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ROA HOLDINGS ISSUE REPORT
Analysis of Samsungs Competitiveness in 2012
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ROA Holdings, INC.
Report No.012501
Copyright2012 ROA HOLDINGS, INC All Rights Reserved.
Analysis of Samsungs
Competitiveness in 2012Focusing on Samsungs Business Structure, Investment,
Marketing and Strategy for Software-Driven Company
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Analysis of Samsungs Competitiveness in 2012
Table of Contents
Executive Summary
Analysis of Competitiveness
1 Finance
1.1 Strong Performance of the Communications Business
1.2 Competitiveness of Product Portfolio
1.3 ROE
2 Analysis of Corporate Structure
2.1 Corporate Restructuring to Generate
Synergy and Prepare for Market Change
2.2 Launch of Software Center and
Development of Global Contents
2.3 Restructuring for Future Businesses
2.4 Control Tower
3 Analysis of Each Divisions Business Result
3.1 Digital Media & Appliances
3.2 Communications
3.3 Semiconductor
3.4 Display Panel
4 Global Top-Tier Strategy
4.1 Visual Display
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Analysis of Samsungs Competitiveness in 2012
4.2 Home Appliances
4.3 Communications
4.4 Semiconductor
4.5 Display Panel
5 Marketing and Brand Strategy
5.1 Increases in Marketing Investment
5.2 Improved Brand Value with Sports Marketing
5.3 Premium Brand Strategy for More Growth amid
Economic Downturn
5.4 Premium + Localization in the Emerging Market
6 Analysis of R&D Investment
6.1 R&D Investment Compared to Sales in 2011
6.2 Patent Strategy and Focus on Software Business
7 New Main Businesses
7.1 Investment Targets for 2020
7.2 Current Status
- Substantial Results in Three Future Businesses
Conclusion
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Analysis of Samsungs Competitiveness in 2012
List of Figures
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[Figure 1] Strategies before and after Restructuring: SW, Synergy Effects and Separation
[Figure 2] Sales and Operating Profit (2002-2011)
[Figure 3] Quarterly Sales and Operating Profit (2009-2011)
[Figure 4] Composition of Sales in 2011
[Figure 5] Composition of Operating Profit in 2011
[Figure 6] Profit Margin of Samsung Electronics (2009-2011)
[Figure 7] ROE of Samsung Electronics (2002-2011)
[Figure 8] New Organization of Samsung Electronics
[Figure 9] SW Development Structure
[Figure 10] Main Businesses and Products
[Figure 11] Sales and Operating Profit of Digital Media & Appliances (2009-2011)
[Figure 12] Sales and Operating Profit of Communications (2009-2011)
[Figure 13] Sales and Operating Profit of Semiconductor (2009-2011)
[Figure 14] Sales and Operating Profit of Display Panel (2009-2011)
[Figure 15] Image of Smart Functions of TV ES8000
[Figure 16] Image of Smart HomeNet - Home Solution Technology of Samsung
[Figure 17] Image of 55-inch OLED TV
[Figure 18] Marketing Expenditure (2006- 2010)
[Figure 19] Image of Sponsoring 2012 London Olympics
[Figure 20] Super Bowl Commercial (Image)
[Figure 21] R&D Investment (2007-2011)
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Analysis of Samsungs Competitiveness in 2012
List of Tables
[Table 1] High-end Smartphone Models of Samsung Electronics in 2011
[Table 2] Mass-market Smartphone Models of Samsung Electronics in 2012
[Table 3] 8 Content Services of Samsung Electronics
[Table 4] Five Future Businesses and Current Status
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Samsung Electronics wide product line-up ranges from set
products to components, encompassing semiconductor, TV,
and LCD and LED display. In the global market, it has been
presenting a successful growth in a tough business environment.
For this reason, Samsung can be referred to as the benchmark
for companies in development of successful business strategies.
Samsungs sales reached a new high in 2011 despite recession
in the IT industry. It recorded KRW 165 trillion in sales which
increased KRW 10 trillion from 2010.
Each of communications, semiconductor and TV business
presented a strong performance, driving the sales increase. Its
mobile handset production surpassed 300 million units last year.
In particular, smartphone shipments reached 100 million of whichGalaxy series made a large contribution. The semiconductor
segment continues to be the cash cow for the company with
improved product mix although DRAM price fell to a record low.
The digital media and home appliance business tripled in profi t
earnings thanks to the popularity of LED TV.
Samsungs TV business enhanced profi tability by being focused
on premium LED TV products and the communications business
posted a new record in terms of shipment by strengtheningsmartphone product line-up.
Executive Summary
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Despite the successful results, Samsung is placed under
pressure to seek new growth engines because its current
business structure is faced with various challenges and it needs
to maintain a steady growth. To achieve the goal, Samsung will
make a huge investment in five strategic businesses by 2020.
In line with that, corporate restructuring has been conducted
through merger, creation of new business segments and
separation since July 2011.
Samsungs restructuring efforts has three goals: first, to fill the
entire product line-up with world-best products; second, to
improve relations with the global partners including Sony and
Apple; and, third, to shift its paradigm to a Software Driven
Company. In 2012, corporate restructuring will be focused on
separation of set product business and component business,
enhancement of competitiveness in software and content
businesses, and preparation for future businesses. It is expectedthat Samsung Electronics will evolve into a new company when
restructuring is completed. On the other hand, businesses
struggling with low profitability due to aggravating business
environment or immature market demand will be integrated with
others for an efficient management. For instance, LED display
business was integrated into component business on April 1,
2012 and LCD display will be merged with SMD to concentrate
on OLED display production.
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[Figure 1] Strategies before and after Restructuring: SW, Synergy Effects and Separation
Samsungs Organization Structure Before 2010 and After 2012
Before After
HARDWARE DrivenHARDWARE Driven
Key Cash Cow Biz
Visual Display Unit
Home AppliancesWireless Business
Semiconductor Business
Software Driven CompanySoftware Driven Company
DMC
DS
CE IM
Global Top-Tier
VDHome
Applicances
WirelessIT
MSC
Software/DesignPower
Software Center
MSCA
Total Spin o / Independent Operation
Mid and Long-Term Growth Engine
Bio Chemistry / Medical Equipment/ Secondary Battery / LED / Solar
+
2010 2012
Source: ROA Holdings
Samsung Electronics has been dedicated to improving its
competitiveness in hardware technologies including mobile
DRAM, AP, NAND flash and OLED display, which, in turn,
resulted in high-quality set products by being combined with
software, design and solutions.
It looks to expand the synergy effect between hardware
technologies and some set products to entire product line-
up, in a way to become the top-tier company in the world.
Besides, solutions and display technology of smart devices will
be adopted for TV and home appliance products, in line with
the business goal of Samsung to become a Software Driven
Company. Samsung has been progressive in sport marketing
and pursues a two-track marketing strategy which is composed
of Premium and Localization. Its annual marketing expenditure
amounts to 6% of sales.
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In case of R&D, it strives to register more patents in preparation
for possible lawsuits. In addition, progressive efforts will be made
in the software business. Competitive software technologies
are gaining importance in the market as smart devices are
spreading from IT and mobile industries to others including home
appliances. It seems that Samsung is willing to respond to rapid
changes in the IT market, including the takeover of Motorola
by Google, HPs pulling away from PC business, and Apples
onslaught of lawsuits around the world.
This report is based on consolidated financial report of
Samsung released in 2012.
Data from 2007 to 2009 is based on ROA Holdings 2010
report (published in Japanese)
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Copyright ROA Holdings. All Rights Reserved. Additional reproduction is
strictly prohibited without a written permission from ROA Holdings. For receiving
written permission, please write to [email protected]. The opinions
and estimates presented in this report are based on information sources that
are believed to be reliable and accurate. The contents of this report reflect the
current opinions and are subject to change without notice. For more information
on ROA Holdings reports, visit www.roaholdings.com
About ROA Holdings
ROA Holdings is a research and consulting company, specialized
in mobile and convergence markets in Asia. ROA Holdings head
offi ce is in Tokyo, and branch offi ce is in Seoul. ROA Holdings main
clients are mobile carriers, handset manufacturers, government
agencies and global IT companies.
ROA Japan HQ
4F,Okada Building,1-10-5,
Shinjuku, Shinjuku-ku
Tokyo 160-0022, Japan
ROA Korea Office
Posco Center Building, West Tower
11th Fl.
892, Daechi 4-dong, Gangnam-gu
Seoul, South Korea
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