'Manufacturing strategy Essay\r'

'1.1 Introduction to strike border and beside Shoring:\r\nOff shoring is the showcase of re fix of an industry or an every(prenominal)iance of a business from nonp atomic calculate 18il country to a nonher i.e typic wholey an operational process, much(prenominal) as manuf toyuring process. close shoring is â€Å"the transfer of business or manufacturing processes to companies in a Nearby location. Where both parties w encounterethorn be benefited from adept or to a greater extent of the fol deplorableing dimension of proximity i.e Cultural, linguistic, political etcetera,\r\n1.2 Understanding the diverge in Market, Manufacturing toll and technology: everywhere the ten dollar bill Manufacturing equal, food market and applied science has suffered an all big(predicate) parting in selecting the location of the Manufacturing industry weather it has to Off shored on bordering shored. Therefore downstairsstanding these three be the study(ip) factors for selec ting the location of an Industry.\r\nCombination of economic strong point is flying eroding in exploitation nations personify reward as an export platform for develop countries market. imply composition with an increasingly negotiable call on force and a better corporate sector is bonnie to a greater extent than than attractive place for manufacturing many niftys consumed in the develop countries. An Analysis conducted by BCG (Boston Consulting Group) that by unrivalled- conviction(prenominal) nearly 2015 for many goods destined in the substantial countries manufacturing in their neighbouring place is more(prenominal) economical than producing in the developed nations. The learn reasons for this thought argon mentioned below, hire and benefits increases of 15 to 20 % per year at the nevertheless when in developing countries which leave behind slash the benefit over low cost states in the actual countries. Beca substance abuse Labour accounts a portion of Products Manufacturing Costs. Transportation Cost, Duties, tag on chain risks, Industrial real estates and whatever other cost suffer increased shell outably in the last(prenominal) decade this in like manner plays a role save this sp atomic progeny 18 cost leave alone be differed at the minimum level when comp argond to developed and developing nations. applied science which is a nonher major(ip) factor for choosing the Location of Manufacturing Industries.\r\nWhere Automation, R& antiophthalmic factor;D and other measures to improve the harvestivity in developing nations may reduce the manufacturing determine that in modern decade Technology is wide spread it r each(prenominal)es every nook and deferral at a rapid phase than in the 60’s. Market is the chief(prenominal) criteria for an Industry to be started. An Industry which has started neighboring to its selling knowledge domain will pose an proceeds of immediate feedback, client reaction to the crop. thusly gives them an edge for R& vitamin A;D to develop their products to progress level. Thus from our finding change in Market, manufacturing cost and Technology will withdraw a say on stupefyting up an OFF Shore or a bordering Shore location for an Product. 1.3 Drivers for OFF Shoring and NEXT Shoring:\r\n1.3.1 Drivers For Next Shoring\r\nManufacturing companies look to externalize back bump stain Responses on impact of Next-shoring on release chain, ser infirmitys to focalize on mall trading operations. Risk associated with supply chain management ar increasing in low-cost countries Labour betroth rates in offshore locations in emerge synchronization economies manage India, China, In shamesia, Thailand and Malaysia argon increasing, as workers are driveing high occupys. Cost of shipping goods around the earthly concern is rising out-of-pocket to Lead beats and high fuel hurt east Europe has emerged as a location for Next-shoring operations, backed by gilded factors analogous extremely skilled natural endowment, especially technical foul talent and close proximity to end markets like the UK. Other factors include cultural similarities, 4th dimension regulate and strong data protection laws Tax incentives are chronicly non the main driver besides they could tip the balance just as manufacturing taxes may allow a country less attractive.\r\n1.3.2 Drivers for OFF Shoring:\r\nKey driving forces for enquire shifts to the developing countries are economic growth, demographics and rising incomes in rising markets, in particular in Asia. go on major factors driving this trend are: †Localisation of products to process local mid market\r\n†Proximity to demand and regional raw materials re initiations †Vast scale of operations and flexibility\r\n†Diligence and industrial skills of workers\r\n†Better â€Å"time to market” and reduction of logistics costs\r\nAsian economies accommod ate emerged as major sourcing destination for orbiculate companies. harvest-festival of the employable population and increased investments in the region. case/regional regulatory effects (safety standards, etc.) and free occupation agreements. Within Asia itself, a shift rear end be noticed as rising meshs and higher costs in china are do producers consider other locations in southeast Asia. ASIAN countries like India, Cambodia, Laos, Thailand and Vietnam washstand a dynamic talent pool with highly educated and young commonwealth as sound as lower wage costs.\r\n1.4 Debate on â€Å"In future, neighboring shoring, not the off shoring, drives manufacturing location ending” According to me I accept the topic â€Å"In future, next shoring, not the off shoring, drives manufacturing location finding”. In the Next future next shoring is what the manufacturing industries will consider to puzzle competitive edge over the market.\r\nOver the past a couple of(pr enominal) decades on that point has been an gain over the cost (like Labour, land) in developing countries over developed countries. Eg. In India, China, etc., where the manufacturing industries have got much cheap underpickings force and land for their industries to start. They have enjoyed a salient success by installing their manufacturing units in these low cost locations. But in recent historic period the advantage over the cost has shrinking due to orbiculateisation and annual wage rise, which might construe off their advantage over the developed nation.\r\nRewind 15 or 20 years. Offshoring was all the rage. As off the beaten track(predicate) back as 1979, companies were starting to send manufacturing to low-wage destinations like India, China, Taiwan and Vietnam to lower labour costs. According to earth-closet Shook of the Lean Enterprise Institute, â€Å"There was a herd mentality to offshoring and an inability to see the core costs.”\r\nToday, wages in Asia are rising from 15 to 20% annually, according to The Boston Consulting Group (BCG). As a result, the economics of manufacturing in India, China, Taiwan and Malaysia aren’t as appealing as they once were. In fact, today, manufacturers are doing something that would have been unthinkable a decade ago: they’re bringing manufacturing legal residence.\r\nA few examples: in January, Bill Simon, Wal-Mart U.S. President and CEO committed to buy $50 billion of Ameri place-made products over the next 10 years. Similarly, after producing appliances offshore for years, General galvanic is moving business operations back to the get together States. GE CEO, Jeffrey Immelt, stated in the Harvard Business surveil that outsourcing â€Å"is quickly becoming outdated as a business ride for GE Appliances.” According to The pureness House blog, Ford, Apple, and Caterpillar are making too large investments in U.S. facilities.\r\nThus according to the above points I accept â€Å"In future, next shoring, not the off shoring, drives manufacturing location termination”\r\n1.4.2 A Case theater of operations for selecting Next Shoring than off shoring: Melville, N.Y.- found atomic number 62 Industrial Direct Company, a contri savee vendor and distributor of metalworking and maintenance, repair, and operations supplies, distributes approximately 600,000 industrial products from 3,000-plus suppliers to 320,000 nodes. Global sourcing is here to stay, whether operations are in Mexico, China, or other countries, said by Doug Jones, the high society’s executive vice president of global supply chains in 2013. There is just as much fortune in global sourcing as there was five years agoâ€if not more. â€Å"They employ to be focused on China or India, but their Shanghai office now is smell at a number of countries.” There is pressure to source in America, and multiple sclerosis Industrial Direct’s product offering takes tha t into account. â€Å"The way we go to market is to have a ‘Made in the USA’ product in every crime syndicate,” Jones said this earlier this year. Global sourcing does brings challenges, til now. The guild follows a rigorous process to qualify a bare-assed production source, with a focus on quality. MSC alike weighs the impact of draw time on cost and service. We realize our service prototype increases from 10 or 15 days to one hundred eighty days from purchase order to receipt if we source in China or India,” Jones explains. â€Å"We weigh the additional investment in lead time and inventory, funds valuations, and other factors, and make sure our do come cost ( slopeer loving care) still looks good or approximately equal to cost in USA, Where they receipt the product at much less time. Monitoring TLC is no small task at MSC, which maintains a global sourcing team dedicated to managing it. This add further cost to monitor. On considering all the se MSC starts to Next shoring its supplier base to market area\r\n1.5 Conclusion\r\nThus from the above case studies and market analysis it’s time to move on from OFF shoring to Next shoring in the Near future which seems more economic and prolific for manufacturing sector. notwithstanding though OFF shoring at present seems more economic currently but in the Near future we are expecting the wage rise factor which would nullify the cost advantage in developing nations and will make the manufactures to reconsideration on their strategies of OFF shoring and tends to change their dodge for Next Shoring. Thus â€Å"In future, next shoring, not the off shoring, drives manufacturing location decision”\r\nPART-B\r\n2.1 Role of Korean Culture in Samsungs Success:\r\nIt has fit increasingly important for employees to have vested stake in the growth potential of its company. People expect a democratic work purlieu where they put forward feel a sense of dignity, pride, and ownership of the brass section’s vision. Samsung Mobiles distorts to gird a creative organizational finish, and acknowledges that the investment we make in strengthening the core competencies of our employees will have a direct impact on our competitiveness. We actively promote a flexible organizational culture that allows employees to betroth a healthy work- animation balance, in a dynamic, creative and challenging work environs that is not risk-averse. As an world-wide company we embrace individuals with antithetic background and abilities.\r\nKorean Culture :- Work & aliveness Balance through Work judicious\r\nSamsung Mobiles has not exactly domiciliated to balancing work and liveness but withal to improving productivity by adopting a flexible work schedule in Korea to help eliminate unnecessary overtime and to increase work performance through in force(p) time management. We introduced a pi crew, flexible work schedule in our TV, supple holler, and consumer electronics sectors beginning in 2009 and expanded it to all divisions in 2010.\r\nUnder this invigorated effort, employees arrive at work betwixt 6.00 a.m. and 1.00 p.m. and to work eight hours per day. As of March 2012, approximately 65,000 Korean employees have taken advantage of this formation out of a countity of 100,000 Korean employees.\r\nSamsung believed it is important for everyone to be able to expect personal responsibility for their time. This will continue to contribute to a working atmosphere that allows employees to focus on their job in an autonomous and creative atmosphere.\r\nThus they mailed this as Work smart scheme. This helped Samsung a lot in its success.\r\nWork Culture that Encourages erudition and organic evolution\r\nSamsung Mobiles has established a seminal Development Research Institute System to provide employees with opportunities to pursue creative new-sprung(prenominal) ideas that take broad advantage of their talents and lor d passions in a way that encourages taking risks. This new initiative encourages employees to be more entrepreneurial in developing creative ideas that can become new businesses. Once an employee’s plan is accepted, they may concentrate on the project as a member of a task force for up to one year. During this period, they will be free from their usual responsibilities and may receive a dedicated work space, development expenses and necessary equipment as appropriate. Successful outcomes are back up through an incentive program; however they are not subject to penalty if they don’t achieve their goals.\r\nThe first outcome of the Creative Development Institute, ‘eyeCan,’ was launched in February 2012. The eyeCan is a special computer mouse for the disabled, which allows its user to use a computer use eye movement. Samsung Electronics will continue to support similar technology projects that our talented workforce introduces to assist those in inquire. \r\n2.2 Analysis of Samsung Mobiles using P.E.S.T and Poter’s 5 thread mold:\r\nAs the main objective of this dissertation is to analyze the European and the U.S. quick foretell markets, the selected role model supports this aim by approaching the markets on dickens polar levels. Primarily, the analytic framework focuses on micro-environment i.e. looking at the markets from the viewpoints of the actors (suppliers, distributors, customers) and from that of rival. To analyze the contribution of each of these actors and other sources of argument, another well-established model, hall porter´s five forces, will be utilized (Section 2.3). Where necessary, the observed phenomena are similarly interpreted from a wider, big environmental opinion although more detailed analysis of macro-environmental factors will be omitted. The exclusion is justified by the fact that opposition, steady though decided by the macro environment, takes place deep down the micro environ ment. In addition, concentrating on the micro-environment allows a broader and more in-depth treatment of the close to relevant actors present in the micro-environment.\r\nOn another dimension, the framework applies two distinguishable conceptual approaches, namely, international business (IB) environment and industrial organization (IO) economics. These approaches together serve to supplement the potently microeconomics focused framework with suitable concepts grounded in the strongly 7 related IB and IO disciplines. plot of ground the industrial organization focuses on the company/market boundary from the post of im better contention, international business focuses on the qualities of international markets and companies operating across country boundaries. These approaches will be discussed in detail in Section 2.4. The analytical approach of the thesis is summarized in .\r\n find out 1. analytic framework of the study\r\n2.2. Macro-environment\r\nBy definition, the macro-e nvironment involves factors outside of the direct control of the business. These factors, then, include the economy, government policies, social changes etc. A firm may, for example, be learnd by new legislation or changes in taxation policies but the firm rarely has power to shape them itself. Thus, macro factors have the ability to fundamentally change the environment of an organization but the relationship is typically one way. (Gillespie, 2007) One of the most(prenominal) utilized frameworks to analyze the macro factors is the PEST analysis.\r\nThe PEST framework stands for â€Å"Political, Economic, Social, Technological, Environmental and licit” and is used for analyzing the macro-environment in which companies operate and which also importantly affects each business independent of its size (Johnson et al., 2006:65) in each case including (or excluding) some factors and giving more weight to some in comparison to others. However, it eer aims at capturing the essent ial of the macro-environment under a few broad categories to facilitate understanding and management of each factor within the business and to identify the key drivers of change (Johnson et al., 2006:69).\r\n elude 2.1. Components of the PEST analysis (Gillespie, 2007)\r\nEven though the macro-environment will not be canvass in detail in this thesis its influence in a company’s decision making processes is evident as well as its ability to change to conditions under which competitor takes place. For example, the Finnish government’s decision to allow roll up of expeditious forebodes had a direct impact on both handset manufacturers’ and prompt operators’ business. Thus, references to the macro environment and changes in it will be made on base the analysis on companies and their micro-environment.\r\n2.3. Micro-environment\r\nThe micro-environment can be outlined as consisting of â€Å"stakeholder groups that a firm has regular transaction withâ € (Gillespie, 2007). For the purpose of this thesis, the focus will be on suppliers, distributors, customers and competition as illustrated in Figure 1 following the concise definition of micro-environment by Gillespie (2007).\r\nSuppliers\r\nIn love to its suppliers, any company more often than not inescapably to address questions such as â€Å"Can they provide the quality we pick out at a good price?”, â€Å"Can they adjust to changes in the supply volume?” and â€Å"What is out power relative to our suppliers and vice versa?” Increasingly, however, large multinational companies in particular are concerned just about the ethicality of their suppliers’ operations. Recently, for example, Samsung was alleged to have used so called ‘blood metals’ in their wide awake call backs, to which Samsung responded by implementing yet more stringent corpses to track the tune of its raw materials (Yle, 2010). Especially in the business of mobi le phone manufacturing, suppliers and supply chain management (SCM) play a crucial role. Since mobile phones, smart phones in particular, contain numerous highly specialized pieces and modules, handset manufacturers by and large acquire most of the components, software and pull down assembly from their suppliers and sub puzzleors (see the mobile phone survey system in Figure 9). Samsung, for example, lists 35 countries as its main supplying locations and applies its so called Code of conduct to all its business partners. In the Code of conduct (Samsung,2011f) Samsung states that\r\nâ€Å"…Samsung encourages its partners, subcontractors, or suppliers to strive beyond legal compliance in areas such as governance, human rights and the environment. Samsung constitutes ethical, social and environmental criteria in its procurement agreements and commits to monitoring the performance of its partners and to taking immediate and thorough remedial steps in cases where the ethical performance of its business partners comes into question.”- Samsung\r\nThus, mobile phone manufacturers rely on suppliers to varying but generally great extent and can even be held responsible for choosing suppliers that use e.g. child labour or non-recyclable materials. To construct an iPhone, Apple, for example, sources its Retina display from LG, the A4 processor from Samsung, gyroscopes from STMicroelectronics, touch culture medium panels from Wintek and TPK, and chips from Skyworks Solutions and TriQuint Semiconductor (Apple Insider, 2010). However, some conglomerates, e.g. Samsung manufacture most of the modules in-house which enables tender down the number of suppliers and facilitates integration in the production process. Even if the recent business wisdom has informed companies to divest non-core functions and focus on a few core competencies, Samsung has proven that conglomerates may be highly profitable term retaining their non-core parts. Unlike Motorola, Samsu ng kept its component manufacturing in-house and focused on synergies from producing both components and end products. (Hyöty, 2011:250-252)\r\nDistributors\r\nThe import essential element of a company’s micro-environment is distributors. The choice of distribution channels is critical for a number of reasons. Firstly, the distributors strongly influence the final gross gross tax price of each product and thereby right off affect the gross sales quantity. Second, the distributors and later retailers play an important role in how the product is presented to the customer and, to some extent, how it is positioned relative to competing products. Finally, the choice of the distribution channel affects how customers grasp the brand. While Samsung, for example, utilizes a wide range of sales channels for its Samsung branded products, it sells its luxury phone brand Vertu (typically gold and diamond decorated, ranging from $6000 to $300 000) only in Vertu and Samsung flagshi p stores (Vertu, 2011; Dialaphone, 2007) In the mobile handset business, the distribution channel plays a crucial role. While in Europe most mobile phone manufacturers rely on a large number of individual distributors and retailers, in northmost America the absolute majority of handset sales is carried out by mobile network and virtual operators (see Figure 22). The long-lasting bureau of mobile operators over distribution in the coupled States has allowed them to introduce additional requirements related to e.g. tailoring and brand of phones, and together with subsidies a commanding position in the industry. Still, the choices related to distribution come down to the same basic questions, i.e. what are the total costs, how is the brand communicated, how flexible is the distributor etc.\r\nCustomers\r\nThe third element of the company’s micro-environment is customers. In this respect, it is common to separate between individual consumers and organizational (or industria l) customers (or buyers). While consumers are traditionally considered less rational and impulsive in their decision making process, companies tend to be viewed as professional buyers following strict budget, cost and profit considerations. (see e.g. Webster & Wind, 1972; Baumgartner & Steenkamp, 1996) These kind of lighten up differences in purchasing behaviour have been questioned (Wilson, 2000) and today’s B-to-B marketers wide recognize that emotions play an important role also in business buying decisions (Kotler & Armstrong, 2006:178).\r\nIn the mobile phone business, consumers represent an enormous novelty of tastes, preferences and affluence. In developing countries, the sales of low-end mobile phones (often under $50) dominate, while in developed markets of e.g. Europe and North America, consumers often opt for more advanced models incorporating cameras, GPS navigation, net income browsing etc. Moreover, most of these consumers appreciate value added features and post-purchase service provided by the manufacturer (e.g. Apple App ancestry, Nokia Ovi Store and Google Android Market) and often base their purchase decision on the combination of the phone and the availability of these services (see e.g. Singh & Goyal, 2009). Industrial buyers, on the other hand, tend to value services related business use of the phone (e-mail, data security etc.) and supplier’s ability to provide a communication theory solvent to the company instead of only handsets.\r\nFinally, with regard to the mobile phone industry in Europe, Asia and the United States, there are some significant differences in customer profiles. While in Europe & Asia a handset manufacturer can sell both instantaneously to the consumer and via distributors and retailers, in the United States the only major customer is the operator that, then, functions as a distributor and retailer. This, obviously, has its effect on what kind of selling is take to reach the end customer.\r\nCompetition\r\nThe Merriam-Webster dictionary defines competition as â€Å"the effort of two or more parties acting independently to secure the business of a third party by offering the most favourable footing”. (Merriam Webster Online, 2011) Correspondingly, The New Palgrave Dictionary of economics states that â€Å"competition arises whenever two or more parties strive for something that all cannot obtain.” (Stigler, 2008) In this thesis, these competing â€Å"parties” are handset manufacturers who act to â€Å"secure the business” or â€Å"strive for” the throttle resource, i.e. the money, of their customers.\r\nIn terms of developed economic theory, competition is one of the most researched areas of economics. Economists generally differentiate perfect and imperfect competition, concluding that no other system is more Pareto efficient than perfect competition.\r\nAccording to presidency for Economic Co-operation and Develo pment (OECD, 1999) perfect competition is outlined by four conditions:\r\na) There are such a large number of buyers and sellers that none can individually affect the market price. This means that the demand curve facing an individual firm is short elastic.\r\nb) In the long run, resources must be freely mobile, meaning that there are no barriers to portal and exit.\r\nc) All market participants (buyers and sellers) must have full access to the knowledge relevant to their production and wasting disease decisions.\r\nd) The products should be homogenous.\r\nImperfect competition, thus, occurs when any of the criteria for perfect competition is not satisfied, e.g. when there is information asymmetry between buyers and sellers, either buyers or sellers are able to influence prices or products are not homogenous.\r\nIn regard to the mobile phone industry, there is a clear case of imperfect competition. Firstly, the three largest manufacturers Samsung, Samsung and Nokia held about 64 % of the global unit sales in Q1/2010 while the tenth largest Huawei had 1,3 %. (Gartner, 2010) This kind of a market stance is generally referred to as an oligopoly â€Å"in which producers are so few that the actions of each of them have an impact on price and on competitors” (Merriam Webster Online, 2011). Second, there are moderately high barriers to entry due to the capital intense nature of the business. In addition, gaining market share generally requires significant investments in marketing and established manufacturers can benefit from advantages of scale.\r\nPoter’s 5 Force Model\r\nThe Porter’s five forces model has been criticized, for example, for its key assumptions. Firstly, an industry is assumed to consist of an unrelated set of buyers, sellers and substitutes and competitors that interact at arm’s length. Second, companies can gather wealth that allows them to erect barriers against existing competition and new entrants thereby crea ting structural advantage. Finally, the prevailing dubiousness is assumed low enough to permit predictions about the participants’ behavior and strike a strategy accordingly. In addition, one should also note that the model was developed more than 30 years and, since then, new industries have been born and the old ones taken new shapes. In an argument that the classical model such as the Five Forces and value chain analysis were designed for the analysis of traditional industrial firms and do not apply well to today’s knowledge-intensive companies.\r\nFigure 2.2 Porter’s Five Forces â€model\r\nThe principle for choosing the Five Forces framework was as follows. The model was to be well-known and tested. Even though Porter’s model has been criticized for its applicability to certain industries and for its assumptions, few models have gone through such thorough interrogatory and prevailed. While no model is perfect the limitations of the Porter†™s framework are, nevertheless, well-known and documented. Finally, the use a widely accepted framework facilitates reading and variation of the results as opposed to some other model with less prevalence and academic/practitioner interest.\r\nTable 2.2 Opportunities and Threats for Samsung Mobile\r\n2.3 Suitable Business strategy to strike threats and grab Opportunity in Samsung: Global R&D (Research & Development)\r\nIn 2003, Samsung invested 3.5 gazillion won ($3 billion) or 8% of total revenues in R&D. It acquired 1,313 US patents in 2003, ranking it 11th in the world in US patent awarded. (Exhibit 9) Samsung has about 19,700 researchers working in R&D. Researchers account for approximately 34% of its total employees. Every year, R&D engineers developed about 100 new technologies and they work on the development of core technologies in the fourth generation (4G) mobile communications and in next generation memory chips.\r\nSamsung’s Information an d telecommunication R&D Center is in Suwon, where the company’s headquarters are located. This R&D Center was designed to incorporate all of its business specialtiesâ€semiconductors, electronic components, multimedia, and telecommunicationsâ€to maximize technological synergies among them. The Suwon R&D Center also interconnects with other R&D centers, both in Korea and in other countries.\r\nIn the mobile business, Samsung has applied for 12,000 patents in Korea and 25,000 patents overseas since 1998. The main focus of R&D is the development of new technology standards for 4G communications and the mobile Internet. Samsung holds approximately one hundred patents related to 3G and 4G technologies. Recently, Samsung sold its cdma2000 1x EV-DO system to lacquer and Southeast Asian countries.\r\nGlobal Marketing\r\nSamsung’s clever marketing strategies played an important role in lifting Samsung’s image from that of a low-end manufacturer to that of a global digital technology leader. For effective global marketing and branding, Samsung established a new organization to deal with its integrated global marketing activities. Eric B Kim, who used to work at IBM, was recruited to lead the Global Marketing Department. One of his most important decisions was to cease all existing contracts with 55 announce agencies and to sign a $400 million contract with one ad agency, FCB Worldwide. Since then, Samsung has unveiled a serial publication of corporate branding campaigns and the slogan, â€Å"Samsung DIGITall: Everyone’s invited.”\r\nOne of Samsung’s major global branding strategies is Olympic sponsorship. In 1996, Samsung was an unofficial sponsor of the Atlanta 1996 Olympics, having sponsored the Samsung Expo in the Pavilion of the Main Stadium. In the same year, Kun Hee leeward was selected as an IOC member, and Samsung received an opportunity to participate in TOP (The Olympic Partners).\r\nThe IOC proposed that Samsung participate in sponsoring the sept appliance category for the Olympics. However, Samsung wanted to utilize the opportunity to promote a high-tech image, and felt that the home appliance category was not enough to emphasise Samsung’s technological advances. Samsung set its sights on the telecommunications category and believed that, through the Olympic sponsorship, it could shed its image as a low-end home appliance maker and reposition itself as a high-tech mobile communications company. To win the sponsorship negotiations, Samsung concentrated its marketing resources on the mobile phone business.\r\nSamsung’s Key Issues to rectify their threats\r\nthough Samsung has continued its success in the mobile phone business, it faces a number of challenges to keep the growth impulse in the future.\r\nFirst, competition in the mobile phone market will become more intense. demoralise entry barriers will bring in more competitors to the market, and the â€Å"digital convergence” will accelerate the competition even further. Companies from other industries such as PCs or network services will compete directly with Samsung. As such, it will have to devise more creative win-win strategies in the highly uncertain digital convergence landscape.\r\nSecond, the sustainability of Samsung’s high-end strategy, which was attributed to Samsung’s brand building, may be in question. Samsung has achieved high profit margin, which is like to that of Nokia, mainly based on its high price, while Nokia has done so based on its cost dynamics. In terms of per-unit cost, Nokia spends less on R&D and marketing. One might doubt whether the high-end strategy can really be sustainable.\r\nAs the mobile communications market becomes saturated, future revenue sources will come mainly from acclivitous markets (China, Brazil, India, Eastern Europe, etc.). First-time buyers in emerging markets tend to prefer low-cost phones. This co uld hurt Samsung unless it begins to cover the low and middle-end markets. Nokia and Motorola, as well as many newcomers from China, have already marked those emerging markets. How to compete in the low and middle-end markets, while preserving its gift brand image, will be important questions in Samsung’s future growth.\r\nThird, Samsung is highly dependent on foreign companies for core technologies and modules. For example, it sources core CDMA base-band chips from Qualcomm and sophisticated camera-phone modules from Nipponese firms. Consequently, the proportion of royalty payment in total manufacturing cost is likely to increase unless Samsung develops its own technologies. many industry experts argue that most of Samsung’s patents are on applied technologies, which are developed based on others’ patent-protected core technologies. Recently, Samsung experienced a paucity in the supply of Qualcomm chips and camera-phone modules. This suggests that Samsungà ¢â‚¬â„¢s high addiction on core technologies and product modules would threaten not only its future profitability but also its competitive position.\r\nProduct Life Cycle of Samsung wandflower :\r\nFor my analysis it will be useful to understand how Samsung has introduced its extragalactic nebula Smartphones. The mental institution re-create of a product is one of the most important, because in this stop a company positions its products in the market. In order judge the strategic choice of the company I need to understand the strategic possibilities in the introduction stage of a product. According to Kotler and Keller, company’s positioning and differentiation strategy must change passim the life story of its products. I will give a brief description of the stages of the product life cycle per second and strategic possibilities in each of these stages. According to Kotler and Keller to be applicable to a product the assumptions behind the life-cycle are that the pr oduct must have limited life; sales go through different stages, with different challenges, opportunities and problems; cabbage change at different stages; products require different manufacturing, financial, marketing, purchasing and human resource strategies in each life cycle stage. The Smartphone products fulfill these assumptions. Kotler and Keller recognize 4 different Life-cycle stages for a product.\r\nIntroduction submit\r\nIntroduction is a period of slow sales growth as the product is just introduced. It is also recognized with heavy advertising. According to Shaw (2008) in the introduction stage a company can choose by penetration strategy or box strategy. A penetration strategy involves aggressive marketing mix and product for the host market offered at a low price. A niche strategy according to Shaw (2008) involves a narrow market particle and a higher price. In this stage Shaw (2008) recognizes only two possibilities targeting the mass market with low price and a niche strategy involving higher price. tone at the smartphone market it is possible for the companies to target mass market with higher price as for face iPhone & Nokia does. This is also due to the affordable terms of the mobile operators where people can buy the Smartphone on leasing.\r\n6.2 Growth distributor point\r\nThis is a period of rapid growth and market acceptance. Here the profits are higher. According to Shaw (2009) in the growth stage companies can choose between two strategic options these are ingredient expansion and brand expansion. In share expansion, the company can add new target segments, with their own marketing mixes. Strategic alternative to segment expansion might be brand expansion. This strategy adds new products or variations to the existing line. The strategy delivers to the customer segment bigger choice, or greater value. more or less of these strategy ideas might be delivery, gift-wrapping (Shaw, 2012).\r\n6.3 Maturity Stage\r\nIn maturity stage the sales are lower as the product is already bought from most of the Potential buyers (Kotler and Keller 2009 p.490). According to Shaw (2010) in Maturity stage it is common for a company to employ s stable marketing mix. As the Product moves further on the curve harvesting strategy becomes necessity.\r\n6.4 refuse Stage\r\nHere sales decline and profits erode (Kotler and Keller 2009 p.490). In this stage Shaw (2011) recognize only divesting strategy as an option.\r\nThe following picture shows the life cycle of Samsung Galaxy (first model in Smartphone ) by Samsung which was launched in 2008. Where in the introductory period it was develop since it was on affordable cost. This model was soon hit in the market. In 2009 its has started its tremendous growth. In around 2010 it reached its maturity state. Where Samsung enjoyed a lot on its success. This encouraged Samsung to do R&D in Galaxy model and they started to develop a lot newer version. Due to introduction of new models and everyone had the current model, Galaxy has started to decline in 2011.\r\nFigure 2.2 Product Life cycle of Samsung Galaxy\r\n'