Case Study Description of Samsung Electronics: Innovation and Design Strategy
In January 2008, Samsung Electronics won 32 innovation and design engineering awards at the Consumer Electronics Show, the largest show of its kind in the world. Samsung Electronics' management believed that the awards were an endorsement (or "vindication") of the company's investment in product design and innovation. However, the company found its competitive advantage diminishing quickly due to commoditization of research and development ("R&D"), product design and innovation processes. This is a management strategy case that explores product design, innovation strategies and strategic planning in a changing competitive landscape. While investment in R&D and product design has rewarded Samsung Electronics with its dominant market position and premium brand perception, such dominance may not be sustainable in the long run, especially now that competitors are achieving higher profitability with lower investments in R&D per product. The case also discusses such issues as product design philosophies, innovation strategies, localization of products, product design outsourcing for consumer electronics products.
Swot Analysis of "Samsung Electronics: Innovation and Design Strategy" written by Ali Farhoomand, Vishwanath Desai includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Electronics Design facing as an external strategic factors. Some of the topics covered in Samsung Electronics: Innovation and Design Strategy case study are - Strategic Management Strategies, Design, Marketing, Operations management, Product development, Technology and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Samsung Electronics: Innovation and Design Strategy casestudy better are - – there is backlash against globalization, increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, increasing transportation and logistics costs, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google,
supply chains are disrupted by pandemic , challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Samsung Electronics: Innovation and Design Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Samsung Electronics: Innovation and Design Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Electronics Design, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Electronics Design operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Samsung Electronics: Innovation and Design Strategy can be done for the following purposes –
1. Strategic planning using facts provided in Samsung Electronics: Innovation and Design Strategy case study
2. Improving business portfolio management of Electronics Design
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Electronics Design
Strengths Samsung Electronics: Innovation and Design Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Electronics Design in Samsung Electronics: Innovation and Design Strategy Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Electronics Design in the sector have low bargaining power. Samsung Electronics: Innovation and Design Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Electronics Design to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Electronics Design has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Samsung Electronics: Innovation and Design Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Samsung Electronics: Innovation and Design Strategy Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Ability to lead change in Innovation & Entrepreneurship field
– Electronics Design is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Electronics Design in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Electronics Design has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Samsung Electronics: Innovation and Design Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Electronics Design is present in almost all the verticals within the industry. This has provided firm in Samsung Electronics: Innovation and Design Strategy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Electronics Design is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Ali Farhoomand, Vishwanath Desai can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Electronics Design is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Electronics Design is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Samsung Electronics: Innovation and Design Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Samsung Electronics: Innovation and Design Strategy firm has clearly differentiated products in the market place. This has enabled Electronics Design to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Electronics Design to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Electronics Design in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Successful track record of launching new products
– Electronics Design has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Electronics Design has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to recruit top talent
– Electronics Design is one of the leading recruiters in the industry. Managers in the Samsung Electronics: Innovation and Design Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Samsung Electronics: Innovation and Design Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Samsung Electronics: Innovation and Design Strategy are -
Need for greater diversity
– Electronics Design has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study Samsung Electronics: Innovation and Design Strategy has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Electronics Design 's lucrative customers.
Aligning sales with marketing
– It come across in the case study Samsung Electronics: Innovation and Design Strategy that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Samsung Electronics: Innovation and Design Strategy can leverage the sales team experience to cultivate customer relationships as Electronics Design is planning to shift buying processes online.
Slow to strategic competitive environment developments
– As Samsung Electronics: Innovation and Design Strategy HBR case study mentions - Electronics Design takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Electronics Design has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Electronics Design is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Samsung Electronics: Innovation and Design Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Samsung Electronics: Innovation and Design Strategy, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Ali Farhoomand, Vishwanath Desai suggests that, Electronics Design is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow decision making process
– As mentioned earlier in the report, Electronics Design has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Electronics Design even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Samsung Electronics: Innovation and Design Strategy HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Electronics Design has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Samsung Electronics: Innovation and Design Strategy, is just above the industry average. Electronics Design needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Opportunities Samsung Electronics: Innovation and Design Strategy | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Samsung Electronics: Innovation and Design Strategy are -
Loyalty marketing
– Electronics Design has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Electronics Design can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Samsung Electronics: Innovation and Design Strategy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Electronics Design can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Manufacturing automation
– Electronics Design can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Buying journey improvements
– Electronics Design can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Samsung Electronics: Innovation and Design Strategy suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Low interest rates
– Even though inflation is raising its head in most developed economies, Electronics Design can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Electronics Design can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Electronics Design can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Electronics Design can use these opportunities to build new business models that can help the communities that Electronics Design operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Using analytics as competitive advantage
– Electronics Design has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Samsung Electronics: Innovation and Design Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Electronics Design to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Electronics Design can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Electronics Design to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Building a culture of innovation
– managers at Electronics Design can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Innovation & Entrepreneurship segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Electronics Design is facing challenges because of the dominance of functional experts in the organization. Samsung Electronics: Innovation and Design Strategy case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Samsung Electronics: Innovation and Design Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Samsung Electronics: Innovation and Design Strategy are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Electronics Design business can come under increasing regulations regarding data privacy, data security, etc.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Electronics Design in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Electronics Design needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Samsung Electronics: Innovation and Design Strategy, Electronics Design may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Electronics Design can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Samsung Electronics: Innovation and Design Strategy .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Electronics Design.
Stagnating economy with rate increase
– Electronics Design can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Easy access to finance
– Easy access to finance in Innovation & Entrepreneurship field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Electronics Design can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Electronics Design is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Electronics Design in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Environmental challenges
– Electronics Design needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Electronics Design can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Electronics Design with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Samsung Electronics: Innovation and Design Strategy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Samsung Electronics: Innovation and Design Strategy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Samsung Electronics: Innovation and Design Strategy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Samsung Electronics: Innovation and Design Strategy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Samsung Electronics: Innovation and Design Strategy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Electronics Design needs to make to build a sustainable competitive advantage.