PESTLE Analysis of Samsung
Introduction
Samsung
is a global conglomerate that operates in the “White Goods” market or the market
for consumer appliances and gadgets. The company that is a South Korean family
owned business has global aspirations and as the recent expansion into newer
markets has shown, Samsung is not content with operating in some markets in the
world but instead, wants to cover as many countries as possible. Therefore, the
focus of this article is on the external environmental drivers of Samsung’s
strategy.
Political
In
most of the markets where Samsung operates, the political environment is
conducive to its operations and though there are minor irritants in some of the
foreign markets like India, overall Samsung can be said to be operating in
markets where the political factors are benign. However, in recent months, it
has faced significant political headwinds in its home country of South Korea
because of the country’s tensions with North Korea wherein the company has had
to take into account not only the political instability but also the threat of
war breaking out in the Korean Peninsula. Apart from this, Samsung faces
political pressures in many African and Latin American countries where the
political environment is unstable and prone to frequent changes in the
governing structures. Of course, this is not yet a major cause for worry as the
company has more or less factored the political instability into its strategic
calculations.
Economic
This
dimension is especially critical for Samsung, as the opening up of many markets
in the developing world has meant that the company can expand its global
footprint. However, this dimension is also a worry since the ongoing global
economic crisis has severely dented the purchasing power of consumers in many
developed markets forcing Samsung to seek profitable ventures in the emerging
markets. The key point to note here is that the macroeconomic environment in
which Samsung operates globally is beset with uncertainty and volatility
leading to the company having had to reorient its strategies accordingly. The
saving grace for the company is that it has adjusted rather well to the
tapering off of the consumer disposable incomes in the developed world by
expanding into the emerging and the developing markets. Indeed, this is the
reason Samsung has begun an aggressive push into the emerging markets in the
hope of making up for lost business from the developed world.
Socio-Cultural
Samsung
is primarily a South Korean Chaebol or a family owned multinational. This means
that despite its global footprint it still operates from the core as a Korean
company. Therefore, there are several aspects to its global operations some of
which include adapting itself to the local conditions. In other words, Samsung
being a Global company has had to act locally meaning that it has had to adopt
a Glocal strategy in many emerging markets. Apart from this, Samsung has had to
tailor its products to the fast changing consumer preferences in the various
markets where it operates. The key point to note here is that Samsung operates
in a market niche that is strongly influenced by the lifestyle preferences of
consumers and given the fact that socio cultural factors are different in each
country; it has had to reorient itself in each market accordingly.
Technological
Samsung
can be considered as being among the world’s leading innovative companies. This
means that the company is at an advantage as far as harnessing the power of
technology and driving innovation for sustainable business advantage is
concerned. This has translated into an obsessive mission by the company to be
ahead of the technological and innovation curve and a vision to dominate its
rivals and competitors as far being the first to reach the market with its
latest products is concerned. however, as we shall discuss later, this has also
resulted in the company cutting corners with its imitation of the legendary
Apple’s product design and this has brought legal and regulatory scrutiny and
troubles for the company. There is a lesson here for other technology driven
companies from Samsung’s experiences and it is that no matter how fast you are
to reach the consumer in this age of Big Bang Disruption, doing the basics
right is still the key to success.
Legal
As
mentioned in the last section, Samsung has had to face heavy penalties for its
alleged imitation of the Apple’s iPad and iPhone and this has led to the
company taking a beating as far as public perceptions and consumer approval of
its strategies are concerned. It remains to be seen as to how the company would
wriggle out of the legal maze that it finds itself in the developed markets
because of the various lawsuits.
Environmental
With
the rise of the ethical consumer who wants his or her brands to source and make
the products in a socially and environmentally responsible manner, Samsung has
to be aware of the need to make its products to satiate the ethical chic
consumer. This means that it has to ensure that it does not compromise on the
working conditions or the wages it pays to its labor who are engaged in making
the final product.
Conclusion
The
preceding analysis clearly indicates that Samsung has its task cut out for
itself as it navigates the treacherous global consumer market landmine. Indeed,
as the company prepares to expand its global footprint, the stakes could not
have been higher in a recessionary era and an uber competitive technological
market landscape.
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