aseSamsung Case Write-up

Student: Guilherme Filho
Penn ID: 85730403

1. What are the sources of Samsung’s competitive advantage? Validate your arguments regarding competitive advantage with evidence from the case.

Differentiation – There are two main sources of competitive advantage that increase the WTP for Samsung customers. The first one is the Product Mix. Samsung offer to its customers a huge variety of products, ranging from the cutting-edge technology to more basic products. It also offers customized products to focus on niche markets. With this strategy, Samsung is able to compete in a broad range of segments in the market, usually offering superior products. In 2003 for example, Samsung offered over 1,200 different
They operated with an operating margin that was significantly higher than any of its competitors. In the example that I was describing (256Mbit DRAM), the operating profit for Samsung was 18.4%, while all the competitors had a negative operating profit.

2. What recommendation would you make to Chairman Lee regarding Samsung’s response to the threat of large-scale Chinese entry?

Before I talk about what I think the Chairman of Samsung should do, I would like to talk about what I think he should not do. For me, it is very clear that the idea of joining forces with a Chinese partner is definitely not a good option for many reasons. There are innumerous cases of companies from all over the world that tried to use this strategy and the result was completely different from what they were expecting. Just to give an example, there is a company from my country (Brazil) that is one of the largest bus manufacturers in the world, called Marcopolo. In 2005, they decided to create a joint-venture with a local player in China, because they were facing challenges that were very similar to those that Samsung is suffering. After they have taught all the secrets of their technology to its Chinese partner, the Chinese decided to quit the partnership and become a competitor. If Samsung decides to use this strategy, there is a high risk that they might have the same outcome. The second reason is that I believe that moving the entire production to China or creating a