• Written on 23 Feb 2013

SWOT analysis of Samsung

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This is Samsung Electronics SWOT analysis for 2013. For more information on how to do SWOT analysis please refer to our article.

Company background

Name Samsung Electronics Co., Ltd.
Industries served Consumer electronics, Telecoms Equipment, Semiconductors, Home Appliances
Geographic areas served Worldwide
Headquarters South Korea
Current CEO Kwon Oh Hyun
Revenue ₩ 201.103 trillion (2012)
Profit ₩ 23.845 trillion (2012)
Employees 221,726 (2012)
Parent Samsung Group
Main Competitors Apple Inc., Nokia OYJ, Intel Corporation, LG Display and LG Electronics, Sony Corporation, Texas Instruments Inc., Lenovo Group Limited, Hewlett-Packard Company, Sanyo Electric Co., Ltd., Toshiba Corporation, SK Hynix Inc., Western Digital Corporation and others.

Samsung Electronics Co., Ltd. is the largest world’s technology company in terms of revenues. It is the largest mobile phone maker and television manufacturer and second largest semiconductor chip producer.
You can find more information about the business in its official website or Wikipedia’s article.

SWOT

Samsung SWOT analysis 2013

Strengths

Weaknesses

  1. Hardware integration with many open source OS and software
  2. Excellence in engineering and producing hardware parts and consumer electronics
  3. Innovation and design
  4. Focus on environment
  5. Low production costs
  6. Largest share in mobile phones and 2 place in smartphones sales
  7. Ability to market the brand
  1. Patent infringement
  2. Too low profit margin
  3. Main competitors are also largest buyers
  4. Lack its own OS and software
  5. Focus on too many products

Opportunities

Threats

  1. Growing India’s smartphone market
  2. Growing mobile advertising industry
  3. Growing demand for quality application processors
  4. Growth of tablets market
  5. Obtaining patents through acquisitions
  1. Saturated smartphone markets in developed countries
  2. Rapid technological change
  3. Declining margins on hardware production
  4. Breached patents
  5. Apple’s iTV launch
  6. Price wars

Strengths

  1. Hardware integration with many open source OS and software. Samsung is focused on producing devices which can be integrated with most of the software and OS. This gives Samsung products an edge over Apple’s (its arch rival) devices, especially as Android and other OS are gaining market share when iOS and OS X are losing it.
  2. Excellence in engineering and producing hardware parts and consumer electronics. Samsung is the number 1 by market share in televisions and mobile phones sales and some of the hardware parts (processors, memory chips, etc.). This was largely achieved due to excellence in engineering and both efficient and effective production.
  3. Innovation and design. In 2011, Samsung ranked second on the list of US top patent assignees. More patents strengthen Samsung position among its competitors. The firm also won many awards for the design of its products, proving the superior advanatage over the competitors.
  4. Focus on environment. Samsung focuses on producing environment friendly products that are free from PVC and BFRs (currently only MP3 and mobile phones). It also develops various recycling programs that are awarded for their success. Thus, Samsung’s focus on environment gives it an edge over its competitors in the eyes of its customers.
  5. Low production costs. The company has set up its production facilities in low cost countries. This allows producing goods with low production cost and benefit Samsung as it can offer lower price and earn higher margins.
  6. Largest share in mobile phones and 2 place in smartphones sales in the world. Samsung Electronics have achieved large market share in many products they sell, especially in mobile phones, smartphones, semiconductors and television sets. Large market share has its advantage, bargaining power, that Samsung can use to further reduce costs and demand for better contract conditions.
  7. Ability to market the brand. Samsung is named as top rising brand by Interbrand and is the 9th most valuable brand with value nearly $33 billion. It has risen by 40% from 2011 to 2012. This was mainly achieved due to company’s ability to market the brand in sporting events and social contributions.

Weaknesses

  1. Patent infringement. Samsung is infringing Apple’s and some other firms’ patents, thus, damaging its reputation and having to pay a huge amount of money in damages.
  2. Too low profit margin. Samsung Electronics is the largest technology business in the world in terms of revenues but it has a low gross profit and net profit margins. Although its smartphones business is quite profitable, Samsung’s profit margin is low due to its semiconductors sales and aggressive price cuts.
  3. Main competitors are also largest buyers. Apple, Sony, Dell, HP are the main buyers of Samsung Electronics products as well as the firm’s main competitors. Such situation would be favorable to Samsung (if competitors could not find complementary products and would form a relatively low share Samsung’s revenues) because it could use its bargaining power over competitors. Due to reverse conditions (competitors can find complements and they form a relatively high share of firm’s revenues) Samsung cannot use its bargaining power over competitors as it can easily lose its customers and sales.
  4. Lack its own OS and software. Software and OS production has a high profit margin, can increase integration of company’s products and brand loyalty. Without strong software and OS Samsung is at disadvantage over its competitors.
  5. Focus on too many products. Samsung Electronics serves 4 different industries with many different products in them. Samsung is at disadvantage over its competitors because it loses a focus when competing in too many industries and too many products.

Opportunities

  1. Growing India’s smartphone market. India’s smartphone market is one of the least penetrated among Asia/Pacific countries. Samsung has a strong presence in India’s market and could use this opportunity to expand its sales.
  2. Growing mobile advertising industry. The company could develop advertising platform for its mobile devices and significantly benefit from this lucrative market.
  3. Growing demand for quality application processors. Samsung is one of the key manufacturers of application processors for smartphones and tablets. The growing demand for these products requires more best quality application processors that only Samsung provide.
  4. Growth of tablets market. Tablets market is expected to grow in double digits over the next few years. Samsung business has a strong position in tablets market and could expand it by introducing newer, better quality tablet models, such as its current galaxy line.
  5. Obtaining patents through acquisitions. The key to Samsung’s competitive advantage is the large portfolio of patents. Patents can be discovered by engaging in costly R&D or through acquisitions of other firms.

Threats

  1. Saturated smartphone markets in developed countries. Smartphones market in the developed economies is saturated and the sales will not be growing at a high rate.
  2. Rapid technological change. The serious threat that Samsung and the other tech companies are facing is a rapid technological change. Companies are under the pressure to release the new products faster and faster. The one that cannot keep up with the competition soon fails. This is especially hard when the business wants to introduce something new, innovative and successful.
  3. Declining margins on hardware production. Samsung is the second largest semiconductors producer where the profit margins are very thin, thus weakening the whole company's figures.
  4. Breached patents. Samsung Electronics has many patents which are often used by its many competitors. Such situation makes it hard to find out which companies benefit from Samsung’s technology but do not pay for the rights to use it.
  5. Apple’s iTV launch. Apple’s iTV is the next big lunch from Apple, which may hurt Samsung’s TV sales.
  6. Price wars. Samsung has a very low gross margin on many of its products and is already selling some of them with significant price cuts. Competitors could follow price cutting strategy too and induce price wars, which would erode Samsung’s profit margin to 0%!

Related topics

Apple SWOT

BlackBerry SWOT

Dell SWOT

Google SWOT

Lenovo SWOT

Microsoft SWOT

Sources

  1. Interbrand (2012). Best Global Brands 2012. Available at: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx
  2. IDC (2012). China to Overtake United States in Smartphone Shipments in 2012. Available at: http://www.idc.com/getdoc.jsp?containerId=prUS23668012
  3. Guardian (2012). Galaxy sends Samsung profits sky high. Available at: http://www.guardian.co.uk/technology/2012/oct/26/samsung-galaxy-profit-sharesAsdf
  4. Wikipedia (2012). Samsung Electronics. Available at: http://en.wikipedia.org/wiki/Samsung_Electronics#Business_areas

Written by Ovidijus Jurevicius

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