The company was founded in 1938 by Lee-Byung-Chul in South Korea. Today, the company is one of the leading multinational tech giants around the globe. Originally, the firm’s products included food items like dried vegetables, kinds of seafood, and fruits. These products were exported mainly to China.
The firm entered the technology race, electronics, in the year 1969. And in 1990, the company started focusing on electronics as its primary business. Another milestone the company has achieved so far is the manufacture of its products on its own without any involvement of the other third party. Thereby assuring their high quality.
The firm has specialization in several fields, including artificial intelligence, mighty smartphone technology, and novel surface mount technology. The company’s products are related to these top categories mainly.
The corporation has been successful in securing the 8th position worldwide in brand value by the year 2020. Several hundred awards have been won by Samsung corporation since its beginning. Although the firm deals with various products, electronics, especially smartphones, are our primary focus of this PESTLE Analysis.
The company’s smartphone market is shaped by many external as well as internal factors. These elements are responsible for the growth of business and financial gain. The most prevalent factors are uncomplicated internet access, easy-to-use products along with up-to-date technological devices of Samsung. The company’s share in the market has declined since the end of the year 2019 and at the beginning of 2020. The firm still has the largest market share in the world. Anyhow, the release of 5G technology can take the company to a new zenith.
This PESTLE Analysis endeavors to take the considerations of external elements like political, social, economic, legal, technological, as well as environmental factors and their impact on the company’s business growth. These factors are further exposed in detail in the following discussions:
POLITICAL FACTORS
Effect of Political Chaos
The giant in tech is not prone to instabilities and chaos in different nations. Samsung has to follow the rules and regulations prescribed in the local laws of countries. The developing world is full of political unrest and turmoil. In such circumstances, the company suffers financial losses when it restricts its operations in such areas. The lowered sales of its products results in the loss of financial growth and gain for the company.
Samsung’s Alliance with The Party-Political
Business firms are often considered neutral when it comes to political parties, elections, and other processes. However, Samsung supported Uri and the Grand National parties and spent billions of revenues while campaigning for them. The company braced a female-leadership party in the 2000s which led the company to suffer a lot. Besides billions of dollars spent on political campaigns, the company suffered reputational damage.
Imprisonment & Bribery of Beneficiary
The controversial relationship between the coming heir of the company Jay Lee and the previous president Park Hye. And his political party. The allegations that the company’s heir had bribed the politicians with billions of dollars brought him under severe criticism, and he lost his public image. The J.Lee was even imprisoned for five years when the court found him guilty of the charges. This caused an immense loss to the corporation. The public of the state specifically felt embarrassed. The loss in the sales of products was borne by the company. In Germany, Samsung Galaxy tablets were banned from penetrating the market due to this controversy. However, in the other European countries, it maintained its sale of products.
Brexit Aftermath
Although it was considered that the exit of the United Kingdom from Europe would impact the businesses, Samsung did not feel a considerable loss in its market share. The other rivals, including Samsung, Mac, and Apple, have increased their products by 25% and 20% of the price after Brexit in the UK.
ECONOMICAL FACTORS
Economic Tumble in Developing States
The company has started operations around the globe to increase its market share. The products sold in developed nations like the US, or the other rich regions generated massive revenues; however, the financial conditions in many developing and underdeveloped nations are not stable. The people of these regions are not able to afford these costly products. Therefore, these economic falls of certain nations do not add much to the corporation’s revenue.
Economic Strategy in The Post-Pandemic Era
The pandemic has affected the globe adversely. The economic recession, strained jobs, and low incomes across the globe have pushed the company to devise policies relevant to these economic conditions of the globe.
The corporation is devising products that may be relevant in these critical times with affordable prices. In this way, the company can increase its revenue as well as market share by adopting these policies.
Saturated Mobile phone Market
Samsung has captured the top spot in the market share of mobile phone markets. Other potential rivals are Google and Apple phones. Samsung must devise strategies to retain its position.
SOCIAL FACTORS
Dynastic Styled Business Structure
A South-Korean family owns the Samsung corporation. The family has successfully operated its business worldwide; however, this family orientation has reduced the chances of dynamism and inculcation of new ideas in the corporation.
Refashion Company’s Offering
As the corporation is running the business in different corners of the world, it must consider the local and regional trends in its products. People use products for different reasons, and the corporation must take these reasons seriously. For example, the new Android Firmware updating was provided almost 6 months late. When people updated their phones, the expiry date of that update was arriving near. On the other hand, Google announced its products’ updates timely and accumulated more buyers.
TECHNOLOGICAL FACTORS
Arrival Of New Technology
Research, development, and tech inventions are the attributes of Samsung. The company adheres to the release of the latest, revolutionary, and innovative technology in its products. The corporation keeps on upgrading as well as updating the products. Therefore, people keep on visiting the company’s stores every now and then.
Faulty Batteries
The flawed battery of this multinational brand has inflicted great damage to the company. Samsung Galaxy Note 7 had a faulty battery which got heat-up leading to the explosion. Back in 2016, the corporation suffered a loss in finance as well as in its reputation. The corporation retrieved 95% of products from the American market and fully refunded its amount. The company suffered around $5.3 billion.
LEGAL ISSUES
Litigation Opposed to Apple
Both giants have lawsuits against each other in more than 10 states, with actively 50 litigations opposed to each other. Samsung corporation lost litigation in Australia, Germany, and the US. ON the other hand, it won several lawsuits in Japan, the UK, and Korea. Samsung celebrated victory when the |US Supreme Court reversed its ruling on a payment of $400 million to Apple. However, Apple has also won many litigations against Samsung.
ENVIRONMENTAL FACTORS
Environmentally Friendly Products
Samsung is well-aware of the rising pollution in the environment and trying its best to mitigate the effects. Its products are best suited to the environment, and people are aware of this fact. Moreover, the manufacturing process is making less waste as compared to the other companies. This led to an increase in its reputation and, thereby, an increase in the company’s sales and growth.
Grave Environmental Fears
Critics around the world have argued that the waste of 4.3 million Galaxy Note 7 phones would contribute to environmental pollution. The estimated amount of waste equals more than 25 containers of metallic waste.
CONCLUSION
The detailed Analysis of Samsung corporation has made it clear that it is the world-leading tech giant. Although the political as well as legal strains have damaged the brand image and finances, it still occupied most of the market share among its rivals. The company must, on the other hand, minimize extraneous expenses in order to retain its global position.
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