Samsung Company Business Model

Samsung Company Business Model

Samsung Company started its operations in 1969 and years after, the company has experienced tremendous developments which have earned it international reputation (Long, 2013). The company success is attributed to sound management and creation of a sound business model which have ensured that the company produces outstanding products. Samsung Company conducts operation sin two segments which include; end product division and component division. The end product division emphasizes on the production of digital and communication devices (Madani, Abdulai, Ha and Koosawangsri, 2014). On the other side, component division emphasizes the production of semiconductors. The operation of the Samsung Company has been categorized into different segments, thus forming a sound business model of the company. The segments include; Consumer Electronics, IT & Mobile Communication, and device solution (Singh, 2018).

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With the quest to enhance its profitability and ease the management of the Samsung company, the company has been divided into diverse segments which have made it easy to manage and account for the operations within the company (Madani et al., 2014). According to Nicholas Long, the Samsung model has proved to me sound and successful due to the notable advancement which the company has been experiencing over the years (Long, 2013).

Consumer electronics is one of the segments which the Samsung Company runs in its operations. However, with the quest to ease the management of this sector, the company has subdivided it into more sections. As provided by Amanpreet Singh, Consumer electronics have been classified into visual display business (Singh, 2018). The visual display segment contributes to approximately 37.22% of the company revenue (Cho & Lee, 2015). From the provided information, it can be deduced that this segment is the most crucial in the Samsung company. Furthermore, the segment indulges in the production of television and diverse music systems. Digital appliances business sector contributes to approximately 15% of the company shares (Long, 2013). However, under digital appliances, devices such as refrigerators, Oven, Washing machines, and Microwaves. Printing solutions and medical appliances sectors further fall under the Consumer electronics. Printing appliances contributes to 16% of the company shares (Madani et al., 2014). Tools include; printers, both heavy and light duty. Medical equipments produced by the Samsung Company includes; X-ray and Ultrasound devices.

IT & Mobile Communications Division (IM) has also been sub-divided into subsections which include, mobile communication business (Cho & Lee, 2015). Mobile communication is among the largest sections of the Samsung Company, which has earned them international company image. This section contributes 30.4% of the company shares. Moreover, the segment engages in the production of laptops, smartphones and tablets. Over the years, the Samsung company has been in constant competition with other companies such as Huawei and Xiaomi (Madani et al., 2014). Due to technological innovation which the company has heavily invested in, they have been able to outcompete other organization hence remain an outstanding company in mobile production. Furthermore, network business is also a segment of the IT & Mobile communications; the network business contributes 9.36% of the company shares and indulges in the production of network devices. Digital imaging business accounts for 12.1% of the Samsung company (Cho & Lee, 2015). The section emphasizes the production of camcorders and digital cameras. The digital cameras have been incorporated in the security surveillance; hence the company plays an essential role in bolstering security. The IM division has been built on the “fast follower” strategy (Singh, 2018).  According to Farshad Madani, the fast follower strategy emphasizes on making the company fast in responding to the changes in the business environment (Madani et al., 2014). In this division, the company studies its competitors to remain competitive in the market and maintain the production of quality products which meets the demands of the customers (Madani et al., 2014). In their production, the company yearns to produce different products which meet the quality demand of the customers. According to the information availed by the Samsung Company, in 2012, Samsung Company exceeded Nokia in smartphone production and sales.

Device Solution division (DS), is a vital division of the Samsung Company. The DS division has been divided into more segments to ease its management, enhance quality services (Cho & Lee, 2015). The DS segments include memory business. The memory business contributes to 41.1 percent of company shares (Madani et al., 2014). In this case, the segment indulges in the production of Mobile Storage, Mobile DRAM and flash memories. System LSI business is one of the DS segments, and it has a significant impact on Samsung development as it comprises 20% of the company shares.

However, various products of the Samsung company are supplied to the customers through multiple channels such as direct retailers, distributors, telecom companies and retail outlets (Singh, 2018). With the quest to develop sound customer relationship, Samsung Company engages in technological shows such as CES 2013. Furthermore, Samsung company has been at the forefront in sponsoring various sports such as the London Olympics 2012 and being the official sponsor of Chelsea Football club in 2014-2015 seasons (Cho & Lee, 2015). The research indicates that the growth of the business largely relies on the company brand and how it is perceived in the market. Over the years, Samsung Company has been at the forefront in the international market in developing its brand hence positive reputation resulting in company profitability (Long, 2013). The brand of the Samsung Company and its growth has been positively received in the market due to the quality of the products it produces and technology employed in their production (Cho & Lee, 2015). Furthermore, Samsung company has been in the forefront in reducing the carbon emission through the corporate social responsibility (CSR), and between 2009-2012 Samsung company has successfully reduced carbon emission by 58.34 million tons (Singh, 2018).

According to the information provided by the Samsung report, it is evident that the company has invested heavily on the research which yearns to bolster innovation within the company (Madani et al., 2014). For many years, Samsung Company has been a leading company in technological developments hence calling for more investments in the research. According to the 2019 financial report, the company noted an increase in investments in the research by 40%. However, the Samsung company largely relies on mobile division for its success. As indicated in the 2018 financial report, mobile contributed to 23.9 % of the company’s report (Madani et al., 2014).

References

Singh, A., 2018. Business Model Analysis (Part-1) – Samsung, [online] Available at: <https://www.academia.edu/5611981/Business_Model_Analysis_Part-1_-_Samsung> [Accessed 25 March 2020].

Long, N., 2013. A Business Model Presentation.

Madani, F., Abdulai, M., Ha, J. and Koosawangsri, R., 2014. Samsung’s Innovation Strategy in Smart Phones Market. SSRN Electronic Journal.

Cho, S. and Lee, J., 2015. A Study on CSV Strategies with the Diamond Model – With a focus on Samsung Electronics -. Korea Business Review, 19(3), p.35.