The multinational enterprise this assignment will be looking at is Samsung. “On March 1st 1938, founding chairman Byung-Chull Lee started a business in Taegu, Korea with 30,000 won. In the 1970s, Samsung laid the strategic foundations for its future growth by investing in the heavy, chemical and petrochemical industries. Samsung’s core technology businesses diversified and expanded globally during the late 1970s and early 1980s.
In the mid-1990s, Samsung revolutionised its business through a dedication to making world-class products, providing total customer satisfaction and being a good corporate citizen – all under the vision of ‘quality first’. Despite the 1997 financial crisis that affected nearly all Korean businesses, Samsung was one of few companies that continued growing thanks to its leadership in digital and network technologies and its steady concentration on electronics, finances and related services.
The digital age has brought revolutionary change – and opportunity – to global business and Samsung has responded with advanced technologies, competitive products and constant innovation. ” http://www. samsung. com/uk/aboutsamsung/corporateprofile/history. html The way that Samsung has stayed so successful is because it has used the 7 P’s of marketing. The reason they use seven is because in international business four is not enough because they are only designed for competition against other companies with the same restrictions as you (i. e. country). However international businesses have extra ways to increase competitiveness.
These are the extra 3 P’s. “The marketing mix framework was particularly useful in the early days of the marketing concept when physical products represented a larger portion of the economy. Today, with marketing more integrated into organizations and with a wider variety of products and markets, some authors have attempted to extend its usefulness by proposing a fifth P, such as packaging, people, process, etc. Today however, the marketing mix most commonly remains based on the 4 P’s. Despite its limitations and perhaps because of its simplicity, the use of this framework remains strong. http://www. netmba. com/marketing/mix/ The first is People. This is making sure that the company recruits the right staff and trains them up properly. What Samsung have done is that they have moved most of their production over to China where labour is much cheaper, hours are longer and the labourers work harder. They have however kept the nucleus of the company in Korea. This is the R;D (research and development) side of the company. This is because there are many skilled well educated Koreans who are well qualified to research and develop new products and there is a lack of that in China.
This however is not the only reason that this is the case. Samsung are in direct competition with cheap Chinese electrical brands that can produce their products much cheaper. There have been problems with these Chinese companies accused of trying to obtain Samsung’s technology as they are behind in that respect as a result I think that this makes Samsung even more determined not to more any R;D to China. This is because the technological advantage is the main one that Samsung have over their Chinese competitors.
Were Samsung not to have moved most of their production over to China they would probably not be able to compete with the Chinese companies prices as they would have to charge a great deal more to cover the cost of manufacture in Korea. This is why the People aspect of the 7 P’s is vital in overseas operations. The second is Process. This is all to do with the way that Samsung manage this is that they are constantly on top of R;D this gives them good PR (public relations) as they are seen as some of the best innovators of electronics. They sell this in their adverts and on their website.
They find out what sort of process people in general in each country are after so that they can tailor to the needs of each nation rather than just consumers as a whole. “For the purposes of the marketing mix, process is an element of service that sees the customer experiencing an organisation’s offering. It’s best viewed as something that your customer participates in at different points in time. ” http://www. marketingteacher. com/Lessons/lesson_process. htm . Marketing backs up this. In the United Kingdom for example the most popular TV at the moment is the large flat-screen, high definition Plasma/LCD as a result they tailor to our needs.
They sell lots of high quality TV’s meeting the specifications that we as a nation are into. “Processes essentially have inputs, throughputs and outputs (or outcomes). Marketing adds value to each of the stages. ” http://www. marketingteacher. com/Lessons/lesson_process. htm The final of the extra P’s is physical evidence. This is where the consumer finds out whether the item they have bought from Samsung is up to the standard that they were assured of and if it was worth the money that the consumers were paying for it.
This is why the brand is perceived so well because of the physical evidence pointing towards it being a quality reliable product that is worth the money at the amount that they charge. It also helps to put some bad physical evidence onto the Chinese companies that they compete against because they are perceived as cheap, poor quality, fairly unreliable products which is not necessarily true it’s just that because Samsung produce such a good quality of product when it is compared to the Chinese alternatives it makes the Chinese brands look bad.
The first of the standard 4 P’s is product. This is all to do with the whole package that the customer gets when he/she buys a Samsung product. Firstly one of the things that the customer is paying for is the brand name. Samsung are a notoriously reliable make and as mentioned earlier one of the leaders in electronics technology. They are also designed to be good to look at (stylish) even when not being used.
Another thing they are well known for is that they are warranted for a year and they have a good technical service if there are any problems with the appliance. They are also thoroughly packed so that they arrive to the customer undamaged and untouched. The second of the standard 4 P’s is Price. This is where Samsung are losing some of their custom to their Chinese rivals as the Chinese’s overheads are much lower so they can sell their lower quality product for much lower prices.
However Samsung price their products so they are seen as quality luxury products but they price them just low enough so that most people can afford them and as a result it is still bought by many as it is seen as affordable quality. This means that in the UK if consumers can afford a high quality product they usually will buy it over a cheaper less well known model. This is because brand image is something that carries a lot of weight in the UK. This is another place that Samsung have an advantage over their Chinese rivals. The third of the standard 4 P’s is Place.
This is where Samsung have one of their biggest advantages over their Chinese counterparts because as Samsung is a well known, globally respected brand it means that every electronics’ shop stocks their products in the UK and the USA however this is more of a problem for the Chinese brands because many shops do not want their products and the ones that do want them to have their own brand on them. This means that the Chinese brands are not getting any publicity, they are not recognised because the only time that the products are seen is when an lectronics shop has put their own label on the product (for example Alba at Argos). This a massive advantage for Samsung in the UK and the USA however they are losing out on Chinese custom as the Chinese people are keener to spend less and get a poorer quality product because in China it is extremely cheap to do compared to buying a Samsung product. The last of the standard 4 P’s is promotion. This is again another big advantage for Samsung in the UK and the USA as the populations are very responsive to advertising and promotion in general because there is much more disposable income in these countries than anywhere else.
This is also because Samsung have a large budget for advertising and promotion in general whereas as most of the Chinese companies’ products are not under their name they are advertised very little simply by the electronics shop who sell the product. However Samsung also have a relatively strong promotional budget in China however the Chinese people are not so responsive to advertising and other promotion techniques as there is less disposable income around China.
As a result the Chinese products still sell better because the product is cheaper slightly due to the fact they don’t have to pass on high promotion costs to the consumer. Overall I think that Samsung are fairly safe from the Chinese companies in Europe and North America for the moment as it would take a hugely expensive promotional campaign from the Chinese companies to break into either of the continents. The Chinese would have to rethink their whole marketing strategy because the markets in Europe and North America are not in need of another ‘cheap and cheerful’ electronics brand.
As a result unless the Chinese companies can get to the same technological stage as Samsung then it is very unlikely that they will be able to get a good market share in either continent. In Samsung’s case though I think that they can attempt to gain a market share in China by either selling the older models that Europe and North America are no longer interested in China for a fraction less than the Chinese companies are because value for money is very important in China and even a very slight amount less that the Chinese competition.
This would give them more of a foothold in the market. Another advantage Samsung (and Korea in general) have is that they have previously been in China’s position (with them and Japan) as a result they can keep on looking at what Japan did and what they did and make sure that they don’t make the same mistakes that Japan did. Japan kept on trying to lower their costs as Korea was catching up instead of staying ahead like they should have done.
This is why Korea has such a successful electronics ‘empire’ Samsung being one of the main companies behind Korea’s success electronically. I think however over the next 10 to 20 years china will catch up Korea however presuming that they keep on expanding at their current rate as the Chinese are learning and putting lots of money into education to produce their own electronic experts so that the Chinese companies R;D can challenge Samsung’s.
I think that possibly to keep the Chinese companies away from their R;D they may have to completely stop manufacturing there so that the Chinese have to improve their electronics by themselves. There are other places they could move their manufacturing plants to that are just as cheap wages if not cheaper, India for example. The only problem would be that costs of transporting the electronics would be higher as the distance it would have to travel would be a bit further.
References http://www. samsung. om/uk/aboutsamsung/corporateprofile/history. html http://www. netmba. com/marketing/mix/ http://3. bp. blogspot. com/_hsghAhbnV8E/Sa6OtSDxb2I/AAAAAAAAABo/hq8LbGsNQRk/s400/Marketing_Mix_Diagram_-_7Ps_L. jpg http://www. marketingteacher. com/Lessons/lesson_process. htm http://www. learnmarketing. net/servicemarketingmix. htm http://www. learnmarketing. net/internationalmarketingmix. htm http://www. thefreelibrary. com/Samsung+SDS+and+Sybase+Sign+Strategic+Partnership+Agreement+Aiming+… -a080555011