Porter Generic Strategies and Samsung

1237 Words Jan 2nd, 2014 5 Pages
This case study deals with Samsung Electronics and its evolvements thorough the years of activity. The semi-conductor industry in which Samsung participate is highly competitive and very dynamic. Thus, in order to analyze the case properly, we must know first the ropes of the industry, and afterwards dig in the company itself.
Porter 's 5 forces – Industry Analysis:
1. Threats of new entries:
The main threat on Samsung is the growing Chinese market that enjoys a government support and attracts outside financing. Moreover, the Chinese are willing to endure loses for several years in order to increase their market share and gain profits in the future. However, we must note that the semi-conductor industry has rather high entry
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Moreover, it is preserving a high brand value do to its product reliability. In that field, we would like to mention that margins are much higher for differentiated products because they don 't negatively affect overall cost-structure.
Additional strategy related ideas
Due to the high capital costs and learning required in the semi-conductor industry, Samsung sets high barriers for entrants. The firm strategy emphasis its importance in developing in human resources, due to high investment in employees and recruiting experts from all over the world. Moreover, the firm uses DRAM by supporting design firms, and in this manner creating new uses for its main product.

The Chinese Entrants and the advantage they are seeking
The Chinese firms are using mainly the low-cost strategy and seeking for the price as their advantage. Moreover, the Chinese are willing to sacrifice immediate profits in order to increase their market share. They were able to do that thanks to easily raised money from local and international sources and talented engineers. The Chinese firms struggled at the beginning suffering mainly from lack of necessary organizational experience and tacit knowledge required, but the financial back helped and still helping them to pass the first period of evolvement. The Chinese firms have already succeeded in applying their strategy and entering few low-cost products to the market. However, they have still a way to go becoming the price leader and a rival to

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