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Case study: Samsung

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  1. Samsung success story in developing a win-win strategy
    1. Analysis of the differentiation strategy of Samsung
    2. Effectiveness of the cost structure of Samsung
  2. Threat to Samsung threatened by the Chinese players
    1. Chinese players and the semiconductor market
    2. Samsung strategy for Chinese players
  3. Recommendations
    1. Strategy of differentiation and premium prices
    2. Strengthen its competitiveness by lowering costs

Between the years 1980 to 2005, Samsung entered the memory chips market and has quickly ascended to the position of market leader. This paper will analyze the factors behind this success and analyze how this position can be affected by recent market developments.
A memory chip is a standardized product with perfectly defined qualities and known buyers. The competition between producers is mostly focused on price and therefore affects the upstream capacity of each producer to control the costs of production.

[...] Chinese players are already poised to emulate some of the historical advantages of Samsung Samsung was the first Korean player in the market for memory chips, giving it access to a cheap labor market in relation to established players at the time, and also motivating engineers to demonstrate their capabilities to their U.S., Japanese, and German counterparts. Today, this advantage is in favor of Chinese players. The Chinese players are as prepared as Samsung in its infancy to bear heavy losses in order to gain market share Samsung has initially acquired certain licensed technologies from Micron. [...]


[...] In addition, traditional competitors from Samsung are already in partnership with Chinese partners, and could offset the relative inefficiency of their cost structure compared to that of Samsung. b. Capital intensive output The alliance with a Chinese actor seems inevitable even if the risk is to eventually create a "new Samsung" to determine how to avoid this? 3. Recommendations: Samsung may forge an alliance with a Chinese actor in order to maintain its competitive advantages A. Samsung must above all maintain its strategy of differentiation and premium prices a. [...]

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