A PESTLE analysis of Samsung involves examining the external factors that could affect the company’s operations and performance. The acronym PESTLE stands for Political, Economic, Sociocultural, Technological, Legal, and Environmental factors.
Background and Introduction
Samsung is a South Korean multinational conglomerate that is headquartered in Seoul, South Korea. The company was founded on March 1, 1938, by Lee Byung-chul as a trading company that primarily dealt in exports of produce, such as dried fish and vegetables, to China.
Over the years, Samsung has expanded its business interests and is now involved in a diverse range of industries, including electronics, semiconductors, home appliances, telecommunications equipment, and more. Samsung Electronics is one of the world’s largest manufacturers of electronic devices, such as smartphones, tablets, televisions, and home appliances.
Samsung has a long history of innovation and has been at the forefront of several technological advancements. For instance, the company introduced the world’s first commercial 3D television in 2010, and it was also one of the early adopters of OLED technology for its high-end smartphones.
In recent years, Samsung has faced some setbacks due to the recall of its Galaxy Note 7 smartphones, which were found to have a battery defect that could cause them to catch fire or explode. However, the company has since rebounded, and its Galaxy S and Galaxy Note series remain some of the most popular smartphones on the market.
Overall, Samsung is a highly diversified company that has played a significant role in the development of the electronics industry and continues to be a major player in several other sectors as well.
Company Information
| Category | Information |
|---|---|
| Founded | March 1, 1938 |
| Headquarters | Seoul, South Korea |
| Founder | Lee Byung-chul |
| Industries | Electronics, semiconductors, home appliances, telecommunications equipment, and more |
| Subsidiaries | Samsung Electronics, Samsung Heavy Industries, Samsung Life Insurance, and more |
| Revenue (2021) | KRW 236.81 trillion (approximately USD 200 billion) |
| Number of employees (2021) | 320,671 |
| Products | Smartphones, tablets, televisions, home appliances, semiconductors, and more |
| Innovation | First commercial 3D television, early adopter of OLED technology for smartphones |
| Challenges | Recall of Galaxy Note 7 due to battery defect |
| Market position | One of the world’s largest manufacturers of electronic devices and a major player in several other sectors |
Introduction
Samsung has become number one telecommunication device manufacturer over the years and in order to understand this miraculous journey let us undergo the journey along with them. The company was named Samsung because it means “three stars” and it was formed with the vision of achieving the same fame and image as that of star. It is South Korean company.
The company was reborn in 1993 when its Chairman Lee Kun Hee introduced new management style and philosophy where product quality and innovation was placed at centre of all operations. In order to make sure that consist quality products are provided to their customers Samsung handles 90% manufacturing of its own products which is the opposite of Apple’s management style.
Political Factors
Political battle confronts the company on many grounds, firstly the relationship between North and South Korea have never been healthy and stable, there is always danger of war or barriers in trade apart from this the family succession plan of Samsung has met many political confrontations in the past. Every new head of company has to prove his skills to the board members and world before taking charge in order to show that he is worthy of responsibility. Despite many politics the new company CEO is from the family only and they plan on keeping the business in the family.
Economic Factors
In 2014 Samsung’s profit declined for which they blamed falling Korean currency and increasing local competition which they faced. They also said that Smartphone market is slow in developed markets where there isn’t much room left for expansion, fight for market share is built on taking competitor’s share rather than growing the overall market. Even in the weak demand market the company had to invest in marketing which reduced the profits even more.
Supremacy of Samsung was still intact as the number one mobile phone manufacturer but as 70% of company’s business is based on telecommunication devices therefore any slowing down of this business has huge impact on profitability. Samsung recovered in 2015 through new launches of galaxy note series and S series. It is in the industry where innovation is must for survival. (Samsung’s profits fall again as Smartphone market declines, 2014)
Social Factors
Since major transformation that took place in Samsung after which the company grew tremendously, it also developed internally. The conservative environment gave way to freedom of speech, emphasis on quality of employee life outside office and reduced meeting hours. Earlier in Samsung like all family owned South Korean businesses it was expected to put in long hours as an expression of respect and gratitude as bosses are considered as a fatherly figure and colleagues as family. The initial weeks after induction were as tough as military boot camps where new comers were deprived of sleep and ordered to maintain a certain exercise regime.
But as increasingly South Koreans started receiving education abroad they started realizing the importance of work-life balance and the difference in the upkeep of employees abroad as compared to their own country. Samsung as early as 1996 reviewed its performance reward policy and based it on merit. The country culture is such that they are skeptical of foreigners and do not award senior positions to them but Samsung went against these norms. However it is still a family owned business and is determined to continue the same. (Loosening their ties, 2015)
Technological Factors
Many people believe that Samsung’s success is an attribute of its copy skills and part of it is true as proven in the court of law, but there is much more to it then what meet the eyes. Samsung started off by copying designs and features but somewhere along it started producing its own designed products too. It has whole range of products from refrigerators and TVs to Smartphone so it definitely has technological superiority over others. In Apple we know that three internal design teams are formed to compete with each other and come up with a winning design which is then launched.
Samsung collaborated with Russia in order to purchase cheap scientific research from them. Russian scientists have not only helped Samsung in improving image processing chips and other features besides the barrier of foreign entrants due to terrorism has been tackled by them due to foreign partnership with Russian Academy of Science. (Shaughnessy, 2013)
Environmental Factors
Samsung has adopted Green Management policy which entails protection of environment through various steps taken like recycling of products, it includes five main areas: Management, Products, Processes, Workplaces and communities. Under this policy all the mentioned areas have to make sure that the actions taken are not harmful to environment. In order to contribute to the community they have built partnership with suppliers who share their philosophy of environment protection.
Health and safety measures have been implemented at manufacturing facilities of Samsung and since it manages 90% of its production therefore monitoring is not an issue. They meet all local and international standards of environment and also abide by local body rules and regulations. They are known to have applied procedures which help in minimizing the negative externalities of products like Carbon dioxide emission.
Law/Legal Factors
For the betterment of customers and mobile phone companies, governments have now imposed various laws regarding patents, copyrights and infringements. Samsung has been under a lot of media highlight due to suits filed against it by its major competitor Apple which put allegations in 2011 of copying its touch zoom concept on touch screen smart phones, Apple put as many as 6 allegations on Samsung for one or the other type of infringement and amazingly in 2012 5 out of these 6 were proven true in the court of law and Samsung had to pay $1 billion in fine.
Bibliography
- Loosening their ties. (2015, November 28th). The economist .
- Samsung’s profits fall again as smartphone market declines. (2014, July 08). The New Economy .
- Shaughnessy, H. (2013, March 07). What Makes Samsung Such An Innovative Company? Forbes .