Samsung Case Study Essay

2031 Words Nov 8th, 2011 9 Pages
“Samsung” case study
1. Introduction:
Samsung Electronics Company, henceforth called “Samsung” in this case, was established in 1969 to manufacture black-and-white TV sets. In 1974, Samsung, which was a producer of low-end consumer electronics, purchased Korea Semiconductor Company and began its semiconductor industry. Under the leadership of the chairman of Samsung Group, Kun He Lee, Samsung has risen, with a remarkable speed, to become the world’s leading memory producer, ranking 2nd just behind Intel. Meanwhile, Samsung used the earnings from memory division to invest in various technology products like mobile phones, liquid crystal displays and so on. These businesses made Samsung generate the second-largest net profit of any
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Chinese competitors - threat or not?
In 2005, Chinese enterprises entered the DRAM market. Though these enterprises lacked critical infrastructure and the cutting-edge technology in DRAM industry, they drove down the price to compete with the existing DRAM enterprises, much the same way that had been successfully used in acquiring market share by Samsung. Moreover, Chinese enterprises had the following advantage:
1. A strong support from the Chinese government
In recent years, Chinese government invested much in the development of high-tech products. Some Chinese enterprises could get funding from the government as capital to conduct the so-called “price war”. They were patient enough to endure years of losses to gain significant market share. Although such kind of low price is not sustainable, but it would certainly have a considerable impact on Samsung for at least 5 years, during which time Samsung may have successfully turned to other businesses already.
2. Availability of large number talented technicians
China is a country never short of talented people. The government emphasized on cultivating technical talents these years, making more Chinese enterprises from labor intense to skill intense. The number of people who went to study in developed countries was increasing dramatically. These people would greatly promote R&D, and thus competitiveness of technical enterprises.
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