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Hola Kola The Capital Budgeting Decision 5 Case Study Solution and Analysis


Intro

Historically, the business's core customers include the Original Devices Manufacturers (OEMs), which utilized to sell Hola Kola The Capital Budgeting Decision 5 Case Study Solution items withtheir own brand name. Its client circle consists of Original Devices Manufacturers (OEMs), who utilized to sell Samsung products with their own brand name. He rearranged Samsung as an international brand and educated his divisional managers to understand marketing and its value.

Problem Declaration

Samsung's transition from an item based to a marketing business is not going as efficiently as planned.Overcoming the reluctance of divisional supervisors to integrate marketing efficiently is still a major difficulty. Developing a constant brand identity across the whole world and utilizing marketing methods that finest fits the local culture is no easy task. The M-net program analysis have actually been truly helpful in identifying the high and less possible development locations, however allocation of resources accordingly is not well received among the supervisors. There is no agreement among the hierarchy regarding the best matched future technique.
Executive Summary
Situational Analysis

Hola Kola The Capital Budgeting Decision 5 Case Study Help efforts for developing its trademark name throughout the world was begun after presenting the "new management effort" by Chairman Lee in 1993. The goal was to transform Samsung from a low-cost OEM to a high value-added product supplier. To make the vision of Samsung a truth, Chairman Lee appointed Yun as a vice chairman in 1997. Yun had a rather clear picture in his mind about how Samsung can transform from a low end to a high-end product provider. He understood that change can just be done through positioning Samsung as a company providing high-end items and this might just be done through high level of marketing.

In spite of having a clear vision about how to construct Samsung brand, with a potential support of its executives, Yun dealt with numerous marketing challenges in early years of its efforts.

One of the marketing obstacles for Yun was the understandings of executives about the value of marketing. They thought about marketing and selling as exact same tools and thought that quality items do not required marketing for increasing sales. As their focus towards marketing was quite low in their previous organisation practices, and the present marketing requirement was excessive high, the space was too larger and to fill this gap with wrong perceptions about marketing was rather tough for Yun.

Along with it the item variety of the company was increasing with the ripening of brand-new product concepts by the R&D sector of Samsung. Yun had a difficulty to carry out marketing preparation and to develop marketing spending plans for existing as well as for new products from the very start, and this would take a substantial time.

A big shift would be required in present marketing expenses to build the Samsung brand name. This would result in increased marketing expenses for Samsung and might disrupt the administration relating to increased expenses, as they were reluctant to marketing expenditures previously and a sudden big shiftwould make them disturb.

Internal Analysis
SWOT Analysis
Strengths


Hola Kola The Capital Budgeting Decision 5 Case Study Analysis strengths lie in its big product portfolio. Samsung has biggest number of patents in the market with overall number of 15499 patents granted in United States( USP).

Another strength of Hola Kola The Capital Budgeting Decision 5 Case Study Analysis is its ability to establish innovative products at a constant rate. It major shows for the development and product designing of Samsung is that the company has actually received many awards for its development and item style.

Unlike Apple and other competitors, Samsung is concentrated on producing devices which can be easily incorporated with any type of open source Operating System (OS) and software application. This provides Samsung an edge over Apple gadgets.
Porter's 5 Forces Analysis
Samsung's ability to produce luxury items at low expense of production is likewise among the significant strength of Samsung as it enables the business to record more market by offering quality items with expense control.

Weak points

Hola Kola The Capital Budgeting Decision 5 Case Study Analysis weak points are hidden in the company's reliance on outsourcing software for its gadgets due to business's failure in establishing software, unlike Sony. Samsung also has low earnings margins as compare to Apple due to huge difference in the prices of Apple and Samsung with a much lower difference in quality. The diverse focus of the company due to large number of products in its portfolio, lead to the less efficient production and make the company not able to charge greater prices like Apple. The company is likewise ineffective in managing its patents and often faces the problem of patent offense.

Opportunities

Opportunities for Samsung depend on the growing Smartphone market and the company's performance in the market. It can increase its market share and profits from cell phone as the company is rather efficient in mobile phone market. Samsung currently runs in about 80 countries and the business has an opportunity to increase its geographical growth by moving towards more emerging markets outside Asia. Samsung can move towards acquisitions to get patents. It would enable the company to increase its product portfolio with a boost in its wealth.

Risks

The dynamic industry environment of technology industry posture an extreme danger on Samsung's survival and require the business to invest much of its revenues share on R&D in order to survive in the long run. The marketplace saturation in developed countries i.e. saturation of mobile company is likewise a huge risk for the company's growth in the existence of strong rivals like Apple.

4 P's of Marketing
Swot Analysis
Item

Samsung offers quality items and has a quite abundant portfolio which caters to different segments. LCD and mobile phones are the biggest items of Samsung, whereas DRAM is also not far behind in contrast of them.

• LCD/ TELEVISION
• Laptops.
• Cellphone.
• Ac system.
• Desktop computer.
• Hard disks.
• Washer.
• Fridges.
• Video cameras.
• Microwaves.
• Flash memory.
• DRAM.

Cost.

Hola Kola The Capital Budgeting Decision 5 Case Study Help uses both market competitive and market skimming rates strategies for its wide range of items. In competitive rates it changes the cost according to the competition in order to acquire advantage, whereas, it utilizes market skimming method where the product has actually an added worth and by selling a few items it can reach break-even.

Location.

It has among the best supply chain networks, with retail suppliers, their own sole distributors, E commerce channels like Amazon and so on. All its products are prompt provided to the selling location/ delivered to the clients directly in case of online order.

Promo.
Vrio Analysis
It uses both offline & online channels of promo to market their items. Paid item advertisements, social promotion and digital ads are uses to create awareness about Samsung items.

Worth Chain Analysis.

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

Incoming Logistics.

For its inbound logistics it owns numerous logistics companies as it subsidiaries. It looks after its providers and develops a harmonious relationship with them and even reduced their payment cycles to enhance this relationship even more which adds worth to their chain network.

Operations.

Samsung's core competency is its mass manufacturing it produces 90% of its products internal. Divided into 3 various departments its operations are specifically IT & Mobile Communications, Device Solutions and Customer Electronics. It is maintaining operation hubs worldwide to further include value to its value chain network.

Outbound Logistics.

Its outbound logistics system efficiency is among the main reasons Hola Kola The Capital Budgeting Decision 5 Case Study Solution is able to take on Apple. Samsung's own Electronic Logitec system plays a significant function in the outbound logistics operations. It even carries out the jobs of collection of payment, settling insurance coverage claims, etc. on behalf of Samsung.

Marketing and Sales.

Attracting target consumer attention towards the product is done through marketing and sales to communicate with them the worth and competitive advantage the product uses. Hola Kola The Capital Budgeting Decision 5 Case Study Analysis advertising budget plan is constantly rising considering that they started their repositioning globally and will continue to do so as they are continually aiming to broaden and invest in high prospective development markets. The spending plan is invested in occasions, print and media ads, public relations etc.

Samsung put their customers at the leading and constantly strive to deliver unmatchable consumer service requirements. By adding a direct support line to contact them 24 hours they have actually further increased the included worth of Samsung service.

Division.

Hola Kola The Capital Budgeting Decision 5 Case Study Solution has actually diversified market segmentation, based upon its provision of wide range of items to large number of customers. Samsung target consumer sectors can be divided into 3 categories i.e. Hola Kola The Capital Budgeting Decision 5 Case Study Solution IT and Mobile Communications, Samsung Consumer Electronic Devices and Samsung Device options.

Geographic.

Hola Kola The Capital Budgeting Decision 5 Case Study Help geographic division is based upon two criteria i.e. area and density. Samsung serves about 80 nations worldwide with its products provided to Urban in addition to Backwoods of the nation. The Samsung is also growing its global presence and the company's flexibility in locating its plants encourages global growth of Samsung.

Demographic.

Samsung produces products that can be used by both females and males. The target clients for Samsung IT and mobile interaction products have an age variety of 18-65 with bulk at a young or recently wed life cycle stage. Apart from it, Samsung Consumer Electronics are targeted to a client section with an age variety of 25-65.

Psychographic.

The psychographic segmentation of Hola Kola The Capital Budgeting Decision 5 Case Study Analysis s based upon the social class and the lifestyle of the consumer. Samsung target customers on the basis of social class are primarily upper middle, middle and working class clients, as Samsung offer products like cellular phone very little more affordable i.e. Motorola in addition to not much costly i.e. Apple. It offers quality items to middle level customers at a somewhat high price than others targeting the very same section.

Behavioural.

Hola Kola The Capital Budgeting Decision 5 Case Study Solution bulk target consumers have special behavioural qualities. It has clients with an ambitious, trendy and figured out character with moderate level of commitment towards the brand. Its consumers have some degree of shift towards other popular brand names i.e. Apple. Most of Samsun consumers desire quality in addition to expense control. They are brought in towards Samsung since of its moderate prices with a degree of quality.

Quantitative analysis.

Sales of Hola Kola The Capital Budgeting Decision 5 Case Study Help has increased amazingly from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net profit of.48 billion $ to 5.9 billion $. Digital media is the biggest selling classification of Samsung with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales.

Qualitative analysis.

Whereas, the core strength of the business is currently making but long gone are those days when great items were selling themselves. Kim has actually currently begun to enhance the marketing activities of Samsung and extremely soon it will end up being one of its core strength like manufacturing if not much better.

VRIO.

Worth.

Samsung operates styles, manufactures and offer a large portfolio of consumer electronics. It operates in an exceptionally competitive environment and has effectively placed itself as the maker of quality products. So, the answer is yes.

Rarity.

As, said earlier that Hola Kola The Capital Budgeting Decision 5 Case Study Solution runs in a highly competitive environment, which implies all the business have similar items. The response for rarity is no.

Imitability.

Due to the nature of the industry, it is very easy for rivals to understand the performance of the items and quickly make their own designs. Yes, Samsung is just behind IBM in registering brand-new patents annually, however the benefit is very short-term in this industry.

Organization.

Chairman Lee has entirely turn-around Samsung, from going nearly bankrupt throughout the Asian financial crisis of 1997 to the top 25 company on the planet. Definitely yes there is proper company in the business and the outcomes speak for themselves.

External Ecological Analysis

PESTLE Analysis

Political

Being a multinational brand name spread practically in every nation worldwide, bulk of the environments like U.S.A., Europe, China etc., are extremely conductive for its operations. It faces some political pressures in less developed nations where law and order situation is not excellent. Latin American, African and some Asian nations fall in this category, where political instability do have a result on Hola Kola The Capital Budgeting Decision 5 Case Study Help operations.

Economic

Purchasing power of customers is vital for companies like Samsung to succeed and grow. Emerging markets like India, middle-eastern nations and so on supply growth chances, whereas, due to economic crisis even the customers of developed nations suffer badly. It is really essential for the business to keep an eye on the ongoing financial circumstance of the country prior to entering the market.

Socio-Cultural

International companies need to deal with different social and cultural concerns throughout its operations in a foreign country. Samsung has actually also dealt with numerous problems but have actually adopted to the local environments of most of the countries remarkably well. It has customized its products, practices, policies and so on accordingly in order to achieve success.

Technological

With a yearly expense of 2.4 billion dollars in Research & Advancement, and with constant ingenious product launches, Hola Kola The Capital Budgeting Decision 5 Case Study Solution is among the top innovative companies of the world. With a clear mission to be ahead of the rest when it concerns technological advancements, Samsung has risen to the no 25 of the top effective 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 result in severe legal consequences. So, it has to study or work with a regional law specialist prior to beginning its operations in a particular country.

Environmental

With the increasing awareness amongst customers about the ecological & ethical infractions of companies, Samsung has to guarantee that it follows all the security guidelines. Environmental damages, ethical misconducts are not appropriate and in some nations the effects can be extremely extreme. On the other hand it needs to do some Business Social Responsibility practices to reveal the locals that it appreciates their environment and people.

Porter's 5 Forces

Threat of Substitution

Threat of replacement for Samsung's each item category is rather significant. Aspects for high danger of substitution for Hola Kola The Capital Budgeting Decision 5 Case Study Analysis Mobile phone consist of the presence of high number of suppliers and Market saturation in industrialized countries, which make the expense of changing for customers practically no. Along with it, Samsung printing solutions items are threatened by the increasing attraction of consumers towards cloud storage.

Rivalry Amongst Existing Firms:

The rivaly among Samsung and its close rivals is intense. The major factor behind this is the technique of market saturation in different variety of product classifications, requiring Samsung to present more innovative features in existing products and new ingenious items to maintain its development. Other element for the intense competition among the rivals is the little product differentiation amongst the items. The popular gamers in the technology industry are quite knowledgeable about the value of R&D costs for their survival and are facing a race of marketing and R&D spending, to record the marketplace. The significant competitors for Hola Kola The Capital Budgeting Decision 5 Case Study Analysis samrtphones include Apple, Motorola, LG, Nokia, Huawei, OPPO and so on. High competition rivalry results in the changing market shares which can be seen in Exhibit F.

Bargaining Power of Suppliers:

Hola Kola The Capital Budgeting Decision 5 Case Study Analysis has a large supply chain including about 2700 providers 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 huge orders enable Samsung to negotiate rates with its providers. Nevertheless, due to incapability of Hola Kola The Capital Budgeting Decision 5 Case Study Solution to build its own software application, it has to outsource its software application advancement to Google, which ends up being a potential supplier of software for Samsung, resulting in high bargaining power of Google. Although, in most of cases Samsung has a power to work out prices, but it provide considerable prices to its providers to construct a strong supply chain and to have strong relationships with its providers.

Bargaining Power of Buyers:

Market saturation in many of the product classifications likewise make the bargaining power of purchasers more extreme in for Samsung. In spite of igh bargaining power Samsung is rather capable of offering its products at a greater cost than much of its rivals, due to high end quality product and a fair brand name image.

Threat of New Entrants:

Threat of brand-new entrants for Hola Kola The Capital Budgeting Decision 5 Case Study Analysis is rather low. Along with it, requirement of big knowledge and research study and advancement expenditures for survival in the industry likewise make brand-new entrants unwilling to go into in the market. Market saturation is likewise one of the barrier of entry in technology industry.

Competitive Analysis

Samsung's high item diversity provides it distinction from its rivals. Unlikely to its close rivals consisting of Sony, Intel and Nokia, who focus bulk on a single item classification with Sony focusing on customer electronic devices, Nokia on cell phones and Intel on chips, Hola Kola The Capital Budgeting Decision 5 Case Study Help had a big R&D costs on all of its product classifications which enable the company to make prospective profits from sales of nearly all of its products.

The company ranks first in 4 item categories i.e. DRAM Chips, LCD Displays, Cinema TVs and Microwave ovens, in terms of global market share, amongst 8 various product classifications. Samsung was the international leader in producing DRAM, SRAM and NAND flash chips. Although, Samsung earnings from chips was less than Intel but its revenues from chips was growing much faster than Intel and has actually grown near to the income levels of Intel, as given up the case Exhibit 2.

In addition to 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 development. The significant reson behind Samsung's high growth despite of greater costs than Nokia and Motorola was the company's high-end quality cellular phone.

Samsung was likewise profiting from increasing market share of luxury LCDs as given in case Display 3. The major reason, making the company enable to avail the chance is its mass production at low cost. Sony was the greatest competitor for Hola Kola The Capital Budgeting Decision 5 Case Study Solution in LCD market, nevertheless, it had actually also started joint venture with Samsung in 2003 for LCD making, decreasing the competition for Samsung.

Porter's Competitive Technique

Low Cost Management method of porter is fully implemented by Samsung the method they accomplish economies of scale by reinforcing their core competencies of manufacturing. Even to the point that their rival SONY decided to form an alliance with them to produce for them, since they were not able to compete with them on low expense. Distinction is another method well executed by Samsung by continuous financial investment in the R&D and staying ahead of the competition. They always bring something innovative and new whether it's a service or a product.

Alternatives

Alternative Option 1

The Chief Marketing Officer (CMO) of Hola Kola The Capital Budgeting Decision 5 Case Study Help would produce a brand-new brand name image by targeting the more youthful generation of the specific nation. As, specifically cellphones of Samsung are popular amongst the more youthful group.

Pros

1. It is the very best method to construct Consumer Life time Worth (CLV) by producing a long-lasting relationship with customers. Construct commitment through delivering worth and reap the benefits for long-term, as research has actually showed it is more affordable to maintain current clients than to bring in brand-new ones.
2. Another pro of this alternative is that word of mouth spread more quickly amongst younger people and which in turn will generate brand-new customers for my items.

Cons

1. Old customers who were related to Samsung before may not like this new image the business is attempting to depict.
2 It will incur further expenditures to rearrange some items and it might not even bring success as the patterns alter very rapidly among the more youthful demographic.

Alternative option 2.

It would be done by setting up training workshops throughout which importance of marketing will be taught and numbers will be offered. Marketing environment need to be developed 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 a very unhealthy environment in the office, as people often withstand modification because they fear it.

Recognize the best alternative

Alternative is the best as it plainly has more pros because as soon as a Consumer Lifetime Worth is built the business will profit from it till that consumer is alive and has buying power. Plus, our target consumers are the younger generation which are bound to live longer than the present aging individuals. However, Samsung's primary goal is to produce loyalty amongst its customers and make them repurchase it from them and even buy their different products too.

Execution Strategy

• Targeting more youthful generation through social marketing, producing a relate to them like Pepsi finish with music. And set the expectations sensible and achievable.
• A team including best marketing and sales experts ought to be assemble, and both views must be considered prior to protecting the resources required to carry out the plan.
• Thorough communication of the strategy must be done as it is extremely important for everybody to be on the very same page to make it work.
• Tasks and timelines need to be build and interacted appropriately to each individual accountable.
• The supervisor need to use a dashboard which shows the progress of all the tasks which have actually been done or about to be done and by whom.
• The supervisor need to keep track of and keep a continuous check on the specific and overall performance.
Due to the fact that any new trend or policy might come in due to which all the things currently planned have actually to be changed, • Everyone ought to be prepared to adjust midway. It's better to have contingency plans currently prepared.
• At the end of the project the supervisor need to communicate the outcomes and if successful should celebrate with the team.

Budget plan

The M-net program revealed compelling analysis about the low and high growth potential locations and just how much marketing budget plan must be assigned accordingly. This change the budget allocation of various countries and many managers were unhappy and argued but the analysis done by the program was accurate and showed figures like North America and Russia development prospective warranted a 35% allotment while they were receiving 45%. Whereas, China and Europe must be receiving 42% but were rather offered 31%. It really assisted to fairly distribute the resources and capture more customers by spending more on advertisements on the high growth capacity areas of the world.
Recommendations
Conclusion

Hola Kola The Capital Budgeting Decision 5 Case Study Analysis is a leading 25 business in the world now and prepares to get ahead of Sony who sits presently at no. 20. Its constant investment in R&D and innovative practices have moved them to new heights however for them its' only the start and they want to be amongst the leading 3 brand names worldwide. They entirely turn-around from nearly declaring bankruptcy throughout the Asian Financial Crisis to a world renowned brand name, known for quality and innovation. Their value chain and their core competency their production ability, along-with international brand name image building have actually seen their sales go from 16 to 44.6 billion $ from 1997-- 2002. With additional growth in China and other emerging markets those numbers will just increase even more in the future. Their marketing efforts must be directed towards younger market amidst the internal arguments about marketing and must develop Customer Lifetime Value as it will not only provide benefits now however will continue to reap it till the consumer lifetime. As the cost of retaining the client is much cheaper than drawing in a new one.