samsung in china :: essays research papers

Environmental AnalysisExternal EnvironmentChinese commercialize-still socialist economyhuge gap between the stated plans and the true ability of government to manage and control the economytremendous amount of sparing interaction took place outside the governments formal economic plan-many smugglings and piracies-regional blockades-over-employment problemChinese color TV Market-full production capacity in demandprincipal battlefield-high competitionJapanese firms high-end commercialize. Increasing production basesDomestic Firms low-end market. But they were less competitive in large screen TV.-small color TV market was shrinkinglarge market size of these product lines facilitated the fast achievement of cost reduction(economy of the scale, learning effect)Consumer analysis-only 41% of households had color TV80% of urban, 28% of ruralLow-end market is not a viable long-term. But overall market was still expanding.-Buying power expanding both high-ends and low-ends - list that fi rst image of a product lasted long in the eyes of the consumer.the reason for differentiation needed focusing on high-ends -consumer preferenceUrban- denounce name, functionality were crucial factors.Rural- reasonable quality and low price were preferred.-High protected market too much tariff costlocalization neededDomestic (Korean) Market-Deteriorating of competitive advantage rising the labor cost-Korean government policy supportive of big businessgetting worse of Korean marketLosing the M/S in the U.S. and no longer competitive in the low-end productneed to change the strategy focusing on high-end, high-tech- ease of Korean marketForeign firms were permitted to sell their product directlyMore competitive in Domestic market, losing the domestic M/SSamsung had to expand the orthogonal market.Internal EnvironmentExperience in the U.S.-Set up the subsidiary there in 1979-Focusing on the low-end market segment based on competitive labor cost in Korea because of large demand and low competition base, and low barrier in the U.S.-Samsung produced a few of the most common sizes TV for cost reduction through economies of scale and the experience curve.-Dual brand policy adopting buyer brand name(large retailers or OEM) mostly but exhausting to build its own brand image-Establishing a production subsidiary in the U.S. because of trade barrier-Policy of Japanese firms targeting high-ends for differentiation through brand name recognitionMatsushita 4% of M/S in 1995 but could be high-price, higher profit-Policy of Samsung still pricing strategy dismantle though it had good quality of product3% of M/S, but much less profit than Matsushita and facing intense competition-Importance of TV industry to Samsung second proportion of Samsung electronicsIt was getting worse in situation of Samsung electronics, so needed some way to solve these problemsMarket participation in China-later market entering than Japanese firms-The establishment of SCH would enhance its image in China and speed up the accumulation of local association of the market.