Samsung Company Analysis: Final Report

Subject: Company Analysis
Pages: 7
Words: 1221
Reading time:
5 min
Study level: Bachelor

Introduction

The company focuses on manufacturing and developing a wide range of electrical products, including semiconductors, digital media devices, integrated systems, electronics, and memory chips (Gadalla, 2020). Samsung Electronics has a hierarchical administrative architecture; the corporation’s board of Directors (BOD) comprises five independent directors and four executives (Haizar et al., 2020).

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Structure of the Supply Chain

A substantial portion of Samsung’s supplier network is based in the United States, Vietnam, Korea, Japan, China, Taiwan, Hong Kong, and the United Kingdom (Bondarenko, 2021). Through strategic supply chain management, Samsung aims to ensure that there is the existence of operational efficiency and cost competitiveness while also focusing on sustainability. Corporate accountability and social responsibility among suppliers are significant focal points of Samsung’s strategic supply chain management. While dealing with its suppliers, the company always ensures that it complies with ethical standards and laws to protect its environment.

Economic Aspects

Concerning the economic aspect, Samsung’s strategic supply chain management is to maintain a comprehensive competitive advantage. The company’s primary concern areas are product quality, technology, and efficiency cost applied in supply chain management. Samsung only works with Eco-Partner authorized distributors to provide an environmentally sustainable supply chain.

Marketing Strategies at Samsung

The strategies of marketing at Samsung Company are centered on producing novel advanced, user-friendly devices backed by robust promotional and branding procedures. Their goal was to create goods that deliver benefits that specific buyers consider valuable (Bondarenko, 2021). Samsung streamlined its roster of advertising companies from 55 to one worldwide advertising company like Wire and Plastic Products plc.

Financial Strength

One of the most noticeable assets of Samsung Electronics is its intense financial situation. Proper management of its financial affairs has also been one of its survival strategies over the years. Samsung is a South Korean company that consists of multiple affiliated businesses. As of 2020, it had the eighth-highest international brand value. In the electronics sector, the Samsung Group has faced stiff competition from companies such as Apple and Huawei.

Goals and Strategy Vision

Samsung Inc.’s vision is to inspire innovative technologies, products as well as designs that enrich individuals’ lives plus contribute to social prosperity by creating a different future. According to its business operations, as well as current global industry positioning, the company has focused on human and technological resources, the superiority of products plus services, and the betterment of society (Zhou, 2020). The strategic aim of this approach is to maintain a competitive edge by offering peculiar products that target a wide market. Regarding investment philosophy, the company believes in devoting its talent plus technology to creating products as well as services that lead to a better society.

Comparison With Apple and Huawei

The vision statement is in line with the company’s corporate social responsibility approach as well as stresses sustainability, the overall betterment of the ecological influence of the business, and environmental conservation. Samsung Inc. uses a generic strategy and intensive growth. Apple, too, utilizes this approach as it relates to the firm’s approaches in marketing, pricing, plus other business areas (Amron, 2018). Investment decisions at Apple Inc. are based on value factors as well as financial criteria.

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Huawei has the vision to bring digitalization to all people, at home as well as in the organization for a completely connected and intelligent world. Huawei aims to connect all the people, firms, and homes that are still not online. It also aims to continue driving broadband as well as ultra-fast broadband adoption. The core of Huawei’s pricing approach has been to guarantee lower prices than its competitors, such as Apple Inc. and Samsung Inc.

Samsung Financial Analysis

In analyzing Samsung’s financial performance, the paper will use indicators such as return on assets (ROA), return on equity (ROE), net income growth, operating cash flow, quick ratio, and cash ratio (Alexander, 2018). The company has a large volume of assets indicating showing its high ROA. The eternal environment was influenced by the high rates of COVID-19, which impacted its performance during that period. However, the ROA of its major competitors, such as Apple, is higher when compared to Samsung’s performance as it has a ROA of 28.06. Samsung has an ROE of 13.92 during the 2021 financial period, and its competitor Apple has an ROE of 147.44. Samsung’s ROE portrays that the company can fund its business activity and expansion despite its top competitor is much ahead.

Samsung has a three-year net income growth of 65.13%, which shows that the company’s net incoming has been increasing for the last three years. Samsung’s cash flow has been increasing for the last three years, and this shows that the company can finance its core business operations without the need for external funding sources. Samsung has a quick ratio of 2.04, which shows that its performance is healthy and can cater to its liabilities.

Samsung has a quick ratio of 1.41, which is greater than indicating that the organization is in a good position when converting the value of the current assets into cash. The organization can cover its short-term debts and remains with cash to fund business operations. Samsung has a current ratio of 2.51, indicating that it is stable in the market. Samsung has a total debt-to-equity ratio of 6.21, portraying that the organization uses debts to finance most of its operations and projects. The ratio is significant for Samsung Company as it enables understanding the shareholders’ earnings and comparing itself with other competitors in the market. In the case of Apple Company, the organization has a total debt to total equity ratio of 216.39, portraying that Samsung is well off when the profits decrease in case of market shifts. Samsung has a price-to-cash flow ratio of 8.17, indicating that its stock is valued in the market hence a possible venture for potential investors.

Samsung has a receivable turnover ratio of 7.01, indicating that its debt collection is efficient and has an incredibly significant number of quality customers who quickly pay the debts owed. Samsung has a price-to-sales ratio of 1.90, indicating that the organization is profitable. Samsung has an ROIC of 13.76, indicating that the organization has a competitive advantage making it profitable.

Financial Risk Management

The Samsung organization focuses on handling financial risks such as liquidity, credit, and market risks emanating from the business. Samsung Company is vulnerable to risks resulting from foreign exchange because it operates in a global environment. The interest rate risk is generated by the fluctuation of the market interest rates. Samsung Company is vulnerable to interest rate risk because of its exposure to interest-bearing deposits and debt obligations (Samsung Electronics, 2021). The company is vulnerable to price risk because of the direct and indirect investments of the company’s equity instruments. The price fluctuation impact is a significant factor as between 2020 and 2021, the organization’s marketable equity securities were affected by 1%, resulting in income changes.

Credit risk usually arises due to investing and transaction activities as clients cannot fulfill their obligation. The company has numerous investments in various regions, making it critical to maintain an adequate level of liquidity risk.

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Conclusion

For Samsung to achieve its goals, it must critically consider its organizational structure, supply chain, marketing strategy, and financial status. Ever since its founding, Samsung Inc. has been focused on providing consumers with the best products in the industry while also maintaining uniqueness.

References

Alexander, J. (2018). Financial planning & analysis and performance management (1st ed.). Wiley.

Amron, A. (2018). The Influence of Brand Image, Design, Feature, and Price on Purchasing Decision of Apple iOS Smartphone in Surakarta, Indonesia. The International Journal of Social Sciences and Humanities Invention, 5(12), 5187-5191. Web.

Bondarenko, P. (2021). Samsung. Encyclopedia Britannica. Web.

Gadalla, A. (2020). Samsung Management. Web.

Haizar, N. F. B. M., Kee, D. M. H., Chong, L. M., & Chong, J. H. (2020). The impact of innovation strategy on organizational success: A study of Samsung. Asia Pacific Journal of Management and Education (APJME), 3(2), 93-104. Web.

Zhou, Y. (2020). The Samsung story. Web.

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