Luca De Meo Speaks At Harvard Business School 2 Case Study Solution & Analysis
Historically, the company's core consumers include the Original Equipment Manufacturers (OEMs), which utilized to offer Luca De Meo Speaks At Harvard Business School 2 Case Study Solution products withtheir own brand name. Its client circle includes Original Equipment Manufacturers (OEMs), who utilized to offer Samsung products with their own brand name. He rearranged Samsung as an international brand and informed his divisional supervisors to understand marketing and its value.
Samsung's transition from a product based to a marketing company is not going as efficiently as planned.Overcoming the reluctance of divisional supervisors to incorporate marketing successfully is still a major challenge. Producing a consistent brand name identity across the entire world and using marketing techniques that best fits the regional culture is no simple task. The M-net program analysis have been really useful in determining the high and less potential development areas, however allotment of resources accordingly is not well received amongst the managers. There is no consensus amongst the hierarchy relating to the best matched future technique.
Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis efforts for constructing its trademark name across the world was started after introducing the "new management initiative" by Chairman Lee in 1993. The goal was to transform Samsung from a low-cost 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 quite clear image in his mind about how Samsung can transform from a low end to a high-end product supplier. He knew that change can only be done through positioning Samsung as a business offering high-end products and this could only be done through high level of marketing.
In spite of having a clear vision about how to develop Samsung brand, with a potential support of its executives, Yun dealt with a number of marketing difficulties in early years of its efforts.
Among the marketing obstacles for Yun was the perceptions of executives about the value of marketing. They thought about 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 organisation practices, and the current marketing requirement was too much high, the space was too larger and to fill this gap with wrong perceptions about marketing was quite challenging for Yun.
As specified above, marketing focus was extremely low in previous practices, for that reason there were no correct marketing budgets for each of the item on the portfolio. There was no marketing planning provided for the existing products. In addition to it the product range of the company was increasing with the ripening of new product ideas by the R&D sector of Samsung. Yun had a difficulty to perform marketing planning and to produce marketing budget plans for existing in addition to for new items from the very start, and this would take a substantial time.
A huge shift would be needed in existing marketing expenses to build the Samsung brand name. This would result in increased marketing expenses for Samsung and might disrupt the administration regarding increased expenditures, as they were unwilling to marketing expenses previously and an unexpected huge shiftwould make them disrupt.
Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis strengths lie in its big product portfolio. Samsung has largest number of patents in the industry with total number of 15499 patents given in US( USP).
Another strength of Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis is its ability to develop innovative products at a continuous rate. It major shows for the development and product developing of Samsung is that the company has actually received many awards for its development and product design.
Unlike Apple and other competitors, Samsung is focused on producing gadgets which can be quickly integrated with any type of open source Operating System (OS) and software application. This offers Samsung an edge over Apple gadgets.
Samsung's ability to produce luxury items at low expense of production is likewise among the significant strength of Samsung as it makes it possible for the business to record more market by supplying quality items with expense control.
Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis weak points are hidden in the company's dependence on outsourcing software application for its devices due to business's failure in establishing software, unlike Sony. Samsung also has low revenue margins as compare to Apple due to substantial distinction in the rates of Apple and Samsung with a much lower difference 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 prices like Apple. The business is also inefficient in managing its patents and frequently deals with the issue of patent infraction.
Opportunities for Luca De Meo Speaks At Harvard Business School 2 Case Study Solution lie in the growing Smart device market and the company's effectiveness in the market. Samsung presently runs in about 80 nations and the company has a chance to increase its geographical expansion by moving towards more emerging markets outside Asia.
The dynamic industry environment of innovation market position a severe danger on Samsung's survival and force the company to invest much of its incomes share on R&D in order to survive in the long run. The marketplace saturation in developed nations i.e. saturation of mobile company is likewise a big hazard for the company's development in the presence of strong rivals like Apple.
4 P's of Marketing
Samsung provides quality items and has a rather rich portfolio which caters to various sectors. LCD and mobile phones are the biggest items of Samsung, whereas DRAM is likewise not far behind in contrast of them.
• LCD/ TV
• Mobile phones.
• A/c unit.
• Personal computers.
• Disk drives.
• Video cameras.
• Flash memory.
Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis utilizes both market competitive and market skimming pricing strategies for its wide range of items. In competitive prices it changes the cost according to the competitors in order to get benefit, whereas, it uses market skimming method where the item has an added worth and by selling a couple of products it can reach break-even.
It has among the very best supply chain networks, with retail distributors, their own sole suppliers, E commerce channels like Amazon etc. All its products are prompt supplied to the selling place/ delivered to the customers straight in case of online order.
It wasn't a popular company beyond Korea till 1993. However the management effort taken by their CEO has pushed them to market more effectively outside the borders and now it has actually gotten in the league of leading 25 companies on the planet in just 9 years. This is an exceptional accomplishment in spite of the ongoing arguments among the managers about embracing marketing practices. It uses both offline & online channels of promo to market their items. Paid item ads, social promotion and digital ads are uses to produce awareness about Samsung items.
Value Chain Analysis.
It's an analytical structure for identifying business activities that include worth or competitive benefit for the company.
It has one of the most efficient and efficient supply chain network and has more than 2700 suppliers across different markets worldwide. Nearly 80% of which is based in Asia and the staying around the globe. For its inbound logistics it owns different logistics firms as it subsidiaries. It takes care of its suppliers and develops an unified relationship with them and even lowered their payment cycles to increase this relationship further which adds worth to their chain network.
Samsung's core competency is its mass making it produces 90% of its items in-house. Divided into 3 different departments its operations are particularly IT & Mobile Communications, Gadget Solutions and Consumer Electronics. It is keeping operation hubs worldwide to further add worth to its worth chain network.
Its outbound logistics system efficiency is one of the primary reasons Luca De Meo Speaks At Harvard Business School 2 Case Study Solution has the ability to take on Apple. Samsung's own Electronic Logitec system plays a significant role in the outgoing logistics operations. It even performs the jobs of collection of payment, settling insurance coverage claims, etc. on behalf of Samsung.
Marketing and Sales.
Bring in target consumer attention towards the item is done through marketing and sales to communicate with them the value and competitive benefit the product offers. Luca De Meo Speaks At Harvard Business School 2 Case Study Help marketing budget plan is continually increasing given that they began their rearranging worldwide and will continue to do so as they are constantly looking to invest and broaden in high possible development markets. The spending plan is invested in events, print and media advertisements, public relations and so on.
Samsung put their clients at the leading and continuously make every effort to deliver unmatchable consumer service requirements. By adding a direct support line to contact them 24 hours they have actually further increased the added worth of Samsung service.
Luca De Meo Speaks At Harvard Business School 2 Case Study Help has diversified market segmentation, based upon its provision of large range of products to a great deal of customers. Samsung target consumer sections can be divided into 3 categories i.e. Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis IT and Mobile Communications, Samsung Customer Electronic Devices and Samsung Device services.
Luca De Meo Speaks At Harvard Business School 2 Case Study Solution geographical segmentation is based upon 2 criteria i.e. region and density. Samsung serves about 80 countries worldwide with its items offered to Urban along with Rural areas of the country. The Samsung is likewise growing its international presence and the business's versatility in finding its plants encourages worldwide growth of Samsung.
Samsung produces products 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 bulk at a young or freshly married life cycle phase. Apart from it, Samsung Consumer Electronic devices are targeted to a client section with an age variety of 25-65.
The psychographic division of Luca De Meo Speaks At Harvard Business School 2 Case Study Help s based upon the social class and the life style of the customer. Samsung target consumers on the basis of social class are mainly upper middle, middle and working class customers, as Samsung sell products like mobile phone not much more affordable i.e. Motorola as well as not much pricey i.e. Apple. It offers quality items to middle level consumers at a somewhat high rate than others targeting the same section.
Luca De Meo Speaks At Harvard Business School 2 Case Study Help majority target consumers have unique behavioural characteristics. They are drawn in towards Samsung because of its moderate prices with a degree of quality.
Sales of Samsung has increased remarkably from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net revenue of.48 billion $ to 5.9 billion $. It has also reduced its debt from 15 billion $ to 4.6 billion $. Digital media is the biggest selling category of Samsung with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales. Due to the fact that of the high overhead expense, profits/ sales are increasing but net revenue is not increasing appropriately. New expansions and hiring's were the primary reason of the increase in the overhead costs, with china presently not offering any profit to Samsung, however there is so much potential in the present market with 75 % yet to be explored.
Yes, this decision is based on the objective of Kim to target the more youthful audience and develop a worldwide brand name picture of the business. Whereas, the core strength of the business is presently producing but long gone are those days when excellent products were offering themselves. In the current age marketing is very important and companies can not prosper without it. Kim has actually currently started to enhance the marketing activities of Samsung and very soon it will become one of its core strength like producing if not much better.
Samsung operates designs, makes and offer a huge portfolio of customer electronics. It runs in an extremely competitive environment and has actually successfully positioned itself as the maker of quality items. So, the answer is yes.
As, said earlier that Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis runs in an extremely competitive environment, which implies all the companies have comparable items. So, the answer for rarity is no.
Due to the nature of the industry, it is extremely easy for rivals to understand the performance of the items and quickly make their own models. Yes, Samsung is only behind IBM in registering new patents yearly, however the benefit is very short term in this industry.
Chairman Lee has completely turn-around Samsung, from going nearly bankrupt during the Asian monetary crisis of 1997 to the leading 25 business in the world. Certainly yes there is proper company in the business and the outcomes promote themselves.
External Environmental Analysis
Being an international brand spread nearly in every country worldwide, majority of the environments like USA, Europe, China etc., are very conductive for its operations. Nevertheless, it faces some political pressures in less industrialized nations where law and order situation is bad. Latin American, African and some Asian countries fall in this classification, where political instability do have a result on Luca De Meo Speaks At Harvard Business School 2 Case Study Help operations.
Buying power of customers is vital for companies like Samsung to succeed and grow. Emerging markets like India, middle-eastern countries and so on provide development chances, whereas, due to recession even the customers of industrialized countries suffer badly. Hence it is very important for the business to keep an eye on the ongoing financial circumstance of the country prior to going into the market.
International companies have to deal with different social and cultural problems throughout its operations in a foreign country. Samsung has actually also faced numerous concerns but have adopted to the regional environments of most of the nations remarkably well. It has customized its items, practices, policies and so on appropriately in order to achieve success.
With an annual expense of 2.4 billion dollars in Research & Advancement, and with constant ingenious item launches, Luca De Meo Speaks At Harvard Business School 2 Case Study Help is among the leading ingenious business of the world. With a clear objective to be ahead of the rest when it concerns technological developments, Samsung has increased to the no 25 of the top 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. It has to study or employ a local law expert prior to starting its operations in a specific nation.
With the increasing awareness among customers about the environmental & ethical offenses of business, Samsung has to ensure that it follows all the security guidelines. Ecological damages, ethical misconducts are not appropriate and in some nations the effects can be really severe. 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 Five Forces
Risk of Alternative
Hazard of substitution for Samsung's each product classification is quite significant. Factors for high hazard of replacement for Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis Mobile phone consist of the existence of high number of suppliers and Market saturation in industrialized countries, which make the cost of switching for consumers nearly zero. Along with it, Samsung printing services items are threatened by the increasing tourist attraction of consumers towards cloud storage.
Competition Among Existing Firms:
The rivaly among Samsung and its close rivals is extreme. The significant reason behind this is the technique of market saturation in various number of item categories, forcing Samsung to present more ingenious features in existing products and brand-new ingenious products to maintain its growth. Other element for the intense rivalry among the rivals is the little item distinction among the products. The prominent players in the innovation market are quite aware of the significance of R&D costs for their survival and are running into a race of marketing and R&D costs, to record the market. The significant competitors for Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis samrtphones consist of Apple, Motorola, LG, Nokia, Huawei, OPPO and so on. High competition rivalry leads to the changing market shares which can be seen in Exhibition F.
Bargaining Power of Providers:
Luca De Meo Speaks At Harvard Business School 2 Case Study Analysis has a huge supply chain consisting of about 2700 suppliers throughout the world.( Samsung Sustainability Report, 2016) Provider'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 make it possible for Samsung to negotiate costs with its suppliers. Due to incapability of Samsung to build its own software application, it has to outsource its software application advancement to Google, which becomes a potential provider of software for Samsung, resulting in high bargaining power of Google. Although, in the majority of cases Samsung has a power to work out costs, but it provide significant costs to its providers to build a strong supply chain and to have strong relationships with its suppliers.
Bargaining Power of Buyers:
Haggling power of buyers for various variety of item categories of Samsung is extreme. One of the element causing the intense bargaining power is the accessibility of a great deal of rivals in practically each product category i.e. rivals of Samsung Smart device, with an extremely little differentiation. The high schedule of providers of Smartphones with minimum distinction, make the changing expense for purchasers nearly no, hence increasing the bargaining power of purchasers. Market saturation in the majority of the item classifications also make the bargaining power of buyers more extreme in for Luca De Meo Speaks At Harvard Business School 2 Case Study Help. In spite of igh bargaining power Samsung is rather capable of selling its products at a higher price than much of its rivals, due to high end quality item and a fair brand image.
Threat of New Entrants:
Threat of brand-new entrants for Luca De Meo Speaks At Harvard Business School 2 Case Study Help is quite low. Along with it, requirement of big proficiency and research and advancement expenses for survival in the industry also make brand-new entrants hesitant to go into in the market. Market saturation is also one of the barrier of entry in technology market.
Samsung's high item diversity supplies it differentiation from its competitors. Unlikely to its close competitors including Sony, Intel and Nokia, who focus majority on a single item classification with Sony focusing on consumer electronic devices, Nokia on cell phones and Intel on chips, Luca De Meo Speaks At Harvard Business School 2 Case Study Help had a huge R&D spending on all of its item classifications which make it possible for the business to make prospective revenue from sales of nearly all of its products.
The business ranks first in 4 item classifications i.e. DRAM Chips, LCD Displays, Big Screen TVs and Microwave ovens, in regards to international market share, amongst 8 different item classifications. Samsung was the global leader in manufacturing DRAM, SRAM and NAND flash chips. Samsung incomes from chips was less than Intel but its revenues from chips was growing quicker than Intel and has grown close to the earnings levels of Intel, as given in the case Display 2.
In addition to the chips Samsung mobile market was also growing at a high rate than its competitors i.e. Motorola and Nokia. Samsung's cellular phone's sales development was 51% as compare to Motorola with only 4% and Nokia with no sales growth. The significant reson behind Samsung's high growth despite of higher costs than Nokia and Motorola was the company's high-end quality cell phones.
Samsung was likewise profiting from increasing market share of luxury LCDs as given in case Display 3. The significant reason, making the business enable to avail the opportunity is its mass production at low cost. Sony was the most significant rival for Luca De Meo Speaks At Harvard Business School 2 Case Study Solution in LCD market, nevertheless, it had actually likewise started joint endeavor with Samsung in 2003 for LCD making, reducing the competitors for Samsung.
Porter's Competitive Method
Low Cost Management technique of porter is totally implemented by Samsung the method they achieve economies of scale by reinforcing their core competencies of manufacturing. They always bring something ingenious and brand-new whether it's a service or a product.
Alternative Service 1
The Chief Marketing Officer (CMO) of Luca De Meo Speaks At Harvard Business School 2 Case Study Solution would develop a new brand name image by targeting the younger generation of the specific country. As, specifically mobile phones of Samsung are preferred among the more youthful market.
1. It is the best method to build Customer Lifetime Value (CLV) by creating a long-lasting relationship with consumers. Construct commitment through delivering worth and profit for long-term, as research has revealed it is much cheaper to keep present consumers than to bring in brand-new ones.
2. Another pro of this option is that word of mouth spread more quickly among more youthful people and which in turn will generate new consumers for my products.
1. Old customers who were associated with Samsung before might not like this brand-new image the business is trying to depict.
2 It will incur further costs to reposition some products and it might not even bring success as the trends alter really quickly amongst the more youthful market.
Alternative solution 2.
Samsung has made making its core competency for the a lot of part of their business and due to which its managers are not afraid to totally get out of their convenience zone. It would be done by arranging training workshops during which significance of marketing will be taught and numbers will be offered. Failure to get the passing ratings will get demoted. Marketing environment ought to be produced internally initially as real marketing begins inside the corporation.
1. Its pro will be that all the marketing technique advocates will come out and likewise the opposite ones.
2. Its con can create a very unhealthy environment in the work environment, as individuals often resist change due to the fact that they fear it.
Determine the very best option
Option is the best as it clearly has more pros since as soon as a Customer Lifetime Worth is developed the business will profit from it till that customer is alive and has buying power. Plus, our target customers are the younger generation which are bound to live longer than the present aging people. Nevertheless, Samsung's main goal is to develop loyalty amongst its clients and make them repurchase it from them and even purchase their various products as well.
• Targeting more youthful generation through social marketing, developing a link with them like Pepsi make with music. And set the expectations realistic and possible.
• A team consisting of best marketing and sales experts must be assemble, and both views should be taken into account prior to securing the resources needed to implement the plan.
• Thorough communication of the plan must be done as it is extremely important for everyone to be on the same page to make it work.
• Jobs and timelines should be construct and interacted appropriately to each person responsible.
• The manager ought to use a dashboard which reveals the development of all the tasks which have actually been done or about to be done and by whom.
• The manager must keep track of and keep a constant check on the individual and general performance.
• Everybody ought to want to adjust midway due to the fact that any brand-new trend or policy may be available in due to which all the things already prepared have to be adjusted. It's better to have contingency plans currently prepared.
• At the end of the campaign the supervisor need to communicate the outcomes and if successful should commemorate with the group.
The M-net program revealed engaging analysis about the low and high development potential locations and how much advertising budget plan ought to be allocated accordingly. This change the spending plan allocation of different countries and numerous managers were dissatisfied and argued however the analysis done by the program was accurate and revealed figures like The United States and Canada and Russia growth prospective warranted a 35% allotment while they were receiving 45%. Whereas, China and Europe need to be getting 42% but were rather offered 31%. It truly assisted to fairly disperse the resources and capture more clients by spending more on advertisements on the high growth potential regions of the world.
Luca De Meo Speaks At Harvard Business School 2 Case Study Solution is a top 25 company in the world now and prepares to get ahead of Sony who sits currently at no. 20. Its continuous financial investment in R&D and innovative practices have actually moved them to brand-new heights however for them its' just the start and they want to be among the leading 3 brand names on the planet. They totally turn-around from nearly declaring bankruptcy during the Asian Financial Crisis to a world prominent brand name, known for quality and innovation. Their worth chain and their core competency their manufacturing ability, along-with global 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 more youthful market in the middle of the internal arguments about marketing and need to create Consumer Life time Value as it will not just give them advantages now however will continue to reap it till the client lifetime. As the cost of maintaining the client is much cheaper than bring in a brand-new one.