Environmental worse in situation of Samsung electronics, so
Environmental AnalysisExternal EnvironmentChinese Market-still socialist economy,huge gap between the stated plans and the actual ability of government to manage and control the economy,tremendous amount of economic interaction took place outside the governments formal economic plan-many smugglings and piracies-regional blockades-over-employment problemChinese color TV Market-full production capacity in demand,principal battleground-high competition,Japanese firms: high-end market. Increasing production bases,Domestic Firms: low-end market. But they were less competitive in large screen TV.-small color TV market was shrinking,large market size of these product lines facilitated the fast achievement of cost reduction(economy of the scale, learning effect)Consumer analysis-only 41% of households had color TV,80% of urban, 28% of rural,Low-end market is not a viable long-term. But overall market was still expanding.
-Buying power: expanding both high-ends and low-ends -Tendency that first image of a product lasted long in the eyes of the consumer.,the reason for differentiation needed focusing on high-ends -consumer preference,Urban- brand name, functionality were important factors.,Rural- reasonable quality and low price were preferred.-High protected market: too much tariff cost,localization neededDomestic (Korean) Market-Deteriorating of competitive advantage: rising the labor cost-Korean government policy: supportive of big business,getting worse of Korean market,Losing the M/S in the U.
S. and no longer competitive in the low-end product,need to change the strategy focusing on high-end, high-tech-Liberalization of Korean market,Foreign firms were permitted to sell their product directly,More competitive in Domestic market, losing the domestic M/S,Samsung had to expand the foreign market.Internal EnvironmentExperience in the U.S.-Set up the subsidiary there in 1979-Focusing on the low-end market segment based on competitive labor cost in Korea because of large demand and low competition base, and low barrier in the U.S.
-Samsung produced a few of the most popular sizes TV for cost reduction through economies of scale and the experience curve.-Dual brand policy: adopting buyer brand name(large retailers or OEM) mostly but trying to build its own brand image-Establishing a production subsidiary in the U.S. because of trade barrier-Policy of Japanese firms: targeting high-ends for differentiation through brand name recognition,Matsushita: 4% of M/S in 1995 but could be high-price, higher profit-Policy of Samsung: still pricing strategy even though it had good quality of product,3% of M/S, but much less profit than Matsushita and facing intense competition-Importance of TV industry to Samsung: second proportion of Samsung electronics,It was getting worse in situation of Samsung electronics, so needed some way to solve these problemsMarket participation in China-later market entering than Japanese firms-The establishment of SCH would enhance its image in China and speed up the accumulation of local knowledge of the market.-Still China was stereotyped in Seoul,The problem of headquarter that it couldnt recognize exactly about todays China-Samsung was concerning about the volume of sales, so Samsung wanted to focus on low-end.,But, it led to low profit because of low marginal revenue.
It is shorted-insight.SWOT Analysis: Chinese Color TV MarketStrengths-high technology in this industry-the experience to enter the foreign market and to be successful-supporting of the Korean government-many production subsidiaries in the world and ability to control them-ability to conduct cost reduction through economies of scale-increasing the interests of Chinese market-Weaknesses-Stereotyped thinking of the Headquarter about China-Trouble between SCH and headquarter in SeoulOpportunities-still and quickly expanding of the market-only 41% diffusion of household in China, especially just 28% in rural area-evaluation that the TV made by Samsung was high quality comparing with price-positive image in China for establishment of SCHThreats-late entering in Chinese market because there was a tendency that first image of a product lasted long in the eyes of the consumer-many competitors, intense competition in low-ends market-socialist economy in China, causing some problems- employment problem, difference between stated plans and real facts-many smugglings and piracies-regional blockades