Samsung Electronics Case Study Example | Topics and Well Written Essays - 500 words

Samsung Electronics - Case Study Example The memory industry is characterized by having few powerful suppliers. The consumers are extremely price conscious thus profit margins are low. In order to be able to get lower prices from suppliers companies have to buy in bulk. Suppliers give high volume buyers a 5% purchase discount. Memory represents about 4-12% of the cost of an OEM computer. The OEM computer industry is the primary buyers of DRAM. The OEM computer industry is fragmented and no single OEM manufacturer holds more than a 20% market share. Quality is a critical success factor for companies in the memory industry. Product quality allows companies to achieve customer retention (Kotler, 2002). Defective memory is high risk for a computer manufacturer because it could destroy product value. OEM companies are willing to pay an extra 1% price premium for reliable suppliers. Samsung which is a successful player in the memory industry developed new types of cutting edge memory chips that enable them to differentiate themselves from the competition. The use of innovation enabled the company to have a great product variety and penetrate niche markets within the industry were they could charge higher prices. In 2003 Samsung offered 1200 types of DRAM products. This gave the company an advantage because by 2005 the prices of the older memory technology started to depreciate in price. When this occur the best approach for companies that did not have the new innovative products like Samsung was to utilize a strategy to gain market share. Chinese manufacturers utilized the strategic approach of increasing market share. Another critical success factor in the industry is having organizational experience and tacit knowledge to master the design and production process. Testing chips for reliability during the production process was imperative. Successful companies designed process improvements to allow more