External Environment Analysis

External Environment Analysis (Samsung Electronics)
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Abstract
Samsung Electronics prides in being the leading electronic company especially in the production of smartphones. The success is attributable to its ability to seize opportunities and minimize threats achieved through an external analysis of its operations. Political, economic, social, technological, environmental, and legal aspects (PESTEL) impact the undertakings of the firm and the decisions thereon. The entrance into either existing or blue ocean markets is thus dependent on the PESTEL factors. The global strategy applied by the business is the best-cost provider, which combines low cost and differentiation tactics to achieve a competitive edge. With its effective competitive approach, the company has been able to position itself in the market at a place where it wards of competitive threats and please customers in order to attain cutting edge. The organization diversifies in both markets and products. Vertical diversification is a common practice, which has resulted in higher revenues and lower costs.

External Environment Analysis (Samsung Electronics)
Samsung Electronics’ success is attributable to its vision of inspiring the world and creating change. Focusing on creating a global environment through the use of technology and product innovation, the company is set on even greater achievement in the future (Gamble et al., 2016). The company has over the years contributed to the improvement of the world through the creation of modernized environmental friendly safe products embedded in its mission statement.

Samsung Electronics, however, operates in an industry that is susceptible to technological change and consumer dynamism that may hinder the achievement of both its long and short-term goals. Given the high competition, operations in the electronic market, therefore, requires an understanding of the external environment and establishment of opportunities and threats of the institution and industry at large in order to attain a cutting edge.
Pertinent issues
Samsung Electronics operates in a fast-changing and competitive electronic market with its main competitors as Apple, LG, HTC, Nokia, and Sony. Among the issues pertinent to the industry are integrated into the PESTEL framework of political, environmental, social, technological, economic, and legal changes.
Political
As a multinational corporation, Samsung Electronics is often faced with a number of political challenges and especially in developing nations such as those in Africa and Latin America (Hill, 2010). The ever-changing governmental structures in less developed nations can interfere with the firm’s smooth operations consequently impacting profits. Through the incorporation of political instability into its strategic operations plans, the organization minimizes the negative outcomes thereon (Hill, 2010). The institution thus considers the political aspect while deciding to go into foreign markets.
Economic and social
The uncertainty and volatility of the macroeconomic environment call for Samsung Electronics to always restructure its strategies. The electrical line of work is characterized by shorter product life cycles hence sector players like Samsung stand a risk of running losses from existing products in the long run. Razdan (2017) observe that firms have to set higher prices for new products in order to break even and attain growth. Economic conditions in given areas affect the purchasing power of consumers. Movement into industrialized and unindustrialized nations by the firm is thus done with consideration to the economic state. Social, cultural factors present in each region affect consumer behavior and trends. Operating in a sector that is highly influenced by consumers’ preference and lifestyles, Samsung Electronics has had to adjust its operations to suit the local needs and its conditions. According to Razdan (2017), electronic shoppers have an impulsive nature of buying which amounts to them exhibiting short-term product gratification. Samsung hence has to be keen on making products that meet the immediate as well as future needs of consumers.
Ethnological
Technology forms the backbone of the electronics sector and hence a major influence in the operations of the firm. Being a leader of innovation comes with the price of always coming up with the best products technologically that meet consumer’ needs in comparison to those of competitors. Main capabilities of the institution are achieved through investment in research and development and production technology (Razdan, 2017).
Environmental and legal
The surrounding in which Samsung Electronics operates in affects its activities. The firm has the responsibility of ensuring its operations are eco-friendly. Environmental sustainability is essential for the continued existence of a business. Application of ecological responsive processes and material would help the company to attain an edge in the market (Razdan, 2017). Environmental factors have an indirect effect on the business and should, therefore, be given due deliberation by the firm during strategic planning. Laws and regulations, which govern the business conduct in the various regions characterize the legal aspect. As a global company, Samsung Electronics is not only faced with local but also regional legal requirements that it ought to keep in mind when planning its undertakings. Relying on technological innovation, protection of intellectual property is of fundamental importance (Razdan, 2017). Noncompliance with industry legal requirements may amount to huge losses both monetary and non-monetary by the firm.
Global strategies
Gamble et al. (2015) assert that through an effective competitive strategy, a company can position itself in the market at a place where it wards of competitive threats and please customers in order to attain a cutthroat advantage. Samsung Electronics adopts best-cost provider tactic that comprises low cost and differentiation approaches that offer customers more value upscale products at relatively lower costs to those of competitors (Gamble et al., 2016). In its differentiation strategy, the three main value drivers for the firm are product features and performance, production research and development, and technology and innovation. Nisen (2013) observed that Samsung Electronic was willing to spend 3.3% more in advanced technology and improvement of products offering features that rivals have not. According to Nisen (2013), the company is a good definition of “market reader.” The corporation has a diversified supply chain which enables it to enjoy economies of scale through cost advantages and more production flexibility (Nisen, 2013).
Gamble et al. (2016) assert that a change in the value chain supply system enhances differentiation. Coordination with channel allies and suppliers enhances customer views of products and better address their needs. The products are therefore tailor-made for the specific desires of the clients. Razdan (2017) points out on the low cost of production and high investment in R&D as among the main success factors in the electronics industry. The high volume of production leads to reduce manufacturing costs and consequently higher revenues. The consumer market unpredictability in the sector calls for investment in a highly talented individual such as designers who do not only meet the prevailing consumer need but also accurately anticipate the future one. Low-cost strategy incorporated into the best-cost provider has been more effective in the device solutions department (Razdan, 2017). With the key driver as cost leadership, the institution has been significantly reduced to its overall cost of production while maintaining a high level of quality. Performance of lower cost value chains has led to decreased cumulative costs across the value chain in comparison to that of competitors.
Diversification
Samsung Electronics’ achievement of a global brand and its growth has been associated to its willingness to push into emerging markets such as India and China where rival firms were reluctant to go (Mahmood, Chang, Zintel, 2013). The firm’s diversification, therefore, relates to both products and markets. The firm has adopted a vertical integration in production, which enables it to achieve higher profits at relatively lower prices. The strategy is a key player in the smartphone section of the company where the company design and manufactures its phones plus the small parts that make up the gadget such as chips. As its supplier, the organization can control the quality of the product. Traditional supply chain risks such as availability of materials and timing of production are effectively mitigated. Samsung Electronics is the largest manufacturer of chips, and a good number of rival firms purchase chips from the firm giving it some form of control in the industry and aiding its cost reduction initiative (Nisen, 2013). The corporation’s product cuts across different type of customers including high end and low-end clientele. Unlike rivals’ products such as Apple, Samsung Electronics’ merchandises were easily acceptable in developing nations markets, which have low incomes. Samsung products’ are recognized as a super brand that meets the larger consumer market requirements. The company deals with a wide range of products including smartphones, iPods, tablets, computers, and home appliances. New products are tailor-made to fit specific wants of a given market that has not been met, for instance, the introduction of the phablet that incorporated handwriting on the feature in demand in the Asian market.

Conclusion
Samsung Electronics has earned its leading position in the innovation world through its ability to learn from the mistakes of others. Using external analysis of its operations, the firm can use the opportunities available to its benefit while limiting its threats. Having an understanding of the external environment enables the organization to align its strategic mission and vision with the current and future needs of clients. Given the competitive and unstable nature of the electronic market, research and technological development are paramount. As long as the firm keeps applying its low cost and differentiation strategies, it is bound to maintain a competitive innovation enterprise in the electronic sector.

References
Gamble, J. E., Peteraf, M. A., Strickland III, A. J., & Thompson, A. A. (2016). Crafting and executing strategy: Concepts and readings.
Hill, M. T. (2010). International Business 4E, Aswathappa.
Mahmood, P., Chang, S., & Zintel, C. (2013). Samsung Electronics: Global strategies. Journal of Consumer Electronics, IMD.

Nisen, M. (2013). Samsung Has A Totally Different Strategy From Apple, And It’s Working Great. Business Insider. Retrieved from HYPERLINK “http://www.businessinsider.com/samsung-corporate-strategy-2013-3?IR=T” http://www.businessinsider.com/samsung-corporate-strategy-2013-3?IR=T.grif
Razdan, V. (2015). Analysis of Samsung Electronics’ Strategy for the period 2014-2017, and development of strategic options for growth and sustainability. Research Gate.