1.0 INTRODUCTIONSamsung is a multinationalKorean electronics company engaged in designing, manufacturing and marketingmobile communication and other media devices, as well as related software,accessories and third-party applications. They are one of the most well-knownelectronic brands in the world. According to Mintel (2017), Samsung is stillthe world’s number one smartphone vendor and along with Apple they dominate thesmartphone market with 66% of the market share. Samsung currently operates in relatively84 countries and have hired more than 320 million employees working for them.In the recent period, it has been focusing on making products that help peoplelead a better and smarter lifestyle.
On being operational in theglobal market, Samsung has been subjected to various kinds of pressure.Therefore, the focus of this report is show while formulating an internationalstrategy how Samsung should take both environment factors into considerationthat will shape their business approach. The analytical business tools namelyPESTLE and Porter Five Forces will be used to understand the micro and macroenvironment drivers of Samsung’s strategy. 2.
0 PESTLE (Macro Environment) This business tool is used as astrategy to explore the macro environment of Samsung and identify how futuretrends in the political, economic, social, technological, environmental andlegal environments might have impacts on their organisation on a global scale. 2.1 POLITICALIn the UK, in terms of Brexit effects,inflation has lead general prices to escalate, in part due to the weakeningpound which has fallen against the US dollar. Though, Samsung has not been muchinfluenced much as their prices have stayed the same.
But in the near futurethere is a probability of falling behind as their rival Apple have alreadyraised their prices on its UK App Store by almost 25%Nevertheless, due to the ongoing Samsung’shome country tension with North Korea, Samsung has faced powerful politicalinstability but also the threat of a military conflict in the Korean Peninsula.Overall Samsung has a quite low political risk as they are geographicallydiversified and their administrative representation is measured with strategiccalculations. Samsung’s business isspread over 84 countries and any kind of geopolitical turmoil in any of the countrieswill result in a loss.2.
2 ECONOMIC The Economic environment inwhich Samsung is operating is based on riskiness and volatility making surethat the company enhances its strategies appropriately. Also due to Brexit, aquick depreciation in Great Britain Pound was noticed. This has lead Samsungdevelop an encroaching push into the emerging markets in order to compound forthe lost business from the advanced world.Due to the rapid transitionstaking place in the markets with high volatility in the emerging stock markets aswell as invariable fluctuation in exchange rates has had an important impact onthe world economy. Samsung has sales over KRW 200.7 trillion (South KoreanWon).
To this we can say that, Samsung on one side is impacted by economicalforces and on the other they have an essential impact on the total world’seconomy. To such a degree, the rising economic activity can be highlyprofitable for businesses like Samsung and vice versa. The electronics market is experiencing an increase in sales dueto the high spending power among individuals. 2.
3 SOCIAL According to Mintel (2017), there is abehavioural shift in the way consumers are buying phablets as they are moreinclined to use phones which can perform more complex tasks, such as gaming oronline shopping, thus explaining the decline of tablet sales for Samsung.Samsung operates in a fast-moving consumer marketthat is strongly persuaded by the lifestyle preference of consumers and keepingin mind that socio cultural factors are different in each country, so thusSamsung noting its brand image has to take care of the cultural element and re-strategizeitself in each market accordingly. Also, the trend of marketing via socialapplications implicated by Samsung has boosted the consumption of their mobilephone.
In order to understand the gravity of theconsumer culture and market, Samsung has invested 7% of their total revenueinto research and development. 2.4 TECHNOLOGICAL Technological factors are regarded to be thekey force in an electronic industry. Samsungacquires advanced technology that enables the company creating latestinnovative smartphones. Samsung has always been progressing beforehandof its rivals in making new developments in smartphone technology in terms ofmore features, versatility and adaptability (Mintel 2017). The distributionchannels used by Samsung for sales are diversified to supply every need of thecustomer, with online shopping as well as in store options available.
They have also invested nearly 14.8 KRW (Korean won) trillionin research and development. Samsung’s technological position has improved byhiring best designers and engineers that help them in creating innovativeproducts and achieve remarkable performance.
Samsung has an advantage of harnessing powerof innovation, driving technology and a vision to dominate competitors with beingfirst to lay down latest products in the market. Technology has helped Samsung to maintain effectively inthe market. On a largescale, Smartphone-based virtual reality headsets and wireless chargingtechnologies are highly in demand among the present generation consumers. 2.5 LEGAL Legal risksfor Samsung has been quite big and severe. From a long time, the patentinfringement suits by Apple have lead Samsung unbinding billions of dollars indamages and resulting in huge loss for the company. Also, Samsung has been accused of violatingrules & and regulations at workplace by abusing their workers and notpaying them on time.
There could be a possibility that these individualsworking for Samsung would then join the rival companies, risking the leakage ofinnovative ideas and thus placing the firm’s reputation at stake.Samsung hashad a very enduring PR team in UK making them able to wriggle out of the legalweb in the developed market. 2.
6ENVIRONMENTAL Businesses are compelled by national andinternational standards to conduct their operations in a manner which limitstheir negative impact on the environment (McWilliams & Siegel, 2001). Itmeans that companies shall ensure that the working conditions cannot becompromised in making the final product. After the downfall of Galaxy Note, Greenpeacehad scrutinized Samsung for failing to address how they will be disposingmillions of those recalled phones around the world. Over the period, Samsungwith the has taken firm steps towards importance of environmentalsustainability. For example, Samsung’s LED TVs are now manufactured without theuse of mercury which could be dangerous to the environment.
They are moving onestep ahead to recycle and produce eco-friendly product. 3.0 PORTER’S FIVE FORCES (Micro Environment) This business tool is used toexplore the analytical framework from five individual forces that shape the overallextent of competition in the industry. 3.1 Bargaining power of SuppliersSamsung’s success story could be defined by their profitmargin products as they cheaply manufacture their components from the AsianMarket. They have the high capacity of developing software on their own, likehow their rival Apple develops the IOS system.
3.2 Bargaining power of CustomersSamsung considering that customers have abundantchoices to purchase a smartphone have put forth an aggressive pricing techniqueby investing a huge sum of amount on marketing to target all divisions. Samsungcan strengthen their bargaining power by building customer loyalty, to bring asituation they can overcome customers unwilling to change their purchasingdecisions from one brand to another.3.3 Rivalry among existing firmsAs mentioned earlier, the electronic industry has beenfierce than ever, yet Samsung was able to capture most of the market share. However,Samsung is not able to match Apple’s marketing capability. They have made a greatinvestment in R to keep them up producing with the latest technology innovativeproducts which differentiate their products from others.
3.4 Threats of new entrantsXiaomi smartphones have been produced through mastered qualitytechniques as well as being cheaper giving them a competitive edge overSamsung. They have been producing android devices that have similar specificationsthat of Samsung, reflecting in a new threat.Threats of substitute products of servicesThere are many brands in the market apart from Applethat operate low but at a possible current competition to Samsung. The threatof substitute is comparatively low, but new substitutes may be created in thefuture as technology develops quickly. 3.
0 CONCLUSION Samsung is a global leader in the consumer electronics market, thecompany reputation, including their ethical behaviour, from human resources toother can have a large impact on the environment and it can influence to theirprofits significantly.From the analysis in Samsung’s industryusing the business tools PESTLE and Porters Five Forces, it was able toconclude that the current micro and macro environment has given us an insightabout how Samsung faces competitive pressures and battles for dominance in theelectronics market. Samsung has faced many political and legal scandals whichresulted in hurting their economic cash flow structure. Samsung have beencomplemented by their investment in research and development facilities in orderto strategize adapting globalisation. The company is prepared to expand itsglobal footprint as their current practices are in line with the demands andrealities of the consumers.
However, the competition is fierce but the ethicalbehaviour of Samsung has helped them to increase their revenue each year bylaunching innovative and tech-savvy products at a compatible price. https://www.reuters.com/article/us-samsung-elec-smartphones/samsung-electronics-reviewing-ways-to-limit-note-7-environment-impact-idUSKBN12Y0T7 https://www.grin.com/document/338598