Samsung Electronics Case Write-Up
1. The Memory Industry (5 points).
Conduct a five-forces analysis of the memory industry. You will need to rate each of
the five forces in this industry as high, medium or low and then explain briefly why
you selected this rating.
A) Threat of New Entrants(Barriers to entry) (MEDIUM)
Samsung, being a global company with net revenues of over $30 billion, had established
an integrated supply chain with economies of scale and scope. New entrants were
required to come in on a very large scale for effectively minimizing costs, which the
Chinese companies succeeded in doing. Samsung had scale of economies in research and
chip fabrication and was world leading memory producer for all types of PC’s, digital
cameras and other electronic products. Samsung had demand side benefits of scale as it
demanded superiority in product quality and efficiency and it was a well established and
trusted brand name ($5.2 billion in 2004). High switching costs were associated with the
industry as due to established production lines and multibillion dollar commitments, it
would be extremely costly and time consuming for a company to divest into different
technologies and design commitments. When IBM, Toshiba and NEC discovered
problems with their “trenching” method of incorporating cells into tiny chips, they lost
years of development time trying to switch to the “stacking” method. The cost of
production facilities rose to $3 billion and hence created a higher barrier of entry for
smaller level competitors. As most of the capital required in the semiconductor industry
is used in Research and development, it is unrecoverable and enhances the eff...
... middle of paper ...
...me the
administrative barrier and enjoy the same benefits as a regular Chinese firm. They will
also receive easier access to finance, tax incentives and other essential resources to help
them reduce the Chinese competitive advantage. In doing so they must take precautions
to ensure that their technology and intellectual property is not replicated as there are
several flaws in the Chinese administrative system. They could also buyout an
established local Chinese semiconductor firm that has some brand recognition in the
market which could give them a local presence. Lastly, they could cede the lower end of
the market to the Chinese firms and invest in higher value, cutting edge memory products
that would be hard to replicate. All three options would be viable in different ways and
could help Samsung overcome their primary threats.
can expand through marketing ideas and ways the company can save money by not stocking up on as
thoughts online, which would create buzz. Another upside to this market is the lack of
will have to make sure that they get enough profit to be able to open
Not much detail marketing will still need to do competitor research so it doesn't help much in that area
...ional handouts they could start to develop something they’ve yet to have the initiative to start. Industry & Hard work!
force. Because of this tremendous growth the industry is now facing a major shortage of
Other possibly meaningful factors that cannot be forgotten include: higher yields (due to process quality and use of more efficient, larger silicon wafers), use of common core design for different products supported by the flexibility of production lines (which enabled cost-efficient production of a wide variety of different semiconductors), and – reportedly – 12 per cent lower investment in capital assets related to the aforementioned strategic decision on fab collocation.
The volume of their operation is important to how their business is organised. Essential to their operation is the repeatability of the tasks their employees are doing as well as the systemisation of the work, where standards and procedures drive the way in which each part of the job is carried out. This combination provides a low cost base. For example McDonalds; are well-known for high volume low cost hamburger and fast food production.
Five-force analysis provides a means of identifying the forces which determine the nature of the competitive environment, especially in terms of:
be the increase in jobs. Creation of new jobs will take place in the manufacturing
...o come in and take over a huge part of that market and keeping that position.
Economic factors affecting negative or positive way the companies. The inflation and currencies rates have big influence.
Specifically, it analyzes the major factors within a specific industry. The user can define the “industry” as broadly or as narrowly as is most appropriate for each business. The “five forces” are competition, threat of new entry, suppliers, buyers, and substitutes. Overall, it provides an idea of how attractive an industry is for new entrants or can provide an idea of where a particular business sits within the landscape of that industry. It is important for Casa San Ysidro to understand where they fit within the competitive landscape and what forces could affect their position in years to
Further there were other challenges like limited funds and working capital, limited time to execute and complete the work, weather conditions, legal challenges etc.
They have a good local reputation, but limited means to reach further than where they are.