Laptop and Samsung Electronics Co

Executive Summary

This paper is focused on Samsung Electronics Co. , and it has four major product lines. Digital Media line produces digital electronics for both personal and business uses. Telecommunication line produces variety of mobile phones and supply to carriers; LCD line produces flat screen monitors used on TVs, cellphones and computers.

Last, semiconductors product line produces memory chips used on computers and cell phones. For each product lines, we will be talking about their history, records of success, risks and opportunities, and recommendations. Lastly, we will give recommendations regarding how the company should develop itself to be more attractive to investors.

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Introduction

Samsung was founded in 1938 and are located in Seoul, South Korea. The founder’s name is Byun-Chull Lee. “Samsung” means “three stars” in Korean. It started as a trading export company. In 1969, they became Samsung Electronics Co. And now it has become one of the largest technology companies known worldwide (Samsung Electronics, 2011). It is most known for its flagship products; the Galaxy smartphone and its LCD screens.

Samsung became a publicly traded company in 2000. It has four major lines of business, Digital Media, Telecommunications, LCD, and Semiconductors.

Four Lines of Business

Digital Media

Digital media is the line of business that consists of all of Samsung’s digital consumer products, both home and personal use. These products include; personal computers, MP3 players, cameras, televisions, and home appliances. Samsung puts forward innovative designs, select world-leading products, and power efficient products. Digital media consisted of 37% of all sales in 2010 (Sustainability Report, 2012).

https://phdessay.com/the-distribution-strategy-of-samsung/

As you can see from the graph below is was the majority of Samsung’s sales. In the 1970’s, Samsung came out with its first black and white televisions, washing machines, refrigerators, and by the end of the decade color televisions. In the 1980’s, Samsung was marketing air conditioners, personal computers, and the world’s smallest video tape recorder. Since the 1990’s, Samsung’s innovation boomed. They came out with the world’s first digital television, the world’s first Blu-ray disc player, the world’s first HD camcorder, and the world’s thinnest television (About Samsung, 2012).

Samsung also led the home entertainment business into the 3D market. Digital media’s record of success is definitely significant. Its sales numbers have increased by about 4 billion USD. Unfortunately, the profits are very low compared to its sales. This is due to Samsung’s high investment in research and development. You can see the difference between sales and profits in the graph shown below. The biggest risk for the digital media line of business is whether the large investments in research and development will pay off against its competing products.

Many electronic companies invest heavily in creating better products and imbedding innovative technology in them, so the competition is very high for this line of business. The only way for a company to be successful is getting its products in the most consumers’ hands. So that is why Samsung invests about 6. 2% of total sales into research and development (Sustainability Report, 2012). This enables Samsung to ensure that its products are of the best quality, have the most innovative technology, provide convenient and advanced features, and have a stylish design.

Research and development will always be one of the biggest investments of a successful technology company. Samsung should continue its high investments to secure its place as the leader in technology and innovation in this industry. Since Samsung is a global leader in technology, it should use this advantage to lead the rest to the next level of innovation. Samsung has already lead others in the 3D home entertainment business now it has the opportunity to go further and create more advanced products that will lead its consumers to a more advanced and convenient lifestyle.

Telecommunications

Samsung Telecommunications is one important line of Samsung Electronics. It is known as Samsung mobile and wireless, which provides a variety of personal and business communications productions, such as mobile phones, tablets, and wireless infrastructure equipments (Samsung, 2011). In 1988, Samsung Electronics merged with telecommunication, which then became a product line of Samsung Electronics (Company history, 2012. ). In 1986, Samsung released its first built-in car phone, but it failed due to the poor products’ qualities. But, the company did not give up on telecommunication product line.

In 1992, Samsung developed its own mobile phone systems. In 1997, they developed world’s smallest CDMA mobile phone (Company history, 2012). Samsung became the leader in the personal communications service market. Samsung Electronics has been successful since the company expended business into global market.

Samsung took first step and exported its personal phones to Sprint, an American CDMA carrier, and then Samsung extended into GSM market. The company’s phones are compatible with the networks of leading wireless service providers, including AT&T, Sprint Nextel, T-Mobile USA, and Verizon Communications.

It has powered Samsung’s growth in the telecommunications industry. The bestselling Galaxy S smartphones was launched in 2011. It has been sold more than 20 million units around the world. In 2012, Samsung Electronics was ranked the 17th of global 500 companies by the Financial Times (Samsung annual report, 2012). By end of second quarter 2012, Samsung Electronics accounted for 330 million or 21. 2% of worldwide demand of mobile phones (Samsung annual report, 2011).

Samsung Electronics has involved with lawsuits in more than 10 countries between Samsung and Apple (Wingfield, 2012). Opportunity for Samsung is that partnership with more carriers, which would help Samsung Telecommunication to expand their business and market share. The recommendations for Samsung telecommunication is that focus on unique technology design. I think that will not only help Samsung avoid lawsuits, but also increase the market share and customer royalty.

Samsung’s LCD Display

A liquid crystal display (LCD) is a flat screen monitor that is made of a thin liquid crystal layer in the middle. LCDs are used in many different applications such as, televisions, mobile phones, laptops and computers. LCD screen has been one of the best-selling products of Samsung, yet it still faces risks and needs some improvement to attract more customers (Mote, Stansell, & Greenland, 2010). Mote et al. (2010) state that Samsung created LCD technology in 1991. The LCD panel was first used for laptop computers and showed at a world trade event in Japan. The first LCD display for laptop computer was 9. 3 inches. In 2002, Samsung introduced a 54-inch digital LCD television monitor-the largest LCD television in the world at that time.

Today, Samsung is the most famous LCD maker in the global market (Mote, Stansell, & Greenland, 2010). According to “About Samsung” (2012), Samsung sustained the highest profit among LCD manufactures over the world in 2007. In 2009, Samsung became the first company that sold more than ten million LCD televisions in the first half of the year and more than five million LCD panels per month. Epperson shows that, total segment revenue of LCD was about 62. 6 trillion U. S dollars in 2011. There were about 330 million shares, and the price was 1,067 dollars per share.

Samsung has also maintained the largest market share in the global LCD televisions from the first quarter of 2011 to the second quarter of 2012 (About Samsung, 2012; Epperson, 2012). (Data collected from www. statista. com) Although the record of success of LCDs seems really outstanding, Samsung is facing many risks. One of the risks that Samsung confronted was about LCD patent infringement. In 2008, Sharp filed the suit against Samsung in the U. S. District Court for violating its four patents related to a technology to improve the picture quality of LCDs. Then, Sharp expanded the suit to South Korea in December of the same year.

Samsung fought back in the same month with lawsuits in Japan and the U. S. For some reasons, Samsung won over Sharp in Japan, but lose the case in the U. S. In 2009 US International Trade Commission began to block Samsung LCD products. Samsung also faces price war from other serious competitors such as LG, Sony, Toshiba, and Panasonic. In Standard & Poor’s Equity Research, Samsung’s LCD sales are decreasing due to the very competitive prices other competitors offer consumers (Patel, 2012). Base on “LexisNexis Academic” (2012), Samsung just created a new technology of LCD called Active-matrix OLED (AMOLED).

This is another type of flat panel display which is very thin and flexible. Samsung announced that it will use AMOLED to invent a new model of its mobile phone named “Youm”, and the product will be introduced at the beginning of 2013. This is considered as a bright opportunity for Samsung in the future to increase its LCD revenues and profits (“Samsung’s flexible”, 2012). (Google images) To overcome risks and be more attractive to investors, Samsung should obtain LCD patent protection. For example, when any LCD design is created, Samsung should register for a license or trademark to protect the company from copyright.

Samsung also need to focus on Research and Development investment to create new technology, new products and find out ways to lower the production costs, so they can compete on price with others.

Semiconductors

The decision of entering the semiconductor business is essential to Samsung. Byung-Chull Lee, the founder of Samsung, realized how big the high-tech electronics market would be in the future in mid-1970s, and that Samsung has to be a major player. Because of that, he decided to form Samsung Semiconductor and Telecommunications Co. in 1978.

However, South Korea is lack of technological expertise, and that’s when the South Korean government steps in. The South Korean government required foreign telecommunications equipment manufacturers to hand out advanced semiconductor technology, in order for them to get access to the South Korean market. (Data collected from IBIS World) Semiconductor is one of the most successful product lines in Samsung. The sales of semiconductor have increased from 32. 6 billion dollars in 2010 to 33. 5 billion dollars in 2011. Moreover, its net income has also increased from 16 million dollars in 2010 to 48 million dollars in 2011.

In fact, the company’s semiconductor segment consists two major parts: memory and LSI (Large-Scale Integration). Like the past 15 years, Samsung has topped the position in the dynamic random-access memory in 2011 with 42. 2% of shares. For the LSI segment, Samsung produces LCD panels for computer monitors and notebook displays. In 2011, Samsung has about $26. 5 million of revenue from LCD panel business (IBIS world, 2012). One of the biggest customers to Samsung’s semiconductor product line is Apple, which is recently considering switching to another semiconductor manufacturer.

Losing this huge customer will definitely risk the market position of Samsung, as it is now at the top of the semiconductor manufacturing market. Opportunity for the product line would be its rising demand. There is a growing demand on semiconductor out in the market. Although the demand of desktop computers is slowing down, which will affect the sales of memory part of semiconductors, demand of tablets and smartphones is raising rapidly, which will lead to a rise in demand of semiconductor (Epperson, 2012). There are still a lot of rooms for the sales of semiconductor to grow.

Increasing production of semiconductor due to its raise in demand may not seem hard in the future. Manufacturers are now developing automated production in order to decrease their production cost. Samsung can start increase semiconductors supply to these robots, since those parts will boost the demand for the sophisticated electronics that control the robots.

Conclusions and Recommendations for Samsung

One of the important recommendations is technology innovation. Samsung Electronics is a high-tech company, which provided support for innovation in the areas of technology.

Product lines involved with other companies regarding the patent lawsuits. Lawsuits have negatively impacts on company’s growth. In order for company to maintain sustainability and remain competitive in the industry, we recommend that the Samsung Electronics should focus on unique technology designs. In that way, it will protect the company from getting sued and attract more customers. Samsung should also increase semiconductors productions by finding opportunities to cooperate and be a supplier to other smaller electronic companies. Again, the company hould invest more in R&D projects, so it can built new technologies and new products in order to compete against its competitors.

References

1. About Samsung. (2012). Corporate profile. Retrieved from http://www. samsung. com/us/aboutsamsung/corporateprofile/
2. Epperson, L. (2012). Samsung Electronic Co. , Ltd. Hoover’s. Retrieved Oct. 27, 2012, from Hoover’s database.
3. Mote, D. , Stansell, C. M. , Greenland, P. R. (2010). Samsung Electronics Co. , Ltd. In International Directory of Company Histories, 108, 433-440. Retrieved Oct. 27, 2012, from Gale Virtual Reference Library database.
4. Patel, A. (2012). Samsung Electronics. Standard & Poor’s Equity Research. Retrieved Oct. 27, 2012, from Net Advantage database.
5. Samsung Electronic. (2011). FY 2011 Annual report. Retrieved from http://www. samsung. com/us/aboutsamsung/ir/news
6. Main. do. Samsung. (2012). Samsung Company history. Retrieved from http://www. samsung. com/us/aboutsamsung/corporateprofile/history04. html
7. Samsung. (2011a). Samsung 2011 annual report. Retrieved from http://www. samsung. com/us/aboutsamsung/ir/news
8. Main. do Samsung. (2011b). Samsung Telecommunications. Retrieved from http://www. samsung. com/global/business/telecommunication/productInfo. do? tgrygroup=11&ctgrytype=18&b2bprdid=146
9. Samsung’s flexible AMOLED display codenamed “Youm” in the works. (2012, April 11). Kashmir Monitor (India). Retrieved Nov. 28, 2012, from LexisNexis Academic database.
10. Sustainability report. (2012). Global harmony with people, society, and environment. Retrieved from http://www. samsung. com/aboutsamsung/sustainability/sustainabilityreport
11. Wingfield, N. (2012, August 24). Jury awards $1 billion to Apple in Samsung patent case. The New York Times. Retrieved from http://www. nytimes. com/2012/08/25/technology/jury-reaches-decision-in-apple-samsung-patent-trial. html? _r=0

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