Samsung Electronics

Does Samsung follow a focus Strategy? Substantiate

Samsung electronics emerged as a subsidiary of Samsung electric industries in the year 1969; provides consumer electronics, IT and telecom products.

 It follows a focus strategy, as it caters to a niche segment of target market which has the potential to grow further and earn profits. Their focus strategy aims to service isolated geographical areas to satisfy the needs of customers with special financing, inventory or servicing problems or to tailor the products to the unique demands of the small and medium income consumers.

Products of Samsung range from frontier products (e.g.: 512Mbit DRAM) at the cutting edge of technology to legacy products (e.g.: 64Mbit DRAM) that Samsung offered to customers after the industry had moved on to later generations. Within each product generation, there also exist “specialty products” (e.g.: DDR2, SDRAM, Rambus DRAM) using customised architectures for niche products. The company simultaneously developed a flash memory chip for Sony Erricson and a flash memory chip customised for Nokia. After a generation had passed, however, legacy product lines could be transformed into high-value niche products. Samsung electronics follows a focused differentiated strategy for Rambus DRAM and Flash memory. 

Focused differentiated strategy: Samsung launched new DRAM products (Rambus DRAM) with product specific applications which shared a common core design with DDR DRAM; Samsung’s Rambus differentiated itself from that of other DRAMs by having an enhanced component, a high-speed interface I/O. It is a differentiated and a customised product especially designed for laptops and personal game players.  It is also differentiated in terms of quality and price from that of Samsung’s competitors. If we look at the average selling price of Rambus DRAM of Samsung, it is higher than that of Infineon (9.21 $ for Samsung and 8.45$ for Infineon).

Flash memory was tied to growth in digital cameras and camera phones (niche segment). For flash memory, there are no substitutes that can even pose them a challenge. Flash memory differentiated itself from other DRAMs as it can retain stored data in the absence of power supply as well. The growth of flash memory is expected to grow in double digits and so, the prices are likely to be higher compared to DRAM prices. 

Contributed by:-

Sravya Neeli

Section B