Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Case Summary
Korea Semiconductor
company founded, began
with Wafer production.
And acquired by Samsung
latterly
Crisis : 2001 2002
Semiconductor Industry Crisis
Growth : Semiconductor Industry has 16% of growth rate
On average, 1960 - 2000
1980s, Samsung Group
more focus on Electronics
market and found Samsung
Electronics, manufacturing
in South Korea built
8 Wafer technology
developed, dramatically
shift to Samsung of
production capacity
Recovery : Samsung survived
crisis with their competency and
Branding strategy
Samsung Brand being
listed as 21st valuable
brands in the world by
Interbrand Corp.
Samsung Group started Electronics
industry in television market
1960 1969
1974
1980
1992
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
2004
2005
Industry Summary
Semiconductor Industry
Market Size DRAM in 2003 ($19.5 Billion)
Avg. Growth rate = 16%
Sales = $200 Billions
(1996 2000)
68.2
521.5
896.4
535.3
Logic Chips
672.8
19%
Samsung
Micron
Infineon
Hynix
SMIC
3%
33%
Sales = $166.3 Billions
20%
Memory Chips
Production Volume in million unit
256 Mbit equiv. EXHIBIT 4
Sales = $33.7 Billions
FLASH
32%
Mobile devices
SRAM
10%
Server & Workstation
DRAM
58%
Desktop
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
25%
Samsung
Micron
Infineon
Hynix
SMIC
Market Share DRAM in 2003
Industry Summary
DRAM Production
Electronics design tools; Samsung
develop in-house
Wafers; Samsung owned technology
to produce DRAM with the largest
wafer (more production capacity)
Materials; Semiconductor (Silicon
and Germanium) are costly in
production process and has a few
suppliers
System Firms; Samsung can
customize to met customer
requirements
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Past Strategy and Challenge
Past Strategy
Kun Hee Lees Strategy is learn from competitors, Samsung
invests in DVD and Video products for billions, Less priority in
quality control (sampling for quality check will be done in
some parts for a product), concentrate with high volume
production
Economies of scale production, propose low price
products, Line stretching marketing strategy and Variety
of electronics products
Overall Low-Cost Provider is the main strategy of Samsung
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Past Strategy and Challenge
Challenge Strategy
Samsung focused more on niche market and low price
strategy still be a main strategy for protecting their
market shares from China's companies
Once Samsung targeted on niche market, new products
development needed while a pricing shall be strongly
considered to competitive in the market
Best-Cost Provider become to the main strategy for next
growth of Samsung
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Macro Environment Analysis
Political factors
(+) The industry is on focusing in several countries,
more government supports for technology
development
(+) South Korea has strong relationship with others
General economic conditions
Technological factors
(+) Technology market is moving fast
(+) No trends of new substitute technology
Global force
(-) Labor cost is trendy higher
(-) Economics regression of the world
(-) Instability of Exchange rates
(-) Interest rates volatility
(-) Perfect competitive market coming
Social force
(-) Environmental Conservatisms Resistance
Natural environment
(-) Products is more sensitive with climate
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Difficult
to Survive
Industry Analysis
Threat of New Entrants :
(+) High Investment required
(+) High Production Technology
(+) High Switching cost
Bargaining Power
of Suppliers :
(-) Critical materials
(-) A few of suppliers
(-) the most suppliers is
larger company
Samsung overcome
the factor with good
suppliers relationship
management
Analysis result :
Semiconductor industry is
unattractive market for new
entrant
Bargaining Power of
Buyers :
Rivalry among Existing
Competitors :
(-) High competition
(-) Market moving fast
(-) Price is competitive factor
Threat of Substitute
Products :
(+) No substitute technology
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
(-) Commodity Products
(-) more provider in the
market
(-) Low switching cost for
buyers
Samsung differentiate the
market by proposes products
customization, Products can be
customized to meet customers
preferences
Competitor Analysis and Comparison
Analysis
Result
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Primary Activities
Support Activities
Internal Analysis
Firm Infrastructure : Adaptability culture organization
Human Resource Management : Acquire Korean global talent
Technological Management : Products development competition
Procurement : Economies of scale purchasing, Focus on potential
suppliers
Inbound
Logistics :
Operations Outbound
:
Logistics :
Marketing
& Sales :
Focus on
time to
market,
Volume,
consistency
Focus on
quality, high
capacity and
low defect
Variety of
products,
older-tech.
promotion
Relationship with Suppliers
Focus on
time to
market,
consistency
Services :
Customize to
customer
demands
Relationship with Buyers
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Primary Activities
Support Activities
Internal Analysis
Human Resource Management : Acquire Korean global talent
Technological Management : Products development competition
Procurement : Economies of scale purchasing, Focus on potential
suppliers
Operations
:
Marketing
& Sales :
Focus on
quality, high
capacity and
low defect
Variety of
products,
older-tech.
promotion
Relationship with Suppliers
Services :
Customize to
customer
demands
Relationship with Buyers
Strengths in Samsungs Value Chain
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Resource, Capability and Competency
Resource
Tangible
Financial : Cash flow and Capital
Organizational : 5 Business units
Physical : Fab Manufacturing
Technological : High capacity production line
Capability
Innovative products
High capacity
Varity of products
Best quality
Customize to customers demand
Intangible
Competency
Human Assets : Recruit promoted successor
scholarship
Brands : Value $12.6 billion (21stof the world)
Company : Reward outstanding performance
Culture
do not punish failure
Excellence HRM
Effective procurement by volume
Creativity human capital
Effective production technologies
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
SWOT Analysis
STRENGTHS
Process excellence
High competency
Strong researcher team
Good Organization Structure
OPPORTUNITIES
Market being growth
No substitute technology
High demands
Government supports
WEAKNESSES
Low quality of brand image
International cultural lacking
Inter-cultural crashing
THREATS
China competitors
Social resistance, environmental
effects
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
20%
Strategic Analysis
Flash
Market Growth
Flash
DRAM
DRAM - Less profits, reduce
investment
SRAM
Flash - More invests in R&D, gains
market share is critical strategy
SRAM - Maintains the market
SRAM
0%
DRAM
10X
Relative Market Share
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
0.1X
Continuous product
improvement is very importance
Small company needs partners
for more competitive advantage
to survive in the market
Less competitive advantage /
less margin (low price strategy
needed)
Sized by revenue
Low
Products Development
High
Strategic Group Analysis
Low
Average Selling Price
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
High
Narrow Market Target
Broad Market Target
Past and Current
Generic Business Strategy Analysis
Overall Low-Cost Provider
Strategy in the Past
Broad Differentiation
Strategy
Best-Cost Provider
Strategy in the Present
Focused Low-Cost
Strategy
Focused Differentiation
Strategy in the Future
Cost Leadership Strategy
Differentiation Strategy
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Business Strategy
Sub-branding for penetrate to high-end market, higher positioning as
high quality products provider
Build valuable brand / Communicate values to customer and more
focus on flash memory products
More promotion and selling campaign for DRAM products, preparing
for price war coming of China competitors
Develops new products with green technology, less energy
consumption and toxic materials
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Corporate Strategy
Forward vertical integration for expanding business to downstream,
utilizes strength of technology expertise, manufacturing resources
and a large scale electronic materials provider to be a electronic
devices manufacturer
Build up business in China, for blocking growth of China competitors
and gain cost advantage from low cost manufacturing (lower labor
rate)
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Implementation Strategy
Prepares organization that suitable for international business
especially in China, recruits Chinese employee for faster familiar
with chinas culture and market behaviors
Clearly formulation of forward vertical integration strategy, what
business units should to do (e.g. computer, cellphone, data storage)
Keeps investment on R&D to be leader in innovation, technology
and cost advantage production
Communicate vision and missions needed to employee
Align goals of all related business sections to consistent with
corporate goal
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
Copyright 2012 by College of Management, Mahidol University. All rights reserved.
