Lufthansa 2012 Case Study Solution & Analysis
Lufthansa 2012 Case Study Analysis is a popular global brand in technology industry, founded in 1938 by Lee Byung Chul, in South Korea. Lufthansa 2012 handle large number of product classifications consisting of Semiconductors, Telecommunications, Digital Media, Digital Appliances and many more other electronic items. Historically, the business's core clients consist of the Original Devices Manufacturers (OEMs), which utilized to offer Samsung products withtheir own brand. Till early 1990s, the core competency of Samsung depend on its low rate offerings than its competitors by producing existing products at economies of scale. Its consumer circle consists of Original Devices Manufacturers (OEMs), who used to sell Lufthansa 2012 Case Study Solution items with their own trademark name. Samsung was not simply understood outside Korea. There were also no or little interest in developing the trademark name internationally. Marketing spending plan was managed by production department with a prime focus on offering cheap products.During the 1997 Asian Financial Crisis the company nearly got bankrupt, but with the Vision of Chairman Lee it completely turn its fortune around and in 2002 was listed the leading 25 most valuable company in the world. When Kim was employed as a Chief Marketing Officer in 2000 the business was not even listed. He rearranged Samsung as an international brand and informed his divisional supervisors to understand marketing and its importance. Now their objective is to arrive 10 by 2005.
Samsung's transition from an item based to a marketing company is not going as efficiently as planned.Overcoming the hesitation of divisional managers to include marketing effectively is still a major difficulty. Producing a consistent brand name identity across the whole world and utilizing marketing strategies that finest fits the regional culture is no simple task.
Lufthansa 2012 Case Study Solution efforts for building its brand name across the world was started after presenting the "new management initiative" by Chairman Lee in 1993. The objective was to change Samsung from a cheap OEM to a high value-added item supplier. To make the vision of Samsung a truth, Chairman Lee selected Yun as a vice chairman in 1997. Yun had a rather clear image in his mind about how Samsung can change from a low end to a high-end product company. He understood that change can only be done through positioning Samsung as a company using high-end products and this might only be done through high level of marketing.
In spite of having a clear vision about how to build Samsung brand name, with a possible support of its executives, Yun faced several marketing obstacles in early years of its efforts.
One of the marketing obstacles for Yun was the understandings of executives about the worth of marketing. They considered marketing and selling as very same tools and believed that quality products do not needed marketing for increasing sales. As their focus towards marketing was rather low in their previous service practices, and the existing marketing requirement was excessive high, the gap was too larger and to fill this space with incorrect perceptions about marketing was rather tough for Yun.
As specified above, marketing focus was very low in previous practices, for that reason there were no proper marketing budgets for each of the item on the portfolio. There was no marketing preparation done for the existing products. Together with it the product range of the company was increasing with the ripening of new item ideas by the R&D sector of Samsung. Yun had a challenge to perform marketing preparation and to develop marketing budgets for existing along with for new products from the very beginning, and this would take a huge time.
A substantial shift would be needed in current marketing expenditures to develop the Samsung brand name. This would result in increased marketing expenditures for Samsung and might interrupt the administration relating to increased expenditures, as they were reluctant to marketing expenditures formerly and an unexpected big shiftwould make them interrupt.
Lufthansa 2012 Case Study Help strengths lie in its substantial item portfolio. Samsung has biggest number of patents in the industry with total number of 15499 patents granted in United States( USP).
Another strength of Lufthansa 2012 Case Study Solution is its ability to establish innovative products at a continuous rate. It major proves for the innovation and product developing of Samsung is that the business has gotten a lot of awards for its development and item style.
Unlike Apple and other rivals, Samsung is focused on producing devices which can be quickly incorporated with any kind of open source Operating System (OS) and software application. This provides Samsung an edge over Apple gadgets.
Samsung's capability to produce luxury products at low cost of production is also among the major strength of Samsung as it allows the company to catch more market by supplying quality products with expense control.
Samsung's weaknesses are hidden in the company's reliance on outsourcing software application for its gadgets due to company's inability in establishing software application, unlike Sony. Lufthansa 2012 Case Study Help also has low profit margins as compare to Apple due to big difference in the rates of Apple and Samsung with a much lower distinction in quality.
Opportunities for Samsung depend on the growing Smart device market and the company's effectiveness in the market. It can increase its market share and incomes from mobile phone as the company is rather efficient in smart phone market. Samsung currently runs in about 80 nations and the company has an opportunity to increase its geographical expansion by moving towards more emerging markets outside Asia. Samsung can move towards acquisitions to obtain patents. It would allow the business to increase its item portfolio with an increase in its wealth.
The vibrant market environment of innovation industry posture a severe hazard on Samsung's survival and require the business to spend much of its profits share on R&D in order to survive in the long run. The market saturation in developed nations i.e. saturation of mobile business is likewise a huge risk for the business'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 different sections. LCD and mobile phones are the biggest products of Samsung, whereas DRAM is also not far behind in contrast of them.
• LCD/ TELEVISION
• Smart phone.
• A/c unit.
• Hard drives.
• Video cameras.
• Flash memory.
Lufthansa 2012 Case Study Analysis uses both market competitive and market skimming pricing methods for its wide range of items. In competitive rates it changes the rate according to the competition in order to get advantage, whereas, it uses market skimming strategy where the item has actually an included worth and by selling a couple of products it can reach break-even.
It has among the very best supply chain networks, with retail suppliers, their own sole distributors, E commerce channels like Amazon and so on. All its items are prompt provided to the selling place/ provided to the clients directly in case of online order.
It wasn't a widely known company beyond Korea until 1993. However the management effort taken by their CEO has pushed them to market more efficiently outside the borders and now it has gotten in the league of leading 25 companies worldwide in simply 9 years. This is an exceptional accomplishment in spite of the continuous arguments among the managers about embracing marketing practices. It uses both offline & online channels of promotion to market their products. Paid item advertisements, social promo and digital advertisements are uses to produce awareness about Samsung products.
Worth Chain Analysis.
It's an analytical framework for determining company activities that add value or competitive advantage for the company.
It has among the most effective and effective supply chain network and has over 2700 suppliers throughout various industries around the globe. Almost 80% of which is based in Asia and the remaining all over the world. For its inbound logistics it owns different logistics firms as it subsidiaries. It looks after its providers and develops an unified relationship with them and even decreased their payment cycles to enhance this relationship even more which includes worth to their chain network.
Samsung's core proficiency is its mass making it produces 90% of its products internal. Divided into 3 different departments its operations are namely IT & Mobile Communications, Gadget Solutions and Consumer Electronic Devices. It is preserving operation hubs worldwide to even more add worth to its worth chain network.
Its outbound logistics system performance is among the primary factors Lufthansa 2012 Case Study Analysis has the ability to compete with Apple. Samsung's own Electronic Logitec system plays a significant function in the outbound logistics operations. It even performs the jobs of collection of payment, settling insurance claims, etc. on behalf of Samsung.
Marketing and Sales.
Attracting target client attention towards the product is done through marketing and sales to communicate with them the worth and competitive benefit the product offers. Lufthansa 2012 Case Study Analysis advertising budget plan is constantly growing considering that they began their rearranging globally and will continue to do so as they are continuously wanting to invest and broaden in high possible growth markets. The budget is spent on events, print and media ads, public relations etc.
Samsung Service. Samsung put their customers at the top and constantly aim to deliver unmatchable customer care standards. As after sales service is becoming exceptionally essential to keep consumers delighted and engaged, they even conduct surveys through third parties to discover their client's feedback and implement it in the positive way to lower or if possible entirely remove their consumer concerns. By including a direct assistance line to contact them 24 hours they have actually even more increased the added worth of Lufthansa 2012 Case Study Help service.
Lufthansa 2012 Case Study Help has actually diversified market segmentation, based upon its arrangement of vast array of products to large number of customers. Samsung target consumer segments can be divided into 3 categories i.e. Lufthansa 2012 Case Study Solution IT and Mobile Communications, Samsung Customer Electronic Devices and Samsung Gadget services.
Lufthansa 2012 Case Study Analysis geographic division is based upon two requirements i.e. area and density. Samsung serves about 80 nations worldwide with its products supplied to Urban in addition to Rural areas of the nation. The Samsung is likewise growing its global presence and the company's flexibility in locating its plants encourages international growth of Samsung.
Samsung produces products that can be utilized by both males and females. The target clients for Samsung IT and mobile communication products have an age variety of 18-65 with bulk at a young or freshly wed life cycle phase. Apart from it, Samsung Customer Electronic devices are targeted to a consumer section with an age range of 25-65.
The psychographic segmentation of Lufthansa 2012 Case Study Help s based upon the social class and the lifestyle of the customer. Samsung target consumers on the basis of social class are generally upper middle, middle and working class clients, as Samsung sell items like mobile phone not much cheaper i.e. Motorola in addition to not much pricey i.e. Apple. It supplies quality products to middle level consumers at a somewhat high rate than others targeting the exact same segment.
Lufthansa 2012 Case Study Solution bulk target customers have distinct behavioural attributes. They are brought in towards Samsung since of its moderate rates with a level of quality.
Sales of Samsung has increased astonishingly from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net earnings of.48 billion $ to 5.9 billion $. It has actually likewise lowered its financial obligation from 15 billion $ to 4.6 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. Revenues/ sales are increasing however net profit is not increasing accordingly because of the high overhead expense. New expansions and employing's were the main factor of the increase in the overhead expenses, with china currently not offering any profit to Samsung, however there is so much potential in the existing market with 75 % yet to be checked out.
Whereas, the core strength of the company is presently producing however long gone are those days when good items were offering themselves. Kim has actually already begun to strengthen the marketing activities of Samsung and extremely soon it will end up being one of its core strength like producing if not much better.
Samsung operates designs, makes and sell a vast portfolio of consumer electronic devices. It runs in an exceptionally competitive environment and has actually effectively positioned itself as the maker of quality items. The answer is yes.
As, said previously that Lufthansa 2012 Case Study Help operates in a highly competitive environment, which implies all the business have similar items. The response for rarity is no.
Due to the nature of the market, it is extremely easy for rivals to understand the functionality of the products and quickly make their own models. Yes, Samsung is only behind IBM in registering new patents yearly, however the advantage is really short-term in this market.
Chairman Lee has entirely turnaround Samsung, from going practically bankrupt throughout the Asian monetary crisis of 1997 to the leading 25 company in the world. Definitely yes there appertains company in the business and the results promote themselves.
External Environmental Analysis
Being a multinational brand name spread practically 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 industrialized nations where law and order circumstance is bad. Latin American, African and some Asian nations fall in this category, where political instability do have an effect on Lufthansa 2012 Case Study Analysis operations.
Purchasing power of consumers is essential for business like Samsung to grow and succeed. Emerging markets like India, middle-eastern countries etc. provide growth opportunities, whereas, due to recession even the clients of industrialized countries suffer terribly. Thus it is really important for the business to watch on the ongoing economic circumstance of the country before entering the marketplace.
International companies need to deal with various social and cultural issues during its operations in a foreign country. Samsung has likewise faced lots of problems but have actually adopted to the regional environments of the majority of the nations incredibly well. It has customized its products, practices, policies and so on accordingly in order to achieve success.
With a yearly expenditure of 2.4 billion dollars in Research & Advancement, and with continuous innovative product launches, Lufthansa 2012 Case Study Analysis is one of the leading innovative companies of the world. With a clear objective to be ahead of the rest when it comes to technological improvements, Samsung has increased to the no 25 of the leading effective business of the world.
Each nation has their own laws and policies, being a multinational business Samsung have to strictly follow those laws in their jurisdictions. Failure to do so, will lead to serious legal effects. It has to study or hire a local law expert before starting its operations in a specific nation.
With the rising awareness amongst consumers about the environmental & ethical infractions of business, Samsung needs to ensure that it follows all the security standards. Environmental damages, ethical misconducts are not acceptable and in some countries the consequences can be very extreme. On the other hand it has to do some Corporate Social Obligation practices to reveal the locals that it cares about their environment and people.
Porter's 5 Forces
Threat of Alternative
Risk of replacement for Samsung's each product category is rather significant. Elements for high threat of replacement for Lufthansa 2012 Case Study Analysis Smart device consist of the presence of high number of providers and Market saturation in industrialized countries, which make the expense of changing for customers nearly zero. Along with it, Samsung printing solutions products are threatened by the increasing attraction of consumers towards cloud storage.
Competition Amongst Existing Firms:
The rivaly among Samsung and its close competitors is extreme. The major reason behind this is the technique of market saturation in numerous number of product categories, requiring Samsung to present more ingenious features in existing items and brand-new innovative items to maintain its development. The significant competitors for Lufthansa 2012 Case Study Help samrtphones consist of Apple, Motorola, LG, Nokia, Huawei, OPPO etc.
Lufthansa 2012 Case Study Help has a vast supply chain consisting of about 2700 providers across 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 rates with its providers. Nevertheless, due to incapability of Lufthansa 2012 Case Study Solution to develop its own software application, it has to outsource its software advancement to Google, which ends up being a prospective supplier of software application for Samsung, resulting in high bargaining power of Google. In most of Lufthansa 2012 Case Study Help has a power to negotiate prices, but it provide substantial costs to its providers to develop a strong supply chain and to have strong relationships with its providers.
Bargaining Power of Purchasers:
Market saturation in most of the product categories likewise make the bargaining power of buyers more extreme in for Samsung. In spite of igh bargaining power Samsung is quite capable of offering its items at a higher cost than much of its competitors, due to high end quality item and a reasonable brand image.
Risk of New Entrants:
Threat of brand-new entrants for Lufthansa 2012 Case Study Solution is quite low. Along with it, requirement of substantial expertise and research and development expenses for survival in the industry likewise make brand-new entrants unwilling 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 rivals. Unlikely to its close competitors consisting of Sony, Intel and Nokia, who focus majority on a single product classification with Sony focusing on customer electronic devices, Nokia on cell phones and Intel on chips, Lufthansa 2012 Case Study Solution had a substantial R&D spending on all of its item categories which enable the business to earn potential profits from sales of practically all of its items.
The business ranks initially in 4 item categories i.e. DRAM Chips, LCD Displays, Cinema Televisions and Microwave, in terms of worldwide market share, among 8 various item classifications. Samsung was the international leader in producing 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 actually grown close to the revenue levels of Intel, as given in the case Exhibit 2.
Together with the chips Samsung mobile market was likewise growing at a high rate than its rivals i.e. Motorola and Nokia. Samsung's cellular phone's sales development was 51% as compare to Motorola with just 4% and Nokia with absolutely no sales development. The major reson behind Samsung's high development despite of greater prices than Nokia and Motorola was the business's high-end quality cellular phone.
Samsung was likewise profiting from increasing market share of high-end LCDs as given in case Exhibit 3. The significant factor, making the business allow to avail the opportunity is its mass production at low cost. Sony was the greatest competitor for Lufthansa 2012 Case Study Help in LCD market, nevertheless, it had actually also started joint venture with Samsung in 2003 for LCD manufacturing, reducing the competitors for Samsung.
Porter's Competitive Strategy
Low Expense Management technique of porter is completely executed by Samsung the way they achieve economies of scale by strengthening their core proficiencies of production. Even to the point that their rival SONY decided to form an alliance with them to make for them, because they were unable to compete with them on low cost. Distinction is another strategy well carried out by Samsung by constant investment in the R&D and remaining ahead of the competition. They constantly bring something ingenious and brand-new whether it's an item or a service.
Alternative Solution 1
The Chief Marketing Officer (CMO) of Lufthansa 2012 Case Study Help would create a new brand name image by targeting the younger generation of the specific nation. As, especially mobile phones of Samsung are incredibly popular among the younger demographic.
1. It is the best method to develop Customer Life time Value (CLV) by developing a long-lasting relationship with customers. Construct commitment through delivering value and reap the benefits for long-term, as research study has actually showed it is more affordable to retain current consumers than to draw in brand-new ones.
2. Another pro of this alternative is that word of mouth spread faster among younger people and which in turn will generate new consumers for my products.
1. Old consumers who were associated with Samsung before may not like this brand-new image the business is trying to depict.
2 It will incur more costs to reposition some products and it might not even bring success as the patterns alter extremely quickly among the younger market.
Alternative solution 2.
Samsung has made manufacturing its core proficiency for the many part of their service and due to which its managers are not scared to fully get out of their convenience zone. It would be done by arranging training workshops during which importance of marketing will be taught and numbers will be provided. Failure to get the passing ratings will get demoted. Marketing environment should be created internally initially as real marketing begins inside the corporation.
1. Its pro will be that all the marketing method fans will come out and likewise the opposite ones.
2. Its con can produce an extremely unhealthy environment in the workplace, as individuals frequently withstand modification due to the fact that they fear it.
Recognize the best alternative
Alternative is the best as it clearly has more pros because when a Consumer Lifetime Value is developed the business will profit from it till that consumer is alive and has purchasing power. Plus, our target customers are the more youthful generation which are bound to live longer than the present old age individuals. Samsung's primary goal is to create commitment amongst its consumers and make them redeemed it from them and even buy their various products.
• Targeting more youthful generation through social marketing, creating a link with them like Pepsi make with music. And set the expectations reasonable and achievable.
• A group including finest marketing and sales professionals must be put together, and both views must be considered prior to securing the resources needed to execute the strategy.
• Thorough communication of the strategy need to be done as it is very essential for everybody to be on the exact same page to make it work.
• Jobs and timelines need to be build and interacted accordingly to each individual responsible.
• The supervisor should utilize a dashboard which shows the progress of all the jobs which have actually been done or about to be done and by whom.
• The manager should monitor and keep a consistent examine the individual and general efficiency.
• Everyone need to want to adjust midway since any brand-new trend or policy may can be found in due to which all the important things currently prepared have to be changed. It's better to have contingency strategies already prepared.
• At the end of the campaign the supervisor should interact the results and if effective should commemorate with the group.
This change the spending plan allowance of lots of managers and various nations were unhappy and argued but the analysis done by the program was accurate and showed figures like North America and Russia growth prospective warranted a 35% allotment while they were receiving 45%. It actually helped to fairly disperse the resources and catch more clients by investing more on advertisements on the high growth potential areas of the world.
Lufthansa 2012 Case Study Analysis is a leading 25 company worldwide now and prepares to get ahead of Sony who sits presently at no. 20. Its consistent financial investment in R&D and innovative practices have propelled them to brand-new heights however for them its' just the start and they wish to be amongst the leading 3 brands on the planet. They entirely turnaround from almost going bankrupt throughout the Asian Financial Crisis to a world popular brand, understood for quality and development. Their worth chain and their core proficiency their manufacturing ability, along-with international brand name image building have 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 further in the future. Their marketing efforts should be directed towards more youthful group amidst the internal arguments about marketing and need to produce Consumer Life time Value as it will not just provide advantages now however will continue to gain it till the consumer lifetime. As the cost of retaining the consumer is much cheaper than drawing in a brand-new one.