Question

How have the following elements of international read theory influenced the business model of Samsung under study? Especially be sure to discuss Product Life-Cycle, New Trade Theory and Porter's Diamond of National Advantage

Answer 1

INTRODUCTION:

The product life cycle describes the period of time over which an item is developed, brought to market and eventually removed from the market. The cycle is broken into four stages: introduction, growth, maturity, and decline. The idea of the product lifecycle is used in marketing to decide when it is appropriate to advertise, reduce prices, explore new markets or create new packaging.

In order to find out which strategy Samsung used to achieve its leading position in the market, we will take a look at its marketing mix. The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix - Product, Price, Promotion, and Place.

Product: These are the goods and services that a company offers to the target market. the product in marketing refers to all activities relating to the product development, keeping in mind that there is a market for the product, it has to be appealing; it differentiates from other products existing in the market, and it can be produced at an affordable competitive price. Samsung‘s smartphones evolve beyond its limitation in slim phones to embody the perfect combination of comfort, simplicity, and sophistication. All their unique customized smartphones come with outstanding features. Products vary greatly in Samsung‘s phone department. They have a number of Galaxy smartphones, Galaxy S4 being their fourth generation. Samsung Galaxy Series is Android-based and many more

Promotion: refers to all the activities undertaken to make the product or service known to the user and trade. This can include advertising, word of mouth, press reports, incentives, commissions and awards to the trade. It can also include consumer schemes, direct marketing, contests, and prizes. Samsung uses different promotional tools across different media platforms to promote its smartphones. They use the television, print advertising, internet social media and outdoor media

Price: refers to the value that is put for a product. It depends on costs of production, segment targeted, the ability of the market to pay, supply - demand and a host of other direct and indirect factors. The company should implement a sound pricing strategy; this will support the company‘s overall marketing strategy and profitability. After manufacturing innovative and cost-effective phones worldwide for a long time, Samsung has been able to learn what is required to stay on top of its industry. It has not allowed Apple Inc. to grow in markets like Asia and developing countries like India due to its price policy. This is the results of manufacturing wide range of products with the different price range.

Place: refers to the point of sale. In every industry, catching the eye of the consumer and making it easy for her to buy it is the main aim of a good distribution or 'place' strategy. Samsung uses a variety of distribution channels. They distribute to various telecommunication companies like mobile phone retailers, Internet partners such as Amazon and other carriers. They also have Popup Samsung retail stores .

New Trade

The new trade theory began to emerge in the 1970s when a number of economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade. New trade theory makes two important points: First, through its impact on economies of scale, trade can increase the variety of goods available to consumers and decrease the average cost of those goods. Second, in those industries when the output required to attain economies of the scale represents a significant proportion of total world demand, the global market may be able to support only a small number of enterprises. Thus, world trade in certain products may be dominated by countries whose firms were first movers in their production .

In order to reduce the production cost, Samsung Electronics using global procurement, they looking for the potential suppliers, is committed to enhancing product development, corporate culture, and contributions to the global society. Samsung Electronics and Suppliers, as well as the manufacturers, can cooperate to make the best product. Global procurement not only can reduce the production cost, it also can enhance the productivity.

Samsung Electronics has realized economies of scale in semiconductor production. Semiconductor devices can perform a variety of control functions in electronic equipment, such as Samsung touch smartphone. Through the continuous improvement, Samsung's semiconductor production successfully extended the R & D centers and production lines to China and other countries, and the products can sell around the world, via mass production to reduce the costs. This is the cost advantage

Porter’s Diamond Theory

The Porter Diamond is a model that is designed to help understand the competitive advantage nations or groups possess due to certain factors available to them, and to explain how governments can act as catalysts to improve a country's position in a globally competitive economic environment. The model was created by Michael Porter, ıt is a proactive economic theory, rather than one.

Porter theorizes that four broad attributes of a nation shape the environment in which local firms compete, and these attributes promote or impede the creation of competitive advantage. These attributes are:

• Factor endowments—a nation’s position in factors of production, such as skilled labor or the infrastructure necessary to compete in a given industry.
• Demand conditions—the nature of home demand for the industry’s product or service.
• Related and supporting industries—the presence or absence of supplier industries and related industries that are internationally competitive.
• Firm strategy, structure, and rivalry—the conditions governing how companies are created, organized, and managed and the nature of domestic rivalry .

South Korea that is the origin country of Samsung Electronics has many of these attributes which mentioned above. As a factor endowment, South Korea located nearby China and South Asian countries. South Korean’s Government supports companies with specific financial and international policies to be an export-oriented company. They also support competitive education system through public universities specialized in engineering especially in IT sector. Samsung Electronics has high-quality partners both locally and internationally.
Besides the government’s supportive policies, Samsung has also a huge amount of investment on R&D projects to keep their position in the market as a big player.