Business Strategy – Samsung

Introduction to Samsung:

The organization that we have selected is Samsung. Samsung is a South Korean multinational conglomerate company. Its head quarter is in Samsung town, Seoul. It was founded in 1938 as a trading company. Samsung entered the electronic industry in 1960s.

Strategy used:

The strategy that our selected organization, Samsung, is using is Limited Growth Strategies.

Limited Growth Strategy:

It is the type of strategy in which an organization focuses on its current products that are being produced and the potential market. Ways of growing are considered to make the product more innovative.

Samsung basically relies on four different growth strategies i.e Market Penetration, Market Development, Product development and Innovation.

Market Penetration:

Samsung maintains its market shares. the organization innovates its product so that their potential customers doesn’t get bored with the product and they can attract new customers. In this way their customers will be satisfied with the product and this can lead to greater market share for Samsung

Product Development:

Samsung targets same old customers with a new product. By launching a new product, they will attract more customers towards their product and can increase their market share by doing so. For the awareness of the product, they advertise in TV, newspaper, and pamphlets and on billboards.

Example: Samsung launching Galaxy S5 mobile phone

Market Development:

Samsung entering a new market will cause an increase in market growth and its market shares. By adopting this strategy, they enter a new market by targeting new customers in other areas. New market for Samsung could be a new Country or a new City within the same country it is operating in before.

Example: Samsung introducing its product in a village or a new country.

The future strategy that our selected organization, Samsung, will adopt is substantive growth strategies. In substantive growth includes vertical integration.

Vertical Integration:

There are three types of vertical integration, vertical forward integration and vertical backward integration and horizontal integration.

1. Vertical forward integration:

Vertical forward integration in a business is when a manufacturer decides to controls distribution or retail store. Samsung will cut themselves off from the wholesalers to sell directly to retailers and then the retailers directly to the customers.

Example: Samsung owning retail shop or franchise and sells their product directly.

2. Vertical backward integration:

It is a form of integration in which companies controls its suppliers directly. There will be efficiency and cost will be saved. This might cut transportation cost, improve profit margins and make Samsung more competitive.

3. Horizontal integration:

Samsung do not follow Horizontal integration

Diversification:

Other than Samsung’s electronics, Samsung also produces unrelated products. Samsung has Samsung heavy Industries, which is 2nd largest shipbuilders. Samsung also has two Construction Company which is 13t h and 36th largest companies which are Samsung engineering and Samsung C&T. Samsung also provides services such as Samsung Life Insurance and it is world’s 14 largest companies.

 

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