Samsung Electronics

Competitive Strategy - University of Lausanne - November 22nd, 2011

Bastien DAYER Per JACOBSEN Raoul PANCHARD Luca SELMONI Julian SOTO

In the mid-1980’s, Samsung used to be a growing challenger

As of the 90’s, Samsung managed to become a major player and eventually the market leader

As of the beginning of 2000’s, Samsung faces a new threat, a large-scale Chinese entry

The point is now to see whether and how they’re going to cope with this new challenging situation

• • • Suppliers Few suppliers Encourage high sales volume

Entry barriers + Organizational experience Knowledge Capital requirements

Buyers +/Price-conscious High quality demanding Highly fragmented

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Rivalry High pressure on prices High differentiation High innovation Chinese large-scale production threat

Substitutes Actually, no substitute products Threat for the future

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Government Support for Chinese and South Korean companies

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 The industry seems to be very competitive. Differentiation and costs are fundamentals. To survive you have to rule over at least one of these two aspects.

2

Mid-80s

2005

Cost advantage

Cost advantage

X Samsung

X SMIC X Elpida X Infleon X Hynix X Micron

X Samsung

X Micron X Hitachi X Fujitsu X IBM

Differentiation Advantage

Differentiation Advantage

In the Mid-80s Samsung didn’t have the technology to produce memory chips, it had to learn from its competitors. In 2005, it was able to offer 1200 kinds of products at the lowest cost. Nobody could produce something different from Samsung products and/or at a lower cost*. Samsung has overtaken all the other competitors thanks to two technological innovations. The first one was to chose the “stacking” method to fit 4 millions cells onto a tiny chip. The second one was to develop the 8-inch mass production. Their choices turned out to be the good ones as, in 1992, Samsung became the leader of the market and has led it since 2005....