Samsung Electronics

What advantage does Samsung get from undertaking differentiation strategy/ Cost Strategy? Explain.

“A leader of innovation with affordable price – Samsung.”

Samsung with its varied product range has covered all the categories in the consumer electronics which was one of the reasons for its success. Its Innovative products, adhering to the Quality and reliability of the product makes it stand apart from its competitors.

Innovation and R&D are the building blocks of Samsung. Samsung has invested heavily in Research & Development that helps the company to innovate and create new products that helped the company to grow into a Global powerhouse.Heavy investment in the semiconductors in 1983-85 initially cost much but later paid off to the company where it had a cost advantage compared to its competitors.

South Korea was the largest exporter of semiconductors exporting 25.1bn in 2004 of which Samsung alone exported for 22% of the total Korea’s exports.

The company set up competing product development teams throughout its operations to increase its efficiency and to get the better technology from its global R&D sites.

Cost effective value chain helped the company to sustain as a market leader for 1 years since 1992.

In the later generations the company started moving from legacy products to high value niche products and frontier products which gave great profit margins to the company making it still a market leader.

In 1994 Lee realized that Samsung had lost track on product quality and burned the shoddy Samsung products. In late 1990’s it could gain back its reliability and performance appreciation from its major customers.

Investment in HRM also added a great return for Samsung. Its strategy in adopting and managing people made it to be renowned across the globe.  

 In later years, Samsung started facing threat from the giants like China manufacturers. Cost leadership can have an advantage for a company, but to sustain for the future, it needs to adopt differential strategies based on the environment prevailing.

Contributed by:-

Kedareshwari Nanduri

Section C

Strategic Management