Menu

Luxottica Sustaining Growth In Challenging Times Harvard Case Study Help

Home >> Hrm >> Luxottica Sustaining Growth In Challenging Times

Luxottica Sustaining Growth In Challenging Times Case Study Solution & Analysis


Introduction

Historically, the business's core customers consist of the Original Equipment Manufacturers (OEMs), which used to offer Luxottica Sustaining Growth In Challenging Times Case Study Analysis items withtheir own brand name. Its customer circle consists of Original Devices Manufacturers (OEMs), who utilized to offer Samsung items with their own brand name. He rearranged Samsung as a worldwide brand name and educated his divisional supervisors to understand marketing and its value.

Problem Declaration

Samsung's transition from an item based to a marketing company is not going as efficiently as planned.Overcoming the reluctance of divisional supervisors to include marketing effectively is still a major challenge. Creating a constant brand name identity across the whole world and using marketing strategies that finest fits the regional culture is no simple task. The M-net program analysis have been actually handy in identifying the high and less prospective development areas, but allocation of resources appropriately is not well gotten among the supervisors. There is no agreement amongst the hierarchy relating to the very best matched future method.
Executive Summary
Situational Analysis

Yun had a rather clear image in his mind about how Luxottica Sustaining Growth In Challenging Times Case Study Solution can transform from a low end to a high end item provider. He knew that change can just be done through positioning Samsung as a business providing high-end products and this might just 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.

Among the marketing challenges 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 required marketing for increasing sales. As their focus towards marketing was rather low in their previous organisation practices, and the current marketing requirement was excessive high, the space was too larger and to fill this space with wrong understandings about marketing was quite tough for Yun.

As stated above, marketing focus was really low in previous practices, therefore there were no correct marketing spending plans for each of the item on the portfolio. There was no marketing preparation provided for the existing products. In addition to it the item series of the company was increasing with the ripening of brand-new product ideas by the R&D sector of Samsung. Yun had an obstacle to perform marketing preparation and to create marketing spending plans for existing along with for brand-new products from the very start, and this would take a huge time.

A substantial shift would be needed in current marketing expenses to develop the Luxottica Sustaining Growth In Challenging Times Case Study Solution brand. This would result in increased marketing expenditures for Samsung and could disrupt the administration relating to increased costs, as they hesitated to marketing expenditures previously and a sudden big shiftwould make them interrupt. This could lead to declining executive assistance for international marketing. In this circumstance, Yun deals with an obstacle for validating increased marketing expenses by demonstrating the long term value of substantial marketing expenditures.

Internal Analysis
SWOT Analysis
Strengths


Luxottica Sustaining Growth In Challenging Times Case Study Analysis strengths lie in its huge item portfolio. Samsung has largest number of patents in the market with overall number of 15499 patents given in United States( USP).

Another strength of Luxottica Sustaining Growth In Challenging Times Case Study Help is its capability to establish innovative products at a constant rate. It significant shows for the innovation and product developing of Samsung is that the business has actually received so many awards for its development and product style.

Unlike Apple and other competitors, Samsung is concentrated on producing devices which can be easily incorporated with any kind of open source Os (OS) and software application. This provides Samsung an edge over Apple gadgets.
Porter's 5 Forces Analysis
Samsung's capability to produce luxury products at low expense of production is also one of the significant strength of Samsung as it makes it possible for the company to catch more market by supplying quality products with cost control.

Weak points

Luxottica Sustaining Growth In Challenging Times Case Study Solution weaknesses are hidden in the business's dependence on outsourcing software application for its devices due to company's inability in establishing software application, unlike Sony. Samsung likewise has low profit margins as compare to Apple due to huge distinction in the prices of Apple and Samsung with a much lesser distinction in quality. The diverse focus of the business due to a great deal of items in its portfolio, lead to the less effective production and make the company unable to charge greater rates like Apple. The business is also ineffective in handling its patents and frequently deals with the issue of patent offense.

Opportunities

Opportunities for Samsung depend on the growing Mobile phone market and the company's effectiveness in the market. It can increase its market share and profits from cell phone as the company is rather efficient in smart phone market. Samsung currently runs in about 80 nations and the company 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 allow the company to increase its item portfolio with a boost in its wealth.

Hazards

The dynamic industry environment of innovation market pose a serious danger on Samsung's survival and force the business to invest much of its earnings share on R&D in order to endure in the long run. The market saturation in developed nations i.e. saturation of mobile company is also a big threat for the business's development in the presence of strong competitors like Apple.

4 P's of Marketing
Swot Analysis
Product

Luxottica Sustaining Growth In Challenging Times Case Study Solution provides quality products and has a rather rich portfolio which deals with various segments. Most of the products are in the leading 3 of their particular markets. LCD and cellphones are the most significant items of Samsung, whereas DRAM is likewise not far behind in contrast of them. Following is the product line of Samsung:

• LCD/ TV
• Laptops.
• Cellphone.
• Air conditioning system.
• Desktop computer.
• Hard disk drives.
• Washing machines.
• Fridges.
• Cameras.
• Microwaves.
• Flash memory.
• DRAM.

Price.

Luxottica Sustaining Growth In Challenging Times Case Study Solution utilizes both market competitive and market skimming prices methods for its wide array of products. In competitive prices it adjusts the price according to the competitors in order to acquire advantage, whereas, it utilizes market skimming technique where the product has actually an included worth and by selling a few items it can reach break-even.

Place.

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 items are prompt provided to the selling location/ delivered to the consumers straight in case of online order.

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

Worth Chain Analysis.

It's an analytical structure for recognizing service activities that add value or competitive advantage for the company.

Inbound Logistics.

For its incoming logistics it owns various logistics companies as it subsidiaries. It looks after its suppliers and creates a harmonious relationship with them and even lowered their payment cycles to improve this relationship even more which includes value to their chain network.

Operations.

Samsung's core proficiency is its mass making it produces 90% of its items internal. Divided into three different departments its operations are specifically IT & Mobile Communications, Gadget Solutions and Consumer Electronics. It is maintaining operation centers worldwide to even more add value to its value chain network.

Outbound Logistics.

Its outbound logistics system performance is one of the main reasons Luxottica Sustaining Growth In Challenging Times Case Study Solution is able to compete with Apple. Samsung's own Electronic Logitec system plays a significant function in the outbound logistics operations. It even carries out the tasks of collection of payment, settling insurance claims, etc. on behalf of Samsung.

Marketing and Sales.

Attracting target consumer attention towards the product is done through marketing and sales to communicate with them the worth and competitive advantage the item offers. Luxottica Sustaining Growth In Challenging Times Case Study Solution marketing spending plan is continuously on the rise given that they started their rearranging worldwide and will continue to do so as they are continuously aiming to invest and broaden in high possible growth markets. The budget plan is invested in occasions, print and media ads, public relations etc.

Samsung put their consumers at the leading and constantly aim to provide unmatchable client service standards. By including a direct assistance line to call them 24 hours they have actually further increased the included value of Samsung service.

Segmentation.

Luxottica Sustaining Growth In Challenging Times Case Study Help has diversified market division, based upon its provision of vast array of products to a great deal of consumers. Samsung target consumer sections can be divided into 3 classifications i.e. Luxottica Sustaining Growth In Challenging Times Case Study Help IT and Mobile Communications, Samsung Customer Electronic Devices and Samsung Device solutions.

Geographical.

Luxottica Sustaining Growth In Challenging Times Case Study Solution geographic division is based upon 2 criteria i.e. area and density. Samsung serves about 80 countries worldwide with its items supplied to Urban as well as Rural areas of the nation. The Samsung is likewise growing its worldwide existence and the business's versatility in locating its plants encourages international growth of Samsung.

Group.

Samsung produces items that can be used by both males and females. The target customers for Samsung IT and mobile interaction products have an age variety of 18-65 with majority at a young or newly married life cycle stage. Apart from it, Samsung Customer Electronics are targeted to a consumer segment with an age range of 25-65.

Psychographic.

The psychographic division of Luxottica Sustaining Growth In Challenging Times Case Study Solution s based upon the social class and the lifestyle of the consumer. Samsung target customers on the basis of social class are generally upper middle, middle and working class consumers, as Samsung sell items like cell phones not much less expensive i.e. Motorola as well as not much pricey i.e. Apple. It provides quality items to middle level consumers at a slightly high price than others targeting the very same section.

Behavioural.

Luxottica Sustaining Growth In Challenging Times Case Study Analysis bulk target customers have unique behavioural attributes. It has customers with an ambitious, stylish and identified character with moderate level of commitment towards the brand name. Its consumers have some degree of shift towards other distinguished brand names i.e. Apple. The majority of Samsun customers desire quality as well as cost control. They are drawn in towards Samsung because of its moderate rates with an extent of quality.

Quantitative analysis.

Sales of Samsung has increased remarkably from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net profit of.48 billion $ to 5.9 billion $. It has actually also minimized its debt from 15 billion $ to 4.6 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. Since of the high overhead cost, revenues/ sales are increasing but net revenue is not increasing appropriately. New growths and working with's were the primary reason of the increase in the overhead costs, with china presently not offering any revenue to Samsung, but there is a lot capacity in the present market with 75 % yet to be checked out.

Qualitative analysis.

Whereas, the core strength of the company is currently producing however long gone are those days when good items were selling themselves. Kim has actually currently begun to reinforce the marketing activities of Samsung and extremely soon it will become one of its core strength like manufacturing if not much better.

VRIO.

Worth.

Samsung runs styles, produces and sell a vast portfolio of consumer electronic devices. It runs in an exceptionally competitive environment and has successfully placed itself as the maker of quality products. The answer is yes.

Rarity.

As, said previously that Luxottica Sustaining Growth In Challenging Times Case Study Analysis operates in an extremely competitive environment, which means all the business have comparable items. The answer for rarity is no.

Imitability.

Due to the nature of the market, it is really simple for competitors to understand the functionality of the products and easily make their own designs. Yes, Samsung is just behind IBM in signing up brand-new patents every year, but the benefit is very short term in this industry.

Organization.

Chairman Lee has totally turn-around Samsung, from going practically insolvent during the Asian monetary crisis of 1997 to the top 25 business worldwide. Definitely yes there is proper organization in the company and the outcomes speak for themselves.

External Ecological Analysis

PESTLE Analysis

Political

Being a multinational brand spread almost in every country worldwide, bulk of the environments like U.S.A., Europe, China etc., are extremely conductive for its operations. It deals with 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 an impact on Luxottica Sustaining Growth In Challenging Times Case Study Solution operations.

Economic

Purchasing power of consumers is vital for companies like Samsung to be successful and grow. Emerging markets like India, middle-eastern nations and so on offer development chances, whereas, due to recession even the consumers of developed nations suffer terribly. It is extremely important for the business to keep an eye on the ongoing economic circumstance of the country before going into the market.

Socio-Cultural

International business have to face numerous social and cultural concerns during its operations in a foreign country. Samsung has also dealt with lots of concerns but have actually embraced to the regional environments of most of the countries incredibly well. It has actually customized its items, practices, policies etc. appropriately in order to achieve success.

Technological

With an annual expense of 2.4 billion dollars in Research & Advancement, and with continuous ingenious item launches, Luxottica Sustaining Growth In Challenging Times Case Study Solution is one of the leading ingenious companies of the world. With a clear objective to be ahead of the rest when it concerns technological advancements, Samsung has actually risen to the no 25 of the leading effective business of the world.

Legal

Each country 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 severe legal consequences. It has to study or employ a local law professional prior to starting its operations in a particular nation.

Environmental

With the increasing awareness amongst customers about the ethical & environmental offenses of companies, Samsung has to ensure that it follows all the security standards. Ecological damages, ethical misbehaviors are not appropriate and in some countries the repercussions can be very serious. On the other hand it has to do some Corporate Social Obligation practices to show the residents that it cares about their environment and individuals.

Porter's 5 Forces

Hazard of Substitution

Threat of replacement for Samsung's each product category is quite substantial. Elements for high risk of alternative for Luxottica Sustaining Growth In Challenging Times Case Study Help Mobile phone consist of the presence of high number of suppliers and Market saturation in developed nations, which make the expense of switching for consumers practically zero. Along with it, Samsung printing services items are threatened by the increasing destination of customers towards cloud storage.

Competition Among Existing Companies:

The rivaly amongst Samsung and its close rivals is extreme. The significant reason behind this is the technique of market saturation in different number of item classifications, forcing Samsung to introduce more ingenious features in existing items and brand-new innovative products to keep its development. The major competitors for Luxottica Sustaining Growth In Challenging Times Case Study Solution samrtphones include Apple, Motorola, LG, Nokia, Huawei, OPPO etc.

( 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. Due to incapability of Luxottica Sustaining Growth In Challenging Times Case Study Analysis to construct its own software application, it has to outsource its software application advancement to Google, which ends up being a potential provider of software for Samsung, resulting in high bargaining power of Google.

Bargaining Power of Purchasers:

Market saturation in most of the product categories also make the bargaining power of purchasers more extreme in for Samsung. In spite of igh bargaining power Samsung is quite capable of offering its products at a greater rate than much of its competitors, due to high end quality item and a fair brand name image.

Danger of New Entrants:

Threat of new entrants for Luxottica Sustaining Growth In Challenging Times Case Study Solution is quite low. Along with it, requirement of big expertise and research and development expenditures for survival in the industry also make new entrants hesitant to go into in the market. Market saturation is also one of the barrier of entry in technology market.

Competitive Analysis

Samsung's high product diversification provides it differentiation from its rivals. It is among the three leading brand names by market share. Unlikely to its close competitors consisting of Sony, Intel and Nokia, who focus majority on a single product classification with Sony focusing on customer electronics, Nokia on cell phones and Intel on chips, Samsung had a big R&D spending on all of its item categories which enable the company to make prospective income from sales of almost all of its products. (See Exhibition) Nevertheless, due to the large item range the company deals with high number of rivals.

The company ranks first in 4 item classifications i.e. DRAM Chips, LCD Displays, Big Screen TVs and Microwave ovens, in terms of global market share, among 8 different product categories. Samsung was the global leader in producing DRAM, SRAM and NAND flash chips. Samsung revenues from chips was less than Intel but its incomes from chips was growing quicker than Intel and has grown close to the profits levels of Intel, as given in the case Exhibit 2.

In addition to 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 only 4% and Nokia with no sales growth. The major reson behind Samsung's high development despite of higher rates than Nokia and Motorola was the business's high-end quality cellular phone.

Samsung was also reaping the benefits from increasing market share of luxury LCDs as given up case Display 3. The significant factor, making the business make it possible for to get the chance is its mass production at low expense. Sony was the most significant rival for Luxottica Sustaining Growth In Challenging Times Case Study Solution in LCD market, however, it had actually also started joint endeavor with Samsung in 2003 for LCD manufacturing, lessening the competition for Samsung.

Porter's Competitive Strategy

Low Cost Leadership strategy of porter is completely executed by Samsung the way they achieve economies of scale by enhancing their core competencies 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 take on them on low expense. Differentiation is another technique well executed by Samsung by continuous investment in the R&D and remaining ahead of the competition. They always bring something innovative and new whether it's a service or an item.

Alternatives

Alternative Option 1

The Chief Marketing Officer (CMO) of Luxottica Sustaining Growth In Challenging Times Case Study Analysis would produce a brand-new brand name image by targeting the more youthful generation of the particular country. As, particularly smart phones of Samsung are incredibly popular among the more youthful market.

Pros

1. It is the very best method to develop Customer Life time Worth (CLV) by developing a long-lasting relationship with clients. Build loyalty through providing worth and reap the benefits for long-lasting, as research study has showed it is much cheaper to keep current customers than to attract brand-new ones.
2. Another pro of this option is that word of mouth spread more quickly among younger people and which in turn will generate brand-new consumers for my items.

Cons

1. Old customers who were connected with Samsung before may not like this brand-new image the business is trying to represent.
2 It will incur more expenses to rearrange some items and it may not even bring success as the trends change very rapidly amongst the more youthful market.

Alternative solution 2.

Samsung has actually made making its core proficiency for the a lot of part of their service and due to which its managers are not scared to totally step out of their comfort zone. It would be done by setting up training workshops during which importance of marketing will be taught and numbers will be given. Failure to get the passing scores will get demoted. Marketing environment must be produced internally initially as genuine marketing begins inside the corporation.

Pros

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

Cons

2. Its con can produce a really unhealthy environment in the office, as people often resist modification since they fear it.

Recognize the best alternative

First alternative is the very best as it plainly has more pros due to the fact that once a Client Life time Value is developed the business will profit from it till that client lives and has purchasing power also. Plus, our target customers are the more youthful generation which are bound to live longer than the present aging individuals. Nevertheless, Samsung's primary objective is to create loyalty amongst its consumers and make them repurchase it from them and even buy their different products too.

Application Strategy

• Targeting younger generation through social marketing, producing a link with them like Pepsi make with music. And set the expectations realistic and achievable.
• A group consisting of finest marketing and sales professionals must be assemble, and both views need to be considered before securing the resources required to carry out the plan.
• Thorough interaction of the plan should be done as it is extremely essential for everyone to be on the very same page to make it work.
• Jobs and timelines must be build and communicated appropriately to each individual accountable.
• The supervisor should utilize a dashboard which shows the development of all the jobs which have been done or about to be done and by whom.
• The supervisor must monitor and keep a consistent look at the specific and total efficiency.
Due to the fact that any new pattern or policy might come in due to which all the things already prepared have to be changed, • Everybody need to be willing to adjust midway. It's better to have contingency strategies currently prepared.
• At the end of the campaign the supervisor must interact the results and if successful need to celebrate with the group.

Budget

This change the budget allocation of numerous supervisors and various nations were dissatisfied and argued but the analysis done by the program was accurate and showed figures like North America and Russia development possible warranted a 35% allotment while they were getting 45%. It actually helped to relatively disperse the resources and record more clients by investing more on ads on the high growth capacity areas of the world.
Recommendations
Conclusion

Its constant financial investment in R&D and innovative practices have moved them to brand-new heights but for them its' just the start and they desire to be amongst the leading 3 brand names in the world. Their marketing efforts should be directed towards more youthful group amidst the internal arguments about marketing and need to create Client Life time Worth as it will not only offer them benefits now but will continue to reap it till the client life time. As the cost of maintaining the client is much less expensive than drawing in a brand-new one.