Free Essay Sample «Strategic Management (Samsung Company)»

«Strategic Management (Samsung Company)»

Strategic management is the set of managerial skills that are used in a particular company, in our case Samsung Company. They are to be used throughout the firm in various functions that it undertakes.

Currently, Samsung Company is one of the largest electronics companies in the world, owing its success to its innovation. The Company was founded in 1938 by Byung-Chull Leewho, who was involved in trading of vegetables, fruits, and fish in Korea. These products were being exported to China. And in 1951, Samsung had become a cooperation dealing with machines (Sadler, 2003).

Since 1951, the Samsung business expanded and included other bigger factories, which were dealing with chemicals, building of ships, finance, and media. It started producing televisions, radios, and computer components. The founder Leewho passed away in 1987, and Kun-Hee Lee took over as the chairman of the Company. By the year 1990, the Company had expanded globally, where it had already started building factories in other countries. Samsung electronics in America was established in 1978 (Ansoff, 1979).

When business in Korea shrunk in 1997, Samsung Company was also affected. It was forced to reduce the number of employees to pay debts. Later on, the company was able to recover from the crisis, and from then, it has continued to grow. Currently, Samsung Company is developing smart phones and is also involved in the 3G industry (Sadler, 2003).

Samsung Company is experiencing growth in its daily operations. As such, it is required to develop strategic plans that will help the company in the future. Strategic plans are also vital as they will give the Company a competitive advantage over its rivals (Ansoff, 1979). Strategic management for Samsung Company involves implementation and evaluation of various decisions that will help the company achieve its goals and objectives. Strategic management needs to be included in the work of Human Resource Managers (Sadler, 2003).

Strategic Formulation

Strategic Formulation can be said to include three steps: formulation, implementation and evaluation of the strategic plan. Strategic formulation involves formulation of the Company’s mission and identifying the opportunities and threats of the Samsung Company. In strategic formulation, the weaknesses and strengths of the Company can be determined so that the long term objectives of the Company can be determined (Ansoff, 1979). It is essential to the company as it will provide alternative strategies and help in determining which strategy should be pursued.

External threats to Samsung Company are those other electronic manufacturing Companies. They also include the other factors that are beyond the organizational control such as social, economic, and technological factors. The competitive advantage is a competitive trend that is present in the market.

Internal factors are those things that the Company is able to control from within the Company. They include daily operations, information, research, and development. The long-term objectives that Samsung Company seeks to attain should be measurable, achievable, and reasonable.  The strategy of the Company should be the means that the Company will use to attain the long-term objectives (Sadler, 2003). So as to attain its objectives, Samsung Company has expanded its business geographically, developed its products, penetrated most markets of the world, and diversified its business where it does not only deal with electronic products.

Strategic implementation requires Samsung Company to establish its annual objectives, resources allocated, and policies for the implementation of the strategies. Policies are important as they guide in decision making. Strategic evaluation of the company would help monitor the results of formulation activities (Ansoff, 1979).

It can be argued that strategic management is about identifying and describing the strategies that can be used by managers in Samsung Company to improve their performance and to remain competitive (Sadler, 2003). For Samsung Company to gain a competitive advantage, its profit levels have to be relatively higher compared to those of the other competitors in the market.

Managers of Samsung Company need to have knowledge of the business environment so that they can make the right decisions in relation to the success of the Company. Strategic management also involves planning of those things that are unpredictable and impractical. Through this, the company is able to make future decisions while ensuring that the goals and objectives of the Company can be attained.

Strategic management in Samsung Company is a continuous process that evaluates and controls the businesses that the Company is involved in. It helps in evaluation of the competitors and setting goals and strategies that will help the company become better than other competing companies.

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Strategic management in Samsung Company is important as it provides a broad perspective to all employees. Employees in the Company are able to understand how their roles in the organization relate to the Company’s plan. The Human Resource Management Department is required to manage employees in a way that their ability is maximized for the attainment of the objectives of the Company (Sadler, 2003).

Components of the Strategic Management Process

At first, the mission and goals of the Company should be selected. Samsung Company’s mission is to inspire the world and introduce groundbreaking innovations. The company also plans to explore new territories across the globe. The other component of strategic management is an analysis of the external environment where the threats and opportunities of the Company can be determined (Michell, 2010). Opportunities for Samsung Company are the established markets across the world, while the threat is other Companies producing similar products. The internal environment is very crucial to the Company as it affects the operations of the Company.

For Samsung Company to be effective and successful, it needs to identify its weaknesses as well as strengths. These components are very important as they help promote healthy competitions that will help the Company attain the present and future goals. It can be said that the strategic management of Samsung Company is used in determining the mission, vision, roles, goals, objectives, and responsibilities in the Company (Sadler, 2003).

Strategic planning in Samsung Company is used as a management tool, whereby it helps the Company achieve its goals and also be able to cope with the changing dynamics in the market. It generates important actions and decisions that help guide the Company. The strategies used by Samsung Company during the recession period are funding research and development in its Companies across the world. For example, when the market hibernated, the Company worked on the possibilities of getting chips for mobile phones and computers.

This is how Samsung Company has been able to gain market shares in mobile phones and personal computers in most parts of the world (Michell, 2010). This is an opportunity that can be found in a market recession where it is expected that Companies incurr losses and suffer from uncertainty of the market in the future. When the growth of companies is slow, the company that would grow faster would have an opportunity to increase its share in the market. Having intentions of dominating the market, Samsung Company will increase its market share as opposed to its competitors.

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Samsung Company Cost Advantage

From the comparison of cost, the cost advantage of Samsung Company can be determined in relation to its competitors. Its cost in most cases has been lower, including the cost of its materials and labor. It has been determined that the superiority of Samsung Company compared to its competitors exceeds 51 percent (Michell, 2010). The cost advantage that it enjoys can be attributed to the effective negotiation between suppliers and Samsung Company, as they have agreed on lower distribution and shipping costs. In terms of productivity of labor, it is only the SMIC in China that outperformed Samsung Company. This is because of the low costs of labor in China.

The other factor that has contributed to the success of Samsung Company is the use of large silicon wafers that are efficient and of good quality. The company also uses a design core that is flexible and common for its different products. Samsung Company uses the cost puzzle to maintain its intellectual capital and enhance innovation and creativity among all its employees. The company has an incentive-based remuneration that includes masters and PhD students.

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The company has a friendly environment which helps to efficiently channel the energy of the employees (Michell, 2010). The employees of Samsung Company are, thus, motivated to contribute to solving of the problems. This investment in the human capital pays off in the long run, and it results in high quality products that are cheaper compared to other competitors’ products. Samsung Company has been receiving a higher price premium compared to its competitors. This is attributed to the unique advantage the company has in the semiconductor industry, which was characterized by very little product differentiation.

Because of the outstanding reliability and quality of Samsung products, the company has been able to attain a position that can justify its ability to pay premiums for its products. Samsung rivals prefer the Company to be its supplier as the company’s brands are highly recognized. The company employs a mix of strategies, and a wide range of differentiated products is manufactured by the company. An example is the DRAM memory, where the company has over 1,200 products that are all differentiated (Michell, 2010). The large portfolio of products offered by the company has enabled it penetrate most of the markets through the DRAM commodity.

Samsung Company produces “legacy products” that include the old types of chips that were sold at premium prices. There are also the “specialty products” that are used for niches where there is a bilateral agreement between the buyer and Samsung Company. Samsung Company has demonstrated its unique ability in maintaining the cost of its products low, producing products that are differentiated, and also in taking advantage of changing dynamics in the environment.

China has risen as a major competitor, and this is the reason why most countries are moving their productions to China. Samsung Company is determined to partner with China in production of the legacy products as well (Michell, 2010). With partnership, it is possible for Samsung Company to decrease its cost due to the subsidies that it will receive from the Chinese government. This is particularly important for the company as sales will increase and new markets will be created.

When implementing these strategies, Samsung Company had a competitive advantage because of its unique environment that favors efficacy and innovation. The other competitive advantage that the company enjoys concerns its quality as the company produces only quality products. The company has engaged in efforts to reduce the cost of its labor by producing legacy products.


The good reason associated with working in Samsung Company is that the strategies laid by the Company ensure that its growth is worldwide. Samsung Company has been leader in most of its products, which are associated with the quality. The company produces a wide range of products, including Big Television screens, DRAM Chips, and microwave ovens.  The marketing strategies used by Samsung Company reinforce the products produced by associating them with the popular sites or medias (Michell, 2010).


The new emerging markets around the world are what Samsung Company needs to focus on so that it can tap the demand existing in those markets. As a multinational company, it needs to devise strategies that will enable it make breakthroughs in those markets that have no market data, lack regulation or where there are regulations that are unpredictable and regularly change.  In the emerging markets, the distribution channels are usually poor, and this poses great challenges.

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In case some of the company’s managers lack the understanding of the market, it is required to organize seminars and train them. The marketing team in Samsung Company should develop global market strategies that will ensure that they get to understand the global economy. Enhancement of regional and product strategies should be an on-going process (Sadler, 2003).

For Samsung Company to solve all these problems, it needs to employ a team of qualified personnel who will be able to take on the challenges that exist in the global market. When the company engages in extensive research and analysis of marketing strategies, growth will be witnessed. All these efforts will ensure that Samsung Company continues to expand and grow.



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