Competitive Advantages of Samsung

At present, in the world of electronic industry, Samsung holds the position of one of the top three companies. It is one of the largest multi-billionaire companies in the world right now. It was possible because of the competitive advantages of Samsung.

The name Samsung literally means ‘three stars’ or ‘tristar’ in Korean, reflecting the Samsung Group’s dominance in two further sectors: Samsung Heavy Industries and Samsung Engineering and Construction. In the late 1960s, Samsung Group entered into the electronics industry. It formed several electronics-related divisions, such as Samsung Electronics Devices Co., Samsung Electro-Mechanics Co., and Samsung Semiconductor & Telecommunications Co. In terms of consumer electronics, Samsung has become a major leader in innovation. Again they have been able to achieve the market leader position in many of its products because of their unique innovation, skills & technology. In order to hold the number one position in the market, they are able to achieve more competitive advantages than their rivals.

Competitive Advantages of Samsung

We have discussed the competitive advantages below.

  1. A strong commitment to research & development: Samsung always search and look for the needs of their customers ahead of the rivals. They research and find the demands of the customers. Their engineers try to develop innovative products which will meet customers’ needs. They also work for new technologies to lead the future market. They respond to the customers’ voice by designing and testing new products. Samsung invests over 80% of their revenues into R&D activities. Since Samsung continuous to increase R&D spending, their commitment to leading technology standardization and securing intellectual property rights remains strong.
  2. Product innovation and design capabilities: Samsung is capable of doing well designed and friendly products. Samsung has got different awards for their innovative and well-designed products over the years. The prestigious Consumer Electronics Show (CES) awarded Samsung for their innovation and product design 13 years in a row. It’s commitment to producing environmentally friendly products and to decrease greenhouse gas emissions has been recognized worldwide.
  3. Combining Japanese and American Strategies: Another competitive advantage for Samsung is to combine strategies of both Japanese and American. japanese companies usually like to offer multiple products whereas American companies are more focused and selective on a small product range. By combining these two strategies Samsung uses horizontal diversification and vertical integration. This means that Samsung is diversified with a wide product range, but they are specialized in manufacturing too.
  4. Strong patent portfolio: One of the solid bases of competitive advantage for Samsung is having the strong patent portfolio. In the USA, Samsung is the second largest patent holder since 2006. it has 36 R&D centers across the world to secure core technologies for the future.
  5. Hold Leadership in smartphone industry: Samsung electronics maintain the leadership position by the sales volume in the global market of smartphones. Samsung led the smartphone industry with a share of 21.2% at the end of 2016. Again in 2017, Samsung already sold more volumes of smartphones in the first quarter.
  6. Solid financial Position: Another most notable strength of Samsung is they have a solid financial position in the business market. From the financial perspective, Samsung able to maintain a sound financial structure as well in 2016.

These are few major competitive advantages of Samsung. Some other advantages are there too which helped Samsung to become one of the top three electronics industry in the world. Other competitive advantages are:

  • A culture that embraces cultural differences and adapts approaches to local markets.
  • Expertise in building quality products at low cost.
  • Supply chain and distribution efficiencies.
  • Cutting-edge technology that’s affordable.

Samsung is currently one of the leaders in consumer electronics industry in an international scale. The company employs 325,677 people in 80 countries and has more than 200 subsidiaries around the world (Sustainability Report, 2016). Few other companies have been able to reach the level of the success as Samsung did. All these competitive advantages enhanced Samsung’s reputation & success all over the world.


Reference(s):

1) https://research-methodology.net/samsung-electronics-report-3/

2) http://www.grin.com/en/e-book/324000/samsung-electronics-and-the-global-market-the-history-and-the-competitive

3) https://www.strategicmanagementinsight.com/swot-analyses/samsung-swot-analysis.html

4) https://www.quora.com/What-are-the-competitive-advantages-of-samsung

5) http://dewimiran.blogspot.com/2012/11/value-chain-and-competitive-advantage.html

6) http://www.researchomatic.com/samsungs-sustainable-competitive-advantage-160561.html#buytopicstep

7) https://lawaspect.com/samsungs-corporate-strategy-competitive-advantage/

faizul

Sheikh Faizul Haque, the founder of GotAbout, graduated from North South University, Bangladesh. His major was Finance and Accounting. Faizul has been writing in business blogs since 2013, also has a strong interest in Behavioral Finance, Risk Management, and Portfolio Management.