Academic Year 1st 2018 – 2019 Semester: Fall 2018-2019
Branch: jordan Program: Business Studies
Course Title: Making sense of Strategy I
Course Code: B301A
Student Name:ALI JUMA ALKHWALDEH
Student ID: 2140858
Section Number: Tutor Name:DR.AHMED

Mark details
Allocated Marks Questions Q1 Q2 Q3 Total (100)
Weight 30 30 40
Marks

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Deduction Criteria No PT3
5 Referencing
(0-10) Word Count, Presentation, structure
(0-5) Total deduction
(0-20)
Marks
100 Student’s Total Mark (total marks – total deductions)

Notes on plagiarism:
A. According to the Arab Open University By-laws, “the following acts represent cases of cheating and
Plagiarism:
? Verbatim copying of printed material and submitting them as part of TMAs without proper academic acknowledgement and documentation.
? Verbatim copying of material from the Internet, including tables and graphics.
? Copying other students’ notes or reports.
? Using paid or unpaid material prepared for the student by individuals or firms.
B. Penalties for plagiarism ranges from failure in the TMA to expulsion from the university.

Declaration: I hereby declare that the submitted TMA is my own work and I have not copied any other person’s work or plagiarized in any other form as specified above.
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Question 1
Porter’s Five Forces of Competition framework includes: –
three sources of ‘horizontal’ competition: competition from substitutes, competition from entrants, and competition from established rivals; and
two sources of ‘vertical’ competition: the bargaining power of suppliers and buyers.
First buyer power: Buyer power (the relative power of buyers to their suppliers) is affected by the bargaining talent of buyers and their price sensitivity. Bargaining power is affected by the size and concentration-of buyers, the level of information that buyers process, and the ability of buyers to backwardly integrate – i.e., to produce the goods/services presently produced by supplier(s). The amount of buyers’ price sensitivity is higher the less differentiated the product or service is,
Samsung makes a large range of products including mobile products, TV and Home theatres, computing related products and home appliances. The bargaining power of buyers may be low, but that of the corporate buyers and the customers as a group is significant. In the 21st century there are many factors that have led to increase in the bargaining power of the customers. The customers are well learned and they have some options for most products. They can easily select a brand of their choice and shop from many sources. There are no switching costs and the result is that the bargaining power of customers .is high. There is a high level of competition between the brands and most of them are competing for customers. Overall bargaining power of the buyers is low to fair because there are also several factors that moderate the buyers’ bargaining power. Samsung is an established brand name and its continuous focus on technological innovation is also an important factor that leads to higher bargaining power of the brand compared to the customers.
Second: Bargaining power of suppliers: The sources from which firms gain raw materials for the intention of production are called as suppliers. The suppliers are an main group and their bargaining power and important force affecting the firm. The higher the bargaining power of the suppliers, the lower is the competitive strength of the firm. In case of Samsung, the bargaining power of the suppliers is very low. The low bargaining power of the suppliers is due to many factors and one of them is their small size and low financial strength. besides Samsung can easily switch from one supplier to a new one. In case of the suppliers, losing business from Samsung can mean a big loss of financial support for a supplier. Samsung frames the rules that the suppliers are necessary to follow and conducts regular investigations to ensure if the suppliers are following the rules. There are rules related to labor welfare, child labor as well as sustainability. All these rules are important and Samsung can get rid of the suppliers that do not follow the rules.
Third Threat of new entrants: Firms maintain prices reasonable, for the reason that high prices may attract new entrants. Sunk costs are investments that firms gain in the industry, but cannot be recovered on exit .The absence of sunk costs makes the industry vulnerable to hit-and-run entry. Contestable markets is when there are no entry barriers.
The threat of new entrants for brands like Samsung is low. The explanation is that while there is a main investment in building such brands, there is as well enough investment in attracting ability and building a brand during marketing. The regulatory pressure has improved which has also become a barrier for the new entrants. Any new brand trying to enter the market, can start business on a smaller scale but to raise into a large and global brand it will need to invest in so many things including marketing, human capital and operations. So, overall the barriers are quite large for new brands trying to enter the market.
Forth Threat of substitutes:
: Those products that show to be different but can satisfy the same need as another product. To the extent-that switching costs are low, substitutes may have a strong effect on an industry.
• The absence of close substitutes makes consumers insensitive to price (demand is inelastic).
The presence of substitutes renders the demand elastic
The threat of substitutes for Samsung is moderately high. There are many competitors like LG, Sony and more international as well as local brands that present competing-products and services. The switching costs for the customers are low. The factors that moderate the threat from the substitutes are a huge brand image, technological innovation and-similar more factors like customer convenience.
Finally Competitive rivalry between the existing players:
Competitive rivalry between the existing players in the electronics industry is deep. The major reason is that there are many large brands like LG, Apple, Microsoft, Philips, Toshiba, Sony and more. The stage of rivalry is very high and it is why the new brands too find it hard to enter the market. The largest players are well recognized brands and there are many factors that have led to higher competition in the market space. These brands have to depend on technological innovation for growth and deeper market penetration.
Good design also allowed Samsung to command a price premium for example its mobile phones had the highest average unite sale price US$ 215 in 2002 in their category it was believed that the company was able to achieve this because its mobile phones featured a combination of cutting edge technology and innovative design.
In conclusion the industry is attractive for incumbent business. on the other hand, it is not very attractive for new entrants. To compete within this industry firms need to compete on quality. In order to accomplish this quality firms require to establish relationships with suppliers and establish processes to produce high quality materials. Also, even though buyers don’t have traditional switching costs, buyers are loyal to particular firms in the industry. so, it would take a long time for firms to get recognition and a long time to build a strong customer base, thus making this industry not very attractive for new entrants.

David, Kester. 2017. Samsung electronics – success by design. UKessays. Online 4 18, 2017. Cited: 11 26, 2018. https://www.ukessays.com/essays/engineering/samsung-electronics-success-by-design.php.
Wrigh, Terry O’Sullivan and Alex. 2009. making sense of strategy. making sense of strategy. Walton Hall, Milton Keynes : The Open University, 2009.

Question 2
Strategy is a method or plan selected to bring about a desired future, for.
Strategy is the skill and science of planning and marshalling resources for their mainly efficient and effective use. The term is resulting from the Greek word for generalship or leading an army. See also tactics.
First focus strategy Samsung is shifting its focus to mid-range smart phones
This strategy might help Samsung increase smart phone sales in emerging markets. Samsung’s newest strategy could attract the more price-sensitive consumers in emerging markets away from competition by giving its cheaper smart phones first access to new technology. And luring consumers in emerging markets is central for Samsung, as they present growth markets amid generally worldwide decline in smart phone shipments. For example, in Q2 2018, Indonesian smart phone shipments grew 25% year-over-year (YoY) and Indian smart phone shipments grew 20% YoY.
It might also establish augmented reality (AR) and artificial intelligence (AI) technology to new consumers. a lot of of Samsung’s current smart phone lines don’t have compatibility with AR and AI technology.
Second corporate strategy Samsung have a Totally different Strategy from Apple,
And It’s Working enormous
The company pivots and produces quickly, coming out-with a variety of devices. It sees what the market responds to, pushes successes, and destroy failures. And now, instead than just-providing a cheaper and lesser iPhone, it’s differentiated itself with better screens, unusual features, successful marketing, and delivering what customers want.
The company combines market research and unparalleled execution with, despite its reputation, a lot of innovation of its own. Samsung was second only to IBM in the number of U.S. patents filed last-year, and filed 150 patents related to the new technology in the-Galaxy S4.
Third Differentiation Faced with the challenge that the DRAM industry may fall into a commodity trap and for that reason be subject to cutthroat price competition and price changes Samsung developed the below classification of large product differentiation.
Cost advantage
Samsung was able to command superior operating margins as compared to its competitors because of
Cheap labor: 35% cheaper as compared to non-Chinese manufacturers
Use of new design rules: This allowed-Samsung to create more chips per wafer (the key raw material in chip manufacturing).
Better sourcing: Raw materials cost 37% less than its competitors possibly due to volume discounts-and improved bargaining power
Better manufacturing processes- Yield rates were are at 80%, as compared to 50-67% for the competitors-
Samsung was smart to get 2.4 times the amount of die’s by using 12
-inch wafers as compared to 8-inch wafers, at 90% of the costs per chip leading to better gross margins
Lower depreciation-costs: By collocating its fab investments, Samsung saved an average of 12% of the fab construction costs.
Finally innovation strategy The game changing innovation of Samsung encapsulates business models, business processes and manner of positioning themselves vis a vis their competitor. This is what has made them survive all these years.
Innovation strategy at Samsung can be attributed to this belief of the people on the ability to succeed in the field of electronics. In the late 90?s Korea was gripped with financial failure as an aftermath of Asian crisis.
In 2001, the industry of information technology was gripped by recession and many huge companies suffer losses and some even collapsed. Samsung electronics emerged unscathed and was able to post substantial amount of revenue. They were also able to earmarked substantial resource for their research and development.

Dudovskiy, John. 2017. Samsung Business Strategy and Competitive Advantage. research methodology. Online samsung, 11 5, 2017. Cited: 11 29, 2018. https://research-methodology.net/samsung-business-strategy-competitive-advantage-effective-exploitation-market-readership/.
Wrigh, Terry O’Sullivan and Alex. 2009. making sense of strategy. making sense of strategy. Walton Hall, Milton Keynes : The Open University, 2009.

References

David, Kester. 2017. Samsung electronics – success by design. UKessays. Online 4 18, 2017. Cited: 11 26, 2018. https://www.ukessays.com/essays/engineering/samsung-electronics-success-by-design.php.
Dudovskiy, John. 2017. Samsung Business Strategy and Competitive Advantage. research methodology. Online samsung, 11 5, 2017. Cited: 11 29, 2018. https://research-methodology.net/samsung-business-strategy-competitive-advantage-effective-exploitation-market-readership/.
Wrigh, Terry O’Sullivan and Alex. 2009. making sense of strategy. making sense of strategy. Walton Hall, Milton Keynes : The Open University, 2009.