Lott Industries The Ceo Fights For Survival Case Study Solution and Analysis
Lott Industries The Ceo Fights For Survival Case Study Help is a widely known international brand in innovation market, founded in 1938 by Lee Byung Chul, in South Korea. Lott Industries The Ceo Fights For Survival deals in a great deal of product categories consisting of Semiconductors, Telecommunications, Digital Media, Digital Appliances and much more other electronic products. Historically, the company's core consumers include the Original Devices Manufacturers (OEMs), which utilized to offer Samsung items withtheir own brand. Till early 1990s, the core competency of Samsung depend on its low price offerings than its competitors by manufacturing existing items at economies of scale. Its consumer circle consists of Original Equipment Manufacturers (OEMs), who used to sell Lott Industries The Ceo Fights For Survival Case Study Help items with their own brand name. Samsung was not simply understood outside Korea. There were likewise no or little interest in developing the brand name globally. Marketing budget was controlled by production department with a focal point on providing inexpensive products.During the 1997 Asian Financial Crisis the business almost got insolvent, but with the Vision of Chairman Lee it entirely turn its fortune around and in 2002 was noted the top 25 most important company worldwide. When Kim was hired as a Chief Marketing Officer in 2000 the company was not even listed. He rearranged Samsung as a global brand name and informed his divisional supervisors to understand marketing and its importance. Now their goal is to arrive 10 by 2005.
Samsung's transition from a product based to a marketing business is not going as efficiently as planned.Overcoming the hesitation of divisional managers to include marketing efficiently is still a significant challenge. Producing a constant brand name identity across the whole world and utilizing marketing techniques that best fits the regional culture is no simple task.
Lott Industries The Ceo Fights For Survival Case Study Solution efforts for constructing its brand name throughout the world was begun after introducing the "new management effort" by Chairman Lee in 1993. The goal was to change Samsung from an inexpensive OEM to a high value-added product provider. To make the vision of Samsung a reality, Chairman Lee selected 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 luxury product provider. He understood that improvement can only be done through placing Samsung as a business using high-end items and this could only be done through high level of marketing.
In spite of having a clear vision about how to build Samsung brand, with a possible support of its executives, Yun dealt with a number of marketing difficulties in early years of its efforts.
Among the marketing difficulties for Yun was the perceptions of executives about the worth of marketing. They considered marketing and selling as exact same tools and thought that quality products do not required marketing for increasing sales. As their focus towards marketing was rather low in their previous service practices, and the present marketing requirement was too much high, the gap was too wider and to fill this gap with incorrect perceptions about marketing was rather tough for Yun.
Along with it the product range of the company was increasing with the ripening of new product concepts by the R&D sector of Samsung. Yun had a challenge to perform marketing preparation and to create marketing budget plans for existing as well as for new products from the very beginning, and this would take a big time.
A substantial shift would be needed in current marketing expenditures to develop the Lott Industries The Ceo Fights For Survival Case Study Analysis brand name. This would lead to increased marketing expenses for Samsung and might disrupt the administration regarding increased expenditures, as they were reluctant to marketing expenditures previously and an abrupt huge shiftwould make them disrupt. This could result in declining executive support for international marketing. In this situation, Yun deals with an obstacle for justifying increased marketing costs by showing the long term value of huge marketing expenditures.
Samsung strengths lie in its huge item portfolio. Samsung has largest variety of patents in the market with overall number of 15499 patents approved in US( USP). Large amount of R&D costs has made it possible for the company to grow its product portfolio at a higher rate than its competitors. Lott Industries The Ceo Fights For Survival 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 Lott Industries The Ceo Fights For Survival Case Study Analysis is its ability to establish innovative products at a constant rate. It major proves for the innovation and item designing of Samsung is that the company has received so many awards for its development and product style.
Unlike Apple and other rivals, Samsung is focused on producing gadgets which can be easily integrated with any kind of open source Operating System (OS) and software. This provides Samsung an edge over Apple gadgets.
Samsung's capability to produce high-end products at low expense of production is also one of the major strength of Samsung as it allows the company to record more market by offering quality products with expense control.
Lott Industries The Ceo Fights For Survival Case Study Solution weak points are hidden in the business's dependence on outsourcing software application for its devices due to business's failure in establishing software application, unlike Sony. Samsung also has low earnings margins as compare to Apple due to substantial difference in the prices of Apple and Samsung with a much lesser distinction in quality. The varied focus of the company due to large number of products in its portfolio, lead to the less efficient production and make the business unable to charge greater costs like Apple. The company is likewise inefficient in handling its patents and frequently faces the problem of patent violation.
Opportunities for Samsung lie in the growing Smartphone market and the business's effectiveness in the market. It can increase its market share and earnings from mobile phone as the company is quite effective in cellular phone market. Samsung presently runs in about 80 countries and the business has a chance to increase its geographical expansion by moving towards more emerging markets outside Asia. Samsung can move towards acquisitions to acquire patents. It would enable the company to increase its item portfolio with a boost in its wealth.
The dynamic market environment of innovation market pose a severe hazard on Samsung's survival and require the business to spend much of its earnings share on R&D in order to endure in the long run. The marketplace saturation in developed nations i.e. saturation of mobile company is also a big threat for the business's development in the existence of strong rivals like Apple.
4 P's of Marketing
Lott Industries The Ceo Fights For Survival Case Study Help provides quality products and has a rather abundant portfolio which deals with various sectors. The majority of the items are in the top 3 of their particular markets. LCD and mobile phones are the biggest products of Samsung, whereas DRAM is also not far behind in contrast of them. Following is the line of product of Samsung:
• LCD/ TELEVISION
• Ac system.
• Personal computers.
• Hard drives.
• Flash memory.
Lott Industries The Ceo Fights For Survival Case Study Analysis uses both market competitive and market skimming pricing methods for its wide range of items. In competitive pricing it adjusts the price according to the competitors in order to get benefit, whereas, it utilizes market skimming strategy where the product has an included worth and by offering a couple of products it can reach break-even.
It has one of the best supply chain networks, with retail distributors, their own sole suppliers, E commerce channels like Amazon and so on. All its items are timely provided to the selling location/ delivered to the clients directly in case of online order.
It wasn't a widely known business beyond Korea up until 1993. But the management effort taken by their CEO has actually pushed them to market more effectively outside the borders and now it has gotten in the league of top 25 companies in the world in simply 9 years. This is an impressive accomplishment despite the continuous arguments among the managers about adopting marketing practices. It utilizes both offline & online channels of promo to market their items. Paid item advertisements, social promo and digital advertisements are utilizes to produce awareness about Samsung products.
Value Chain Analysis.
It's an analytical structure for determining company activities that include value or competitive benefit for the company.
It has one of the most effective and effective supply chain network and has over 2700 providers across numerous markets all over the world. Nearly 80% of which is based in Asia and the remaining around the world. For its inbound logistics it owns various logistics firms as it subsidiaries. It takes care of its suppliers and produces an unified relationship with them and even minimized their payment cycles to enhance this relationship even more which adds worth to their chain network.
Samsung's core competency is its mass manufacturing it produces 90% of its products in-house. Divided into three various departments its operations are particularly IT & Mobile Communications, Gadget Solutions and Customer Electronics. It is keeping operation hubs worldwide to further add worth to its worth chain network.
Its outgoing logistics system efficiency is one of the main reasons Lott Industries The Ceo Fights For Survival Case Study Help has the ability to compete with Apple. Samsung's own Electronic Logitec system plays a significant role in the outbound logistics operations. It even performs the jobs of collection of payment, settling insurance coverage claims, etc. on behalf of Samsung.
Marketing and Sales.
Attracting target consumer attention towards the item is done through marketing and sales to interact with them the worth and competitive benefit the product provides. Lott Industries The Ceo Fights For Survival Case Study Help marketing spending plan is continually increasing considering that they started their repositioning worldwide and will continue to do so as they are continuously seeking to invest and broaden in high possible development markets. The budget is spent on occasions, print and media advertisements, public relations etc.
Samsung Service. Samsung put their consumers on top and continuously make every effort to deliver unmatchable customer support requirements. As after sales service is becoming exceptionally crucial to keep consumers happy and engaged, they even conduct surveys through third parties to discover their client's feedback and execute it in the positive method to lower or if possible completely remove their client issues. By adding a direct assistance line to call them 24 hr they have actually further increased the added worth of Lott Industries The Ceo Fights For Survival Case Study Solution service.
Lott Industries The Ceo Fights For Survival Case Study Help has diversified market division, based upon its arrangement of wide range of products to large number of consumers. Samsung target client sectors can be divided into 3 classifications i.e. Lott Industries The Ceo Fights For Survival Case Study Solution IT and Mobile Communications, Samsung Consumer Electronics and Samsung Gadget services.
Lott Industries The Ceo Fights For Survival Case Study Analysis geographic division is based upon two criteria i.e. region and density. Samsung serves about 80 countries worldwide with its products offered to Urban in addition to Rural areas of the country. The Samsung is likewise growing its global presence and the company's flexibility in finding its plants motivates international growth of Samsung.
The demographic segmentation of Lott Industries The Ceo Fights For Survival Case Study Help is based upon gender, age, life-cycle phase and profession. Samsung produces products that can be utilized by both women and males. The target clients for Samsung IT and mobile communication items have an age range of 18-65 with bulk at a young or freshly married life cycle phase. They are mostly trainees, staff members and experts. Apart from it, Samsung Consumer Electronics are targeted to a consumer sector with an age variety of 25-65. They are primarily workers and specialists. Samsung Device Solutions are targeted at students, employees and experts with an age range of 25-65.
The psychographic division of Lott Industries The Ceo Fights For Survival 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 mainly upper middle, middle and working class customers, as Samsung offer items like mobile phone not much more affordable i.e. Motorola as well as not much expensive i.e. Apple. It provides quality products to middle level customers at a somewhat high price than others targeting the exact same sector.
Lott Industries The Ceo Fights For Survival Case Study Help majority target consumers have distinct behavioural characteristics. They are drawn in towards Samsung because of its moderate prices with an extent of quality.
Sales of Lott Industries The Ceo Fights For Survival Case Study Help has increased remarkably 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 largest selling category of Samsung with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales.
Whereas, the core strength of the business is presently making but long gone are those days when good items were selling themselves. Kim has already begun to enhance the marketing activities of Samsung and very quickly it will end up being one of its core strength like producing if not much better.
Samsung operates designs, manufactures and sell a large portfolio of customer electronic devices. It operates in an incredibly competitive environment and has actually effectively placed itself as the maker of quality products. The answer is yes.
As, stated previously that Lott Industries The Ceo Fights For Survival Case Study Analysis runs in an extremely competitive environment, which suggests all the companies have similar items. The answer for rarity is no.
Due to the nature of the market, it is very easy for rivals to understand the functionality of the items and easily make their own designs. Yes, Samsung is only behind IBM in signing up brand-new patents every year, however the benefit is extremely short term in this market.
Chairman Lee has totally turnaround Samsung, from going nearly bankrupt throughout the Asian financial crisis of 1997 to the top 25 company on the planet. Absolutely yes there appertains company in the company and the results speak for themselves.
External Environmental Analysis
Being a multinational brand spread practically in every nation worldwide, bulk of the environments like U.S.A., Europe, China and so on, are very conductive for its operations. However, it faces some political pressures in less developed nations where order situation is not good. Latin American, African and some Asian nations fall in this category, where political instability do have a result on Lott Industries The Ceo Fights For Survival Case Study Analysis operations.
Buying power of consumers is vital for companies like Samsung to be successful and grow. Emerging markets like India, middle-eastern countries etc. offer development chances, whereas, due to recession even the consumers of developed nations suffer terribly. Thus it is very crucial for the company to keep an eye on the ongoing financial circumstance of the nation prior to getting in the market.
International companies have to face numerous social and cultural problems during its operations in a foreign nation. Samsung has actually also dealt with numerous problems however have embraced to the regional environments of most of the nations extremely well. It has customized its items, practices, policies etc. accordingly in order to be successful.
With an annual expense of 2.4 billion dollars in Research & Advancement, and with consistent ingenious item launches, Lott Industries The Ceo Fights For Survival Case Study Analysis is among the leading innovative business of the world. With a clear mission to be ahead of the rest when it concerns technological improvements, Samsung has actually risen to the no 25 of the leading successful companies of the world.
Each nation has their own laws and policies, being an international company Samsung have to strictly follow those laws in their jurisdictions. Failure to do so, will lead to serious legal consequences. So, it needs to study or work with a regional law specialist prior to beginning its operations in a particular country.
With the increasing awareness among customers about the environmental & ethical offenses of companies, Samsung needs to ensure that it follows all the safety standards. Environmental damages, ethical misconducts are not acceptable and in some nations the effects can be really serious. On the other hand it has to do some Business Social Responsibility practices to reveal the residents that it appreciates their environment and individuals.
Porter's Five Forces
Hazard of Replacement
Risk of substitution for Samsung's each item classification is rather considerable. Running in a very dynamic industry lead the business to deal with a high threat of alternative. Elements for high danger of replacement for Lott Industries The Ceo Fights For Survival Case Study Analysis Smart device consist of the existence of high variety of providers and Market saturation in industrialized nations, that make the cost of switching for consumers nearly absolutely no. Substitution threats for Samsung visual display depend on the changing lifestyle of clients. Consumers can switch to seeing visuals in the house towards outdoor activities. Together with it, Samsung printing solutions items are threatened by the increasing tourist attraction of consumers towards cloud storage.
Rivalry Amongst Existing Companies:
The rivaly amongst Samsung and its close competitors is intense. The major reason behind this is the approach of market saturation in various number of item classifications, forcing Samsung to introduce more innovative functions in existing items and brand-new ingenious items to keep its growth. The major rivals for Lott Industries The Ceo Fights For Survival Case Study Solution samrtphones include Apple, Motorola, LG, Nokia, Huawei, OPPO etc.
Lott Industries The Ceo Fights For Survival Case Study Help has a vast supply chain consisting of about 2700 suppliers throughout 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 possible size and worth. These huge orders allow Samsung to work out rates with its suppliers. However, due to incapability of Lott Industries The Ceo Fights For Survival Case Study Solution to construct its own software application, it has to outsource its software advancement to Google, which becomes a possible provider of software application for Samsung, leading to high bargaining power of Google. Although, in the majority of cases Samsung has a power to negotiate prices, however it offer significant costs to its providers to build a strong supply chain and to have strong relationships with its providers.
Bargaining Power of Buyers:
Haggling power of buyers for numerous variety of product classifications of Samsung is extreme. Among the aspect causing the extreme bargaining power is the accessibility of a great deal of rivals in practically each item classification i.e. rivals of Samsung Smart device, with a really little distinction. The high schedule of suppliers of Mobile phones with minimum distinction, make the changing cost for purchasers nearly no, for this reason increasing the bargaining power of purchasers. Market saturation in the majority of the product categories likewise make the bargaining power of purchasers more extreme in for Lott Industries The Ceo Fights For Survival Case Study Analysis. In spite of igh bargaining power Samsung is quite capable of selling its items at a greater rate than much of its rivals, due to high end quality item and a fair brand name image.
Danger of New Entrants:
Danger of brand-new entrants for Lott Industries The Ceo Fights For Survival Case Study Help is quite low. Along with it, requirement of big competence and research study and development expenses for survival in the market also make brand-new entrants unwilling to enter in the market. Market saturation is likewise one of the barrier of entry in technology market.
Samsung's high product diversity supplies it differentiation from its competitors. It is one of the 3 top brands by market share. Unlikely to its close rivals including Sony, Intel and Nokia, who focus bulk on a single item classification with Sony concentrating on consumer electronic devices, Nokia on cell phones and Intel on chips, Samsung had a big R&D costs on all of its item categories which enable the business to earn possible revenue from sales of practically all of its items. (See Exhibit) Nevertheless, due to the broad item range the business faces high number of competitors.
The company ranks initially in 4 product categories i.e. DRAM Chips, LCD Displays, Cinema Televisions and Microwave, in terms of global market share, amongst 8 various product classifications. Samsung was the international leader in manufacturing DRAM, SRAM and NAND flash chips. Samsung earnings from chips was less than Intel but its incomes from chips was growing faster than Intel and has actually grown close to the profits levels of Intel, as offered in the case Display 2.
Together with the chips Samsung mobile market was also growing at a high rate than its rivals i.e. Motorola and Nokia. Samsung's mobile phone's sales growth was 51% as compare to Motorola with just 4% and Nokia with absolutely no sales growth. The major reson behind Samsung's high development despite of greater costs than Nokia and Motorola was the company's high-end quality mobile phone.
Samsung was likewise profiting from increasing market share of luxury LCDs as given in case Exhibit 3. The significant reason, making the business enable to get the chance is its mass production at low cost. Sony was the biggest rival for Lott Industries The Ceo Fights For Survival Case Study Solution in LCD market, however, it had likewise started joint venture with Samsung in 2003 for LCD manufacturing, lessening the competition for Samsung.
Porter's Competitive Strategy
Low Cost Management method of porter is fully carried out by Samsung the method they accomplish economies of scale by enhancing their core proficiencies of manufacturing. They always bring something new and ingenious whether it's a product or a service.
Alternative Option 1
The Chief Marketing Officer (CMO) of Lott Industries The Ceo Fights For Survival Case Study Help would develop a new brand name image by targeting the more youthful generation of the particular country. As, especially mobile phones of Samsung are preferred among the younger group.
1. It is the very best method to develop Consumer Life time Value (CLV) by producing a long-term relationship with customers. Build loyalty through providing value and reap the benefits for long-term, as research study has showed it is more affordable to keep present clients than to bring in brand-new ones.
2. Another pro of this option is that word of mouth spread faster amongst more youthful people and which in turn will generate new consumers for my items.
1. Old customers who were associated with Samsung before may not like this new image the business is trying to represent.
2 It will incur more expenses to reposition some items and it may not even bring success as the trends alter really rapidly among the younger demographic.
Alternative solution 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 ought to be developed internally first as real marketing starts inside the corporation.
1. Its pro will be that all the marketing approach advocates will come out and also the opposite ones.
2. Its con can produce an extremely unhealthy environment in the office, as individuals typically resist change since they fear it.
Identify the very best option
First alternative is the best as it clearly has more pros because once a Client Lifetime Value is constructed the company will profit from it till that client is alive and has purchasing power as well. Plus, our target customers are the younger generation which are bound to live longer than the current aging individuals. Nonetheless, Samsung's main goal is to produce commitment amongst its customers and make them repurchase it from them and even purchase their various items too.
• Targeting younger generation through social marketing, producing a link with them like Pepsi do with music. And set the expectations achievable and reasonable.
• A group consisting of finest marketing and sales specialists need to be assemble, and both views must be taken into consideration before securing the resources required to execute the plan.
• Thorough communication of the strategy must be done as it is really essential for everybody to be on the exact same page to make it work.
• Jobs and timelines ought to be build and communicated accordingly to each person accountable.
• The supervisor ought to utilize a control panel which shows the development of all the jobs which have been done or about to be done and by whom.
• The supervisor ought to keep an eye on and keep a continuous check on the specific and total efficiency.
• Everyone ought to want to adjust midway due to the fact that any new pattern or policy might can be found in due to which all the important things currently planned have to be changed. It's better to have contingency plans currently prepared.
• At the end of the campaign the manager must communicate the results and if effective must commemorate with the group.
The M-net program exposed compelling analysis about the low and high development potential areas and just how much marketing spending plan ought to be assigned appropriately. This change the spending plan allotment of numerous supervisors and different nations were dissatisfied and argued but the analysis done by the program was accurate and revealed figures like North America and Russia growth prospective warranted a 35% allocation while they were getting 45%. Whereas, China and Europe should be getting 42% however were rather provided 31%. It truly helped to relatively distribute the resources and record more consumers by spending more on advertisements on the high development potential areas of the world.
Lott Industries The Ceo Fights For Survival Case Study Analysis is a leading 25 company on the planet now and prepares to get ahead of Sony who sits currently at no. 20. Its constant financial investment in R&D and ingenious practices have moved them to new heights but for them its' only the start and they wish to be among the top 3 brand names worldwide. They totally turnaround from nearly declaring bankruptcy during the Asian Financial Crisis to a world popular brand name, known for quality and innovation. Their value chain and their core proficiency their manufacturing ability, along-with international brand image building have seen their sales go from 16 to 44.6 billion $ from 1997-- 2002. With further expansion in China and other emerging markets those numbers will only increase further in the future. Their marketing efforts should be directed towards younger market in the middle of the internal arguments about marketing and need to develop Consumer Life time Value as it will not only provide benefits now however will continue to enjoy it till the client lifetime. As the expense of keeping the consumer is more affordable than bring in a brand-new one.