Samsung SWOT analysis 2016

| October 19, 2016

Company Background

Key Facts
Name Samsung Electronics Co., Ltd.
Logo
Industries served Consumer electronics (digital cameras, camcorders, TVs, blu-rays, laptops, home theaters, displays, tablets)
Telecoms equipment (phones, smartphones)
Semiconductors (DRAM, V-NAND, SSD, UFC)
Home appliances (washers, refrigerators, microwaves, dishwashers, vacuums)
Geographic areas served Worldwide (80 countries)
Headquarters Suwon, Gyeonggi Province, South Korea
Current CEO Oh-Hyun Kwon
Revenue US$177.365 billion (2015) 2.7% decrease over US$182.273 billion (2014)
Profit US$16.848 billion (2015) 18.5% decrease over US$20.679 billion (2014)
Employees 319,000 (2016)
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 many other consumer electronics, telecommunications equipment, semiconductor and home appliance companies.

Samsung Electronics Co., Ltd. (further Samsung), a part of the Samsung Group, is the world’s second largest technology company by revenue. The company produces consumer electronics, telecommunications equipment, semiconductors and home appliances. Samsung operates three business divisions:

  • Consumer electronics - Visual Display Business, Digital Appliances Business, Printing Solutions Business and Health & Medical Equipment Business.
  • IT and Mobile communications - Mobile Communications Business and Networks Business.
  • Device solutions - Memory Business, System LSI Business and LED Business.

The company is the world’s largest mobile phone and smartphone vendor. It is also the largest memory chip and TV manufacturer. Samsung operates in 80 countries, where it sells a range of more than 100 products.

Samsung SWOT Factors

Strengths

1. Very high research and development (R&D) expenditure resulting in one of the strongest patent portfolios among technology companies.

Innovation is crucial to succeeding in the technology sector. Usually, the more a business invests in R&D, the more innovations it creates. Samsung has spent US$14.1 billion on R&D in 2015, which was the 2nd largest amount spent in the world.[3] R&D spending strongly correlates with a company’s revenue growth and expansion into the new product markets.

Figure 1. R&D spending by Samsung and its largest competitors (in US$ billions and percentages)
Company 2014 Change from 2013 As a % of revenues 2015 Change from 2014 As a % of revenues
Samsung Electronics 13.4 28% 6.4 14.1 5% 7.2
Apple 6.0 32% 2.6 8.1 35% 3.4
Microsoft 10.4 6.1% 13.4 11.4 9% 13.1
Intel 10.6 4.6% 20.1 11.5 9% 20.6
Amazon.com - - - 9.3 41% 10.4
LG Electronics 2.3 9.1% 3.9 2.1 (1)% 3.8
Sony 4.5 (10.2)% 6.9 3.9 0.3% 6.0

Source: Strategy+ Business[2][3] Data for Sony and LG are from their respective financial reports[30][31]

In 2014 and 2015, Samsung’s investment in R&D was the largest among technology companies and only Intel and Microsoft came close to their expenditure. Samsung’s R&D budget was also used efficiently as the company spent only 6.4% and 7.2% of its total revenues on R&D in 2014 and 2015, respectively.

Samsung’s high R&D spending has resulted in it developing the largest patent portfolio among its key rivals. The following table shows the number of patents granted for each company in the U.S. from 2013-2015.

Figure 2. Utility patents granted in the U.S.
Company 2013 2014 2015 Total
Samsung Electronics 4,652 4,936 5,059 14,647
Apple 1,775 2,003 1,937 5,715
Microsoft 2,659 2,829 2,408 7,896
Intel 1,454 1,573 2,046 5,073
Amazon.com 530 741 1,136 2,407
LG Electronics 1,945 2,119 2,241 6,305
Sony 3,073 3,214 2,448 8,735

Source: U.S. Patent and Trademark Office [4][5][6]

The more patents a company has, the better position it is in to defend its innovations from being copied by rivals. Currently, Samsung’s patents portfolio is one of the strongest in the technology industry.

Both its R&D spending and patent portfolio are factors that indicate Samsung’s strong competitive position in the markets in which it operates.

2. Product innovation and design capabilities.

Samsung has long been viewed as an innovative company that is capable of producing well designed and ecologically friendly products. This is proven by the many awards the company has received over the years. The prestigious Consumer Electronics Show (CES) awarded Samsung for its innovation and product design 12 years in a row. The company received 80 awards in 2015, including the CES ‘Best of Innovation’ award, and has received more than 300 awards since 2004.[13]

Samsung has also received International Design Excellence Awards (IDEA) awards. According to the company: “Since 2009, Samsung has won the most (IDEA) awards among all nominated companies”.[14]

The company’s commitment to producing ecologically friendly products and to decrease its greenhouse gas emissions has also been recognized. Samsung has been named as one of the world’s top-ten companies in the Carbon Disclosure Leadership Index (CDLI).[15]

Few other companies have received as many awards for innovation and eco-friendly product design as Samsung. This enhances the company’s reputation, increasing brand awareness and sales.

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Published: May 14, 2016
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Pages: 23
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