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Vikas (59), Shantanu (49), Rachit (39), Junaid (29), Himadri (19), Ankit (9)

Porter Model + PEST

Economic - Very High investment for setting up R&D centers and Fabricating Plants - Few Vendors -Samsung is a very large buyer

Supplier Power

Medium

Political -Chinese Govt. provides all sorts of assistance for setting up a plant

Entry Barriers -High Capital Requirement. -Govt. Approvals Very High Technological -Very high use of innovation and technology.

Industry Competition -Micron, Infineon, Hynix, SMIC. As of now Samsung is the clear market leader
-

Moderate

Buyer Power - Chips sold to PC n Mobile makers. - Moderately price sensitive consumer. Medium

Threat of Substitutes - No major substitutes. -Nanotechnology based memory still not ready. Low

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Social - Consumers (PC, Mobile companies) very well informed - Customers ready to try other options

Core Competency Model

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Value Chain
SUPPORT ACTIVITIES
Infrastructur e Human Resource Management Central Technology computer Development linked with vendors

Has a state of art R&D facility and a fabricating unit in Seol.

Strong vendor relations Values human Self resources Distributio a n lot Excellent R&D work New Products Introductions Recruitement Competitive Pay scales

PRIMARY ACTIVITIE S

Lowest Raw Material Cost in the Industry

High Technology based operations

Very strong Brand. Known for its Quality. Rated in the top 20 brands of the world

Customer Oriented

Inbound Operations Logistics

Outbound Logistics

Marketin g / Sales

Service

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Analysis Samsung

Economies of production.

scale

in

semiconductor

High Investment in R&D R&D Facility & Fabricating unit at single site. Innovative human resource policies, performance based promotions. Wide range of customized end products for meeting customer demands. Reliable Product- Very high brand value.
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VRIO
Resource Is it Is it valuable Rare? ? Is it Is it difficult difficult to to organize? imitate? Yes Yes Competitiv Performance e Implications Consequen ces SustainableAbove Competitiv Average e Returns Advantage

Technologic Yes al Expertise

Yes

Brand value Yes

Yes

Yes

Yes

SustainableAbove Competitiv Average e Returns Advantage

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Samsungs cost advantage

Low labor cost at Korea. Higher capacity utilization, lower depreciation cost Raw Material, Labor, Depreciation, R&D, SG&Athese cost are substantially higher for competitors.
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Major Challenges

China is a major upcoming threat Major chip producers are partnering with Chinese company i.e. Infenion, Elpida signed agreement with SMIC. Chinese are desperate in gaining market share at the cost of losses. Chinese Govt is ready to provide cheap finance to set up JV.
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Conclusion

Samsung is ahead in Learning curveemphasis more in R&D works. Play on legacy and specialty product. May collaborate with Chinese partners to expand joint investments. Probably a better option.. Produce low end product in china, high end product in Korea. 4/22/12