Regarded as one of the most reputed brands in the world, Samsung has built a legacy for itself in the electronics industry. Samsung is the largest South Korean manufacturing conglomerate, with its headquarters in Samsung Town, Seoul, South Korea. Samsung Town is located in the Gangnam station area of Seoul in South Korea. The conglomerate has several affiliated businesses. According to a 2022 report by Business Korea, Samsung is considered the fifth-highest company among the top 100 corporations worldwide.
How did this company that has enthralled the world start? Samsung was founded as a trading firm on the 1st of March 1938 by Lee Byung Chul. Over the next thirty years, the company expanded its product and services from just being a trading company to other businesses like textiles, retail, food processing, securities, and insurance. In the late 1960s, the Samsung Group entered the electronics market, and in the mid-1970s, it delved into the construction and shipbuilding industries. These three industries accelerated the brand’s rapid growth. After Byung Chul’s death, Samsung separated into five business groups: Hansol Group, Shinsegae Group, JoongAng Group, Samsung Group, and CJ Group.
At the time of Samsung’s establishment, Japan was ruling over Korea. Lee Byung Chul started Samsung as a trading company with 40 employees. The company then dealt in locally-produced groceries, dried fish, and noodles. Samsung grew rapidly and steadily, so in 1947, Byung Chul moved from his former office in Su Dong [now Ingyo Dong] to Seoul. When the war started in Korea, he left Seoul for Busan, where he established a sugar refinery business. This new firm was called Cheil Jedang. Byung Chul founded another firm in 1954, which he called Cheil Mojik. He also built the biggest wool mill in Korea in Chimsan Dong, Daegu.
After this, Samsung expanded into several industries. The founder wanted Samsung to be a leader in various industries. As such, the company extended its operations to insurance, retail, and securities. In the 1960s, the company first appeared in the electronics industry. It has various electronics sectors, including semiconductors & telecommunications, electronics devices, corning, and electromechanical. A manufacturing facility was opened in Suwon, with the first product being a black-and-white television.
Samsung Electronics started investing in research and development in the 1980s. The investment was necessary for the company’s growth in the electronics market. Samsung built a television assembly facility in Portugal in 1982; in 1984, it built another manufacturing plant in New York. In 1984, a plant was built in Tokyo, and in 1987, another facility was built in England. In 1996, Samsung built another plant in Austin, Texas, in which it invested over U.S. $13 billion in 2012. The Austin plant was named “Samsung Austin Semiconductor’. The heavy investment made the Austin facility the most significant foreign investment in the U.S.
Samsung’s products include automobiles, medical equipment, clothing, chemicals, flash memory, electronic components, consumer electronics, home appliances, solid-state drives, DRAM, ships, semiconductors, and telecommunications equipment. The company’s services include hospitality, advertising, information and communications technology, retail, construction, financial services, semiconductor foundry, entertainment, shipbuilding, and medical and health care services. Due to the various products and services that the Samsung Group offers, the company has multiple subsidiaries such as Samsung SDS, Samsung Biologics, Samsung Asset Management, Samsung Life Insurance, Samsung C&T Corporation, Samsung Securities, Samsung Electro-Mechanics, Samsung Electronics, Samsung SDI, Samsung Heavy Industries, Samsung Engineering, Samsung Fire & Marine Insurance, and Cheil Worldwide.
Samsung industrial affiliates are making waves. In 2010, its Heavy Industries was the world’s second-largest shipbuilder, Samsung Engineering was the world’s thirteenth-largest construction company, and Samsung C&T Corporation was the thirty-sixth construction company in the world. In 2017, Samsung Electronics was announced as the world’s largest information technology company, chipmaker, and consumer electronics maker. Samsung Life Insurance has emerged as the world’s fourteenth-biggest life insurance company, while Cheil Worldwide was the fifteenth world’s largest ad agency in 2012.
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Samsung Strengths
Below, there are what makes Samsung stand out in the global market:
Brand recognition
Samsung is one of the most reputable brands in the world. Its products and services have made it a big shot in the global market. The brand is among the most trusted brands because it delivers the best services and products. It has a strong brand image because of the company’s efforts, ranging from consistently enticing marketing and advertising to its high product quality to its never-ending innovative technologies. This global brand recognition helps the company attract and retain new customers.
Skilled and efficient workforce
Since Samsung’s establishment, the company always recruits diligent, efficient, and skilled workers. Samsung’s workers are highly efficient and professional in technical expertise, management, and quality production. This has been highly beneficial to the company’s growth and expansion. The Samsung Group has also been able to keep and attract top talents into its chain of businesses, helping it stay on top of its game, maintain its innovative and technological edge, and stay ahead of its competition.
Diversification
The Samsung Group took the words of the founder seriously and has done its very best to expand and diversify. Samsung is present in many industries like construction, finance, insurance, heavy industries, display technology, smartphone, semiconductors, and consumer electronics. This diversification has given the company many income streams and shielded the company against economic recession, market fluctuations, or economic downturns.
Economies of scale
Due to Samsung’s large customer base, which leads to higher demand for the company’s products and services, the company produces massively. The massive production allows Samsung to benefit from economies of scale. Massive output results in lower production costs per unit, giving the company a cost advantage. This advantage is passed down to customers via competitive pricing, which gives Samsung a competitive edge in the market.
Vertical integration
Samsung’s supply chain is vertically integrated, allowing Samsung to control its production processes, costs, and quality. The massive in-house manufacturing of different components reduces Samsung’s reliance on external suppliers while helping it maintain stronger control over its product manufacturing and development.
Distribution network
Globally, Samsung has an extensive distribution network, including its massive online presence and partnerships with several distribution channels and retail outlets. The extensive distribution network has helped Samsung reach out to its consumers in every market, allowing Samsung products and services to reach a much larger audience.
Innovation and a strong R&D
The Samsung Group is popularly known for its dedication and commitment to research and development. This zeal has helped the company consistently introduce cutting-edge and magnificent technologies, products, and innovations. Samsung never fails to amaze the world with its over-the-top creative creations. Its focus on creative innovation and technology enables the company to stay far ahead of its competitors in the steadily-changing electronics industry while maintaining its space and reputation as the leader in the technology industry.
Samsung Weaknesses
Despite Samsung’s advantages, it is not without its weaknesses. Below, there are some of them:
Fierce competition
Being a leader in an industry like the technology industry has disadvantages, including fierce competition. Samsung faces intense competition despite being on top of its game. Also, due to its diversified income streams, it faces fiercer competition compared to other brands in almost all its business segments, especially in the semiconductor and consumer electronics industries. Its competitors include leading companies like Google, Apple, Huawei, Xiaomi, and other emerging competitors, constantly challenging Samsung’s innovation, technology, pricing, and, most notably, its market share.
Dependence on the smartphone market
One of Samsung’s weaknesses is its over-dependence on the smartphone industry. Although Samsung has a diversified market, it still depends on the smartphone market. And this is sole because a large part of its revenue is from the competitive smartphone market. This dependence causes Samsung to be vulnerable to market fluctuations, changes in customer preferences, and fierce competition.
Little presence in the software and services industry
The Samsung Group excels exceedingly in the manufacturing of hardware. Still, they lag behind competitors like Apple and Google in providing software and services. This has limited the company’s ability to create a comprehensive ecosystem. It also affects its revenue growth and customer loyalty because this weakness has limited Samsung from offering more value-added services to its customers.
Quality control issues
Once, Samsung experienced an issue with one of its smartphones, the Galaxy Note 7. The phone’s battery had a problem, which caused it to explode. This led to the company recalling all the phones sold, and even after the recall and repairs, the battery issues persisted. This led to the total cancellation of the sales of that phone model. Incidents like this scar a business’ reputation if it occurs repeatedly. It can also destroy the brand’s reputation and affect sales, reducing its market share and losing customer trust and loyalty.
Legal battles and patent infringement
Multiple times, Samsung has faced legal battles with Apple in particular. The legal issue is mostly about patent infringements. Legal actions like this can damage the company’s reputation. Most of these legal disputes end with financial penalties, reducing the company’s revenue. Competitors can also use legal disputes to take away customers.
Limited software differences
Samsung is heavily dependent on Google’s Android OS for its smartphones. This, in turn, comes back to haunt them by making it difficult to differentiate between the software of their brand and its competitors, who use the same platform for its software. Samsung has limited control over its software experience and the potential revenue from software-related services because of its dependence on a third party.
Vulnerability of its supply chain
Though Samsung is vertically integrated, which offers a lot of benefits, Samsung’s supply chain is complex and extensive, making it vulnerable to external factors like global economic recession, natural disasters, global economic downturns, and geopolitical tensions. These factors can cause a rise in production costs, disrupt production, and disturb the business performance.
Samsung Opportunities
Here, there are some of the opportunities that Samsung can explore;
Acquisitions and mergers
Samsung should not stop acquiring profitable companies. The company should spread its wings further and invest money into acquiring more companies and start-ups to benefit its growth. Samsung can acquire tech-savvy companies promising to boost its brand image and reputation in the market. The company can also merge with companies that cannot be acquired. Having more tech-savvy and creative innovators under its jurisdiction will help the company grow steadier with lesser pressure from its competitors.
Diversification and expansion
Even though the Samsung Group is not just in one market, the company can further diversify into more markets. This diversification will help the company increase its market share and retain its industry space. Samsung can enter markets like the education sector and many more and not rely only on the smartphone industry. The brand can also put more energy into other sectors to intensify its growth further. More investments can be made into other industries to promote its growth and make it more popular so that Samsung will be the name on the lips of everyone in the world. Samsung can increase its customer base if it expands its business. The fact that Samsung is a famous brand of excellent quality will generate higher acceptance and revenues.
TPP launching
TPP is the acronym for the newly launched feature of Samsung’s triple protection proposition, which incorporates impeccable construction and cutting-edge technology. It protects against damage caused by humidity, power surge, and lightning. This fantastic innovation will allow Samsung’s existing customers to stay loyal while attracting new customers at a maximum level. It is a general thing that new technology and creative innovations attract customers.
Launching innovative products
The Samsung Group is well known for its innovations, making it one of the leading conglomerates in the technology world. If the company keeps making new innovative products, it will stay on top of its game. Samsung can innovatively explore the smartphone industry that it primarily relies on. Given that the smartphone industry is very dynamic in style and components, the company can take up that industry with its mind-blowing innovations that will entice its customers and make them keep coming for more. Due to the dynamic nature of the smartphone industry, trends go out of style in just a few weeks. Samsung can also maximize this opportunity by feeding the public with aesthetically pleasing designs and great features to attract people who love to stay in vogue. This will allow Samsung to grow more rapidly if it keeps setting the pace for trends and style, just like it did with the launching of foldable phones.
HR Management
One of the most beneficial investments Samsung can make is HR management. A magnificent HR management will give the company better leverage over its competitors and improve the productivity and performance of employees if the company keeps its bar of employing highly skilled, professional, dedicated, resilient, and qualified employees. A top-tier HR can also maximize the company’s already strong brand image to yield more remarkable results.
Next-generation smartphone gaming
Recently, Samsung launched another cutting-edge processor known as Exynos 2200. This processor has been integrated with a GPU from AMD. The GPU is known as Xcplise GPU. The new Exynos processor is at the forefront of groundbreaking technology as the latest and next level of mobile processors, which has been designed with numerous CPU cores for thrilling and intriguing mobile phones’ gaming performance and graphics. Aside from integrating Exynos 2200 with Xcplise GPU, it is also integrated with the updated version of NPU [neural processing unit]. The processor also features RT [ray tracing] technology.
The 5G technology
The world of technology is quite dynamic, and the world has moved to 5G. Samsung has the standing and capacity to maximize this opportunity fully. The company is already in active discussions with the operators in the EU to supply the equipment for the 5G and 6G networks. The Samsung Group is now among the leading companies in the United Kingdom’s list of potential 5G products.
Samsung Threats
Below, there are factors that threaten Samsung’s thriving in the global market:
Increasing competition
Day after day, firms, companies, and start-ups arise. However, Samsung faces the most competition from smartphone products, consumer electronics, and computing industries. These rivals strive daily to outsmart and outperform one another to become the best company in the technology industry. The competition between Samsung, Huawei, Xiaomi, and Apple is more intense, which only increases the pressure Samsung might feel regarding pricing, innovations, new features, and market share.
Controversy
The mostly-battled controversy of the Samsung Group is patent, which poses an enormous threat to Samsung. There has been a rival case of patent infringement where Samsung was sued by its number one rival, Apple, that was dragged for seven long years before both parties agreed. Controversies threaten to destroy a company if proper measures are not taken.
Court cases
Disruption or any form of disturbance to leadership can affect performance. Jay Lee, the Samsung heir and one of the Samsung leaders, caught the court’s attention. One of the courts in South Korea is considering sending Jay Lee back to prison for the allegations such as stock-price manipulation and audit-rule violations filed against him. This threat can throw the company into a troubling time without effective leadership.
Product counterfeit
Multiple research studies have shown that Samsung is the most counterfeited product in terms of phones. AnTuTu, a mobile benchmarking site, shows that almost 36% of counterfeited phones are Samsung products. Samsung Galaxy S7 Edge is the counterfeit of all Samsung smartphone models. Counterfeiting products reduces the market share for the original products. This is because the income generated via the counterfeits goes to the makers of such counterfeits, not the company with the original copy. Another issue with counterfeits is that their quality sometimes differs from the original, leading to customers leaving bad reviews.
Economy uncertainty
Some unfortunate events have caused uncertainty in the global market, leading to a decline in the sales of smartphones, which is a massive blow to the smartphone industry. The economic recession, which has led to financial struggles, has stopped a lot of customers from purchasing new phones but instead opting for used or refurbished ones. This decline in sales has affected Samsung’s sales growth, which will persist if the uncertainty continues.
Regulatory and legal threats
The world is getting more globalized and digitally oriented, so governmental bodies and authorities must legislate regarding these areas. This, in turn, is causing an increase in regulatory and legal threats to companies and firms across the globe. Laws vary across markets and industries, and Samsung is not an exception to these rules and regulations. Strict laws can wreak havoc on the operations of companies. Disobedience to these rules and regulations can result in the government suspending operations in a company or total shutdown of a company, which is not beneficial to the Samsung Group.
LG foldable display
After Samsung set another pace for other technology companies, LG took up the challenge and launched its foldable display technology. Although LG has yet to make waves in the smartphone industry, launching foldable display technology threatens Samsung. This is because LG has several different divisions, and the sole aim of these divisions is to manufacture components and core parts of mobile devices and smartphones. This gives it leverage over Samsung. Recently, LG Chem introduced its foldable display technology while assuring the public that it is greater than the current glass displays, precisely the type used by the Samsung Group. LG also claims that, unlike Samsung, their new material is created with a special coating that makes it as consistent as hard glass, yet it is malleable like plastic.
Dissatisfied users
Lately, there has been an uproar on the internet that Samsung Galaxy S users cannot clear their cache. One of the complaints that were lodged stated that a user of the model of the phone deleted all cache, but after the user re-entered into the cache settings, all the deleted cache was still found. No matter how often a user keeps deleting their cache, the deleted cache keeps returning. Samsung’s support desk asked if it was like that on all other social media apps, such as YouTube or Twitter, and the user replied that it was only like that with the Samsung Internet app. This shows that the problem lies with that phone model.
Conclusion
The Samsung Group is one of the leading companies in the technology world. However, it spreads its wings in other businesses like insurance and security. Being a chaebol in South Korea, Samsung has taken over the Korean and Asian markets with its thrilling innovations and cutting-edge technology. Samsung is a pacesetter in the technology world, causing it to attract fierce competition. To sustain its growth and brand image, Samsung should fully maximize its opportunities and strengths. The company should also work on its weaknesses to remain a world leader and legacy builder.