Factors That Triggered the Growth of Samsung in the Global Handset Market free essay sample

It is part of one of the multibillion corporations in the world. Samsung is one of the largest handset manufactures, which produce variety of electronic products. The company dominates its domestic rival as the world’s number the OEM in sales of mobile phones. Samsung have their manufactured principally in large production facilities elsewhere in Asia, whereas their domestic activities primarily concentrate on product development and design effort. The name Samsung means â€Å"three stars† in Korean. Samsung surprised Japanese rival Sony in 2005 for the first time become the world’s largest and most popular consumer electronic brand. In 2008, Samsung shipped 197 million handsets globally. It overtook Siemens of Germany and Hewlett-Packard for the USA in 2009 with revenue of $117. 4 billion to take the number 1 spot as the world’s largest technology company. Samsung has turned to designing slick mobile phones. In 2007, Samsung’s mobile phone division overtook Motorola to gain second place in the market and has again seen growth in handset sales reaching 14% share. 1) Factors that triggered the growth of Samsung in the global handset market The company’s mobile handset line is the Galaxy S, selling almost twice as many smartphones as Apple. Samsung’s growth has been driven by popular Android service, elegant hardware design, extensive global distribution and memorable sub brands. In 2010, Samsung Corporation had 9. 3% share of smartphone in the market, while Apple had 17. 4% of market share. Nokia has been losing its market share because of competitors such as Apple and Android operation systems. SWOT analysis Strengths| Weaknesses| * Samsung is a top rising brand in the world and is 9th most valuable brand with value around 30$ billion. The value of Samsung is increased by 40 from 2011 to 2012. Samsung number 2 in terms of market share, it has overtaken Nokia’s market in smartphones. * Innovation and design. The Company won many awards for its product’s design. * Low production cost. Samsung offer low price product with a high quality, it is because the company sets up manufacturing plant in low cost counties like India, which reduces, logistics and supply chain cost. * Samsung brand value increase d by 80% in past 3 years. * Samsung Galaxy is selling very fast which makes the brand more powerful. | * Samsung Mobile produced a series of mobile phones which caused cannibalism. Focus on too many products. Samsung Corporation has four different industries with different products. It loses a focus when competing in too many industries and many products. * Samsung has too much of dependence for software from other companies, which cause a lot of expenses. | Opportunities| Threats| * Growing demand for quality application processor. Samsung is manufacturer that produces application processor for phones and tablets. * Samsung’s advantage is a large amount of patents, which are discovered by engaging in costly Ramp;D or through acquisition of other firms. * Fast technological change. Samsung as other companies faces rapid technological change. This is really hard for the company to introduce a new, innovative and successful. * The potential market of Samsung is India, and entry of other competitors is also high. | Factors of growth * Samsung knew that in order to be successful in handset market, the Company need to match Apple on design. The Company produces Galaxy S3 which is thin and comes with large display. * Samsung has continued to take advance by producing phones with a large display. Samsung Galaxy S3 and Note come with a large display, which matters to consumers and enterprise users alike. * Google is delivering Android devices on the market. Samsung is using Google’s android system in their phones which provide high quality of the system. * Success of Samsung Corporation in handset market helped company to continue its growth over time. If consumers like product they will buy the next one that the company produces. This factor helped Samsung to become a successful. The Samsung Galaxy S (I9000) and Wave (S8500) phones were the winners of European Awards in the smart phone and social media phone categories. Galaxy S was recognized for its high quality screen and excellent connectivity, while Samsung Wave for its operating system â€Å"Bada† with perfect social networking. Samsung used a wide range of operating systems in their phones in the market, while other companies focus on supporting one operating system. Furthermore, the Galaxy S has Google Android for the primary operating system, and it also supports other competing operating systems such as Symbian, Microsoft, Linux based LiMo, and Samsungs proprietary Bada. Samsung sold 280 million phones in 2010, which was 20. % of market share. The Company has overtaken iPhone Apple in sales around the world during the third quarter 2011, with a total market share of 23. 8%, compared to Apple market share, which was 14. 6-$. Samsung became the worlds largest mobile phone maker in 2012, with the sales  of 45 million smart phones from January to March. 2) Strategies adopted by Samsung as the second largest handset market in the globa l mobile market. Corporate strategy, business level strategy In January 2007, Branding Finance ranked the company as the number one global brand in electronics. Samsung Electronics’ handset has overtaken Motorola, making it the world’s second largest mobile phone market. Samsung’s clever marketing strategies played an important role for Samsung’s image and to become global digital technology leader. One of Samsung’s major global branding strategies is Olympic sponsorship. Samsung used Olympic Games as a platform to demonstrate new products and technology. The most powerful way to introduce a new product and technology is by publicity. It is not only effective but also more credible. Samsung provided its latest wireless communications technology during the Sydney 2000 Olympic Games and also participated in the mobile telecommunication equipment category in the Salt Lake 2002 Olympic Winter Games. Samsung’s sponsorships in the world of golf also contributed to its global branding. Samsung thought a great golfer would increase brand value and the reputation of the sponsor, so it decided to sponsor Seri Park just as her career was taking off in the USA. In addition, Samsung became an official sponsor of the SAMSUNG LPGA (Ladies Professional Golfer Association) World Championship. Movies have also taken on a significant role in Samsung’s marketing. For example, Samsung has shown its products – such as its monitors, TVs, mobile phones, etc. – through product placements in many Hollywood movies. And for the popular movie ‘Matrix: Reloaded,’ Samsung actively participated in developing the â€Å"Matrix Phone. † Samsung advertises their product by television, internet, and other advertising like Chelsea football club, NASCAR Nextel cup, Texas motors speedway, and Samsung Cup. Samsung business strategy Samsung’s strategy is to flood handsets in the market during short period of time. The Company is producing many types of gadgets such as smartphones, phones and tablets, and at least one of their products will appeal to a person. Samsung is very successful in the low end market, but has only recently begun increasing its sales in the handsets market and has success for the last years. Samsung had a good share in the smartphone market. Samsung’s share has doubled to 36% from April to June in 2011 and 18% during the same period in 2010. Samsung’s fast increasing market share in handset market is because of large amount of different types of devices as compared to Apple and other competitors. Samsung sold twice more smartphones than Apple in the second quarter of 2012. Samsung success was by Galaxy S3 which sold more than 10 million units in two month. Samsung is not only using Google’s android software, but they also have Windows OS as well. While Apple uses only iOS, Samsung is not held by these same boundaries. Samsung has kept supporting a wide range of operating systems in the market, what why Samsung’s market strategy works so well. Samsung realized a lot of products in one year than Apple has realized in five years. It is clear Samsung floods the market with their products while Apple realizes relatively few products in comparison. 3) Samsung overtakes Nokia in a handset market For the first time in 14 years, Nokia is not number 1 cellphone brand in the world. Korean corporation Samsung has overtaken Nokia as a top phone brand in 2012 and became the world’s largest handset company for the first time. However, Samsung Corporation remained in the second place behind Apple. Samsung success was built on its fast follower strategy for manufacturing and design. In 2012, Samsung sold 93. 5 million phones in the first quarter worldwide. This was a big step for Korean Company to overtake Nokia which sold 83 million which was a 22. 5% market share. Nokia believed in their Windows phone operation system which was powered in their Nokia Lumia devices, but it didn’t give as much profit as they expected. Samsung’s smartphones represented 34% of phones sales in 2012, while Nokia smartphones was just 14%. Samsung has a high demand because of product design, quality and successful marketing plan. Market Intelligence firm  IHS iSuppli  has issued a report claiming that Nokia has slipped from the top mobile phone manufacturer spot for the first time in 14 years. Samsung has taken its place. Its expected that Samsung will account for 29 per cent of all mobile phone sales in 2012, which is up from 24 per cent in 2011. Nokia, meanwhile, is set to take an opposite course from 30 per cent last year to 24 per cent this. Samsung’s successes and Nokia’s struggles in the cell phone market in 2012 were determined entirely by the two companies’ divergent fortunes in the smartphone sector. Nokias strength in the feature phone market continues to diminish along with the market itself, while global smartphone penetration is set to raise from 35 per cent in 2011 to 47 per cent in 2012. While overall mobile phone shipments will only rise by one per cent in 2012, smartphone shipments will rise by 35. 5 per cent a sure sign that smartphones are finally approaching mass adoption. Samsung continues to perform well with the  Samsung Galaxy S3  and the  Samsung Galaxy Note 2, whilst Nokia has struggled to perform with its  Nokia Lumia 920   a fairly late entry to the high-end smartphone market, and one that runs on the brand new (and as yet unpopular) Windows Phone 8 OS. The report claims that Samsungs fast follower strategy where it quickly supplies multiple handsets to address all sections of the market has been the key to its success, while Nokia is mired in transitioning to the Windows Phone platform. Symbian sales have plunged, with sales of previous Windows Phone 7 devices like the Nokia Lumia 900 failing to pick up the slack. Another interesting point from the report is that Samsung will extend its lead over Apple in 2012. In 2011, their total mobile phone shipments were  separated by 17 per cent, whilst this year that will be stretched to 19 per cent. Conclusion Samsung is one of the biggest corporations around the world. The company has been developing at amazing speed comparing with other companies. It produces high quality products with a perfect design, where the best engineers make a future and all details of Samsung products show high technological functions, new innovations and perfect characteristics. Samsung’s focus on design, price and quality of product played an important role in increased demand to maximum and to dominate in handset market. Samsung Electronics Corporation has overtaken the Nokia as the world’s biggest vendor of mobile phones for the first time in 14 years. Samsung wants to be the dominant the smartphone market, it has a strategy to do so, and it is using every tool to be successful. Samsung Corporation focus not only on electronic but also in engineering (Company built famous Burj Khalifa, PETRONAS Tower), heavy industries (Built world’s first drillship for Arctic Regions), financial services (domestic leader in financial services with global aspirations) and etc. Reference ) Competitive Advantage Based on Innovation. Jie Sun, Xindo Sun (2010). Introduction of Samsung. 06. 04. 013. [online] http://jgxy. usx. edu. cn/DAOM/111_JieSun. pdf 2) Samsung Business Strategy (2012). 07. 04. 2013 [online] http://faculty. ist. psu. edu/bagby/432F12/T11/samsung-business-strategy. html 3) Samsung Ends Nokia’s 14 years run as biggest handset market. Jun Yang amp; Mark Lee (2012). 08. 04. 2012. [on line] http://www. bloomberg. com/news/2012-04-27/samsung-overtakes-nokia-as-world-s-biggest-phone-vendor. htmlhttp://www. scribd. om/doc/122555200/samsung-product-strategy-management 4) Samsung tops mobile market share for first quarter. Scott Nichols (2012). 05. 04. 2013. [online] http://www. techradar. com/news/phone-and-communications/mobile-phones/samsung-tops-mobile-market-share-for-first-quarter-1078612 5) Apple grabs 34% mobile market share, passing Samsung to become #1. George Tinari (2013). 05. 04. 2013. [online] http://www. intomobile. com/2013/02/01/apple-grabs-34-mobile-market-share-passing-samsung-become-1/ 6) The management Strategy of Samsung in East Asia.