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Samsung Electronics Case Solution

Solution Id Length Case Author Case Publisher
1099 629 Words (2 Pages) Jordan Siegel, James Jinho Chang Harvard Business School : 705508
This solution includes: A Word File A Word File

The case suggests mixed evidence in response to this question. The answer cannot be generalized for all competitors of Samsung. Against the Elpida Memory, Inc. the Samsung experiences both cost and differentiation advantage. Not only the Elpida suffered financial losses but it also decided not to invest in new product development. As opposed to the Hynix Semiconductor, Inc. Samsung has had both cost and differentiation advantages. Initially, Hynix had the same advantage but it lost. Hynix was short of capital investments, but Samsung had maintained the minimum level to operate smoothly. When Hynix acquired LG Semiconductor, it was nearly forced to collapse. Hynix fired 30% staff and sold non-core operations. Recently, the Hynix was litigated, and it paid $185 million to appease the court. When it comes to Infineon Technologies AG, Samsung does not have a noteworthy advantage of cost and differentiation. Infineon is the offshoot of Siemens, which has always been ahead of the market competitors by building strategic alliances. Infineon is doing quite well in terms of cost and product. It is making new investments and has robust R&D operations across the globe. Although Micron Technology has passed through tough financial times in the past, it is now on the positive path as it received $500 million investment from Intel, and it is also having differentiation advantage by investing in the next generation DRAM technology. Naya Technology Corporation although small in size is having an advantage in terms of both cost and differentiation. It launched joint developments with Infineon for next-generation process technology. Semiconductor Manufacturing International Corp. (SMIC) does not have a differentiation advantage rather it used blueprints for producing chips. However, the other Chinese manufacturers are giving tough time to Samsung as a potential threat.

Following questions are answered in this case study solution

  1. Identify if Samsung has a cost advantage, a differentiation advantage, or both a cost and differentiation advantage over its rivals.

  2. Describe the resources and capabilities that form the basis of Samsung’s cost or differentiation advantage.

Case Analysis for Samsung Electronics

Describe the resources and capabilities that form the basis of Samsung’s cost or differentiation advantage.

Samsung group is the largest conglomerate in South Korea. The sales amounted to $135 billion in 2004. Having 337 operations in 58 countries, the Group employed 212,000 people globally. The core business areas are electronics, finance, and trade and services. The cost and differentiation advantage enjoyed by Samsung is a blend of multiple factors. In the generation of such advantage, the senior management and the core teams of Samsung are the main players. Secondly, the differentiation advantage was also accrued to Samsung due to the outstanding efforts of the design firms such as Rambus, which was unsought by the competitors. Moreover, the main R&D facilities and the fab lines of the Samsung were located at a single site while those of the competitors were scattered across the globe. Samsung also had the ability to quickly customize products to customer demands. Due to the reliability of its products, Samsung was even acclaimed by its rivals to be the supplier of choice.

Another important dimension in the generation of advantage is the human resource policies of Samsung. The introduction of the aptitude tests to examine the mathematical, reasoning and verbal skills of the prospective employees brought the right type of the employees in further process. The employees were promoted on the basis of their performance assessment and development plan. Samsung also promoted diversity in its workplace. It recruited foreign talent in key positions. In Samsung, the achievement was celebrated, and failure was not punished. It invested in employees’ global business skills. There was a knowledge database maintained by all the employees. Samsung sponsored higher education of its employees which is proof that it is a learning organization. Thus, Samsung rightly claims that it invests in its employees more than any competitors, and this is the reason beyond unlimited advantages garnered by Samsung.

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