Knowledge management case Question: What should Samsung Electronics’ growth strategy be after the peak of its mobile division’s success? D) Samsungs future challenges For answering that challenging question, it is vital to consider the product life cycle of Samsungs mobile phones. The product life cycle suggests the following: 1 . A product is introduced (sales are starting to go up) 2. Growth of sales (strong incline in sales) 3. Maturity stage (sales reached the peak) 4.
Decline (downturn in sales) For a company willing to survive in the long run, it is absolutely crucial to innovate in he maturity stage and not to wait until sales are dramatically declining. Relating this model to Samsung Electronics, it is striking that Samsung has done a very good Job in the past. Samsung managed to gain market share through optimizing and introducing new smartphones every time they were close to maturity. However, now we need to allocate future challenges after the peak of Samsungs mobile division has been reached.
Though Samsung has continued its success in the mobile phone business, it faces a number of challenges to keep the growth momentum in the uture. First, competition in the mobile phone market will become more intense. Lower entry barriers will bring in more competitors to the market, and the “digital convergence” will accelerate the competition even further. Companies from other industries such as PCs or network services will compete directly with Samsung. As such, it will have to devise more creative win-win strategies in the highly uncertain digital convergence landscape.
Second, the sustainability of Samsungs high-end strategy, which was attributed to Samsungs brand building, may be in question. Some industry experts argue that most of Samsungs patents are on applied technologies, which are developed based on others’ patent-protected core technologies. An example for that are Apple’s iPhone and iPad technologies which Samsung has simply copied. Furthermore, on the software side, Samsung doesnt own its own primary mobile platform as Apple does.
Looking ahead, Samsung warned that “In the first quarter, demand for smartphones in developed countries is expected to decelerate, while their emerging counterparts will see their markets scalate with the introduction of more affordable smartphones and a higher demand for tablet PCs throughout the year. ” This indicates that Samsung expects its product mix to drive even further towards the low end. Taking a closer look at the tablet market, back in the summer of 2010, Apple launched the iPad. It was launched to great excitement and it seems the initial euphoria was well placed.
From sales of zero at the start of 2010, the tablet market has expanded to over 100 million units a year as we come towards the end of 2013. Sales forecast predict global tablet sales will reach 200 million a year by 2016. The strategy of price skimming had a big impact on the whole consumer behavior. Since Apple was the first to introduce their ‘premium priced’ tablet, they were able to charge a very high end price of around 700?‚¬ per unit. Nevertneless, arter a snort time, otner competltors sucn as Samsung an a MlcrosoTt have skimmed their tablet prices down to 200-400?‚¬.
This seems to be the future consumer expected pricing for tablet pc’s and smartphones. Effectively, Samsung’s rowth strategy for the future should be a more focused view on affordable smartphones and tablet PCs. Additionally, copying the technologies of big competitors such as Apple has not only been high costly (290million US $ for copyright infringement), but also hit hard on the reputation of Samsung electronics. Therefore Samsung would probably be better off by implementing its own software- devices and create a better research and development department at the same time.
In order to be efficient and innovative in the future, young talented people who are apable of understanding consumer habits, change of taste and software improvements have to be secured at Samsung Electronics. In addition, sustainability from an environmental point of view is becoming increasingly important. Due to the fact that Samsung is one of the world’s largest companies (ranked #20 in Global 2000), they cannot disconnect to the fact that they need to be more sustainable in the future. However, Samsung has done a great Job with their new Samsung Galaxy S4, which got the first ever sustainability certification for smartphones.