In this discussion please identify:
1. Sources of Samsung's competitive advantage.
a. One major source of competitive advantage for the company was its emphasis on producing superior products that are well designed and engineered for performance. b. Another major source of competitive advantage for Samsung was the amount of resources and expertise available to the company in recent years. The case study notes that in 2005, the Samsung Group (including Samsung Electronics Company), was the largest conglomerate in South Korea with net sales of $135 billion in 2004, 337 overseas operations in 58 countries and approximately 212,000 staff employed around the world in its far-flung operations.
c. Samsung had already weathered and survived two previous cyclical downturns in the memory chip industry by virtue of delivering the best performance in the industry.
d. In 2000, Samsung's brand value was $5.2 billion (43rd in the world), and increased to $12.6 billion (21st in the world) in 2004. According to Siegel and Chang, "In 2004, Samsung stood ahead of many brands such as Philips, Kodak, and Panasonic. Sony ranked 20th by comparison" (p. 6).
Sources of the Chinese entrants' competitive advantage.
The semiconductor industry experienced remarkable grow during the first part of the 21st century, and experienced increasingly intense competition and large-scale entry by Chinese companies in 2005 (Siegel & Chang.). According...
Whereas the cost of building a new fab had gone up from $200 million in 1985 to $3 billion in 2004, the Chinese firms were having little difficulty raising the money from local and international sources" (Siegel & Chang, p. 2). Notwithstanding these competitive advantages, Chinese entrants encountered some significant problems in their quest to become competitive in the semiconductor industry based on a paucity of organizational experience and the tacit knowledge needed to design and produce these high-tech products. Despite these constraints, the Chinese entrants still enjoyed ready access to outside finance as well as a pool of local engineers with the requisite talent and experience (Siegel & Chang).
3. What recommendations would you make to Chairman Lee regarding Samsung's response to the threat of large-scale Chinese entry?
It is reasonable to conclude that Moore's Law will continue to hold true in the coming years and computer processing speeds will continue to double every 18 months or so. In this environment, it is recommended that Samsung continue "ride the horse that got it where it is today" and pursue superior solutions to anticipated needs in the industry.
References
Siegel, J.I. & Chang, J.J. (2008, August 14…
