Company With An Attractive Opportunity

Published Date: 02 Nov 2017

VERA NGALO

T10073

BBA 3

MGT 301

SAMSUNG ASSIGNMENT

Executive Summary

In the report I have analyzed the IT and Technology industry at large. I specifically placed emphases on the Tablet PC. In analyzing I looked at the Tablet PC industry in the world and then narrowed it down to South Africa. The ultimate objective of this report is to evaluate and scrutinize Samsung South Africa specifically on the range of Samsung tablets. I will be discussing 3 aspects in this report: the outlook of the industry, then answer whether the industry presents Samsung with an attractive opportunity in the market and what strategic issues and problems merit front burner managerial attention and lastly conclude by making recommendations for Samsung to reach a competitive advantage.

In achieving the above part of this report will entail the analysis the internal and external environment (PESTILE) as my analysis tool of the tablet industry and the internal environment using porters 5 forces as my analysis tool and coming up with a SWOT analysis for Samsung. Then after this I discussed what strategic issues and problems merit front burner managerial attention and I answered this question by bring forth a few questions that needs managerial attention. In this report I will use Apple as a benchmark with regards to innovation and I will be comparing it in more than one occasion with Samsung.

In the closure of this report I concluded by giving my recommendations and conclusions for Samsung.

Contents

Executive Summary

Introduction

Does the outlook for the industry present the company with an attractive opportunity?

Industry Analysis

Tablet Market Forecast

Opportunities for the industry

The current Outlook on tablets

Tablet in South African Market

Over-view of Samsung

Achievements of Samsung thus far

2011 theme: Samsung’s theme: Smarter Life

Micro environmental analysis

Porters five force model

SWOT Analysis for Samsung

Macro-environmental analysis of the tablet in South African market

PESTILE

Key drivers for change

What strategic issues and problems merit front burner managerial attention?

Some questions Samsung Managers should be asking:

What if the tablet market does not increase?

What if the customers taste changes?

What if a new product which is much more advanced and multitasking enter the market?

Conclusion

. Recommendations

11. References

Introduction

We have stayed in a PC model world for approximately 30 years now, until the launch of I-Pad in 2010. (www.apple.com) which is most astoundingly the only comparable change in the market had been the laptop. Now it is clear that we can determine that the invention of tablets has changed most aspects of our lives; the way we work and live, within a very short span of time. (www.southafrica.info)

The tablet is the third generation of computers. Tablets are taking the computing industry to higher levels. Tablets are able to give you internet access, access to email, video chat and access to capture images and videos while on the go. Tablets are convenient for students, business professional or just any technology gurus, tablets have something for everyone. Tablets offer one of the best devices; the tablets offer an approachable touchscreen that speedily follows every command. There are various functions that can be conducted using the tablet, you can take notes, send and receive emails and create documents, excel spreadsheets and PowerPoint documents at anytime, anywhere and while on the go. With the application of the built-in cameras, you can take images and video clips at any moment or even communicate with someone anywhere in the world via Skype. In other words it would be safe for me to say that tablets have cannibalized the traditional computer industry. According to Reuters, the original version of i-Pad, which was launched in April 2010, crossed the one-million mark 28 days after its launch. This news showed the impact of tablet in computer market. After the sales of Apple I pad went sky rocket, many other companies also got attracted to tablet market; and a live example would be Samsung. (www.businesstech.co.za)

Does the outlook for the industry present the company with an attractive opportunity?

Industry Analysis

Tablets are certainly the hottest topic in mobility. Everywhere you go you will see someone that has one; either using one or talking about them; even in my daily academic life, almost in every course that I do we are speaking about tablets or the different company producers of tablets. A number of 17 million units were sold in 2010 and just over 60 million will be sold in 2011. The sales figures are looking very well but it also important for me to mention that cash is not always king, so the sales figures is in fact is one measure of success with regards to these tablets. So in essence the way the market received these tablets and the way in which the consumers interacted with them is good and this too is shown in the high sales volume. (www.fin24.com)

Tablets are different from other devices, devices such as cellphones, laptops and computers in a number of ways. It would be fair to say that tablets owe their legacy to the smartphone, because they are in more than one way similar and share a lot in common however one of the great advantages of tablets is that tablets offer richer user experience, I will elaborate more about the rich user experience in this report at a later stage as Samsung 2011 theme. Some features such as the internet browsing experience, with video, and the accessibility of e-reader is substantially richer influenced by the ecosystem that tablets support.

I found similarities between what the Apple iPad did to the tablet PC market is very similar to what the iPhone did to the smartphone market: Apple just reinvented it. Analyzing the feedback and response from the consumers to the iPad, a few competitors are striving to compete by offering 1st on the hardware and ultimately striving to impact the platform of the ecosystem. However, I have found that these competitors have the same mistake in common and that is the competitors are trying to achieve and prioritize hardware features and technology and this tends to exceed the overall user experience and service says Lesley Horn.

Consumers buy tablets because of what they can do with them, so important factors would be the services the tablets offers, its applications and content including a good design the hardware are the important factors that have an impact on the customers overall experience and eventually drive sales of the tablet, and not necessarily the hardware features. This is one of the reasons why Apple has a massive advantage over its competitors in the price section of the marketing mix. Most of Apples competitors predominantly focus on browsing the net and watching video on a tablet, on the other hand Apple has been educating its consumers about the interaction between the applications and multi-touch that gives an experience that can’t be experienced using a PC. (www.apple.com)

Tablet Market Forecast:

Taking the global economic circumstance into consideration, the demand for the mobile computing industry will increase steadily that leading the price-performance ratio of the device will progress. There will also be enhancements to the software and hardware support for android-based tablets according to Digitizes Research analysis.

In essence there is a possibility for mobile computing industry to increase and so will the price-performance of the tablet will also improve. There will be a simultaneous enhancement to the software and hardware assistance for android-based tablets and in my opinion will without brings about growth in the tablet industry and gives an indication of growth in the tablet industry as well. (www.pcworld.com)

Opportunities for the industry:

From the beginning of having the tablets in the market, and Apple was the first to launch the iPad in 2010, a speedy occurrence of tablets has flooded the consumer marketplace by other tablet manufacturers like Samsung. There are about40 different tablets in the market and these tablets are produced by more than 10 manufacturers, and this will without a doubt create competition amongst these different manufacturers. The increasing amount of demand for tablets as opposed to smartphones indicates the consumer demand for information and accessibility on-the-go; and I would put this under the category of convenience. Because this is one of the factors that consumers enjoy most in a product. (www.the-computer-tablet-industry)

The current Outlook on tablets in the Corporate Industry:

Currently 21% of companies purchase tablets for employees and the prediction is that in one years (2012) it will increase to 51%

In what functional areas are tablets currently used in organizations?

36% Executive Management

28% Sales and Marketing

8% Operations

6% Engineering

5% internal support

The above stats are an over-view of which departments tablets are used in the work place.

People use tablets to watch movies, work reasons, while travelling, at home and while commuting.

(Source: Goldman Sachs IT, Spending Survey, January 2011)

Tablets in South African

These statistics are taken from a survey that was conducted by Liz Hillock, the head of Marketing at Kalahari.com. Statistically proven more than 70% of South African tablet owners are predominantly using the tablet device to shop online, according to (Kalahari.com) marketing head Liz Hillock.

Tablet owners set to grow, and the number of South African tablet owners was set to grow, as close to 60 percent of online shoppers who did not currently have tablets were considering buying one says Liz Hillock.

Tablets are so convenient to such an extent that they are portable and can be carried anywhere at any time, with their touch screens , tablets have become a more tangible and convenient way to accomplish varies factors such as access the internet , sending and receiving email and even shopping online.

The survey conducted by Liz Hillock also stipulates that the Apple iPad is the most popular tablet in South Africa, and the 2nd is the Samsung Galaxy. Furthermore a third of connected online shoppers has a tablet and uses it for purchase online and buy items like electronic books, music, videos and for banking. (Kalahari.com)

From a gender point of view Hillock said an increasing number of South African women were purchasing tablets. She says from 2010 to July 2011, males were the major buyers of tablets (at 64 percent) and on the other hand the amount of female tablet buyers was only 36%. Furthermore Liz Hillock mentions that this reality is changing because as from August 2011 to date, 54% of people who buy tablets are male and 46 percent female.

The major players for the tablet industry are Apple, Motorola, Blackberry, Samsung and recently Amazon. Among these players there is major competition between Apple I -pad and the Samsung galaxy. (www.digitaltrends.com)

Overview of Samsung

Achievements of Samsung thus far

Expand eco-system

Stimulate innovation last year announced new serious of Androids on the platform

The Galaxy serious sold more than 10 million phones around the world

Late last year on androids platform Samsung played leading role in the new wireless communication methods

Samsung’s emerging processers are also seen great success

Samsung is also known for indigitalling image fastest growing brand with the reputation for time period innovation

Samsung offers dual view, wireless camera and annex series

Samsung focuses in environment and sustainability

1st initiative which was

A global initiative at global and corporate level

To make the number of the top sustainable in the world by 2013

Samsung recycled direct items such as LCD TV, notebooks, printers, pcs and exceeded energy star standards and

The National Recycling program has safety recycled numerous Samsung products at no charge to its customers

Out of all Samsung’s products they have 6 products selected as eco design winners.

(Samsung CES 2011: Press conference Introduction by David Steell)

2011 theme: Samsung’s theme: Smarter Life

Samsung had 3 main objectives to achieve through their mobile products and the 3 categories were:

Smart Design

This contains products with more functions more features to use and physical design highly appealing and emotional at home, in your pocket, bag and even at work.

Smart Experience

Samsung offers a whole range of applications, content, games, platforms wanting to optimize great view eye and great displayers.

Smart Connections

Samsung aims to make it easy to connect products to each other and to the realm of service of internet

(Samsung CES 2011: Press conference Introduction by David Steell)

Micro environmental analysis-(Internal Environment)

Porters five force model

Threat of new entrants

Analyzing threat of new entrants is quite low for Samsung because of the following reasons. It is complicated to begin in an industry where there is already companies operating in and are established in the market place. (www.industryanalysis.doc) one of the challenges that could be faced by new entrance is overcoming obvious issues more especially if the company did not plan to bring something unique and new in the market. That is why it is very important for new entrance to create and establish their brand (brand loyalty) and simultaneously creating economics of scale new entrants can’t reach the high economies of scale because currently apple has more than 70% of market share. So for that reason it is a bit complicated to attain economies of scale. Another important requirement for new entrance is high capital volumes. It is very essential in establishing a new company and launch new product however current computers and electronic companies can easily enter into the tablet market very easily. It is also evident that customer loyalty is very high with the apple company with regards to tablets shown by the market share and this indicates that it is more difficult to obtain customer loyalty to new entries. (www.industryanalysis.doc)

Threats of substitutes

Threats of substitutes are also higher for Samsung tablets because of people can easily move to the mobile phone or laptop rather than using tablet. Infact any mobile phone (smart phone) that can perform the same functions as the Samsung tablet can be regarded as a substitute. Other device that can substitute Samsung and that are highly competitive in the market is Apple and Blackberry specifically in South Africa. (www.industryanalysis.doc)

Bargaining power of buyers

Power of buyer is also very high because of how competitive the industry is, there is also no switching cost change that takes place, and also every tablet is literally same; they have the similar features (software and hardware) - so an advantage factor here would be innovation of the tablet: better features, brand loyalty and pricing will be play a big role. (www.industryanalysis.doc)

Bargaining power of suppliers

In the case of Samsung, the bargaining power of suppliers is very low because Samsung is its own supplier in most of the components to manufacture these tablets.

Competitive Rivalry

With regards to the industry the overview of this industry is that the rivalry is high because the tablet industry has many competitors that are equally balanced and another factor is due to the imbalance of the market; the influence of the "big player" in the market: Apple. So this means that high exit barriers may occur, and the market is possibly unclear whether the new product will come into the market or a new tablet will gain market share or not. Except Apple’s android most of the other tablets are having same android in them. (www.samsung.com)

SWOT analysis for Samsung

STRENGTHS

Largest producer of micro-processors & flash memory drives

Samsung has got the required resources to overcome innovation and make a similar product in the market

Customization (new Products every year)

WEAKNESSES

Samsung has a very low market share in the tablet industry

Samsung has limited innovation

OPPORTUNITIES

Samsung can produce its own tablets

Production of Samsung can help them to gain market share

Tablet entering new markets such as Financial services, Healthcare, Media, Retail, Education and Emerging markets

THREATS

The lack of innovation can be a threat to the company

Macroeconomic matters

Technological change

Legislations

Changes in the competitive market place

(PESTILE)

(www.samsung-swot-analysis)

Macro-environmental analysis of the tablet in South African market

For analyzing the extensive macro environment of an organization, there is amongst I will use the concepts-PESTEL. PESTEL cover the external environment very well because it cover the major factors that are found in the macro environment and gives a broader overview of the industry, and assists in exploring different ways in which macro-environment could possibly change.

PESTILE:

Economic Environment

After the recession in 2008 the South African economy started to grow once again with a very little boom, but again in 2011 the economic growth slopes down. This meant that the consume disposable income will be low, and the consumers will start saving more and spending less on luxury goods like tablets, and it can be concluded that the tablet industry may have suffered because of this in 2011, however there are higher predictions in sale volumes in the tablet industry for 2012 and 2013.

Social Environment

It is evident in this modern society that we are living in that people are more active and connected through social networks like Facebook, twitter, whatsApp, BBM and MySpace etc. these are not only platforms for the youth to communicate but also older people depend completely on internet to interact and communicate with their friends and families and even at a business level. Some commitments are done via the internet like: online shopping, online banking and online news sites are more established nowadays. The market is in need of new trends and new technology (innovation) in every sphere of their lives and because the internet has become a part of their lives it is almost impossible to life without internet. And because of this people are alert and on par with technology innovation and advancement; and for technology gurus and early adaptors are always ready to get these products like tablets as soon as they are in the market place. The internet and computing as become so much of human nature that people are so much more multitasked now by performing different things like doing house chores, chatting online, and watching movies all at the same time.

Technological Environment

Technological environment is a changing environment and is changing by the day; it is a rapid and volatile environment. The development in the telecommunications has rapidly changed. For instance the high speed internet, touch screen facility for the tablets, long battery span, the connection of electronic devices, Wi-Fi, virtual key pad, etc. These features are all found on the tablet edifying to the enhancement of the tablet.

Environmental Environment

In South Africa and in the world in fact we are facing numerous environmental challenges like amongst many: pollution and global warming mainly because of the disposal of electronic goods which causes highly toxic carbon monoxide gas ultimately influencing the drain of the ozone layer which screens the harmful ultra-violet rays from entering the worth.

That is why Samsung in specific focuses on in environment and sustainability and recycled direct items such as LCD TV, notebooks, printers, pcs and exceeded energy star standards. National Recycling program has safety recycled numerous Samsung products at no charge to its customers and lastly out of all Samsung’s products they have 6 products selected as eco design winners. (Samsung CES 2011: Press conference Introduction by David Steell) and Samsung is considered as a eco-friendly company

Legal factors

In the tablet industry there is rivalry and legal battles between Apple and Samsung around the globe with regards to copyrights. The first incident between Apple and Samsung happened when the battle was start by Apple in mid-April when Apple filed a suit in District Court claiming that Samsung Android-based smartphones and tablets infringed and trespassed on Apple’s intellectual property. Apple’s original suit against Samsung included the Samsung Nexus S, Epic 4G, Galaxy S 4G, and Galaxy Tab. This is just one example that could occur in the tablet industry.

(pest-analysis-of-samsung-mobile)

Key drivers for change

By having done the analysis of the PESTEL, it is evident that the social and technological factors are one of the major key drivers for change and are factors that high impact on the success or failure of a strategy.

Social factors: it has a great impact on the tablet industry because of the change in lifestyle of the people and affects the demand for a company's products and how that company operates. We are living in a highly hectic world where we got hardly little time for leisure or to spend time with family. Including this there is a major change in the way people live and work. The new trend that I am talking about in this case is that if something new or trendy comes to the market, people show great enthusiasm to adapt the new technology depending where the individual lies in the life cycle. The tablet market since most people perceived it as a notebook computer with modified features of a smart phone and music installed; the internet automatically becomes a part of people’s life which will be a necessity for the tablet as well.

Technological advancement: (Innovation) as we have seen in PESTEL, technological development plays a key role in tablet market and in fact in every other market. The advancements in technology led to the innovation of tablet industry. The introduction of the happen very quickly if you take into consideration the evolution of tablet starting from a laptop, mp3 player and smart phone all occurred in a short period.

What strategic issues and problems merit front burner managerial attention?

Some questions Samsung Managers should be asking:

What if the tablet market does not increase?

By observing Apple’s success in tablet industry, many companies also came into the market; hence companies like Samsung came in too. However for the success of the Samsung tablet it is very important for the tablet to be highly innovative to be able to survive in this industry. This does not only apply to Samsung but also apple have to be very differentiated and distinguished to survive for long term in the industry .Technological factor clearly indicates that lot of new innovations are taking entering in the market and it may lead to a possible product much better than the tablet.

What if the customers taste changes?

In social factors we have seen that consumer taste changes dramatically and sometimes in near future, they may get bored with tablet and may likely to demand product which is much compact and easy to use. Thus the tablet companies have to keep an eye on consumer taste and behavior and should modify their product in order to satisfy their consumers. Conducting a customer survey will be really helpful to companies to survive in the market.

What if a new product which is much more advanced and multitasking enter the market?

As we know the technological environment is always changing and is very volatile to such an extent, new technology is keep on coming and most people are more interested about the current technological advancement which could possibly lead to the introduction of a new product which will take over tablet. That is why Samsung should put more effort and emphasis on research and should be innovative and creative to be sustainable in the long run and to achieve a competitive advantage.

Conclusion

In conclusions I have observed that the tablet industry is doing very well. This even gives Samsung a great opportunity to take advantage of the market. In compiling this report one of the most critical factors that consumers take into consideration is convenience and accessibility. The tablet does fill both these consumer needs, because you can use a tablet at any given time and anywhere. You can even use the tablet as a cellphone so it is 2 in 1. A cellphone and portable PC as well; where one can receive and send emails and even create word, excel and PowerPoint document. Using the increase in the sales figures as one tool to measure success; It is evident that the market has been responding very well to the tablet PC. Samsung needs to be innovative to sustain them in the market; brand establishment and brand loyalty won’t only be sufficient to keep Samsung above its competitors and substitutes in the market. But if Samsung can as I have listened in my recommendations improve their innovation and come up with their own unique ideas the company would get a positive response.

. Recommendations

My recommendations for Samsung would be that the company needs to be extremely innovative to sustain their product in the market. My observation on Samsung is that they are waiting for other companies to bring forth new products that are innovative and Samsung are trying to imamate their products.

I took a look at Samsung website and Samsung would do with some innovation and attraction of their website and I think it would also be wise for Samsung to stipulate why they are better than their competitors especially Apple.

When comparing Samsung with Apple, Samsung has a competitive advantage and should capitalize on the fact that with Apple ipads it is difficult and in some cases impossible to share videos, music and files via Bluetooth, making it almost impossible to connect with Apple if you are using another device. So Samsung should take advantage of the market in this regard.

In closure Samsung needs to dedicate themselves in finding new innovations and this can be taken as a challenge for Samsung. But Samsung can use the perceptions in working towards achieving this goal and sustain them in the market.