Samsung Electronics Case Write Up

Mattison Wilson

MKTG 4020

October 2, 2018

Samsung Case Write-Up

1. What are the ingredients of SEC’s corporate turnaround strategy?

Vertical Integration: They invested $19 billion in new chip factories, and $17 billion in TFT-LCD’s so that they could keep their manufacturing capabilities strong. Because they weren’t outsourcing, they had greater flexibility and control and had prices 17% above industry levels.

Hardware Focus: While many companies were investing in software, Samsung decided to stick with hardware so that consumers could access more software through its superior devices than competitors.

Product Breadth: Their R&D spanned multiple categories, while competitors typically specialized in one. This was possible due to their strong manufacturing capabilities.

Digital Product Innovation: They bet that digital would take over the market, and invested heavily into digital products. By the time the market was exploding, they were able to capitalize on the demand for digital products. They were able to bring new products to market in 5 months instead of the previous 14 months.

Digital Convergence: Samsung began integrating many products into a single product, and they were able to do this very well because they were already involved in many product categories.

b.   What are the implications for marketing?

Samsung originally built market share through economies of scale as a low-cost manufacturer, but with the new management initiative it was decided that Samsung needed to develop strong brand power and become a high value-added products provider. Modeled after Sony going to market under their own brand name, Samsung needed to develop a global brand. Top executives were hesitant at first, but Kim was able to educate managers on the role of marketing and better communication strategies. Samsung also wanted to start focusing more on consumer driven insight rather than competitor driven insight, which would allow them to create more innovative products and segment them properly.

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