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OBJECTIVE
To comprehend and analyse the development history of Samsung Electronics so that we may
prescribe ways to counter the danger of Chinese competition
...
Semiconductors were classified into two broad categories, memory chips
and logic chips
...
– DRAM represent over 50 % of memory market and SRAM and flash
– memory represent 10% and 32 % respectively
...
– Flash memory and SRAM market was expanding by extensive use of
– memories in telecommunication and consumer electronics
...
Chinese firm with help of joint venture and agreements were in position to get license
and technology for manufacturing
...
FIVE FORCES MODEL
1) Rivalry within industry:
• Many Chinese firms were ready to enter the market
...
2) Suppliers:
•
With the growth of industry, supplier become more concentrated and would offer 5%
discount on bulk purchases
...
4) Buyers:
•
•
Buyers were largely OEM, with no one controlling more than 20% of global PC market
...
• Buyers would pay 1% premium for reliability of product
...
It involves high capital investment and complex technology
...
Collaboration would provide access to local
Chinese market which was growing rapidly and access to cheap resources and local
talented engineers
...
OR
• Invest heavily in cutting edge memory products and niche markets and leave low end of
the market for Chinese
...
Without any interest to make profits at the beginning, Samsung
dropped selling price to the lowest point that Japanese firms could not follow to expand the
market share
...
Chinese entrants with some assistance possibly perform
the same low-cost leadership strategy
...
Also, The Chinese government is able to provide valuable features
such as chep credit and utilities, abundant land, skillful engineering expertise, tax incentives, and
other essential resources to companies that build cutting-edge semiconductor facilities with
Chinese partners
...
Their level of technological sophistication is currently low but they are already
forming partnerships with firms such Infineon and therefore have access to the necessary
technological expertise to compete, in spite of trade restrictions imposed by the U
...
By 2010
china was expected to become the world second largest purchaser of semiconductor of the world
after US
...
Chinese entrants could afford to sell
their products at lower prices and grow their market shares at the expense of profitability
...
2
mil) among all the competitors after Samsung, the company’s fully loaded cost of product is the
second lowest among all the firms as $4
...
3%
...
How much of Samsung’s performance is based on its reputed low cost advantage?
Samsung’s Low Cost Advantage
The most favorable cost advantage for Samsung is in its DRAM, Samsung was the largest
producer of RAM chips also
...
Secondly low labor cost compared to industry average excluding the Chinese market
...
Samsung has all of its manufacturing facilities in one location which gives it the advantage of
economies of scale
...
Main R&D
and fab lines where located in a single location which enabled close interaction of R&D and
production engineers
...
The reason behind
the level of motivation was the caring company, success highly rewarded
...
Then
they choose on the basis of merit
...
It means they should
locate their research and development centre and their manufacturing plant at a same location
because it will decrease the cost for them
...
They should invest more and more in their
research and development to maintain and to remain ahead from competitors in technology and it
will provide them a competitive advantage
...
They should also focus on segmenting their
product line and deliver different products to its consumers with the best quality they can
produce and a reasonable price
...
As mentioned above they should invest more in their research and development
to find new ways to improve their technology and also find out new purpose of using that
technology
...
The common core of products should remain the same
and other technology should improve according time and need of consumer
...
If the company invest
more in research and development then they will going to know new design rules which
beneficial for the company and should apply those rules towards their production
...
It includes high capital financing and complex innovation
...
Not at all like contenders, Samsung
attempted to make new uses for Dram's
...
It empowered Samsung in
making new markets that were inaccessible to its rivals
...
Samsung was fit to make new
market was creating new requisitions of memory and most recent better innovation
...