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Lyondell Chemical Company 2 Harvard Case Study Analysis

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Lyondell Chemical Company 2 Case Study Solution and Analysis


Intro

Historically, the business's core customers include the Original Equipment Manufacturers (OEMs), which used to offer Lyondell Chemical Company 2 Case Study Help products withtheir own brand name. Its customer circle consists of Original Devices Manufacturers (OEMs), who utilized to sell Samsung products with their own brand name. He repositioned Samsung as a worldwide brand name and educated his divisional managers to comprehend marketing and its significance.

Problem Statement

Samsung's shift from an item based to a marketing business is not going as smoothly as planned.Overcoming the reluctance of divisional managers to integrate marketing efficiently is still a major obstacle. Creating a constant brand identity throughout the whole world and utilizing marketing techniques that best fits the local culture is no easy task. The M-net program analysis have actually been truly helpful in determining the high and less prospective development areas, but allotment of resources accordingly is not well received among the managers. There is no agreement amongst the hierarchy relating to the very best matched future strategy.
Executive Summary
Situational Analysis

Lyondell Chemical Company 2 Case Study Help efforts for building its brand across the world was begun after introducing the "new management effort" by Chairman Lee in 1993. The objective was to transform Samsung from an inexpensive OEM to a high value-added item service provider. To make the vision of Samsung a truth, Chairman Lee designated Yun as a vice chairman in 1997. Yun had a rather clear picture in his mind about how Samsung can change from a low end to a luxury product company. He knew that change can just 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 develop Samsung brand, with a prospective support of its executives, Yun faced numerous marketing challenges in early years of its efforts.

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

As stated above, marketing focus was really low in previous practices, therefore there were no proper marketing spending plans for each of the product on the portfolio. There was no marketing planning provided for the existing items. Along with it the item series of the company was increasing with the ripening of brand-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 in addition to for new products from the very beginning, and this would take a big time.

A substantial shift would be needed in existing marketing expenditures to develop the Samsung brand. This would result in increased marketing expenses for Samsung and could disrupt the administration regarding increased costs, as they were hesitant to marketing expenditures formerly and an unexpected huge shiftwould make them disrupt.

Internal Analysis
SWOT Analysis
Strengths


Samsung strengths depend on its big item portfolio. Samsung has biggest number of patents in the industry with total number of 15499 patents approved in US( USP). Large amount of R&D spending has made it possible for the company to grow its product portfolio at a greater rate than its rivals. Lyondell Chemical Company 2 Case Study Solution spent about $13.079 billion on its R&D sector in 2016, which is 7.3% of its total incomes.

Another strength of Lyondell Chemical Company 2 Case Study Solution is its ability to develop innovative products at a continuous rate. It major shows for the innovation and product creating of Samsung is that the business has actually received numerous awards for its innovation and item style.

Unlike Apple and other competitors, Samsung is focused on producing devices which can be easily integrated with any kind of open source Operating System (OS) and software. This provides Samsung an edge over Apple gadgets.
Porter's 5 Forces Analysis
Samsung's ability to produce high end products at low expense of production is likewise among the major strength of Samsung as it allows the business to record more market by supplying quality items with cost control.

Weaknesses

Lyondell Chemical Company 2 Case Study Solution weaknesses are concealed in the business's dependence on outsourcing software application for its devices due to company's failure in developing software, unlike Sony. Samsung also has low profit margins as compare to Apple due to big difference in the costs of Apple and Samsung with a much lesser difference in quality. The diverse focus of the company due to large number of products in its portfolio, lead to the less efficient production and make the company unable to charge greater costs like Apple. The business is likewise ineffective in managing its patents and regularly deals with the problem of patent violation.

Opportunities

Opportunities for Lyondell Chemical Company 2 Case Study Solution lie in the growing Smartphone market and the company's effectiveness in the market. Samsung currently runs in about 80 nations and the company has an opportunity to increase its geographical growth by moving towards more emerging markets outside Asia.

Hazards

The dynamic industry environment of innovation market pose a severe danger on Samsung's survival and require the business to spend much of its profits share on R&D in order to endure in the long run. The marketplace saturation in developed nations i.e. saturation of mobile business is likewise a huge danger for the business's growth in the presence of strong rivals like Apple.

4 P's of Marketing
Swot Analysis
Item

Lyondell Chemical Company 2 Case Study Help offers quality products and has a quite rich portfolio which accommodates various segments. Most of the items are in the leading 3 of their respective markets. LCD and cellphones are the most significant products of Samsung, whereas DRAM is also not far behind in contrast of them. Following is the line of product of Samsung:

• LCD/ TELEVISION
• Laptops.
• Cellphone.
• Air conditioning system.
• Computer.
• Hard disks.
• Washer.
• Fridges.
• Cams.
• Microwaves.
• Flash memory.
• DRAM.

Cost.

Lyondell Chemical Company 2 Case Study Help uses both market competitive and market skimming rates methods for its wide variety of items. In competitive prices it adjusts the rate according to the competitors in order to acquire benefit, whereas, it utilizes market skimming strategy where the item has actually an added value and by offering a couple of items it can reach break-even.

Location.

It has one of the very best supply chain networks, with retail distributors, their own sole distributors, E commerce channels like Amazon and so on. All its items are prompt supplied to the selling place/ provided to the clients straight in case of online order.

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

Value Chain Analysis.

It's an analytical structure for determining company activities that include value or competitive advantage for the company.

Incoming Logistics.

It has among the most efficient and effective supply chain network and has more than 2700 suppliers throughout numerous industries around the world. Nearly 80% of which is based in Asia and the staying all over the world. For its inbound logistics it owns various logistics firms as it subsidiaries. It looks after its suppliers and creates an unified relationship with them and even reduced their payment cycles to enhance this relationship even more which includes worth to their chain network.

Operations.

Samsung's core competency is its mass producing it produces 90% of its products in-house. Divided into 3 various departments its operations are specifically IT & Mobile Communications, Gadget Solutions and Consumer Electronics. It is preserving operation centers worldwide to further include worth to its worth chain network.

Outbound Logistics.

Its outgoing logistics system performance is one of the main reasons Lyondell Chemical Company 2 Case Study Solution 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 tasks of collection of payment, settling insurance claims, etc. on behalf of Samsung.

Marketing and Sales.

Bring in target customer attention towards the item is done through marketing and sales to communicate with them the worth and competitive advantage the product provides. Lyondell Chemical Company 2 Case Study Analysis marketing budget is continuously rising since they began their repositioning globally and will continue to do so as they are constantly wanting to invest and expand in high potential development markets. The budget plan is spent on events, print and media ads, public relations etc.

Samsung Service. Samsung put their clients on top and constantly make every effort to provide unmatchable customer care requirements. As after sales service is ending up being extremely essential to keep customers pleased and engaged, they even perform studies through third parties to learn their consumer's feedback and execute it in the favorable method to reduce or if possible completely remove their consumer concerns. By including a direct assistance line to contact them 24 hours they have even more increased the included worth of Lyondell Chemical Company 2 Case Study Help service.

Division.

Lyondell Chemical Company 2 Case Study Help has diversified market division, based upon its provision of wide range of products to a great deal of customers. Samsung target customer sectors can be divided into 3 classifications i.e. Lyondell Chemical Company 2 Case Study Help IT and Mobile Communications, Samsung Customer Electronic Devices and Samsung Gadget services.

Geographic.

Lyondell Chemical Company 2 Case Study Help geographic division is based upon 2 criteria i.e. region and density. Samsung serves about 80 nations worldwide with its products provided to Urban in addition to Backwoods of the nation. The Samsung is also growing its worldwide existence and the business's versatility in finding its plants encourages global growth of Samsung.

Group.

The demographic division of Lyondell Chemical Company 2 Case Study Help is based upon gender, age, life-cycle phase and profession. Samsung produces items that can be used by both females and males. The target consumers for Samsung IT and mobile communication items have an age series of 18-65 with majority at a young or recently married life process phase. They are mainly experts, employees and trainees. Apart from it, Samsung Consumer Electronic devices are targeted to a consumer sector with an age series of 25-65. They are mainly specialists and employees. Samsung Gadget Solutions are targeted at students, workers and professionals with an age range of 25-65.

Psychographic.

The psychographic segmentation of Lyondell Chemical Company 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 primarily upper middle, middle and working class customers, as Samsung offer items like cell phones not much less expensive i.e. Motorola along with very little expensive i.e. Apple. It provides quality items to middle level consumers at a slightly high price than others targeting the very same sector.

Behavioural.

Lyondell Chemical Company 2 Case Study Help majority target customers have distinct behavioural qualities. It has customers with an enthusiastic, fashionable and figured out character with moderate level of commitment towards the brand name. Its clients have some degree of shift towards other popular brand names i.e. Apple. Most of Samsun customers desire quality in addition to cost control. Since of its moderate rates with an extent of quality, they are drawn in towards Samsung.

Quantitative analysis.

Sales of Samsung has actually increased amazingly from 16 billion $ in 1997 to 44.6 billion $ in 2002, and the net revenue of.48 billion $ to 5.9 billion $. It has actually likewise decreased its debt from 15 billion $ to 4.6 billion $. Digital media is the largest selling classification of Samsung with sales of 13.9 billion $, whereas, Telecommunication and Semiconductors sectors both reached 11 billion $ in sales. Because of the high overhead cost, revenues/ sales are increasing however net earnings is not increasing accordingly. New growths and working with's were the primary factor of the increase in the overhead expenses, with china presently not providing any profit to Samsung, but there is so much potential in the current market with 75 % yet to be checked out.

Qualitative analysis.

Whereas, the core strength of the company is presently making however long gone are those days when good products were selling themselves. Kim has actually currently started to enhance the marketing activities of Samsung and very quickly it will end up being one of its core strength like manufacturing if not much better.

VRIO.

Worth.

Samsung runs designs, manufactures and sell a vast portfolio of customer electronics. It operates in an exceptionally competitive environment and has effectively placed itself as the maker of quality products. So, the answer is yes.

Rarity.

As, stated previously that Lyondell Chemical Company 2 Case Study Analysis operates in a highly competitive environment, which suggests all the companies have similar products. The response 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 annually, however the advantage is very short term in this industry.

Company.

Chairman Lee has completely turn-around Samsung, from going nearly insolvent throughout the Asian monetary crisis of 1997 to the top 25 company worldwide. Certainly yes there appertains organization in the business and the results promote themselves.

External Environmental Analysis

PESTLE Analysis

Political

Being a multinational brand spread nearly in every country worldwide, bulk of the environments like U.S.A., Europe, China and so on, are really conductive for its operations. Nevertheless, it faces some political pressures in less industrialized nations where order circumstance is not good. Latin American, African and some Asian nations fall in this classification, where political instability do have a result on Lyondell Chemical Company 2 Case Study Solution operations.

Economic

Buying power of clients is crucial for business like Samsung to grow and prosper. Emerging markets like India, middle-eastern nations etc. offer growth opportunities, whereas, due to economic crisis even the customers of industrialized nations suffer badly. Hence it is very crucial for the business to keep an eye on the continuous financial situation of the nation prior to entering the market.

Socio-Cultural

Multinational companies have to face numerous social and cultural problems during its operations in a foreign nation. Samsung has likewise faced numerous problems but have actually adopted to the local environments of most of the countries incredibly well. It has actually customized its items, practices, policies etc. appropriately in order to be successful.

Technological

With a yearly expense of 2.4 billion dollars in Research & Development, and with continuous innovative product launches, Lyondell Chemical Company 2 Case Study Solution is among the top innovative companies of the world. With a clear mission to be ahead of the rest when it concerns technological developments, Samsung has increased to the no 25 of the leading successful business of the world.

Legal

Each country has their own laws and policies, being a multinational business Samsung need to strictly follow those laws in their jurisdictions. Failure to do so, will result in serious legal repercussions. So, it needs to study or hire a regional law professional prior to starting its operations in a specific country.

Environmental

With the increasing awareness among customers about the ethical & ecological violations of business, Samsung has to ensure that it follows all the security standards. Environmental damages, ethical misconducts are not acceptable and in some nations the consequences can be very severe. On the other hand it needs to do some Corporate Social Responsibility practices to show the locals that it appreciates their environment and individuals.

Porter's 5 Forces

Danger of Replacement

Threat of substitution for Samsung's each item category is rather significant. Running in an incredibly vibrant market lead the company to face a high danger of replacement. Aspects for high threat of substitution for Lyondell Chemical Company 2 Case Study Analysis Smartphone include the presence of high number of providers and Market saturation in developed nations, that make the expense of changing for consumers nearly no. Replacement threats for Samsung visual display screen depend on the changing life style of clients. Customers can change to viewing visuals in your home towards outside activities. Together with it, Samsung printing services items are threatened by the increasing tourist attraction of clients towards cloud storage.

Competition Among Existing Companies:

The rivaly among Samsung and its close competitors is intense. The major reason behind this is the technique of market saturation in numerous number of item classifications, requiring Samsung to introduce more ingenious functions in existing items and new ingenious products to preserve its development. The significant competitors for Lyondell Chemical Company 2 Case Study Help samrtphones consist of Apple, Motorola, LG, Nokia, Huawei, OPPO etc.

Lyondell Chemical Company 2 Case Study Solution has a large supply chain including 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 prospective size and worth. These substantial orders enable Samsung to negotiate rates with its suppliers. Nevertheless, due to incapability of Lyondell Chemical Company 2 Case Study Analysis to develop its own software application, it needs to outsource its software application advancement to Google, which ends up being a possible provider of software for Samsung, leading to high bargaining power of Google. Although, in most of cases Samsung has a power to negotiate rates, however it provide significant prices to its suppliers to build a strong supply chain and to have strong relationships with its suppliers.

Bargaining Power of Buyers:

Negotiating power of buyers for different variety of product categories of Samsung is intense. Among the aspect resulting in the intense bargaining power is the schedule of large number of competitors in practically each item category i.e. competitors of Samsung Smart device, with an extremely little distinction. The high availability of providers of Smartphones with minimum differentiation, make the switching cost for purchasers almost absolutely no, hence increasing the bargaining power of purchasers. Market saturation in the majority of the product classifications also make the bargaining power of buyers more extreme in for Lyondell Chemical Company 2 Case Study Analysis. In spite of igh bargaining power Samsung is rather efficient in selling its products at a greater price than much of its rivals, due to high end quality item and a reasonable brand name image.

Risk of New Entrants:

Risk of brand-new entrants for Samsung is quite low. Among the significant aspect for low hazard of brand-new entrants is the high competition in the market. The requirement of big quantity of capital to enter in the marketplace is also one of the prospective barrier to entry. Along with it, requirement of substantial proficiency and research study and advancement expenditures for survival in the industry likewise make new entrants unwilling to go into in the marketplace. Market saturation is also among the barrier of entry in technology market. High bargaining power of providers force the gamers in the market to charge as low rates as possible and this can just be accomplished by production effectiveness. New companies, in bulk cases, do not have the production efficiency, for this reason increasing the risks for entryway in the innovation industry.

Competitive Analysis

Samsung's high product diversification supplies it differentiation from its rivals. Unlikely to its close competitors consisting of Sony, Intel and Nokia, who focus bulk on a single product classification with Sony focusing on customer electronic devices, Nokia on cell phones and Intel on chips, Lyondell Chemical Company 2 Case Study Analysis had a big R&D costs on all of its product classifications which allow the company to make potential revenue from sales of nearly all of its products.

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

Along with the chips Samsung mobile market was also flourishing 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 just 4% and Nokia with no sales growth. The significant reson behind Samsung's high development despite of greater prices than Nokia and Motorola was the company's high-end quality cellular phone.

Samsung was also profiting from increasing market share of luxury LCDs as given up case Exhibit 3. The major reason, making the company enable to get the chance is its mass production at low cost. Sony was the greatest rival for Lyondell Chemical Company 2 Case Study Solution in LCD market, nevertheless, it had actually also begun joint venture with Samsung in 2003 for LCD producing, lessening the competitors for Samsung.

Porter's Competitive Strategy

Low Expense Management method of porter is totally executed by Samsung the method they achieve economies of scale by strengthening their core proficiencies of production. Even to the point that their competitor SONY decided to form an alliance with them to make for them, due to the fact that they were not able to compete with them on low expense. Differentiation is another technique well implemented by Samsung by continuous investment in the R&D and remaining ahead of the competitors. They constantly bring something new and ingenious whether it's a service or a product.

Alternatives

Alternative Option 1

The Chief Marketing Officer (CMO) of Lyondell Chemical Company 2 Case Study Help would develop a new brand name image by targeting the more youthful generation of the specific nation. As, specifically smart phones of Samsung are popular amongst the younger market.

Pros

1. It is the very best strategy to build Customer Lifetime Worth (CLV) by producing a long-lasting relationship with consumers. Construct loyalty through providing value and profit for long-lasting, as research has revealed it is much cheaper to retain existing consumers than to bring in brand-new ones.
2. Another pro of this alternative is that word of mouth spread faster among more youthful people and which in turn will bring in brand-new consumers for my products.

Cons

1. Old customers who were associated with Samsung prior to might not like this brand-new image the company is trying to represent.
2 It will sustain further expenses to rearrange some items and it may not even bring success as the trends change really rapidly among the younger group.

Alternative service 2.

It would be done by arranging training workshops during which importance of marketing will be taught and numbers will be provided. Marketing environment ought to be produced internally first as real marketing starts inside the corporation.

Pros

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

Cons

2. Its con can create a very unhealthy environment in the office, as individuals frequently resist modification due to the fact that they fear it.

Determine the very best option

Very first option is the best as it plainly has more pros since as soon as a Customer Lifetime Worth is constructed the company will profit from it till that consumer lives and has buying power also. Plus, our target consumers are the more youthful generation which are bound to live longer than the existing aging individuals. Samsung's main goal is to develop commitment amongst its clients and make them repurchase it from them and even buy their various items.

Execution Strategy

• Targeting more youthful generation through social marketing, developing a link with them like Pepsi finish with music. And set the expectations attainable and realistic.
• A group consisting of best marketing and sales specialists need to be put together, and both views need to be taken into account before protecting the resources required to implement the plan.
• Thorough interaction of the plan must be done as it is extremely essential for everybody to be on the very same page to make it work.
• Tasks and timelines should be construct and communicated appropriately to each person accountable.
• The manager need to utilize a control panel which reveals the progress of all the jobs which have been done or about to be done and by whom.
• The manager need to keep an eye on and keep a constant look at the total and individual efficiency.
• Everybody ought to want to adjust midway due to the fact that any new trend or policy may come in due to which all the things already prepared have to be changed. It's better to have contingency plans already prepared.
• At the end of the project the supervisor need to interact the results and if effective ought to celebrate with the group.

Budget

This change the budget allocation of different countries and lots of managers were unhappy and argued however the analysis done by the program was precise and showed figures like North America and Russia development potential merited a 35% allocation while they were getting 45%. It truly assisted to fairly distribute the resources and capture more customers by spending more on ads on the high growth potential regions of the world.
Recommendations
Conclusion

Its constant financial investment in R&D and ingenious practices have actually moved them to brand-new heights but for them its' just the start and they desire to be amongst the leading 3 brands in the world. Their marketing efforts should be directed towards younger demographic amidst the internal arguments about marketing and need to produce Customer Life time Value as it will not only offer them benefits now however will continue to reap it till the customer life time. As the expense of maintaining the client is much more affordable than bring in a new one.