Samsung Electronics - Harvard Business School Essays

1384 Words Oct 22nd, 2014 6 Pages
Samsung Electronics


Introduction: With the introduction of new Chinese competitors in the DRAM market it is necessary for Samung to access their strategy for the future. Looking at past trends in the DRAM market, current market situation, and projections for the Flash market, the best option for Samsung is to focus their efforts on growing the Flash technology, while maintaining their DRAM output. This is the best course of action because Samsung’s customer loyalty will carry their market share in the DRAM market, while they are focusing on establishing this type of dominance in the Flash market.


Problem Statement: Memory industry is
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But the chances of nanotechnology acting as a substitute for DRAM is very low, at least in the near future. Buyers are largely OEMs, with no one controlling more than 20% of the market. OEMs are price conscious and they negotiate hard for price but they also pay 1% premium for reliability of DRAM memory. So, the bargaining power of buyers is medium as the buyers are highly fragmented and are also looking for reliable chips by not focussing solely on low price.

As the memory technology grew more complex, the number of suppliers became more concentrated. Only 2­3 key players are dominating the equipment market but they are also providing a discount for high volume buyers (like Samsung). So, the suppliers are powerful and have a higher bargaining power against low volume buyers (new Chinese companies). One of the options that Samsung has going forward, is to suppress the Chinese entrants by decreasing margins on the low­end DRAMs. A competitive price along with Samsung’s well­known quality would likely push its Chinese competitors towards more operational losses. Meanwhile, Samsung would still be able to earn revenues from its wide range of other memory products. However, a price war like this cannot be expected to

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