Samsung Case Study Essay

2018 Words Oct 18th, 2011 9 Pages
“Samsung” case study
1. Introduction:
Samsung Electronics Company, henceforth called “Samsung” in this case, was established in 1969 to manufacture black-and-white TV sets. In 1974, Samsung, which was a producer of low-end consumer electronics, purchased Korea Semiconductor Company and began its semiconductor industry. Under the leadership of the chairman of Samsung Group, Kun He Lee, Samsung has risen, with a remarkable speed, to become the world’s leading memory producer, ranking 2nd just behind Intel. Meanwhile, Samsung used the earnings from memory division to invest in various technology products like mobile phones, liquid crystal displays and so on. These businesses made Samsung generate the second-largest net profit of any
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Off course, buyers could choose to switch to other memories like SRAM or FLASH. However, given the distinct function of DRAM, the switching costs are high. Thus, the bargaining power of buyers in the industry is very weak.
3. Intensity of rivalry among existing firms
There were 6 major competitors in the memory chip industry in 2005. Since Intel exited the DRAM market in the 1980, Samsung gradually has become the largest DRAM producer, with a market share of 30%. The intensity of rivalry was rather low, and for Samsung, it was easy to hold the leading position so long as it conducted continuous innovation.
4. Pressure from substitute products
As is mentioned above, there was no mainstream substitute of DRAM. This market would be very stable in the predictable future. Keeping in this industry will be beneficial.
5. Threat of new entry
Since 2000 to 2004, there was a decline in DRAM market, with many firms in financial loss. Though Samsung had achieved profits despite of the reverse DRAM environment, it had reduced the price (a combined result of both strategy adjustment and periodic cycle of the industry). In 2005, the competitive environment changed dramatically. Samsung faced the challenge from Chinese entrants who were attacking the DRAM market in much the same way Samsung did 20 years ago. From the analysis of the Porter’s 5 forces in DRAM market, it is not difficult to find that Samsung had great advantage in the first 4 factors. The only

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