Country Analysis for Samsung S Presence in Egypt and ChinaAssessment

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Country Analysis for Samsung in Egypt and China

Market Opportunity

Country Risk

Business Environment

Political factors

Economic factors

Environmental factors

Technological factors

e-Business Readiness Rating

Samsung Electronics comprises 150 worldwide subsidiaries, which include nine regional production and sales headquarters, each in the divisions of Information Technology & Mobile Communications and Consumer Electronics, and five in its Device Solutions division. Its Consumer Electronics division produces and sells Cable TVs, ACs, refrigerators, monitors, and printers, while its Information Technology & Mobile Communications division is focused on handheld phone manufacturing and sales (including smartphones and feature phones), computers and network systems. The cellphone industry first surfaced during the early eighties with its first generation analog mobiles, subsequently evolving to its next generation digital technology, and then to the third generation of mobile communication (Wideband Code Division Multiple Access or WCDMA accompanied by high-speed transmission of data) (Samsung electronics Co., Ltd. 2014). In its Egyptian market, Samsung's focus is offering novel products concurrently with their global launch, emphasizing the recent high demand for smartphones among Egyptians. Samsung is expanding its mobile device market (i.e., tablets, smartphones, etc.), particularly in developing areas like India and Africa (including Egypt), where citizens aren't familiar with computers, resulting in the ultimate overtaking of personal computer sales by tablet sales. While Samsung represents China's largest smartphone vendor (20% market share as of the first sales quarter in the year 2013), as per Canalys, a number of Chinese firms surged past its rival Apple (8% market share). Egypt's Economist Intelligence is higher compared to China with regards to Unit e-readiness ranks and, hence, will be more favorable for Samsung (Pfanner, 2013).

Introduction

Global technology leader, Samsung Electronics, has been known to open fresh avenues for people the world over. By means of constant discovery and innovation, the company has been transforming the smartphone, TV, camera, tablet, wearable devices, digital appliances, LED solutions, printer, medical devices, network systems, and semiconductor markets. The corporation also leads the global market in the area of IoT "Internet of Things" through initiatives like Digital Health, Smart Home, etc. Instituted in the year 1969, the corporation has become one among the leading technology firms in the world, and features in the list of top 10 international brands. Samsung's network covers all corners of the world; the company is known for its talented pool of creative and diverse employees, who drive the company's growth. The company engages in production and selling of electronic goods, operating through its Consumer Electronics (offering cable TV, printer, monitor, refrigerators, ACs, medical devices, and washing machines), Device Solutions (offering light emitting diodes, large-scale system ICs (integrated circuits) and memory chips), and Information Technology & Mobile Communications (offering computers, digital cameras, handheld devices, and communication systems) business divisions (Jacks, 2013).

Market Opportunity

The Information and Communication Technology (ICT) sector of Egypt is a key contributor to the nation's economic development and employment. It already has a firm position as key supplier of multinational companies' ICT services and back office operations, and is now prioritizing its ascent towards manufacturing and exporting higher value-added ICT services and software. Intellectual property has a significant role to play in the country's ICT sector development, and is linked to innovation and foreign direct investment (FDI). Promoting the ICT sector as well as its contribution to the nation's economic development has long remained the focus of government policy in the country. This strategic backing of Egypt's ICT sector appears to have produced positive results. The country performs fairly well in IT and business processes, but has shown limited activity when it comes to the call-center area (Jacks, 2013).

Meanwhile, in China, the company, Samsung Electronics, represents the ideal example of a successful corporation, continuously changing the technological industry in the past two decades. The company has ascended to occupy the "market leader" slot for semiconductors, enjoying the biggest share of the market for more than 13 years. But, owing to the success achieved by every technological industry sector, new competitors typically make their way into any market segment rather quickly. Akin to how Samsung made its entry into China's semiconductor market more than fifteen years ago, numerous other corporations in China are working hard to capture Samsung's market share. Chiefly because of low-cost product manufacturing, these local firms have threatened the main segment of the company's semiconductor business -- its 256 Mbit Dynamic Random Access Memory (DRAM) division. This product, as of the year 2003, accounted for 78% of the company's manufacturing process. It was predicted by some analysts that, by the year 2010, China would become the second largest global semiconductor manufacturer, behind the U.S. (Jacks, 2013).

In Egypt, the aim of Samsung Group is increasing its cellphone market share by 10%age-points (pps) between 2014 and 2015. Following the launch of Note 4, its latest offering, Samsung intends to boost smartphone sales and acquire 75% of the Egyptian market. Tamer El Gamal, Sales Head for the company's Egyptian division, states that Samsung expects a minimum 5% monthly growth within Egypt in the near future. Its strategic objectives differ every year, and one of these involves its offering, the way it upgrades product technology, and the launch of novel devices. Further, Samsung intends to continue reducing product prices in keeping with Egyptians' purchasing power. The company has been working on offering products to Egyptian markets with prices identical to those offered in similar markets in other countries, to match the nation's financial capabilities. New technology products' prices usually drop with further technological advances, complementing Samsung's strategy to cater to the needs of every Egyptian social class. Another aspect of Samsung's strategy for Egypt is enhancing smartphone usage across the nation, particularly given its goal of increasing smartphone sales growth in the country (Eldin, 2014). Meanwhile, China represents the largest global smartphone market, accounting for 30% of overall smartphone sales in last year's second quarter. Poor performance has adversely impacted the Chinese cellphone market's performance during this period. China has clearly attained saturation, with its cellphone market being principally dominated by replacement buyers, and hardly any first-timers. Beyond the cellphone market's lower end, premium smartphones' appeal will be important for smartphone vendors to sustain or increase their Chinese market share and attract upgrades. In spite of the introduction of novel S6 phones, the large-screen smartphones produced by Apple (iPhones) continue challenging Samsung's premium smartphones. In last year's second quarter, the company's market share declined by 4.3 pps and unit sales dropped by 5.3%. Huawei reported the highest rate of sales growth (46.3%), on account of local 4G smartphones sales and strong sales in its overseas markets. Apple's iPhone witnessed a 36% growth in sales, helping the company gain 2.4 pps of market share. Further, Apple witnessed strong replacement buying of iPhones in mature as well as emerging markets (and especially in its Chinese market) (Gartner, 2015).

Samsung's Chinese market is one of the world's most attractive areas. The nation has steadily risen to become a strong economy, thereby boosting international business. Moreover, the Chinese legal system has witnessed improvements as well. Foreign investors are largely drawn to the country due to its market size, overall growth potential, and extremely cheap labor cost. The country is increasingly integrating with other regions of the globe and has, of late, welcomed and involved itself in a range of overseas economic activities. Nevertheless, managing international business within the nation is no easy task. The key challenges faced by enterprises in China include:

Achieving their strategic aim of reduced costs,

Core competency strengthening in particular business activities and areas, and Local differentiation

China is formally a World Trade Organization member; its entry into the global marketplace profits its own economy as well as enhances global economic progress through technological, political, economic and social factors. Political factors in China that influence Samsung's market include: (1) Governmental regulations: These include informal as well as formal rules that corporations need to adhere to, to impact the company. Many individuals assert that the most variable force is political force. In the last few years, e-commerce development has been the Chinese government's focus. (2) Legal concerns: E-commerce's legal framework is still in its initial stage in China. The nation has scant experience with drafting legislation in this context, for subjects like intellectual property (IP) tax and protection of IP rights. There are no regulations in China to support digital signature recognition, privacy, electronic contracts validation, and consumer rights, as yet. Samsung's Chinese market witnessed significant growth in its gross domestic product (GDP). Reports indicate that if the country continues excelling at its current pace, it will soon surpass USA's GDP. Contributory factors include:

High savings rate

Abundance of skilled labor

Likely urban growth

Increased export business (Makos, 2015).

Minor economic developments are capable of significantly impacting small-to-medium enterprises and their operations. The GDP rate of China suggests that all its citizens are adding increasingly more values to Chinese society, successively resulting in increased purchasing power. China is characterized by extremely low labor cost, causing leading corporations (e.g., Apple) to hire… [END OF PREVIEW]

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