rival for H J Heinz Weighted Average Cost Of Capital Case Study Analysis in LCD market, however, it had actually likewise started joint endeavor with Samsung in 2003 for LCD manufacturing, reducing the competition for Samsung.

Porter's Competitive Technique

Low Expense Management strategy of porter is fully carried out by Samsung the way they accomplish economies of scale by strengthening their core proficiencies of production. Even to the point that their rival SONY chose to form an alliance with them to manufacture for them, since they were unable to take on them on low expense. Distinction is another technique well implemented by Samsung by continuous investment in the R&D and staying ahead of the competition. They constantly bring something new and innovative whether it's a service or an item.

Alternatives

Alternative Option 1

The Chief Marketing Officer (CMO) of H J Heinz Weighted Average Cost Of Capital Case Study Analysis would produce a brand-new brand image by targeting the younger generation of the specific country. As, particularly smart phones of Samsung are incredibly popular amongst the more youthful group.

Pros

1. It is the very best strategy to build Consumer Life time Worth (CLV) by creating a long-lasting relationship with clients. Develop loyalty through delivering worth and profit for long-term, as research study has actually showed it is much cheaper to retain current consumers than to bring in new ones.
2. Another pro of this option is that word of mouth spread more quickly among more youthful individuals and which in turn will generate new clients for my items.

Cons

1. Old consumers who were connected with Samsung prior to may not like this brand-new image the company is attempting to represent.
2 It will incur further costs to rearrange some items and it may not even bring success as the trends alter really rapidly among the more youthful group.

Alternative option 2.

Samsung has made manufacturing its core competency for the a lot of part of their business and due to which its supervisors are not scared to completely get out of their convenience zone. It would be done by arranging training workshops throughout which value of marketing will be taught and numbers will be provided. Failure to get the passing ratings will get benched. Marketing environment should be created internally first as genuine marketing begins inside the corporation.

Pros

1. Its pro will be that all the marketing method fans will come out and likewise the opposite ones.

Cons

2. Its con can develop an extremely unhealthy environment in the work environment, as people typically withstand change due to the fact that they fear it.

Recognize the best option

Alternative is the best as it plainly has more pros because when a Client Lifetime Worth is developed the business will profit from it till that consumer is alive and has buying power. Plus, our target clients are the more youthful generation which are bound to live longer than the present old age people. However, Samsung's primary objective is to produce commitment amongst its clients and make them redeemed it from them and even purchase their different items as well.

Execution Plan

• Targeting more youthful generation through social marketing, producing a link with them like Pepsi do with music. And set the expectations achievable and practical.
• A group consisting of best marketing and sales professionals should be assemble, and both views should be considered prior to securing the resources needed to implement the plan.
• Thorough communication of the plan need to be done as it is extremely important for everyone to be on the same page to make it work.
• Tasks and timelines must be build and interacted accordingly to each individual responsible.
• The supervisor need to use a dashboard which reveals the progress of all the jobs which have actually been done or about to be done and by whom.
• The manager must keep an eye on and keep a constant examine the private and total efficiency.
• Everyone must want to adapt midway due to the fact that any new pattern or policy may be available in due to which all the important things already prepared need to be changed. It's much better to have contingency strategies currently prepared.
• At the end of the project the supervisor ought to communicate the outcomes and if effective should celebrate with the team.

Spending plan

The M-net program exposed compelling analysis about the high and low development possible areas and just how much marketing spending plan ought to be assigned accordingly. This modification the budget plan allocation of numerous managers and different countries were unhappy and argued but the analysis done by the program was accurate and showed figures like North America and Russia growth possible merited a 35% allowance while they were receiving 45%. Whereas, China and Europe need to be receiving 42% but were rather given 31%. It really assisted to relatively distribute the resources and catch more customers by spending more on advertisements on the high growth potential areas of the world.

Conclusion

Its constant investment in R&D and ingenious practices have actually moved them to brand-new heights but for them its' only the start and they desire to be amongst the leading 3 brands in the world. Their marketing efforts must be directed towards younger demographic amid the internal arguments about marketing and must develop Customer Life time Value as it will not only provide them advantages now but will continue to reap it till the customer life time. As the expense of keeping the customer is much cheaper than attracting a brand-new one.