Strategic Analysis of Samsung USA

A STRATEGIC PLAN2016 MARIST COLLEGE v1.0

We is greater than I.
We are the pioneers who see the world differently to show a future that cannot be created alone.

Contents
1.0 OVERVIEW 05
1.1 History 06
1.2 Business Case 09
1.3 Leadership and Culture 12
1.4 2020 Vision and Mission 14
2.0 LOOKING INTO THE FUTURE 15
2.1 Strategic Question 16
2.2 Rationale 17
2.3 Strategic Recommendation 18
3.0 SITUATIONAL ANALYSIS 19
3.1 Demographics 20
3.2 Technology and Security 23
3.3 Strategic Group Map 24
3.4 Key Success Factors 28
4.0 INTERNAL ANALYSIS 29
4.1 Key Leaders 30
4.2 Value Chain 34
4.3 Core Competencies 35
4.4 Liquidity Ratio 36
4.5 Efficiency 37
4.6 Profit 38
5.0 KEY CONSIDERATIONS 39
5.1 Key Considerations and Implications 40
6.0 SWOT PROFILE 41
6.1 Strengths and Weaknesses 42
6.2 Opportunities and Threats 44
6.3 Grand Strategy Orientation 46
6.4 Grand Strategy Clusters: Attractiveness 47
6.5 Grand Strategy Section Matrix: Investment 48
Ɨ Please see authors on last slide

7.0 STRATEGIC APPROACH 49
7.1 Strategic Question 50
7.2 Industry Reminders 51
7.3 Internal Reminders 52
7.4 Corporate Level Strategy 53
7.5 Business Level Strategy 60
7.6 Strategic Impact 62
8.0 MANAGERIAL IMPLICATIONS 65
8.1 Value Chain Implications 66
Contents
9.0 STAKEHOLDER IMPACT 67
9.1 Stakeholders 68
10.0 ETHICAL FRAMEWORK 69
10.1 Ethical Implications 71
11.0 CONCLUSION 72
11.1 Next is Now 73
12.0 REFERENCES 75
Ɨ Please see authors on last slide

OVERVIEWAn Introduction to Samsung
1.0

Some of our (over)achievements.
06
1.0 OVERVIEW History
Foundation……………………………………….………......Manufacture Continuity……………………………………………….......…………………………………………….…......
Founded as a trading company in
1938 in Seoul, South Korea

07
In the 1950’s Samsung’s
manufacturing processes became
it’s most known function, and still
remains to be that

08
In the 1950’s Samsung’s
manufacturing processes became
it’s most known function, and still
remains to be that
Samsung has aimed to maintain a
corporate identity of improving
the lives of consumers and
bettering the community

Who we are defines what we do.
09
1.0 OVERVIEW Business Case
(CE) TV, Monitor, Refrigerator, Washing Machine, Medical Devices, etc.
(IM) Smartphones, Network System, Computer, Digital Camera, etc.
(Semiconductor) DRAM, NAND Flash,
Consumer Electronics
Information Technology
Device Solutions
Mobile Communications
Products
Divisions
(DP Business Unit) TFT-LCDs, OLEDs,
Mobile AP, etc. LED, etc.

Division 2015 2014 2013
Revenue Portion Revenue Portion Revenue Portion
CE 468,954 23.4% 501,831 24.3% 503,315 22.0%
IM 1,035,534 51.6% 1,117,645 54.2% 1,388,172 60.7%
DS
Semiconductor 475,867 23.7% 397,299 19.3% 374,365 16.4%
DP Business Unit 274,869 13.7% 257,272 12.5% 198,371 13.0%
Sub – Total 750,261 37.0% 657,898 31.9% 677,609 29.6%
Total 2,254,749 100% 2,277,374 100% 2,569,096 100%
10
1.0 OVERVIEW Business Case
Ɨ Unit: KRW 100 Million, %
What we do defines our success.

Culture eats strategy for breakfast.
People create the culture.

A culture and a new way of thinking
12
We aim to reform our internal
culture, execute as quickly as a
startup company and push towards
open communication and
continuously innovate
– Samsung Press Release ‘16
“
1.0 OVERVIEW Leadership and Culture

The leader that gives Samsung an edge.
13
Dr. Oh-Hyun Kwon,
Vice Chairman & CEO Samsung Electronics
Key Achievements
 Developed first 64mb DRAM
 TIME 100 most influential people
 Achieved top market shares of:
 Display driver IC’s
 Application processors
 CMOS image sensors
1.0 OVERVIEW Leadership and Culture

2020 Vision & Mission
Inspire the World, Create the Future.
Carlo
Barlocco
Vice President, Head of Sales and Marketing, Italy
14

LOOKING INTO THE FUTUREThe Question that Drives the Plan
2.0

How will home entertainment
evolve in the smart home within the
next one to three years?
The Strategic Question for Samsung

17
2.0 LOOKING INTO THE FUTURE Rationale
How we choose to rationalize this
Do something so different that it sets us a part.
As home entertainment grows within the smart home industry,
we see this as a means to challenge the way we collect data to
primarily better the lives our consumers, create valuable
opportunities for our business partners, and create a better,
more insightful future.
GROWTH
BIG DATA
BIG
INSIGHTS
CONTENT
STREAMING
ARTIFICIAL
INTELLIGENCE
INNOVATION
PARTNERSHIPS
LEAD

How will home entertainment evolve in the smart home within the next one to three years?
18
We will Collect.
We will Organize.
We will Interrogate.
We will Create.
We will Innovate.
2.0 LOOKING INTO THE FUTURE Strategic Recommendation

SITUATIONAL ANALYSISThe Factors that Drive the Strategy
3.0

Know the trends of home entertainment.
20
3.0 SITUATIONAL ANALYSIS Demographics

21

22
Movies TV Shows

23
3.0 SITUATIONAL ANALYSIS Technology and Security
The way technology pushes us forward.
 Smart home devices are expected to reach 9 billion by 2018
 Big data will change traditional business
 Blockchain technology is emerging
Trends developing in security.
 Mobile payment apps are increasing
 Security concerns
 Data theft concerns

Understanding the industry will help you understand the competitors
24
3.0 SITUATIONAL ANALYSIS Porter’s Five Forces
Rivalry is High
 Smaller companies compete for
opportunity to collaborate with larger
companies to reach consumers
 Tight oligopoly in consumer electronics
industry compete closely for market share
Buying Power: Moderate-High
Barrier to Entry: Low
Supplier Power: Moderate
Threat of Substitution: Low

Understanding Players in Home Entertainment
25
3.0 SITUATIONAL ANALYSIS Strategic Group Map
NumberorFeatures
Number of Products
HighLow
High
Kodak
Nikon
Cannon
Phillips
Sonos
Nintendo
Lenovo
Vizio
Bose
Yamaha
GoPro
LG
Panasonic
Amazon
Microsoft
HTC
HP
Samsung
Google
Apple
Sony

26
NumberorFeatures
Number of Products
HighLow
High
Kodak
Nikon
Cannon
Phillips
Sonos
Nintendo
Lenovo
Vizio
Bose
Yamaha
GoPro
LG
Panasonic
Amazon
Microsoft
HTC
HP
Samsung
Google
Apple
Sony

27
NumberorFeatures
Number of Products
HighLow
High
Kodak
Nikon
Cannon
Phillips
Sonos
Nintendo
Lenovo
Vizio
Bose
Yamaha
GoPro
LG
Panasonic
Amazon
Microsoft
HTC
HP
Samsung
Google
Apple
Sony

28
3.0 SITUATIONAL ANALYSIS Key Success Factors
Key Success Factors with smart home industry weighting.
Compatibility .40 Security .15 Data Collection .25 Personalization .20 Total
Samsung
Connects to 19
products & 38
other company
products
4 1.6
A few product
recalls since
2011,
Smartthngs is
hacked easily 2 .15
Various smart tech.,
wide array of products
and appliances
4 1.0
“Passive
experience”
Consumer can
personalize all
products 4 0 3.55
Apple
Connects to 7
products but
only Apple
brand 2 0.8
2 product
recalls, minor
hacking issues
4 .45
Various smart tech,
limited amount of
products and few to
no appliances 3 .75
Focuses on ease of
use vs
personalization
2 0.4 2.4
Google
Google Home
and Google
Pixel, several
partnerships
3 1.2
1 produce recall,
privacy policies
improve
3 0.6
Various smart tech.
limited to product line
and no appliances
2 .50
Adapts to
consumer
tendencies w.
permission; created
Android – designed
for personalization 3 0.6 2.9
Sony
Space UX:
Connects to 3
products
1 0.4
3 recalls
1 0.3
Limited smart tech.,
wide range of
products and
appliance
1 .25
VAIO
personalization
manger – learns
user preferences;
Xperia 3 0.6 1.55

INTERNAL OVERVIEWThe Culture that Drives the Strategy
4.0

30
4.0 INTERNAL ANALYSIS Key Leaders
Gregory Lee,
President and CEO, Samsung North America
Key Achievements
 Developed strong relationships,
strategic alliances and new
technology
 Was previously Chief Marketing
Officer
Those who lead us to higher levels by sharing their vision

31
Pranav Mistry,
Vice President of Global Research and Development
Key Achievements
 Heads Samsung’s Think Tank
Team
 Created Sixth Sense Project,
Samsung Galaxy Gear, and Project
Beyond

32
Marc Mathieu,
Chief Marketing Officer
Key Achievements
 Previously CMO at Coca-Cola and
Unilever
 Developed the #OpenHappiness
and “Coke Side of Life” campaigns

33
Jesse Coulter,
Chief Creative Officer
Key Achievements
 Formally the Co-Chief Creative
Officer at CAA Marketing
 Developed award winning work
for Chipotle
 Hailed one of the top 15
campaigns of the century

What makes us, us?
34
Infrastructure ROE: 9.75%; ROA: 7.91%; 161 Subsidiaries Internationally; Net Profit Margin: 8.10%
Human Resource
 Samsung Careers
Website
 Talent
Management
 Marketing
Department
 Samsung Direct
Support
Technology &
Development
 Global
Partnerships
 Second Largest
R&D Spender
 18 Subsidiaries
 Customer
Collaboration
 Samsung Pay
Procurement
 Samsung Corning
Adv. Glass
 Acquisitions:
LoopPay, Viv Labs,
Smartthings
 UPS/FedEx  External Retail
Primary
 SELC
 Raw Material
Suppliers
 Produce
Electronics
 Global Logistic
Partnerships
 42 Subsidiaries
 SELC
 CELLO
 80 Subsidiaries
dedicated to
Marketing and Sales
 Dedicated Samsung
Sales Channel
 Recall Program
 4 Subsidiaries
Inbound Operations Outbound Marketing & Sales Service
STRENGTH WEAKNESS
4.0 INTERNAL ANALYSIS Value Chain

35
One unifying brand that stays true to ourselves
Specialization
In
Subsidiaries
Heavy
Research
&
Development
Spending
Global
Reach
Consumer
Personalization
Strives
For
Partnerships
4.0 INTERNAL ANALYSIS Core Competencies

36
CURRENT RATIO 2015 2014 2013 2012 2011 Company Avg
Samsung 2.47 2.21 2.16 1.86 1.61 2.06
Google 4.67 4.69 4.58 4.22 5.92 4.82
Sony 0.88 0.88 0.85 0.83 0.93 0.87
Apple 1.11 1.08 1.68 1.50 1.61 1.40
Strategic Group Avg 2.28 2.22 2.32 2.10 2.52 2.29
Ɨ From Bloomberg Terminal
4.0 INTERNAL ANALYSIS Liquidity Ratio
QUICK RATIO 2015 2014 2013 2012 2011 Company Avg
Samsung 1.91 1.66 1.55 1.31 1.10 1.51
Google 4.38 4.40 4.25 3.90 5.62 4.51
Sony 0.59 0.57 0.53 0.52 0.58 0.56
Apple 0.73 0.67 1.23 1.04 1.12 0.96

RETURN ON ASSETS 2015 2014 2013 2012 2011 Company Avg
Samsung 9.22 13.77 15.09 10.39 7.91 11.28
Google 11.82 11.77 12.62 12.91 14.93 12.81
Sony -0.81 -0.87 0.31 -3.48 -2.01 -1.37
Apple 20.45 18.01 19.34 28.54 27.07 22.68
37
RETURN ON EQUITY 2015 2014 2013 2012 2011 Company Avg
Samsung 9.75 13.08 19.82 18.77 12.67 14.82
Google 18.66 16.54 16.25 14.79 14.12 16.07
Sony -5.51 -5.76 2.04 -19.96 -9.42 -7.72
Apple 46.25 33.61 30.64 42.84 41.67 39.00
4.0 INTERNAL ANALYSIS Efficiency

38
OPERATING MARGIN 2015 2014 2013 2012 2011 Company Avg
Samsung 13.16 12.14 16.08 14.45 9.37 13.04
Google 25.82 24.99 27.74 25.43 30.98 26.99
Sony 0.83 0.34 3.38 -1.04 2.78 1.26
Apple 30.48 28.72 28.67 35.30 31.22 30.88
4.0 INTERNAL ANALYSIS Profitability
PROFIT MARGIN 2015 2014 2013 2012 2011 Company Avg
Samsung 9.32 11.19 13.04 11.53 8.10 10.64
Google 21.80 20.64 24.04 21.50 25.69 22.73
Sony -1.53 -1.65 0.63 -7.03 -3.61 -2.64
Apple 22.85 21.61 21.67 26.67 23.95 23.35

KEY CONSIDERATIONSThe Implications from the Facts
5.0

From the Facts.
40
5.0 KEY CONSIDERATIONS Key Considerations and Implications
Key Considerations  Implication for Smart Home Entertainment
Increased awareness in products  Allows for exponential growth within the industry
Low barriers to entry leads to many
acquisitions  Allows Samsung to strengthen intellectual capital
Samsung’s vision is cohesive with new
culture  Allows Samsung to promote new a work ethic and new work assignments
Align heavy R&D spending with marketing
efforts  Not directly competing through products, but investing into the future

SWOT PROFILEUnderstanding our strengths, weaknesses, opportunities and threats
6.0

What Samsung is known for, isn’t all you should know.
42
6.0 SWOT PROFILE Strengths and Weaknesses
 Volume and diversity of connected products
 Research and development
 Global presence
 Partnerships
 Logistics subsidiaries
Strengths Weaknesses
 Internal audit of system processes
 Lower profit and operating margins
 Reliance on external software
 Marketing efforts compared to competitors
 Decreased brand equity

43
 Volume and diversity of connected products
 Research and development
 Global presence
 Partnerships
 Logistics subsidiaries
Strengths Weaknesses
 Internal audit of system processes
 Lower profit and operating margins
 Reliance on external software
 Marketing efforts compared to competitors
 Decreased brand equity
6.0 SWOT PROFILE Strengths and Weaknesses

44
 Growth in smart home market
 Trend toward video content streaming
 Online retail and e-commerce
 High merger and acquisition activity
 Millennials gaining spending power
 Families utilizing televisions the most
Opportunities Threats
 Apple’s prominence in North America
 Emerging Chinese manufacturers
 Consumers security concerns
 Smart home products are too expensive
6.0 SWOT PROFILE Opportunities and Threats

45
 Growth in smart home market
 Trend toward video content streaming
 Online retail and e-commerce
 High merger and acquisition activity
 Millennials gaining spending power
 Families utilizing televisions the most
Opportunities Threats
 Apple’s prominence in North America
 Emerging Chinese manufacturers
 Consumers security concerns
 Smart home products are too expensive
6.0 SWOT PROFILE Opportunities and Threats

General Strategic Orientation
46
OPPORTUNITY
W E A K N E S S
THREAT
TURNAROUND
Overcome Weakness
DEFENSIVE
Redirect Involvement in Product and Markets
AGGRESSIVE
Growth
DIVERSIFICATION
Opportunities in Other Markets
S T R E N G T H
6.0 SWOT PROFILE General Strategic Orientation

Grand Strategy Clusters: Attractiveness
47
REPIDGROWTH W E A K E N I N G C O M P E T I T I V E P O S I T I O N
SLOWGROWTH
RE-EVALUATE MARKETS
Turnaround
Concentrated Growth
Vertical Integration
Horizontal Integration
Divestment
SEEK TO DECREASE
RESOURCE COMMITMENT
Redirect Involvement in Product and Markets
CONSUMER SATISFIED
REINFORCE AND HOLD
Concentrated Growth
Related Diversification
REDIRECT CASH FLOW
TOWARDS OPPORTUNITIES
Unrelated Diversification
Joint Ventures and Strategic Alliance
Concentrated Growth
I M P R O V I N G C O M P E T I T I V E P O S I T I O N
6.0 SWOT PROFILE Grand Strategy Clusters: Attractiveness

Grand Strategy Section Matrix: Investment
48
INTERNALDEVELOPMENT W E A K N E S S
EXTERNALDEVELOPMENT
CONSERVATIVE APPROACH
REDIRECT RESOURCES
Turnaround
Retrenchment
Divestiture
Liquidation
OVERCOMMITTED BUSINESS W.
LIMITED GROWTH/HIGH RISK
Strategic Alliance
Merge with Competitor
Unrelated Diversification
COMMITMENT TO CURRENT
BUSINESS SOLIDIFY POSITION
Concentrated Growth
Innovation
EXPAND BASE OF OPERATIONS
Joint Venture
Strategic Alliance
S T R E N G T H
6.0 SWOT PROFILE Grand Strategy Section Matrix: Investment

STRATEGIC APPROACHThe Strategic Recommendation to Samsung
7.0

What we know about the industry.
51
7.0 STRATEGIC APPROACH Industry Reminders
 The television isn’t going anywhere
 Big data is old news
 Security is an issue
 Prices are high
 Heavy relationship between communication and data
 Content streaming providers want in
 We’re dealing with multitaskers

What we know about Samsung.
52
 #1 television provider for 10 consecutive years
 Has a mission that strives for partnerships, personalization and revolution
 Has the tools and funds to research and develop
 Wants an entrepreneurial culture
 Their devices are compatible with over 40 companies products
 Bought the creators of Siri
7.0 STRATEGIC APPROACH Internal Reminders

So… What does that mean for us?
53
  


7.0 STRATEGIC APPROACH Corporate Level Strategy

54
 

55

ARTIFICIAL INTELLIGENCE, MACHINE
LEARNING, AND BIG INSIGHTS: ALL
THROUGH THE WAY WE SPEAK.via Consultation with Linguistics Consultant
“

The unthinkable must be done.
57
Dr. Deb Roy,
Chief Media Scientists at Twitter
Key Achievements
 Human Speechome Project
 Founder of Bluefin Labs
 PhD at MIT in Media Arts and Science
 Revolutionized the way we collect and measure data

Create a team
Samsung’s Digital Appliances Research Lab under their R&D department
58
 Deb Roy – Media Scientist
 Marc Mathieu, Samsung CMO
 Employees from Samsung’s CognitiV Analytics Team

Form a Strategic Alliance with ComScore.
60
7.0 STRATEGIC APPROACH Business Level Strategy

WE HAVE TO IDENTIFY PATTERNS IN
DATA AND SEE HOW IT ALL INTERACTS
WITH EACH OTHER.via Consultation with Vice President of Corporate Strategy and Innovation at IBM
“

What does this mean?
62
 Personalized mass marketing opportunities
 Better updates
 New innovative products
 Precision marketing
 Generates big insights
 Potentially sell market insight to content streaming providers
 Content streaming providers will see partnering opportunities
7.0 STRATEGIC APPROACH Strategic Impact

V E R G EForward Thinking. Entrepreneurship. Innovation.
One Goal. One Team.
68

INTERNAL CAMPAIGNS ARE GREAT
FOR MOTIVATING TEAMS TO WORK
STRATEGICALLY WITH OTHERS. AT
NBCUNIVERSAL WE HAVE THE
SYMPHONY CAMPAIGN.via Consultation with Senior Vice President of Strategic Initiatives at NBCUniversal
“

MANAGERIAL IMPLICATIONSThe implications in the activities
8.0

What would change?
66
Infrastructure Ethical implication with legal team
Human Resource
 Samsung hires
deb Roy
 Launching internal
HR campaign
 Forming a team
in Design
Research labs
 Training Deb Roy
 Training new
team
Technology &
Development
 Creating smart TV
with voice-data
encoding features
 Using voice-data
to create
innovative
opportunities for
buyers
 Software and
system updates
through Wi-Fi
 Using data to
personalize mass
market to average
consumers
 Creating
personalized
products and
updates
Procurement
 New partnering
with ComScore to
transcribe
information and
create outputs
Primary
Inbound Operations Outbound Marketing & Sales Service
STRENGTH WEAKNESS
7.0 MANAGERIAL IMPLICATIONS Value Chain implications

STAKEHOLDER IMPACTShareholders. Employees. Consumers. Clients. Suppliers.
9.0

68
Strong values is the key to good business
Shareholders
Employees
Consumers
Clients Suppliers
9.0 STAKEHOLDER IMPACT Stakeholders

ETHICAL FRAMEWORKThe ethical impacts behind the strategy
10.0

THE MARKET WILL COMBAT SECURITY
CONCERNS IN THE SMART HOMEvia Consultation with Head Leader of Internet of Things at IBM
“

Devices that are too logical.
71
10.0 ETHICAL FRAMEWORK Ethical Implications
Samsung will face a few setbacks for home entertainment. Here’s how we will get around it:
 Agree to our terms and conditions
 All information is secured through blockchain technology
 Untraceable identity
 Turn it off whenever you would like

CONCLUSIONDoing what’s never been done before is not an excuse, it’s a challenge
11.0

Never been done before.
73
11.0 CONCLUSION Next is Now
Samsung pulls inspiration from “pioneering spirits.”
Doing what’s never been done before is not an excuse, it’s a challenge.

NEXT IS NOW
2016 MARIST COLLEGE v1.0
T H A N K Y O U
ANY QUESTIONS

Belson, Gerald, Scott Lippstreu, and Kevin Westcott. Digital Democracy Survey.
https://www2.deloitte.com/content/dam/Deloitte/us/Documents/technology-media-telecommunications/us- tmt-deloitte- digital-democracy- executive-summary.pdf.
Big Data Analytics: What It Is and Why It Matters. Big Data Analytics: What It Is and
Why It Matters | SAS. Accessed November 20, 2016.
http://www.sas.com/en_us/insights/analytics/big-data- analytics.html.
CMOs Are Beginning To Fill CEO Seats. Cmo.com.
http://www.cmo.com/features/articles/2015/3/17/cmo_to_ceos_.html#gs.IP6qCvw.
Company Overview of Samsung Electronics Co. Ltd. Bloomberg.
http://www.bloomberg.com/research/stocks/private/person.asp?personId=208549privcapId=91868.
Delivering on the Promise of Connected Homes. McKinsey | Connected Homes. Accessed November 15, 2016.
http://www.mckinsey.com/spContent/connected_homes/index.html.
LCD TV Panel Market Share (%). January 1, 2013 - December 31, 2015, via Bloomberg LP accessed October 6, 2016
McQuain, John R. Smart Tvs: Everything You Need to Know. Tom's Guide. Last modified October 18, 2016. Accessed November 10, 2016.
http://www.tomsguide.com/us/smart-tv- faq,review-2111.html.
Pranav Mistry: The Thrilling Potential of Sixth Sense Technology. Ted.com.
https://www.ted.com/talks/pranav_mistry_the_thrilling_potential_of_sixthsense_technology?language=en#t-446488.
Samsung Management Committee. Samsung About Us. Accessed November 15, 2016.
http://www.samsung.com/us/aboutsamsung/investor_relations/corporate_governance/boardcommittees/.
Samsung to Abolish Rigid Corporate Culture. Koreatimes. June 27, 2016. Accessed November 15, 2016.
http://www.koreatimes.co.kr/www/news/tech/2016/09/133_207977.html.
Top 5 Smart Home Trends for 2016 - Electronic House. Accessed January 16, 2016.
https://www.electronichouse.com/smart-home/top- 5-smart- home-trends- for-2016/.
REFERENCES12.0

AUTHORS
Brandon Lee Heard,
Business Marketing: Creative Strategy and Psychology ‘17
Daniel Goodstein,
Business Marketing and History ‘17
Curtis Bruaner,
Business Finance, Computer Science and Economics ‘17
Meghan Rooney,
Business Finance and Paralegal Studies ‘17
Donald Spampinato,
Business Marketing: Creative Strategy and Advertising ‘17
Brendan Cosgrove,
Business Finance and Economics ‘17

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