Strategic Audit

Samsung Electronics.

4/20/2011

Instructor
Prof. Manal El-Kurdy

Prepared By
Amal Kherialla Amr Lotfy
Dalia Magdy Marwa Amin
Rasha Ossman
Table of Contents

Contents
2. Current Situation.................................................................................................................................2
2.1 Current Performance 2
2.2 Strategic Posture 2
2.2.1 Mission.................................................................................................................................2
2.2.2 Objectives............................................................................................................................2
2.2.3 Strategies.............................................................................................................................2
2.2.4 Policies.................................................................................................................................2
3. Corporate Governance........................................................................................................................2
3.1 Board of Directors 2
3.2 Top Management 2
4. External Environment Opportunities and Threats (SWOT)..................................................................3
4.1 Natural Physical Environment Sustainability Issue 3
4.2 Societal Environment 3
4.2.1 Economic.............................................................................................................................3
4.2.2 Technological.......................................................................................................................3
4.2.3 Political-legal........................................................................................................................3
4.2.4 Sociocultural........................................................................................................................3
4.3 Task Environment 3
4.3.1 Forces drive industry competition.......................................................................................3
4.3.2 Key factors in the immediate environment.........................................................................4
5. Internal Environment Strengths and Weaknesses (SWOT)..................................................................4
5.1 Corporate Structure 4
5.2 Corporate Culture 4
5.3 Corporate Resources 4
5.3.1 Marketing............................................................................................................................4
5.3.2 Finance.................................................................................................................................4
5.3.3 Research and Development (R&D)......................................................................................5
5.3.4 Operations and Logistics......................................................................................................5
5.3.5 Human Resources Management (HRM)...............................................................................5
5.3.6 Information Technology (IT)................................................................................................5
5.4 Summary of EFAS & IFAS 6
6. Analysis of strategic factors (SWOT)....................................................................................................7
6.1 Situational analysis (SFAS Matrix) 7

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 6.2 Review of mission and objectives 7
7. Strategic alternatives (TOWS) and recommended strategy.................................................................7

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1. Current Situation

1.1 Current Performance

1.2 Strategic Posture

1.2.1 Mission

1.2.2 Objectives

1.2.3 Strategies

1.2.4 Policies

2. Corporate Governance
2.1 Board of Directors

2.2 Top Management

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3. External Environment Opportunities and Threats (SWOT)
3.1 Natural Physical Environment Sustainability Issue
 There are no any environmental issues like climate, weather or solar changes that effect sustainability.

3.2 Societal Environment

3.2.1 Economic
 The flash memory is growing industry and the company was seeking to move of its production Capacity
from DRAM to flash memory
 DRAM industry became mature.

3.2.2 Technological
 These products are labor intensive assembly lines

3.2.3 Political-legal
 U.S. Department of Justice (DOJ) that it and the other memory manufacturers had conspired to control
prices in the U.S , Samsung in December 2004, set aside $100 million as a contingency to cover any future
settlement

3.2.4 Sociocultural
 Powerful suppliers while number of suppliers become more concentrated, price conscious customers and
that will not be different from region to other

3.3 Task Environment

3.3.1 Forces drive industry competition

 Threat of new entrants

 Industry attract new entrants like Chinese (T)

 Bargaining power of buyers

 price conscious customers (T)

 Threat of substitute products or services

 No Substitute (O)

 Bargaining power of suppliers

 Powerful suppliers while number of suppliers become more concentrated (T)

 Rivalry among competing firms

 Highly competition with many players ex. Elpida Memory, Inc., Hynix Semiconductor, Inc. , Infineon
Technologies AG , Micron Technology , Nanya Technology Corporation , Semiconductor Manufacturing
International Corp. (SMIC) and Chinese companies (T)

 Relative power of unions, governments, special interest groups, etc.

 There is no clear information about any relative power of unions , governments , special interest groups

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 3.3.2 Key factors in the immediate environment
 Customers are Pc’s producer and normal customers that purchase flash memory
 Competitors Elpida Memory, Inc., Hynix Semiconductor, Inc. , Infineon Technologies AG , Micron
Technology , Nanya Technology Corporation , Semiconductor Manufacturing International Corp. (SMIC)
and Chinese companies
 Suppliers consternated
 Government only in USA department of justices

4. Internal Environment Strengths and Weaknesses (SWOT)

4.1 Corporate Structure
The company is a conglomerate that consists of 5 main Businesses; Semiconductor, Digital Media, Telecom, LCD,
Digital Appliance. (S)

4.2 Corporate Culture

 Samsung has a unique company culture. (S)

 The global business skill program helps high-potential employees adapt through learning the foreign
language and culture. (S)

 Encouraging employees to accept foreigner employees (S)

 Employees have a strong sense of achievements, their weekly schedule consisted (S)

 Complacency in the company. (W)

4.3 Corporate Resources

4.3.1 Marketing
 The CEO does market research and studies the competitors’ products, strategies and history (S)
 Samsung has a strong brand portfolio (S)
 Samsung prided itself on the reliability of its products and its ability to customize products to customer
demands (S)
 Extend the use of DRAM from just being a commodity (S)
 Offering over 1200 different variations of DRAM products ranging from frontier products to legacy
products as well as specialty products for niche markets. (S)
 Samsung has a high customer perceived quality - rated first in terms for quality by its customers (S)
 Samsung has the lowest operating cost among its competitors (S)

4.3.2 Finance
 Samsung has the highest selling price and the highest operating profit among its competitors (S)

 Samsung used the earnings from its memory division to invest in other technology products. (S)

4.3.3 Research and Development (R&D)

 Samsung tried to create new uses for DRAMs by putting its manufacturing and R&D in support of design
firms such as Rambus. (S)
 The R&D engineers and production engineers lived together in the same company-provided housing (S)
 Internal competition across global R&D sites to come up with the best design (S)
 They spend the highest on R&D among competitors (S)

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 4.3.4 Operations and Logistics
 Samsung actively sought to customize its products around a core design (S)
 Samsung’s main R&D facility and all of its fab lines were located at a single site just south of Seoul, South
Korea saving in construction costs. (S)
 Samsung has the largest production volume in the different DRAM products compared to all other
competitors. (S)
 They seem to have tacit knowledge and high experience and learning curve (S)

4.3.5 Human Resources Management (HRM)

 Meritocratic evaluation system (S)

 Samsung places programs to invest in employees’ global business skills (S)

 Samsung sponsored hundreds of employees’ MBA and Ph.D. studies in foreign countries.(S)

 Samsung actively recruited foreign talent (S)

 Samsung proudly claimed that it invested more in its employees than almost any other competitor in its
industry (S)

 Legion of Samsung employees may not all follow the CEO’s strategy of superiority in product design and
process efficiency. (W)

4.3.6 Information Technology (IT)

The case doesn’t show the use of information technology.

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 4.4 Summary of EFAS & IFAS

  Factors Weight Rating Weighte Comment

d Score
EFAS External Factor  
  Threats        
T1 Industry attract new entrants 0.15 3 0.45 like Chinese
T2 Bargaining power of buyers 0.1 2 0.2 price conscious customers
T3 Bargaining power of suppliers 0.2 Powerful suppliers while
number of suppliers become
3 0.6 more concentrated
T4 Highly competition with many players 0.15 ex. Elpida Memory, Inc.,
Hynix Semiconductor, Inc. ,
Infineon Technologies AG ,
Micron Technology , Nanya
Technology Corporation ,
Semiconductor
Manufacturing International
Corp. (SMIC) and Chinese
4 0.6 companies
T5 Government regulations 0.2 Weak Intellectual Property
4 0.8 rights in china
  Opportunists  
O1 Growing industry market 0.1 3 0.3
O2 Economic expand in china 0.1 3 0.3 The Chinese government was
able to provide cheap credit,
abundant land, cheap
utilities, engineering talent,
tax incentives, and other
essential resources to anyone
who wanted to build a
cutting-edge semiconductor
facility with a Chinese
partner
    1 3.25  
IFAS Internal Factors  
  Strengths  
S1 The CEO studies the competitors’ .2 3 .6
products, strategies and history
S2 Samsung tried to create new uses for .2 3 .6
DRAMs by putting its manufacturing
and R&D in support of design firms
such as Rambus
S3 Samsung proudly claimed that it .1 4 .4
invested more in its employees than
almost any other competitor in its
industry
S4 Samsung has the lowest operating .2 3 .6
cost, the highest selling price and the
highest operating profit among its

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 competitors
S5 Samsung actively recruited foreign .1 4 .4
talent
  Weakness
W1 Legion of Samsung employees may .05 3 .15
not all follow the CEO’s strategy of
superiority in product design and
process efficiency
W2 Sense of complacency in the .05 3 .15
company
1 2.9

5. Analysis of strategic factors (SWOT)

5.1 Situational analysis (SFAS Matrix)
  Weighted Duration
Factors Weight Rating Score
Comment
SML

5.2 Review of mission and objectives

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 6. Strategic alternatives (TOWS) and recommended strategy

Strengths (S) Weaknesses (W)

Internal Factors (IFAS)

External Factors SO Strategies WO Strategies

Opportunities(O)

Threats (T) ST Strategies WT Strategies