Case Study on Samsung Electronics

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This sample case study explores Samsung’s business development, lawsuits, and marketing strategies, offering recommendations believed to help strengthen the global organization.

Samsung Electronics Lawsuits, marketing, and recommendations

Founded in 1938 by Byung-Chull Lee, Samsung has flourished in the electronics industry to become one of the most dominant companies in the field today. But it hasn’t always been easy for Samsung executives to drive forward their company’s mission statement and vision.

Background:

Samsung’s global headquarters are located in Seoul, South Korea, but their U.S. headquarters are located in Ridgefield Park, New Jersey. This company currently employs 369,000 people worldwide, and is one of the largest companies in the electronics world. The current CEO and Chairman for Samsung is Lee Kun-hee. He oversees all of the branches of Samsung:

• Samsung Electronics
• Samsung heavy industries
• Samsung Techwin
• Samsung Engineering

(“Samsung History”)

Company finances

Due to Samsung Electronics business strategy, being one of the largest companies in the world, its finances are vast. This company reported a huge amount of assets in its most recent financial statement. In the 2012 Consolidated Statement of Financial Position report of Samsung Electronics Co., Ltd. and its subsidiaries:

The company reported that as of 2011 it had:

• $62.8B of total current assets
• $136.7B of total assets

The company reported that as of 2012 it had:

• $140.7B of total assets
• $62.6B of total current assets

Needless to say, Samsung Electronics has the resources to invest, research, develop, and market basically anything that it wants to (“Samsung Financial”).

Key products

One of the key products that Samsung has distributed and seen wild success with is its mobile phone division of the electronics company. On the company’s website, they claim that their mobile phones are:

“Admired by customers around the world, enhance mobile lifestyles while meeting the diverse need of the mobile marketplace,” (“Business Area”).

Even though Apple has given Samsung a run for its money, by attempting to follow these statements, the company has released several different Smartphones that have seen wild success among the population. Some of the key products that are under this heading include:

• Galaxy S III
• Galaxy Note
• Galaxy Note II
• Galaxy S series

These products have been the some of the most popular and most highly reviewed products that the mobile phone division of Samsung Electronics has released recently.

With the wild success that Samsung has seen in its mobile communication products recently, there has been some serious backlash from Samsung’s competitors, namely Apple. The two companies have entered a legal dispute in which Apple claims that Samsung has infringed on its patents for many of its devices. The case includes:

“More than a dozen different patents” and “more than 30 allegedly infringing devices,” (Crook).

Of the patents, 4 are in relation to Apple’s 2015 products including features such as basic product design and user interface, 1 patent on design recognition, and 3 patents on utility patents that control the way in which the mobile phone operates and functions to the user’s specific actions. The devices that are most notably included in this particular lawsuit are the Samsung Galaxy S, S II, and Galaxy Tab 10.1. This legal battle between Apple and Samsung has serious repercussions on the marketing strategy that Samsung can undertake because it may determine what the company can sell to its consumer base (Crook).

Analysis:

The marketing campaign that Samsung has adopted for its mobile phone division, as well as most other electronics divisions, has been to basically flood the market. As of September 2012, Samsung has unveiled many new products to the electronic world, including new mobile devices. Some of the items that have been released recently include:

“Updates to some of Samsung’s best-selling existing models such as the Galaxy Note as well as new product launches such as Series 5 and Series 7 Windows 8 tablets and a ATIV S Windows Phone 8 smartphone,” (Trefis Team).

It is worth noting that the high number of recent releases from Samsung could be in accordance with the company attempting to deflect a portion of the negative media attention that fell to it after the lawsuit that Apple filed against Samsung for stealing their patent on phone software, however it appears that Samsung is following its strategy of continually offering its consumers more and more options in the world of mobile communications.

Court's ruling

The impact of the court ruling could have a monumental effect on the mobile phone division of Samsung and on the entire Electronics division as a whole. In the past year, Samsung’s market share of the Smartphone market increased dramatically. From the 2nd quarter of 2010 to the 2nd quarter of 2011, Samsung’s market share jumped from 18% to 36%. This success can be attributed, in large part, to the Galaxy S III. The Smartphone sold over 10 million units in a timeframe of fewer than two months. This has lead to Samsung taking a large lead over Apple, in the 2nd quarter of 2012. However, the patent win by Apple threatens to put Samsung’s recently found success in serious jeopardy.

Additional Reading: Impact of Cellphones

Currently, Apple has filed an injunction that would ban eight different Samsung devices from being sold in the U.S. because of patent-infringement. Though the devices are not necessarily the backbone of Samsung’s mobile products, as they include mostly older products that are approaching the end of their product cycle, this precedent could become a much larger issue, as it is just the first of many injunctions to follow. Apple has already made plans for a similar case to be filed that would target some of the newer Samsung products including the Galaxy S III. A ban on a product as successful as the Galaxy S III could seriously jeopardize all of the progress that Samsung has made in gaining a larger share of the Smartphone market (Trefis Team).

The issue of losing one of its key products looms largely on Samsung’s mobile phone division, however the company has acquired multiple platforms for operation in the Smartphone market. Currently, Samsung produces Smartphones that run on multiple mobile operating systems. The operating systems include:

• Android
• Windows Phone 7
• Bada OS (Samsung developed)
• webOS (HP developed)

This approach is much more diverse than other companies in the mobile phone market that tend to focus on a single system and work within it such as Apple with its iOS or RIM’s BlackBerry system. This approach can be seen in two potential views. The first, is that Samsung does not know if Android (the system that has seen Samsung’s highest selling products) is going to be successful in the long run - since it is prone to cellphone malware, or that the company is simply trying to diversify the potential platforms that it has a foothold in in case one of the lesser known mobile phone operating systems should become wildly popular with the consumer base (Nguyen). Regardless of the provider that Samsung endorses the highest, there is one other glaring problem that the company must address beside the lawsuit with Apple.

Samsung has consistently received negative reviews and feedback on its customer service. Customer Service Scoreboard, a website that takes user reviews on a company’s customer service program and ranks the comments, areas of interest, and overall quality of the customer review program, has found that Samsung’s program is overall “Disappointing.” The site ranked Samsung as “#373 out of 583 companies that have a CustomerServiceScoreboard.com rating with an overall score of 31.52 out of a possible 200 based upon 1128 ratings,” (“Samsung Customer Service”).

The negative comments ranked at 93.88% of total comments received about the customer service system, and on the scale of 1 to 10 (where 1 is the worst and 10 is the best) of ranking Issue Resolution, Reachability, Cancellation, Friendliness, and Product Knowledge, the company’s highest mark was in Friendliness at 3.4 (“Samsung Customer Service”). To continue in a successful manner, especially when one of its top selling product’s future is jeopardized, the company must address the way in which it deals with customers in the customer service field.

Recommendations:

There are three major recommendations that should be made to Samsung as to deal with the issues of the lawsuit and its customer service reputation. The first two both deal with the lawsuit and the last is about the company’s customer service division. First, Samsung should put much more of its resources into drawing attention to its products that are on different mobile operating systems in the short term. If the company is banned from selling its Galaxy S Smartphone series in the U.S., the market share that Samsung has recently acquired is in serious jeopardy of being retaken by Apple. Therefore, it is of the upmost importance that the company has a serious backup plan if the banning should take place.

By marketing its phones that operate under the other platforms, Samsung will be able to minimize the potential losses felt from its top-selling products being outlawed. This will help to keep the company’s market share from drastically falling (though it would still see a significant loss should the Galaxy S series be banned). Second, the company, before any action is taken to ban any of the products that Samsung currently is selling, the company should attempt to make a large push to get as many of the jeopardized products out to its consumers. Those that have the product before it is banned will likely be grandfathered in and be able to keep their device after it gets banned from being sold. If therefore, the company were to offer some sort of large incentive for customers to buy their products, they could get a stronger hold on the market before their potential top selling product is removed.

One strategy could be to offer a discounted price or an extended warranty that covers extensive damages and losses at no additional price. This will allow for many people to have incentives to immediately acquire a top-tier Smartphone that is covered for any potential damages for years to come. Finally, the company has to overhaul their customer service program and use social media and marketing. The current figures are alarmingly poor. Many consumers are turned off by the idea of buying a Samsung product because they do not want to deal with one of the worst rated Customer Service programs in the world. Though the company is worldwide and sells products all over the globe, the customer service representatives should be localized to a country where the consumer buys the product.

Though this service costs more, consumers will really appreciate it. By having someone in America call and talk to another American worker, they will feel more comfortable and less irritated than reaching a customer service representative based in Asia dealing with a product that person bought from a retail store literally thousands of miles away. By implementing these recommendations, Samsung will see improvements in both its sales and its feedback from its customers. These changes will also stem the potential loss that Samsung may see if the injunctions filed by Apple to ban the sales of many of its key products goes through the legal system swiftly. Samsung has been a leading tech company for years, and the adoption of these recommendations will help to keep the company as one of the most profitable in the world.

Works Cited

"Consolidated Statements of Financial Position." Samsung Financial. Samsung Electronics Co., Ltd. and its subsidiaries , n.d. Web. 15 Nov 2012. http://www.samsung.com/us/aboutsamsung/ir/financialinformation/auditedfinancialstatements/downloads/consolidated/2012_con_all.pdf.

Crook, Jordan. "Apple and Samsung Bring Their Marketing Strategies to Court." Tech Crunch. 20 2012: n. page. Web. 15 Nov. 2012. http://techcrunch.com/2012/08/20/in-this-complex-patent-battle-apple-and-samsung-take-their-marketing-strategies-to-court/.

Nguyen, Chuong. "Samsung's Mobile Strategy: Diversify." Gotta Be Mobile: Mobile News Reviews. 30 2012: n. page. Web. 15 Nov. 2012. Trefis Team, . "Samsung's Market-Flooding Strategy May Not Work Much Longer." Forbes. 06 2012: n. page. Web. 15 Nov. 2012.

"Samsung Business." Business Area. Samsung, n.d. Web. 15 Nov 2012. http://www.samsung.com/us/aboutsamsung/ourbusinesses/businessarea.html.

"Samsung Customer Service." Customer Service Scoreboard. Customer Service Scoreboard, n.d. Web. 15 Nov 2012. http://www.customerservicescoreboard.com/Samsung.

"Samsung's History ." Samsung. Samsung, n.d. Web. 15 Nov 2012. http://www.samsung.com/us/aboutsamsung/corporateprofile/history.html.

Trefis Team, . "Samsung's Market-Flooding Strategy May Not Work Much Longer." Forbes. 06 2012: n. page. Web. 15 Nov. 2012. http://www.forbes.com/sites/greatspeculations/2012/09/06/samsungs-market-flooding-strategy-may-not-work-much-longer/.