Samsung E-commerce Strategy Assignment PDF

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Introduction to e commerce and how Samsung is using digital business...

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E-commerce strategy Ianthi Georgiou C3522690

Contents:

1. Introduction 2. Review and Analysis of Samsung’s ecommerce businesses 3. Role of Digital Strategy leveraging Samsung’s business model 4. Social and ethical factors which Samsung considered with their strategic direction 5. Conclusion 6. References

Introduction Samsung Electronics Co. Ltd. is a South Korean company who was invented in 1938 and with the years it became one of the largest companies who “specializes in the production of a wide variety of consumer and industry electronics, including appliances, digital media devices, semiconductors, memory chips, and integrated systems” (Peter B,2018), but for this essay we will focus only on their mobile devices. They are both B2B and B2C with B2B being a lot bigger and after the massive growth of global electronic commerce, they soon changed their strategy to bricks-and-clicks which gives them the option to have both offline and online shops so the customers can visit one of the stores or buy online.

Review and Analysis of Samsung’s ecommerce businesses To start with, according to International Data Corporation’s researchers, in 2018 Samsung was the world’s top smartphone vendor on the market followed by Huawei and Apple but they fell to fifth place in China so they had to find a way to keep up with the Chinese companies. For years their revenue was the highest in the industry out of all the companies and everyone was confident that they will be at the top for a long time until the last drop of earnings where Samsung analysts informed people that there was going to be a sharp drop and it was even more than the analysts predicted to be. But even if the revenue dropped, their Research & Development (R&D) department in 2018 announced their sales for the fourth quarter which reached 59.27 trillion in revenue and 10.80 trillion profit and specifically and for IT& Mobile Communications Division (IM) which we are focused on, both Sales and Operating Profit dropped to 23.32 and 1.51 trillion. On the first quarter of 2019 the biggest drop was 23% in revenue on their Semiconductor on Device Solution and for the IM revenue, sales where lower than last year’s first quarter but higher than the fourth quarter with 27.20 trillion. The only reason of the slight increase they had after the end of 2018 is because of the new Galaxy S10 sales which is still selling fast but other than that the other smartphones are not in a high demand anymore, few reasons that caused this drop are the failure of new Samsung Galaxy Fold where the Korean engineers were excited about it as they expected this unique design to top up their sales, cost them a lot not just in sales but with bad reviews as well as customers were complaining about screen issues after few days of using it, another reason is the competition between the companies which they do a good marketing promoting their new products and because of the weak period of the season. Samsung executives believe that there is going to be an increase on the next quarter on smartphones even though the prices will probably drop, because of the latest smartphone which remains strong, because of the new introduction to 5G devices and they still have faith that the new unique foldable smartphone will increase the sales in the future. “Revenues are already projected to be several trillion dollars by 2020, rising to several tens of trillions by 2030.” (Cliff W. 2016).

Figure 1. Consolidated Sales and Operating Profit by Segment based on K-IFRS (2016~2019 1Q) (2019).

Because of this drop of their revenue, Samsung changed their strategy and focused on shifting B2B strategy because they wanted to become stronger on the market and also it would lower their administrative costs and lower their transaction costs. They managed to grow it by focusing on new partnerships and products like new mobile applications which focus on health, retail and finance industries. “Embracing technology is a win-win, businesses can find tools to improve their businesses by enabling a mobile workforce, reducing IT spend and data analysis, while technologymakers gain access to a stable and growing market.” (PYMNTS, 2015). Few examples are when they made the Galaxy A6s which was precisely planned for the Chinese market, they became partners with Suning, one of the largest retailers in China with more than 1600 stores over 700 cities and with their ecommerce platform being one of the top three business to customer companies in China, they donated 300 IGNIS thermal imaging cameras to Vietnam Fire and Rescue Police Department for fire prevention and also they made a B2B tablet called Galaxy Tab Active which gives the permission to professionals to work without any limitations. As it was mentioned earlier Samsung has a big competition from other companies in the market so using Poster’s Five Forces will be very helpful to analyse how these companies have an impact on Samsung’s success.

Moreover, looking at Samsung’s SWOT Analysis and Business Model Canvas you understand a lot about the company, even though it is one of the biggest in the industry and the most successful, like the other companies it has weaknesses that needs to fix and threats as well for example the big competition in the industry. On the tables below you can see some of them as well as their most important Value Propositions, Kew Partners, Channels etc.

Role of Digital Strategy leveraging Samsung’s business model No doubt, to have a successful brand you rely a lot on the online shop as well since ecommerce businesses have grown dramatically within the years. Samsung’s main priority is the quality of the content they have online and they are trying to be active and helpful. It is important to have a variety of channels for different goals that is why they are focused on YouTube which is the second largest search engine for promoting, Twitter and Instagram for communication with the customers and lifestyle communication and of course Facebook which was already one of the best websites for promoting. Through these applications and websites, they are able to create new videos anytime, live videos blogs and also working together with influencers to approach new customers. One of their strategy’s few years ago, was to start selling more online devices as they realised they would save a lot of money and they could provide more discounts to the customers, so they came up with the idea to sell more products online. They had to be careful with the speed of product launch because they had to develop and bring out to the world products in wrong times series. “Presently, Samsung is anticipated to come up with designing and manufacturing of consumer electronics like TVs, and mobile phones for online sales. Along with this, launch of Samsung owned sales channel might be on the cards; people acquainted with the matter revealed.” (SiliconIndia, 2016). At the end this was very beneficial to the company and customers as well as. Additionally, another strategy that they started years ago but they are still following it is them develop in memory chips and

liquid crystal display (LCD) display technology. A lot of people don’t know but Samsung is the largest producer of memory chips helping their profit to grow a lot and in 1995 when they developed on LCD they also became one of the biggest companies producing flat-screen televisions but because of the competitiveness they decided to change the centre of attention to smartphones instead of LCDs. Moreover, “we are focusing on sustainability as they deliver innovative products and services along the value chain, which is based on the core values we pursue at Samsung, we generate values in the fields of economy, society, and environment.” (Strategy, 2019). Talking about generating values on the environment, they announced last year their new project on transitioning to renewable energy in all factories starting from USA to Europe in 2020. It all starts this year with the addition of thousands of solar panels in South Korea. They are creating environmental and economic values with sustainability management for the global society. The chart below represents the social values they created or reduced in 2016 with the result of earning 49 million value.

Figure 2. Strategy. Our Approach to Sustainability, (2019)

Social and ethical factors which Samsung considered with their strategic direction However, for the company to follow these strategies needs to concern some social and ethical factors who are extremely important. First to their own employees, they have an ‘Employee Business Conduct Guideline’ which is translated to 15 different languages and they can complain writing a report on Samsung’s management website. This can be helpful for the customers and for the company as well so they can help with any issues. On the chart below there are the number of reports for the years 2014 to 2016.

Figure 3. SAMSUNG SUSTAINABILITY REPORT (2017)

One extremely important social factor is there focus on innovation despite customer’s complaints. It is not easy to satisfy all the range of audience as everyone have different expectations but what makes it even harder is their slow updates. “For instance, while Google phones got the latest Android firmware update immediately, it took Samsung Galaxy phones more than six months.” (Kiesha F, 2019). On the other hand, some of the most important ethical factors are the fair competition between companies all over the world therefore they follow the laws in each country and they have respect for each other. In addition, to keep a great relationship with other businesses they make long-term contracts for new suppliers and they choose to partnership with companies that they may have better quality, productivity, technology and management. For customers, there top priority is to keep them satisfy so they can come back and because of that Samsung develops new and big variety of products to satisfy all the customers, treat each one with kindness providing customer service and of course they protect their personal information.

Conclusion As suggested above, this decline profit company can get back to the top by focusing more on the quality of the products and following all the strategies. Their vision and goal for the next years is to create a better world with their new innovative products and help the environment with less devices that will harm it. In addition, they always want to deliver the best they can and they are willing to bring together communities by helping on healthcare and biotechnology. “The goal of the vision is to become a beloved brand, an innovative company, and an admired company. For this, we dedicate our efforts to creativity and innovation, shared value with our partners, and our great people.” (Samsung, 2019).

References:

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Peter B. (2018) ENCYCLOPEDIA BRITANNICA. Samsung, SOUTH KOREAN COMPANY. [Online]. Available at: https://www.britannica.com/topic/Samsung-Electronics [Accessed 5 April 2019].

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PYMNTS (2015) Samsung Business Takes B2B Technology To New Heights. PYMNTS.com [Online]. Available from: https://www.pymnts.com/in-depth/2015/samsung-business-takes-b2btechnology-to-new-heights/ [Accessed 10 April 2019].

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Chau M. and Reith R. (2019) Smartphone Market Share [Online]. Available from: https://www.idc.com/promo/smartphone-market-share/vendor [Accessed 15 April 2019].

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Cliff W. (2016) Beginning Samsung ARTIK [Online]. Apress L. P. Available from: https://ebookcentral.proquest.com/lib/leeds-beck/reader.action? docID=4529703 [Accessed 15 April 2019].

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SAMSUNG Newsroom (2019) Samsung Electronics Announces First Quarter 2019 Results [Online]. Available from: https://news.samsung.com/global/samsung-electronics-announces-first-quarter-2019results [Accessed 30 May 2019].

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Kim Y. (2015) Samsung to focus on online marketing [Online]. Available from: https://www.koreatimes.co.kr/www/news/tech/2015/03/133_175675.html [Accessed 15 April 2019].

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SAMSUNG (2019). Vision 2020. What We Believe [Online]. Available from: https://www.samsung.com/uk/aboutsamsung/vision/vision2020/ [Accessed 3 May 2019].

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SAMSUNG (2019). Strategy. Our Approach to Sustainability [Online]. Available from: https://www.samsung.com/uk/aboutsamsung/sustainability/strategy/ [Accessed 3 May 2019].

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SiliconIndia (2016) Samsung to Bet on E-commerce with Exclusive Online Products [Online]. Available from: https://www.siliconindia.com/gadget/news/Samsung-to-Bet-on-Ecommerce-with-ExclusiveOnline-Products-nid-193786.html [Accessed 3 May 2019].

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Kiesha F (2019) PEST Analysis of Samsung [Online]. Available from: https://pestleanalysis.com/pest-analysis-of-samsung/ [Accessed 3 May 2019].

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SAMSUNG SUSTAINABILITY REPORT (2017) [Online]. Available from: https://www.samsung.com/us/smg/content/dam/samsung/us/aboutsamsung/2017/Samsun g_Electronics_Sustainability_Report-2017.pdf [Accessed 3 May 2019]....