Case Study for Samsung Electronics Essay

1417 Words Apr 11th, 2013 6 Pages
Case Analysis for Samsung Electronics 1. What is SMIC’s strategy? Should Samsung be concerned about SMIC? SMIC seems to execute the same kind of strategy Samsung used before to succeed. The strategy is selling their products at low prices and growing their market share at the expense of profitability. SMIC may threaten Samsung’s business in the future, but not too much. Although SMIC can get many resources, such as cheap funds and lands from Chinese government and foreign investors, SMIC only focuses on producing chips, not designing chips. The cost of the application of a new tap today is 3 billion and it is difficult for SMIC with sales revenue of 365.8 million in 2003. Samsung’s success depends on its constant technology …show more content…
3.1 Analysis Samsung VS Industry Composite a. Samsung’s unit selling price advantage comes from two aspects. First, PC OEM manufacturers would pay 1% price premium to reliable suppliers. Second, Samsung can customize its products for some special use because its diverse products line to get premium. Third, Samsung has the most advanced products which can enjoy high selling price during the first several-month launching time. b. Samsung’s unit raw material cost advantage come from three aspects. First, the material suppliers will give maximum 5% discount to large volume buying. Second, the usage of 12-inch wafer (reduce 10% cost per chip) and 0.11μm processing technology(80%, the highest yield rate) makes Samsung get more chips with same amount of materials. Assuming the weighted average raw material cost per chip of Samsung is 100%, the Mircon will be 134%, Indineon 116% and the Hynix 161% (Exhibit 3). c. Samsung’s unit labor’s cost may be explained by the salary differences between Samsung ($44000 per year) and the industry ($49312 per year, weighted average by production volume). Also, there are some invisible issues. Samsung provides equal and competitive corporation value, unique evaluation and promotion system and humanity warfare for their employees. These elements make Samsung more productive, so the
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