Threats of Samsung
The external macro-environment of a company consists of both opportunities and threats that affect the competitive advantage of the company, thereby affecting the long-term sustainability. The analysis of the external threats helps in the strategic management of the company for the formulation of appropriate strategies to avoid the threats and sustain its market position. The SWOT analysis of Samsung electronics shows that a number of significant threats are existent that affect the market position and growth of the company. They are elaborated as follows:
I] Apple Company poses one of the most significant threats to the company. The different aspects with regard to this threat affecting the competitive advantage are:
A. Brand Loyalty
The brand loyalty of Apple across the world due to the high quality products with innovative features has affected the position and market share of Samsung considerably, although Samsung still rules the market with higher market shares and sales. The market shares of Apple has risen from 11.6% to 13.9% in second quarter of 2015 compared to Samsung, which has fallen by more than 3% compared to same period last year from 24.8% to 21.4% (IDC.com, 2015).
B. Specific Products
The specific products of Apple Company pose looming threat for Samsung affecting the market position.
- iPhone vs Galaxy
The introduction of the iPhone series of Apple has affected the market position of the Galaxy series of Samsung due to the innovative features and high quality. Although, the profits and market shares of both the series are neck to neck; however, it is seen that the Galaxy S6 could not meet the challenge of iPhone 6 and iPhone6 plus with considerable decrease of shipment and market total compared to Apple (Worth, 2015).
- Apple pay vs Samsung pay
The introduction of mobile wallet services for making payment and facilitating cashless purchases through smartphones has been implemented by both the giants, Apple and Samsung with Apple pay and Samsung pay respectively, with the crucial role of banks. Both of them have separate system for making the transactions using finger print. However, the main difference is the higher number of steps for conducting the mobile transaction in Samsung Pay compared to Apple Pay that increases the possibility of friction during the process (Profis, 2015). Additionally, Samsung does not provide information regarding the storage of transaction or purchase history of customer, while Apple has confirmed that no such history is stored in its data.
- Litigation issue
Samsung has faced legal lawsuit for infringing patents of Apple in the smartphones and other mobile devices for which the company had to pay $1 billion fine to end the patent lawsuits, which has affected the brand image of the company (Arakali, 2014). These litigation issues of patent infringement may affect the import and export business of the company, as well as penetration into new markets due to negative impact on the authenticity of its devices and the company, as a whole (Danova, 2013).
II] Generic competition
The competition posed to the company from the rival competitors within the same industry pose high threat for substitution of the products with relatively cheaper devices having similar features. The different companies posing threats in different markets are:
- Xiaomi has seen considerable growth in the Chinese market given tough competition with the manufacture of cheaper mobiles that have efficient features, thereby giving tough competition to Samsung (Plummer, 2014).
- Micromax in India has affected the position of Samsung by surpassing the sales and market research figures of Samsung, achieving the leading position as a mobile phone company reaching almost 17% market shares compared to 14% of Samsung though the smartphone market of Samsung is relatively strong (Arakali, 2014).
- Intex and Lenovo in India are giving considerable competition to Samsung due to their successful penetration with high quality devices at considerably cheaper prices with regard to technology devices compared to Samsung (Worth, 2015).
III] Market Saturation
- Increased competition & Price wars
The market for smartphones and technology devices is saturating all over the world with increasing number of devices from new entry of mobile phone companies and falling of prices. This competition and price wars from the rival companies affect and pose considerable threat to the profit margin of the company, since Samsung is known to sell expensive phones relying on the looks and features of the smartphone. Hence, this may force the company to lower the prices to ensure growth (Euronews, 2014). In different markets, the threats may be elaborated as follows:
- US: This is a significant market for smartphones due to its being a developed country. In addition, the companies selling smartphones and mobile phones are multinational companies making the market saturated affecting the position and the probability of innovation diffusion is high making the adoption of smartphone reach a saturation point (Danova, 2013).
- Europe: The high use of smartphone has led to market maturity in Europe due to high penetration of the smartphone companies owing to increase in the replacement behavior. This has contributed to the increase of the shares of Apple compared to Samsung with the high use of the iOS system compared to Android (Freier, 2015).
- Asia: Asia is a growing market for smartphones and technology devices. However, the rise of many companies such as Lenovo, Huawei, etc., that provide high quality devices with multiple features at comparatively cheaper prices than Samsung affect the market position of the company. Moreover, countries such as China have reached saturation level in the smartphone market due to the rise of the replacement buyers rather than the first time buyers (Euronews, 2014).
Arakali, Harichandan. (2014). Samsung, Apple agree to end patent lawsuits outside the US: Report. Retrieved from < http://www.ibtimes.com/samsung-apple-agree-end-patent-lawsuits-outside-us-report-1650128>
Danova, Tony. (2013). The US will reach smartphone saturation sometime in 2015. Retrieved from <http://www.businessinsider.in/The-US-Will-Reach-Smartphone-Saturation-Sometime-In-2015/articleshow/23752028.cms>
Euronews. (2014). Samsung struggles with smartphone saturation, cheaper Chinese rivals. Retrieved from < http://www.euronews.com/2014/07/08/samsung-struggles-with-smartphone-saturation-cheaper-chinese-rivals/>
IDC.com. (2015). Smartphone vendor market share, 2015 Q2. Retrieved from < http://www.idc.com/prodserv/smartphone-market-share.jsp>
Plummer, Quinten. (2014). Xiaomi is smartphone threat knocking at Samsung and Apple’s Doorstep. Tech Times. Retrieved from < http://www.techtimes.com/articles/23793/20141231/xiaomi-the-rising-flood-at-samsung-and-apples-doorstep.htm>
Profis, Sharon. (2015). Samsung pay vs Apply pay: there’s a difference. Retrieved from < http://www.cnet.com/news/samsung-pay-vs-apple-pay/>
Worth, Dan. (2015). Samsung loses market share to Apple as Galaxy S6 fails to challenge iPhone 6. Retrieved from < http://www.v3.co.uk/v3-uk/news/2422679/samsung-loses-market-share-to-apple-as-galaxy-s6-fails-to-challenge-iphone-6>