Hugh Jo & Haram Lee
SWOT & PEST analysis of Samsung
Samsung SWOT analysis
Introduction: Different from other electronic companies, Samsung is not originated from electronics but from other products. In 1938, the founder of Samsung, Lee Byung Chull established a trade export company in Korea. At the beginning, the company sold fish, vegetable, and other groceries to China. Started from 1969, Samsung has started to sell what now familiar to people, electronic devices such as but not limited to TV, radio, computer, and semiconductor to the customers. From that, Samsung has adapted to the trend of IT industry, and the company scale gradually grown. (Samsung history.(n.d). ...view middle of the document...
Samsung largely gained its strong position in China by offering second-hand, cheap phones. Moreover, currently, Samsung is dominating India market. According to the article, Samsung scored 23.2 percent of the smartphone market in quarter 3. (Daniel V.B. (Nov, 3, 2015). Para 3).
High research and development (R&D) expenditure
Innovation is crucial to succeeding in IT industry, and usually the more a company invest its money in R&D, the more innovations it creates Samsung has spent US $13.1 billion on R&D in 2015 (Rob, T. Mar, 10, 2015, para1).
Company | 2014($ billion) | Change from 2013 | As a % of revenues | 2015 | Change from 2014 | As a % of revenues |
Samsung Electronics | 13.4 | 28% | 6.4 | 14.1 | 5% | 7.2 |
Apple | 6.0 | 32% | 2.6 | 8.1 | 35% | 3.4 |
Microsoft | 10.4 | 6.1% | 13.4 | 11.4 | 9% | 13.1 |
Intel | 10.6 | 4.6% | 20.1 | 11.5 | 9% | 20.6 |
LG Electronics | 2.3 | 9.1% | 3.9 | 2.1 | 1% | 3.8 |
Sony | 4.5 | 10.2% | 6.9 | 3.9 | 0.3 | 6 |
Source: All data for each company are from their respective financial reports
Samsung does not a connection with 3D gaming content; unlike Sony, that has association with gaming consoles such as PlayStation. Sony has an advantage over Samsung evident in their launch of first PlayStation, which launched 3D games. This is the only perspective of the market that Samsung does not have role hence regarded as a weakness to the company because Sony can simply displace Samsung and acquire a large market share.
Lack of own OS
The second area that Samsung is vulnerable is OS. Samsung electronics has vertical integration, which means a company can manufacture most of the components it uses in its electronics products, such as refrigerator, smartphone, laptop, and etc. Samsung does not have to concern about the supply of components from other companies. However, while Samsung makes its own CPUs for its products, its devices are run by Android OS (operating system). And except Apple, all other companies use Android OS. This means that Samsung has to rely on Google for Android OS. Samsung strives to add some useful applications and UI (user interface) to its devices, but Samsung always face the limitation of Android OS itself. (Tim. B. Sep. 4. 2013 para 2, 3).
Another major weakness for Samsung is application market. Unlike Apple, Samsung largely relies on Android OS, which means the profit from the customers purchasing mobile applications from their smartphones goes to Google bank account. Therefore, Samsung cannot make revenue from selling applications. According to the article: “apparently 90 percent of the profit on ads sold on a Samsung Android devices goes to Google, while Samsung gets a partly 10 percent of that fee. And as far as I can tell, it gets almost no revenue from apps because Google controls that money flow through Google play.” (Tim. B Sep. 4. 2013 para 4). This quotation proves that how critical to IT company has its own OS.