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

Singapore International Airlines

Will diversification be a good strategy for Singapore International Airline?

Singapore International Airline (SIA) was founded in the year 1972 and has evolved over the years. From being a regional airline, it has become a travel brand across the globe. SIA has not only been limited to its air services, it spreads its wings on the ground as well. 

SIA has built wholly owned subsidiaries and joint ventures to provide services like catering, aircraft maintenance and terminal management. Moreover, SIA has its own school for training pilots and crew members. By diversifying into these related business activities , SIA is making itself self-reliant and will be able to provide better services than its competitors in the long run. Diversification is not just for one time survival rather helps in enhancing the ability of a firm to grow faster.

Diversification in the related activities enables SIA to achieve cost efficiencies and maintain high standard of services. It also helps in the transfer to knowledge across the verticals and provides a source of extra cash flow generation. This extra cash flow generation is very important for SIA to maintain its standards and retain the customers who are now growing price sensitive.

The Changi International Airport is an infrastructure marvel. It has extra ordinary facilities and depicts its superior quality management skills.  It is one of the best airports in the world and is maintained by the SIA .This speaks volumes about the company. SIA is strategically diversified only in related areas. It is a good idea indeed because it creates an image of SIA as a true leader in providing a variety of services in the Aviation Industry. Diversifying in unrelated business activities would lead to dilution of SIA’s Brand.

Contributed by:-

Ridhi Mundra

Section C

Strategic Management

Singapore International Airlines

What should the company do to sustain service differentiation if they plan to expand global/ regional/ local?

Singapore International Airlines (SIA) is known for it’s in flight services, flight performance and progressive performance in strategy development which nourishes a significant source of competitive advantage but their best strength is its high end services and global routes.  This strength can easily be imitated by their competitors.

SIA had low cost competitors and customers were attracted to low fares. Hence, the company is facing dramatic environmental shifts, increasing competition, and changing customer demand. Singapore has a very low unemployment rate, this lead to difficultly in supplying high quality labor at low prices.

To sustain service differentiation,  if SIA planned to expand regionally they could open an operating hub at the Asia pacific region, where labor rate per unit is lower, at better labor productivity .With improving economic condition of Asia pacific the demand for the air carrier is growing, hence SIA can increase the  frequency of flight.

SIA planned to expand globally by investing in Virgin Atlantic –a British airline which has almost 36 destinations worldwide. This allowed the SIA to operate its aircraft on Trans Atlantic sector between US and UK and also the landing slot at the Heathrow airport.

SIA should continue to maintain good flight performance, in flight services and training of cabin crews or engineer to sustain service differentiation in local. Connecting with star alliance would help in increasing its profits, improve the economies of scale and connect it to sectors which it may not access to.

Contributed by:-

Rahul Budhia

Section A

Strategic Management

Singapore International Airlines

Should the company go global/regional/local? Why?

Singapore International Airline (SIA) is one of the leading airlines in the international industry and is facing several competitive issues.

Post liberalization era, the players had to differentiate to get the market share. Singapore Airlines differentiated themselves by providing economy class meals, top-of-the-line technology, comfortable seating, effective staff, good maintenance etc. Their main point of difference was the ownership of the Changi Airport. These resources made Singapore Airlines’ operations inimitable.

There are certain region specific factors also contributing to its success -

·         The Singaporeans had high standard of living and hence higher disposable income.

·         The labor costs were also lower compared to that in US/Europe

·          People in Singapore have a higher literacy rate.

·         They have had exceptional hospitality skills and work ethics.

Thus, we can infer that most of the advantages arise as a result of its region. If Singapore Airlines goes for alliances, there is a high risk of its image getting tarnished. There could be differences between the services offered by Singapore Airlines and other airlines. The other airlines won’t have the same quality of hospitality and work ethics as shown by Singapore Airlines. This could be a cause of displeasure for the customers. Also, if the other airlines do not live up to the standards of Singapore Airlines, their image could be lost which could hit hard on its revenues. Hence, it will be profitable for them to cash their regional advantage than taking risk by going global.

Contributed by:-

Hari Krishnan

Section B

Strategic Management

Wal-mart - Case Analysis

Strategy adopted by Wal-Mart-

Low cost- Wal-Mart created a huge customer base by adopting a low cost strategy. As the main component sold was food products, it comprised of 35% of sales. They focus on opening stores which are huge and provide value for money to the customer and this cost practice makes them cost leaders.

Location-Wal-Mart acquired volume through a careful consideration of locations away from the city; moreover this was adopted by them as they wanted to open huge spacious stores which would have been costlier in the city. Thus it was easier for them to go for internationalization and increase their market reach in different countries.

Competitive advantage of Wal-Mart-

Responsive supply chain/distribution network-The network was centralized and automated.Efficient distribution with cross docking and concentrating on Hub and Spoke model. The center position (hub) was occupied by the 84 distribution centres/warehouse which served other 150 stores within a 150 mile radius.

Hub &spoke Model:

Bargaining power over the suppliers- Wal-Mart had a higher bargaining power over its suppliers as the system was centralized and there was no decentralization of authority. The suppliers had no decision making power and this was difficult to be replicated by the competitors.

EDLP (Every Day Low Price) - They maintained everyday low prices which provided convenience to the customers. Consumers had access to a variety of products under the same roof and hence this confirmed customer loyalty.  Wal-Mart was able to sustain its EDLP model with fewer expenses on advertising and matching volume driven strategy.

Recommendation-

Wal-Mart had a competitive advantage because of its responsive supply chain. The sustainability of the supply chain was outcome of the good relationship with suppliers since they treated them more than just partners.  As Wal-Mart has already shown its commitment and seriousness in its operations so the relationship will prosper more over a period of time. Also, they have the benefit of exclusivity and no imitability because replication of the models and strategies require huge capital investment.

Therefore, building upon the existing distribution network would help them sustain their existing competitive advantage; moreover, internationalization could increase their market penetration and assist them in sustaining as the market leader.

Contributed by:-

Tanvi Lal

Section A

Strategic Management

Class of 2013-15