SWOT Analysis of Samsung. Samsung is a South-Korean conglomerate multinational company. Lee-Byung-Chul laid the foundation of Samsung in March 1938 as a trading company. The brand keeps on changing its focus into different businesses like insurance, construction, shipbuilding, textile, food processing, retail, and securities until 1990. Since then the company has focused on electronics, mobile phones, and semiconductors.
The headquarter of the company is in Seocho, Seoul, South Korea. Some of the main products and services of Samsung are smartphones, TV, LEDs TV, camera, home appliances, memory cards, bulb, camcorder, refrigerator, laptop, consumer electronics, silicon chips, pcs, and stove.
The annual revenue of Samsung was 206 billion US dollars (approximately 230 KRW Trillion) by the end of 2019. Out of which the net income of the company was 21.7 KRW Trillion. According to a statistical report by statista.com, the net income of Samsung by September 2020 is approximately 17 billion dollars.
In 2020, Samsung has become the world’s top consumer electronics and Smartphone Company. According to a statistical report by statcounter globalstats (https://gs.statcounter.com/vendor-market-share/mobile), the total market share of Samsung is 30.58% by the end of 2020, leaving Apple behind. The total market share of Apple is 24.99%. The statistical report is based on the analysis of data from September 2019 to September 2020.
Some of the main competitors Samsung are Apple, Xiaomi, Oppo, Huawei, Vivo, Lenovo, Sony, Nokia, HTC, Intex, Motorola, Iball, Microsoft, Gionee, Asus, Google Pixel, and Micromax.
The detailed swot analysis of Samsung is as follows, we’ll discuss all the internal and external factors in detail one by one. Here’s the swot analysis of Samsung;
Strengths of Samsung
Market Leader in the Smartphone industry
When we talk about market share in the smartphone market, Samsung is at the top of the list. Even the brand has succeeded Apple. However, the total market share of Samsung by Sep 2020 was 30.58%, whereas the market share of Apple was 24.99%. It makes Samsung the market leader in the international market of smartphones.
Samsung has a strong brand name when we talk about electronics and smartphones. It’s because the company is providing unique and innovative products across the world. The company has established its reputation based on years of quality work and dedication.
Innovation/Research & Development
Innovation and R & D play a key role in the success of any smartphone manufacturing company. It’s one of the main reasons behind the success and becoming the market leader of Samsung. The company allocates billions of dollars for research and development annually. According to an estimate, then the brand spent approximately 15 billion dollars on R & D in 2018.
It shows Samsung’s commitment to innovation and customers’ market that the company spends a plethora of resources to launch a new product. The brand is also doing research on other technologies like 5G, AI, and IoT.
Samsung has taken serious steps towards the protection of the environment over the years, and the brand has been doing it since 2004. That’s why western people choose Samsung because the company doesn’t pollute the environment.
According to an EPA (environmental protection agency) list of Green Power Partner in 2016, Samsung ranked in 9th position among the top telecom and tech companies of the world. The company has also received the Energy Star Partner of the year Excellence Award from EPA for 5 years continuously. Other tech companies do not have the status of an eco-friendly brand.
Samsung has the credibility of being a pioneer in innovation and research and development. The company has won the Consumer Electronics Show (CES) award for 14 years continuously because of the unique designs of its products.
In 2018, Samsung has won 36 CES awards in a single year. The company also won the International Design Excellent Awards (IDEA) 7 times. During the period of 14 years, Samsung has more than 400 awards in different categories.
Strong position in the Asia Market
When we talk about the Asian market, especially India, China, and Pakistan, Samsung has gained a strong position in these countries. The smartphone market is growing in the developing economies of India and Pakistan. The company has successful cashed in the opportunity at the right time.
Variety in its Portfolio
The portfolio of Samsung comprises of a variety of products like semiconductors, smartphones, cameras, electronic equipment, home appliances, TVs, and many more. However, the company has product business into 4 major categories Harman, consumer electronic, device solution, and IT & Mobile Communications.
Stronghold in the US Market
Samsung has a stronghold in the US market where Apple has got a dominating position. The total market share of Samsung in the US was roundabout 20-25% during the last two quarters of 2019. The 5G network and 5G devices would hopefully increase the demand for Samsung. The company is also manufacturing the 5G chips. The future of the brand seems bright because of the tech advancements.
Samsung got worldwide popularity due to galaxy smartphone models. The management didn’t waste that opportunity and kept on marketing the new models year after year. It helped the company to reach its products across the world. Years of research work, marketing, and branding have brought the company to global fame and a strong brand in the smartphone industry.
Weaknesses of Samsung
Dependent on the US Market
As we know that Samsung has a strong market position in Asia and across the world. But according to an estimate, both companies like Samsung and Apple sold approximately 70% of their products (smartphones) only in the US market. It seems that the sale of the company’s products depends on the US market.
If we study the US market and the country’s economy, then it’s very uncertain and unpredictable due to many factors. One economic recession can jeopardize the whole work of Samsung. Therefore, the brand should diversify its resources in other markets as well, like Europe and Asia. If one economy goes down, the company should have plan B and C to rely on.
Although the company has got a major share in the market, the sale of Samsung’s smartphones is declining in the Chinese market. It’s because the Chinese market is price-sensitive and they can’t afford the company’s phone. Samsung shifted its focus towards the Indian market and dumped the same product in the Indian market. But it didn’t deliver the desired results.
There’re rumors from various sources that some of the products of Samsung like A20e exploded. Even though the company took full responsibility, banned all running devices, and refunded the full amount to all the customers. It happened many times with the company’s smartphones. Such incidents convey a negative brand image of the company.
Relying on the Smartphones low-end sale
Samsung earns a major portion of its income due to low-end sales of smartphones. According to a report conducted by Gartner, the sale of Samsung smartphones has declined from 71 million units to 55 million units during the last quarter of 2019 and the first quarter of 2020.
Ever since the foundation of the company, the leadership, and management of Samsung have always remained within the family. Although it has brought stability to the company, fresh ideas couldn’t get in because of the hereditary system. There are many scandals and controversies brought to light in the recent about the current heir Jay Lee.
Less Market Share in China
China is also one of the world’s leading economies. But when we talk about Samsung’s market share in the Chinese market, then it was roundabout 1% by the end of 2019. The combined market share of Huawei, Oppo, Vivo, and Xiaomi is 85%. The market share of Samsung is good overall in Asia, but it’s getting very low in China.
Check out this article as well: SWOT Analysis of Samsung (smartphone company)
Opportunities available to Samsung
Triple Protection Security System
Samsung is planning to launch a new triple protection security system with the latest technology and unique construction style. It has attracted the attention of many customers. It’s because people are getting very cautious about privacy and security issues.
Human resource management holds great potential for Samsung. If the company invests some resources on HR, then it wouldn’t only increase the sale but also provides a competitive edge over competitors. It would also help the company to attract highly skilled people that would increase the productivity and performance of the company.
Acquisition & Diversification
As we have discussed earlier that Samsung has been relying only on the US market, and it’s not good for the reputation and future of the company. Therefore, the company should acquire new businesses in the Asian and European markets. It would help the company to diversify its resources. Consequently, reliance on one market would be less.
If we study the trends in the smartphone market, then Samsung has a reputation for establishing new trends in the market like the new foldable phones. If the company keeps on bringing new unique products into the market, it has a great opportunity for growth.
With the rise of 5G technology, Samsung is quick to take it to the commercial level. Even Samsung is the first and top companies to provide 5G devices in the UK. The company is working on to exploit this opportunity to gain a competitive edge.
Nowadays, many new companies are using social media marketing and digital to establish and some of them have done it successfully. Samsung is a globally recognize and well-established brand. But it doesn’t mean that the company should avoid this opportunity. If the brand uses social media and digital marketing to increase customer engagement, it would increase the market share of the company.
Potential in the Chinese Market
China is not only one of the world’s leading economies, a very populous country, but she also plays a key role in the Asian market. After the pandemic of COVID-19, it seems like things are getting back to life. Samsung should see it as an opportunity and try to get back the market share.
Threats Samsung has to face
Patent & Copyrights Lawsuits
Samsung had faced patent and copyrights issues over the years that have brought a negative image to the company. For instance, Apple filed a patent and copyright lawsuit against Samsung, and the case went on for 7 years. Finally, the two rivals agreed to a settlement and the jury decided that Samsung stole ideas of Apple. The company had to pay 1.049 billion US dollars for the settlement.
Competitors both in the industry of consumer electronics and smartphones are getting very stronger. Therefore, it’s becoming very difficult for Samsung to stay at the top. Tech companies’ competitors are working day and night to outsmart one another with a new feature, design, or something to increase the sale.
Technology has made the world a global village. Now, the governments of different countries understand the power the technology and they’re making strict laws to scale tech companies. It’s no doubt that Samsung is the world’s top company, but it’s not above the law. If the company doesn’t comply with the local laws of different countries, it would result in the form of restriction and ban.
COVID-19 Impacted Sale
A recent wave of COVID-19 global pandemic has affected the businesses of all the companies. People lost their jobs and they were out of work. Lessor no income means declining sales. Although Samsung still holds the maximum market share, the post-pandemic period would be difficult for the company.
According to many reports and research studies that many new tech companies, approximately 36% of them, copy the design and style of Samsung. The design and style of the world’s top company shouldn’t be simple and easy that anyone could copy it. It must have some sort of key element only accessible to the parent company.
After a detailed study of swot analysis of Samsung, we have come to accept the fact that Samsung is indeed the world’s top tech and smartphone. But copyright and a patent lawsuit, scandals, and family controversies are serious threats to the company. If Samsung minimizes those threats and exploits the abovementioned opportunities. The company can increase its sales and market share on a great scale.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.