PESTLE Analysis of Samsung

Introduction

Samsung is a global conglomerate that operates in the “White Goods” market or the market for consumer appliances and gadgets. The company that is a South Korean family owned business has global aspirations and as the recent expansion into newer markets has shown, Samsung is not content with operating in some markets in the world but instead, wants to cover as many countries as possible. Therefore, the focus of this article is on the external environmental drivers of Samsung’s strategy.

Political

In most of the markets where Samsung operates, the political environment is conducive to its operations and though there are minor irritants in some of the foreign markets like India, overall Samsung can be said to be operating in markets where the political factors are benign. However, in recent months, it has faced significant political headwinds in its home country of South Korea because of the country’s tensions with North Korea wherein the company has had to take into account not only the political instability but also the threat of war breaking out in the Korean Peninsula. Apart from this, Samsung faces political pressures in many African and Latin American countries where the political environment is unstable and prone to frequent changes in the governing structures. Of course, this is not yet a major cause for worry as the company has more or less factored the political instability into its strategic calculations.

Economic

This dimension is especially critical for Samsung, as the opening up of many markets in the developing world has meant that the company can expand its global footprint. However, this dimension is also a worry since the ongoing global economic crisis has severely dented the purchasing power of consumers in many developed markets forcing Samsung to seek profitable ventures in the emerging markets. The key point to note here is that the macroeconomic environment in which Samsung operates globally is beset with uncertainty and volatility leading to the company having had to reorient its strategies accordingly. The saving grace for the company is that it has adjusted rather well to the tapering off of the consumer disposable incomes in the developed world by expanding into the emerging and the developing markets. Indeed, this is the reason Samsung has begun an aggressive push into the emerging markets in the hope of making up for lost business from the developed world.

Socio-Cultural

Samsung is primarily a South Korean Chaebol or a family owned multinational. This means that despite its global footprint it still operates from the core as a Korean company. Therefore, there are several aspects to its global operations some of which include adapting itself to the local conditions. In other words, Samsung being a Global company has had to act locally meaning that it has had to adopt a Glocal strategy in many emerging markets. Apart from this, Samsung has had to tailor its products to the fast changing consumer preferences in the various markets where it operates. The key point to note here is that Samsung operates in a market niche that is strongly influenced by the lifestyle preferences of consumers and given the fact that socio cultural factors are different in each country; it has had to reorient itself in each market accordingly.

Technological

Samsung can be considered as being among the world’s leading innovative companies. This means that the company is at an advantage as far as harnessing the power of technology and driving innovation for sustainable business advantage is concerned. This has translated into an obsessive mission by the company to be ahead of the technological and innovation curve and a vision to dominate its rivals and competitors as far being the first to reach the market with its latest products is concerned. however, as we shall discuss later, this has also resulted in the company cutting corners with its imitation of the legendary Apple’s product design and this has brought legal and regulatory scrutiny and troubles for the company. There is a lesson here for other technology driven companies from Samsung’s experiences and it is that no matter how fast you are to reach the consumer in this age of Big Bang Disruption, doing the basics right is still the key to success.

Legal

As mentioned in the last section, Samsung has had to face heavy penalties for its alleged imitation of the Apple’s iPad and iPhone and this has led to the company taking a beating as far as public perceptions and consumer approval of its strategies are concerned. It remains to be seen as to how the company would wriggle out of the legal maze that it finds itself in the developed markets because of the various lawsuits.

Environmental

With the rise of the ethical consumer who wants his or her brands to source and make the products in a socially and environmentally responsible manner, Samsung has to be aware of the need to make its products to satiate the ethical chic consumer. This means that it has to ensure that it does not compromise on the working conditions or the wages it pays to its labor who are engaged in making the final product.

Conclusion

The preceding analysis clearly indicates that Samsung has its task cut out for itself as it navigates the treacherous global consumer market landmine. Indeed, as the company prepares to expand its global footprint, the stakes could not have been higher in a recessionary era and an uber competitive technological market landscape.


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