Samsung Electronics And The Smartphone Industry

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Question 1 Samsung competes in a variety of industries and as such are a conglomerate, however in this case we must analyze one of Samsung’s many divisions, Samsung Electronics, which competes in the smartphone industry. Rivalry among existing competitors – High. This force has been set to high as there numerous companies in the industry all of which are similar in size. This is especially true for Android manufacturers where there are the likes of Samsung, HTC, Motorola and many others. They all compete directly with each other as well as with Nokia (the main contributor to the Windows phone OS) and Apple, known for their own iOS. Furthermore, there has been significant patent wars among many of the companies looking to hinder the…show more content…
However, these substitutes listed will likely not be as threatening as the phone encompasses all of these processes and is now becoming more powerful that the divide between the dedicated devices and smartphones is decreasing. Threat of new entrants – Low. The ability to compete in the smartphone industry is indicative of the significant capital requirements needed for product innovations and advertising. Samsung has spent $10.5 billion on R&D in 2012. This suggests that a new company wishing to compete in the market would require significant capital investment, and without this investment they would not be able to compete sufficiently. Furthermore, the sheer size of companies like Samsung and Apple has resulted in significant sales in regards to their flagship phones, this allows them to utilize supply side economies of scale, where they are selling millions of units, while their fixed costs remain the same. Thus, they are rewarded with a low product cost that smaller companies will not be able to replicate. Bargaining power of suppliers – Medium. The suppliers for this case are the various components required for the assembly of the phone as well as the operating system, essentially the hardware and software required for the phone. Most of the components of the phone are smaller
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