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Samsung Mobile is the mobile division of Samsung Electronics, a multinational electronics company headquartered in Suwon, South Korea. Samsung is a South Korean chaebol ( a large conglomerate that is run, controlled, and owned by a family). Samsung mobile is a key player in the mobile phone industry currently owning 23.3%market shares as of Q2 2017. UsingcPESTLE Analysis, I will be able to analyze the environmental drivers that are affecting Samsung Mobile, and how Samsung Mobile are responding to them.
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Using the PESTLE analysis, we are able to analyze the six external Macro environments in which companies must operate in, and the factors that have an impact on a company, in this case, Samsung Mobile. These are: Political, Economic, Socio-Cultural, Technological, Legal and Environmental.
Samsung may face many political pressures in developing countries as the political environment there is unstable, and prone to many changes in governing structures. In addition tensions with South Korea and North Korea should always be a concern for Samsung. If war were to start, this would have significant impacts on the mobile industry and especially Samsung Electronics, that owns 23.3% of the mobile market industry. (Baker, S. and Chau, M. (2017).)
Samsung has also been through many political scandals in South Korea involving then president Park Geun-Hye, which led to Samsungs co-chairman, Lee Jae-Yong and President Park Geun-Hye arrest and trial. This came at a key moment, right after the note 7 debacles.
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South Korea uses a free-floating exchange rate system, meaning that the value of the Korean Won depends fully on the market forces of supply and demand.
Given the fact that there was a global Financial Crisis in 2007-2008, and a US Recession, the Korean Wondecreased over 9% in value against the US dollar from January to June 2008. Samsung has to be aware that the quick changes in the exchange rate can lead to their products being relatively more expensive compared to other countries. This can have a massive effect on mobile companies, especially in mobile companies that are so reliant on importing components and exporting final goods.
In addition, Samsung Mobile has to take note that “China, Brazil, and India will be among the top four smartphone markets in the world by 2018”
This is of great importance to the mobile industry as Mobile companies need to develop cheap smartphones for the high numbers of low-income households in these countries.
Samsung Electronics has had to change its products to match the changes in consumer preferences in certain developing Markets. Samsung has the largest market share for mobile phones and smartphones in the Chinese market. They need to take into consideration changing consumer preferences. The Chinese have become more IT savvy, demanding cheaper and more innovative consumer electronics. This means that Samsung has to design products that are in line with these changes in consumer preferences.
Virtual Reality Handsets and wireless charging technology have proven to be the next Battleground of innovation as many of Samsungs competitors have hit the market with their own products and features. However, Samsung is way ahead of their rivals when it comes to the development of smartphone technology. This is evidenced by the fact that Samsung was the first smartphone maker to develop smartphones with wireless charging capabilities beating rivals such as Apple in terms of adaptability. They also owned a 98% share of the active matrix organic light-emitting diode” (Farhoomand.A2013)
Samsungs main Competitor Apple INCamongst others have many registered patents, therefore Samsung electronics must pay attention to Patent infringements. They lost a patent infringement case in 2015, ending up paying Apple”$548 million before December 14th2015” (Vincent 2015)
There has been a rise in how ethical Consumers who want their goods and services to be sourced in a socially and environmentally responsible manner, meaning that Samsung must not take advantage of workers in developing countries, and must lower its Carbon footprint.
They also need to take notice of how they source their Cobalt. 60% of the worlds Cobalt supply comes from theDemocratic Republic of the Congo, where Cobalt miners are not working in optimum conditions. In addition, “children as young as 7 are working in the mines” (Collins, 2016) This is relative to Samsung Electronic as Cobalt is an important raw material for Lithium-ion batteries which are found in their phones, tablets, and laptops. This has led to increased pressure for Tech companies such as Samsung electronics to investigate their suppliers. However, Samsung has “ set up its EnvironmentalChemicals Integrated Management Systems to operate its eco-partner certification system”( Farhoomand.A2013) to help prevent certified parts or raw materials from being used in manufacturing.
After analyzing all the Macroenvironmental factors using PESTLE, we are able to see that one of the most powerful macro environmental factors was the political landscape. The SouthKorean political scandal has dragged Samsung’s share price and reputation down the drain during a period of serious competition across many of its core businesses. This political scandal has also affected South Korean Society as it has fueled discontent against the government, political elite, and family run conglomerates such as Samsung which dominate South Korea’s economy. In addition, the social environment is a very important factor to keep in mind as consumer tastes and preferences are being changed faster than ever. We live in a world where Consumers are becoming less loyal to brands, so Samsung has to make sure that new developments are in line with the changes in consumers tastes before they end up like Nokia who responded too late to a change in consumer preferences.
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