Table 2 Business model of Samsung Group
From: Designing dynamically “signature business model” that support durable competitive advantage
Building blocks | Key elements of business model |
|---|---|
Key partners | Samsung recognizes that partners play an essential role in developing successful relationships and business opportunities with customers. Mutual development with key partners is a key element that elevated Samsung into a top-notch global corporation. Samsung believes that the best strategy to achieve vision of becoming a true global leader is to strengthen their business partner’s competiveness and pursue coopetition, strategic alliances and joint-venture through win-win partnership. • Coopetition – Samsung has made several coopetitions or simultaneous collaboration and competition between large firms, such as Samsung Electronics and Sony Corporation; and Samsung Electronics and Apple. • Major strategic alliances - Samsung has developed many mutually beneficial strategic partnerships with leading companies worldwide. Some of them include Nokia; Limo; Alcatel; Sony; IBM; Intel & Microsoft; Discovery; and Dell. • Joint-ventures - As a way to master Samsung success and quality of products and services it provides, Samsung has developed many joint-ventures throughout its operating history, many of them with foreign companies (located outside Korea). Some of them include joint venture with Sony Cooperation; BP; Robert Bosch GmbH; TORAY; Toshiba; GE Lighting (subsidiary of General Electric, broken up in 2009); and Compaq. • Buyer–supplier relationships – Samsung has many suppliers worldwide, some of them are Photronics Inc. (American semiconductor Photomask manufacturer); Inphi Corp. (American based leading provider of high-speed semiconductor solutions for communications and computing markets); and Nanometrics Inc. (American leading provider of advanced, high-performance process control metrology and inspection systems). |
Key activities | • Research and development – for Samsung R&D is crucial and in the centre for all activities, it plays a critical role in their ability to innovate products. • Design and innovation – Samsung is striving for continuous innovation and design development. • Production – Samsung products include apparel, chemicals, consumer electronics (including home theatre systems, laptops, cell phones, cameras, LED lighting, printers, refrigerators, dishwashers), electronic components, medical equipment, precision instruments, semiconductors, ships, telecommunications equipment. • Construction - Samsung C&T Engineering & Construction Group has proven its expertise for construction, engineering, and procurement. • Financial services – Samsung offers secure solutions of financial and other profession business services. • Information and communications technology services – Samsung SDS provides information technology services such as Network consulting, Business strategy development, as well as technical and outsourcing services. |
Key resources | • Human – for Samsung the management strategy, GSG (unique internal management system) and their employees are the key resource and the key to their success. • Intellectual – Samsung’s brand is one of the Key Resource of the company – well know brand in the whole world, also Samsung has customer database important component of the company’s success driver. Samsung places great emphasis on the creation and protection of Intellectual Property. In 2010 Samsung was awarded 4551 patents by the US Trademark and Patent Office and ranked second on the world’s most inventive companies list. • Financial Resources: Diversification allows company to rely on internally generated cash from one operation to fund the others (see building block “Revenue stream”). • Physical Resources: Samsung manufactures more than 90 % of their products internally and only relies on contractors for peripheral products such as components, feature phones and handset cases. |
Cost structure | • Samsung is highly diversified company therefore company has cost advantage due to a large scope of operations (economies of scope). Samsung, as a vertically integrated specialized supplier, is able to achieve economies of scale as well, which allows it to hold on to its position as a consumer electronics giant by leveraging on its ability to produce component parts and assemble its products on a large scale and cost efficient process. |
Value proposition | • Green products – Samsung is the industry leader for new eco-friendly design features and manufacturing processes, including energy-efficient design, user-friendly devices and different recycling techniques. • Innovative, cutting edge technology products, improved product performance, convenience and ease to use, great design, as well as well-known brand creates value for money for the customer. • Low prices for good quality products and services are very attractive for customers and increase the competitiveness of Samsung. |
Customer relationships | • Personal assistance – Samsung trained their employees to ensure that every customer feels welcomed, highly valued and satisfied. • After sales service – Samsung practice very good after sales service for the convenience of their customers, nevertheless customer reviews online reveal that Samsung still has a room for improvements concerning after sales service. • Communities – Samsung uses many online sites as their means of communicating, promoting and obtain customer feedback, one of the examples is Facebook where they promote actively their mobile devices for more than 30 million followers. |
Channels | • The distribution channels of Samsung include their own stores, web sales, partner stores, wholesalers, and sales force. |
Customer segments | • As Samsung provide wide variety of products and services for their customers, the customer segment is huge and can be considered as the mass market, in addition another customer segment of Samsung are corporate buyers such as Sony, Apple Inc, Dell, HP, United Arab Emirates government (builds nuclear power plants in the country), Royal Dutch Shell (provides liquefied natural gas) and many more. |
Revenue streams | The revenue stream for Samsung Group’s comes from their subsidiaries such as: • Samsung SDI Co., Ltd (eco friendly energy solution provider); Samsung Electronics Co., Ltd (global leader in semiconductors, telecommunications, digital media); Samsung Display Co., Ltd. (provides cutting-edge display solutions); Samsung Life Insurance Co., Ltd. (life and health insurance, and other financial services); Samsung C&T Corporation (skyscrapers, high-tech manufacturing complexes, roads and bridges, ports, energy and nuclear power plants, and residential housing); Samsung Fire & Marine Insurance Co., Ltd. (non-life insurance company); Samsung Heavy Industries Co., Ltd. (designs, engineers, and builds a broad line of workhorse ships; Samsung Engineering Co., Ltd. (engineering company); Samsung Total Petrochemicals Co., Ltd. (a global energy and chemical company); Samsung Electro – Mechanics (manufacturer of key electronic components); Samsung Hotels and Resorts Co., and others |