Abstract
The research was conducted to determine the key factors that allowed Korean Mobile Phone Manufacturers Samsung and LG to develop market positions in international mobile phone market. Primary research through survey and interview was conducted alongside an in-depth analysis of the Korean Mobile Industry and a resource based analysis of Samsung and LG. It was revealed from the study that both Samsung and LG managed to acquire their strong positions in the Korean Mobile Industry on account of extensive Research and Development combined with continuous attention towards changing trends in consumer demand. Samsung and LG companies carry out extensive product diversification that allows them to maintain an edge over their competitors at the same time.
Chapter 1 Introduction
1.1 Background
The mobile phone industry is one that has become one of the worlds leading industries with the passage of time. The transformation from Non-digital to digital devices has paved the way for the industry to realize its limitless potential. Proof of this realization can be found in the widespread acknowledgment and usage of third generation devices for their integration of broadband services. One cannot ignore the fact that the mobile phone industry is one that owes its growth to multiple factors such as software development and the additional accessories offered in a device. The development in technology has allowed for an equivalent degree of development to take place in the area of these multiple factors. As a result, mobile phones have now acquired positions in everyday lives where they resemble a personal computer more than a wireless cellular communication device.
The mobile phone is no longer limited in its use to a communication device but has taken on the form of a communication device where every development in microprocessor technology allows more room to be created for new products and services in a cellular phone. An example of this fact can be found in the Smartphone that provide users with the capability to make use of extensive information based services. Combined with high resolution cameras, touch screen interfaces, advanced diverse multimedia support and an increasing quality level of internet connectivity, cellular phones are now more productive than they ever were before.
According to (The Korean Culture and Information Service 2009), Korea comes across as the second largest exporter of cellular phones in the world and exported cellular phones worth US29 billion in the year 2007. Products made by Korean cellular phone manufacturers experience favourable demand around the world and are known for their high-resolution cameras, high-tech screens and user-friendly interfaces.
Innovation in technology has brought forth numerous contributions the way that the modern day man lives in society. Of these numerous contributions, perhaps the most profound implications on everyday life have come forth as a result of the development of the mobile phone. The mobile phone has taken the digital era to new heights by serving as a new horizon altogether. While Samsung Mobile, LG Electronics, Motorola and Nokia hold leading positions in the global mobile phone industry, numerous other cellular phone manufacturers and cellular service provider come together to form the one industry that ties the world together through unhindered communication.
However, of all of the companies that constitute the global mobile industry, two companies in particular have managed to acquire leading positions in the market. Samsung Mobile and LG Electronics are two companies that have managed to give exemplary performance in terms of market share acquisition. Their experience in the mobile phone industry spans only a few decades but is one that is riddled with technological innovation and extensive research and development. In 2008, the combined market share of Samsung and LG in the Korean telecommunication industry amounted to over 24 (Sung-Ho 2008).
1.2 Objective
In light of the background presented above, this dissertation shall attempt to carry out an analysis of Samsung Mobile and LG Electronics in order to evaluate the reasons because of which Samsung Mobile and LG electronics have managed to acquire dominating positions in the Korean mobile phone industry and the global mobile phone industry. In order to do so, the research shall make use of the resource based view to acquire a working knowledge of the competitiveness of Samsung Mobile and LG Electronics in the context of the global mobile phone industry.
1.3 Project Aim
The project aims to identify the key success factors of Korean mobile phone manufacturers that have led them to acquire a significant position in the world market.
1.4 Research Questions
What are the key success factors for Samsung and LG in the Korean mobile industry
What are the attributes that allowed Korean mobile manufacturers to derive a long-term competitive advantage from short-term developments
What are the key success factors for Samsung and LG that have allowed them to acquire a strong position in the global mobile industry
1.5 Disclaimer
This research was conducted after the consent and permission of the supervisor had been acquired. The research was conducted while exercising adherence to copyright laws and plagiarism regulations. A significant degree of concern was given to the limitations of the research in order to ensure authenticity. The primary research conducted for the purpose of this study involved the implementation of the survey questionnaire and the respondents were only asked to volunteer for the study once they had been informed about the objectives and purpose of the study. The respondents were given complete liberty to have their answers withdrawn from the study if they wished to do so and were assured that their responses would be brought into use for the singular purpose of this study. It is imperative to note that this research does not attempt to carry out an exhaustive study of the subject of the research. It is therefore recommended that the findings of this research are not taken as the last word on the subject when considering them for the establishment of a financial decision. The report cannot be distributed in any form to any third party without the consent of the researcher and the instructor.
Chapter 2 - Methodology
2.1 Introduction
Research methodologies are a very important element of any research analysis. Research has its own place and it has been given a very important status for the reason that it helps in developing a proper conclusion of the whole research. The ultimate objective of a research process is to systematically investigate and the attainment of knowledge towards a particular subject. In todays dynamic and competitive business world most of the organizations conduct research to get a better understanding about the environment which ultimately leads them towards effective decision making.
The selection of the correct medium of research is a very critical aspect of the research reason being the whole research the findings and the conclusions are dependent on this section. The important thing to remember is that there are lots of methods which can be used to do the same job but the appropriate method is the medium which best suited for your paper and the medium which has the capability of answering all the aspects of the research questions (Creswell 2008).
2.2 Research approaches
The two most popular and widely used research approaches included the quantitative approach and the qualitative approach. According to the experts both of these techniques are the backbone of business research and they are also the very fundamentals of a research. The first approach which is being discussed in this regard is the quantitative approach. In this kind of approach the researcher uses claims for the development of knowledge like the cause and effect thinking etc. similarly specific variables are identified and hypotheses is developed after which the research proceeds. Different observations are also given way and testing of theories is also a fundamental element of this technique. In other words we can say that this type of techniques primarily focuses on the use of statistical tools to draw a result and the most important goal is to test the phenomenon that whether the theory holds true or not. At the other hand the qualitative approach helps in providing an inside views of the problem or cases. The major tool which is used by the qualitative technique is the questionnaire and the surveys. These questionnaires and surveys are designed in such a way that they take into account the population and its respondents as well. Qualitative research is mainly applied in scientific areas to test the objectivity of the data as well as the application of the data to the selected sample of the population (McBurney and White 2006).
2.3 Data collection technique
Another important aspect of a research is its data collection and the techniques which are used to collect and gather the data. The importance of data collection could be viewed from this fact that the data which is being collected at this stage, later on helps in analyzing and evaluating the hypotheses. The two major sources from which data is being collected are named the primary sources and the secondary sources of data collection.
2.3.1 Primary data
As the name suggests primary data means the data which is being designed for the very specific reason of conducting this particular research and this data did not exist prior to this current research. Primary data has many advantages over the secondary data the biggest advantage is that the primary data is directly related to the nature of the problem which is currently on hand and it has been collected for this very purpose.
2.3.2 Secondary data
As the name suggests this is the type of data which has been researched or published or it existed before the current research. The data which is drawn from this research is not similar with the research that is on board, means that the secondary data that has been acquired by the researcher is developed keeping in mind the data and scenario of that particular case.
2.4 Adopted Research Methodology
In order to carry out a thorough analysis of the attributes of Korean Mobile Phone Manufacturers and to identify the attributes that can be considered to be the key success factors for them, it is imperative to make use of data that is thorough and precise in nature. It is for this reason that this research shall integrate qualitative and quantitative approaches of research. The study shall initiate through implementation of the selected primary data collection instrument and the subsequent collection of primary data. The central purpose of the survey for this study is to establish the elements that consumers consider to be of a key nature when they contemplate on buying a cell phone. The survey questionnaire respondents shall be cell phone users and voluntary respondents at RHUL. Interviews shall be carried with personnel from Samsung and LG in an attempt to acquire a clear and unique picture of each company. Therefore the study of Samsung and LG can be considered to be the integration of the case study approach into the research process.
The primary research for the study shall also constitute an interview with representatives of both LG and Samsung. The interview shall be brief but was designed to be carried out for Samsung and LG both. Representatives for both the companies will be contacted and asked a pre-determined set of open ended questions designed to acquire firsthand knowledge of the perception that the companies hold with regard to their own positions in the industry. The interview will begin by inquiring upon basic information such as basic information on the companys history. The next question inquired upon shall be the time when the company established its presence in the international market. The third question shall explore the attribute that served as the core competitiveness of the companys products in the market while the fourth question shall seek to identify the nature of the obstacles faced by the company in the industry.
The respondents for each company will then be asked to establish upon the factor that they consider the most important for the sake of success in the international mobile industry before moving on to ask about which competitor each considers to be the most active in terms of innovation and competitiveness.
The respondents will then asked if they think that they had companies had acquired a sizeable market share before bringing the brief yet comprehensive interview to a close by inquiring upon the internal factors of the organization that allowed it to grow rapidly over time.
Secondary data for the research shall be acquired through peer reviewed publications from the Royal Holloway Library and other electronic libraries. Internet search engines and directories shall be brought into use in order to collect reports and publications that relate to the Korean Mobile Phone Industry. It is essential to note that the majority of these sources shall be brought into use to establish the literature review for the research. Industrial magazines and periodicals shall also be brought into use in the development of secondary data.
The adopted research methodology for this particular assignment is the case study approach. The case study approach helps us in developing an understanding of complex and broad issues which has already been developed by previous researches. A case study provides a contextual analysis of a particular event or a condition in which that even is taking place and what was the relationship between them. Over the period of time researchers have used the case study approach to conduct their researches. These researches revolve around a variety of disciplines but in particular the social scientists have used this qualitative research method to the most of their potential. The reason why this approach is more popular in the disciplines of social sciences is because this method examines the contemporary real time issues and provides the basis for effective decision making, application of new ideas and developing new methods to solve the problem.
Apart from that the case study method has been an essential form of research tool for the management and social sciences studies. This approach has been used in the research which involves the education, business, organizational issues, family studies, international affairs, technology and other social problems (Yin 1994).
There are some critics of this type of approach and according to them the study of a small number of cases can offer no ground on the reliability and integrity of the findings. Some of the experts believe that the case study approach is only effective with the exploratory tool. Besides that researchers along the world now days also uses the case study approach with success, in which carefully crafted and planned studies, real life issues, problems and different kind of situation are presented to enhance the analytical skills of the researcher.
Many of the case study researchers have worked on this approach and after through study they have been able to develop six steps which should be adapted while going forward with this approach. This step includes the following points.
Establish the research question
Selection of related cases
Determine the data gathering and analysis technique
Collection of data
Evaluation and analysis of data
Preparation of report
2.5 Theoretical framework
The theoretical framework of the research primarily depends on the economics view point that is the resource based view. According to this view any firms competitive advantage depends upon the valuable resources which are available on the companys disposal. The resource based view is a contemporary and promising theory and it provides a good insight on both the strategic and organizational issues of a company.
To be more precise we can say that the resource based view holds the point that firms possesses resources which enables them to achieve competitive advantage. Those resources which are valuable and rare help that firm to get competitive advantage over its rival firms in that particular industry.
Another concept which is derived from the concept of resource based view is that of the resource based view of product development. It contributes to the management of the product development by putting importance at the different functional and integrative capabilities that affect the product effectiveness. Now the question arises that how can the resource based view be effective with respect to the organizational perspective. The answer to this question comes from the concept of economic rent. Economic rent means the different units of a business which are working collectively in coherence with the organizational goals. The most important significance of the resource based view is that it that it maintains a balance between the external market context in which the market is operating and its internal capabilities as well. Basically the resource based view focuses on the fact that the internal environment of a firm in terms of its resources and capabilities is significantly more important towards the strategic action of the organization than its external environment. Rather than focusing on the conditions and constraints of the external environment the resource based view holds the view that the firms unique resource and the organizations capabilities provides the grounds to formulate the strategy (Imai 2001).
Often in todays environment we observe managers in pursuit of the answer of this question that what makes the organization distinctive or unique fro, the rest of the firms What are the unique selling points of our company Or what are the key success factors of our business Typically the answer to all these questions that we get is through excellent servicer we can get this, or through aggressive response to the market needs, or through other financial resources we would be able to deliver the goods. The common thing which we get from these answers is that the firms internal capabilities and its resources are very crucial and the most important element in a firms performance.
The core concept of the resource based view of the firm is that to provide a model to the firm which would analyze the strengths and weaknesses. The basic focus of the resource based view is that the organization should be dependent on its own resources and capabilities. For instance when we say the word resource it means all the resources a firm possesses. It includes the human resource it includes the financial resources, the physical resource and the information resource. The whole concept revolves around the fact that the organization should be getting their majority of the work done with the help of these resources and not heavily relying on the external forces.
This also provides path to the fact that in todays competitive environment the factor which provides an organization the cutting edge is their ability to assemble and exploit an appropriate combination of its resources which includes both the tangible and the intangible resources. In this regard the human resource is very vital as this is the only resource out of the other resources which cannot be copied or replicated very easily. Other resources could be substituted but the human asset is the only resource with the organization that can make the difference for them. Strategies, new technology all are important in increasing the value but a knowledgeable and creative workforce is one which at the end would prove to be the most important of all (Afiouni 2007).
In the end we could say that resource based tool is a very essential part which organizations should pay attention to. Focusing on its own resources would provide the organization with sustainability and it would also prove to be very vital for an organizations profitability.
Chapter 3 Literature Review
3.1 Industry Analysis of Korean Mobile Phone Industry
3.1.1 Introduction to the Korean Mobile Phone Industry
As of 2007, the number of mobile phone subscribers around the world topped 3.3 billion or about 50 of the worlds population. Koreas mobile phone industry began to grow in earnest in 1996 when the nation first commercialized Code Division Multiple Access technology. Since then, Korean electronics companies have led the digital convergence of cellular phones with camera and MP3 player functions, continually expanded their global market share in the process. For instance, the combined market share of Samsung Electronics and LG Electronics the two leading makers in Korea - increased from 14 in 2002 to 24.1 in 2008 (Sung-Ho 2008).
It was in 1984 that the Korean Mobile Phone Industry saw its inception through the car phone service. However, the industry was powered fundamentally through foreign imports and domestic contribution remained at a minimal. First generation analogue mobile communication devices were first introduced in the 1980s and were used until the mid 1990s came (The Korean Culture and Information Service 2008). Companies such as Motorola and Nokia dominated the market. Motorolas dominance in the industry grew to as much as 70 in the early 90s (Korea Trade Investment Promotion Agency 2005). The mid 1990s brought the second generation cellular phones that introduced Code Division Multiple Access (CDMA) technology and served as a pivotal transformation in mobile phone development. Options and applications such as Short Messaging Service, wireless internet and transmission of data became frequently used cellular phone functions around this time.
Samsung Electronics became the first cell phone manufacturer to be present in the domestic scenario when it came forth in 1988. However, its market share was no more than 10 in the domestic market on account of low brand awareness and a deficiency in modern technology (Korea Trade Investment Promotion Agency 2005). It was not until 1993 came that Samsung began to acquire a significant position in the Korean cell phone market. At this point, Samsung left Motorola behind in terms of market share as a result of continuous and heavy investment in technology and innovation.
Motorolas market share was further penetrated and captured in 1996 when LG Electronics took an aggressive stance in the handset market through collaboration with Samsung to bring their CDMA cellular phones into the market. This competition became all the more fierce when Personal Communication Services (PCS) became fully commercialized and entered the market through mid-sized companies. Following the closing of the 1990s, the combined implication of the presence of numerous PCSs in the market was observable in the form of Motorolas share coming down to as low as 10 of the domestic market (Korea Trade Investment Promotion Agency 2005). The technological advancement that came forth as a result of heavy investment by domestic Korean CDMA cellular phone companies allowed them to take their business to international markets. Aggressive marketing strategies and experience from the Korean market was brought into use to penetrate the international market.
3.1.2 Koreas Telecommunication industry in a global perspective
If one was to consider Koreas telecommunication industrys position in an international perspective, then there are five major players that dominate the global telecommunication industry. These are Nokia, Samsung Electronics, Sony Ericsson and Motorola making two out of the five from Korea.
In the last 10 years, the telecommunications environment in Korea has changed dramatically. Korea now leads the world in several important market categories and it has become a successful model for other countries, even for developed countries. Todays telecommunications market as private, competitive, mobile, and global. The Korean mobile communications service market has embraced a series of changes that have played an important role for national economic development (Lee, Choi, and Ahn 2007).
Of the many factors that exist that can be attributed to be the reasons because of which the Korean Telecommunication market is undergoing such growth, one of the most important is the fact that consumers continue to demand more. Even though entry barriers are high and have experienced an increase due to the recession, there is still demand for differentiated products and services in the mass market. This demand is further stimulated by the fact that the government has applied no restrictions on the access of foreign capital in the telecommunication industry.
Korean Cellular phone exports are now recognized as one of the key Korean exports. While Korea is known for its exporting of semi-conductors and automobiles, the developments in the cell phone industry have allowed cellular phone exports to become equally recognized. Modern It would not be unjustified to ascertain that Korea served as the base for most of the worlds technological innovation during the 1980s, the 1990s and well into the 2000s(Korea Trade Investment Promotion Agency 2005). The third generation of cellular phones has already begun to get eclipsed by rapid developments in the areas of High Speed Downlink Packet Access (The Korean Culture and Information Service 2008).
Communications infrastructure has experienced profound leaps as the 21st century has replaced the 20th. Broadband and mobile services have become a necessity and the number of subscribers to these services continues to increase exponentially. What comes as a surprise in this scenario is that While there are over 15 million subscribers to broadband connections and over 22 million subscribers to fixed-line phone connections, the numbers of subscribers for mobile phone connections for the year of 2008 goes over 45 million.
It was not until 1996 that the Korean Mobile Phone Industry began to undergo growth for which it could be considered to be a major player in the global telecommunication industry. Korean mobile phone companies are now responsible for leading the technological and innovation revolution in the telecommunication industry on account of the extensive research and development that they have carried out in the area of CDMA technology as well as in other areas that pertain to the augmented products in a cellular phone these include functionalities such as those of a portable music player and a camera amongst many others. It therefore comes as no surprise that the mobile phone and other telecommunication products have become Koreas flagship exports. The Korean telecommunication industry has now become an imperative source of inflow for the Korean economy and is now given the same relevance as the Korean semiconductor industry which is Koreas leading contributor to the economy.
3.1.2 Changing trends in the Korean Telecommunication Industry
By the end of February 2009, Korea has a total of 45.99 million mobile phone subscribers by the end of 2008, Korea has a total of 35.36 internet subscribers, accounting for 77 of its total population. Korea is one of the nations has a fast 3G development in the world the 3G businesses such as mobile TV, mobile music, mobile games and mobile positioning are all developed well in this country. By the end of Nov 2008, Korea has a total of 15.86 million 3G subscribers, accounting for 34.95 of its total number of mobile communication subscribers (Electronics.ca Publications 2009).
It is important to realize that the mobile communication industry is one that is influenced by demands of multiple natures. Users who require multimedia communications chose to make use of functions such as messenger, multimedia messaging services, and push email. Users who choose to focus on deriving entertainment from their handsets demand gaming and music-supporting capabilities. Others require their handsets to assist them in management functions and therefore demand advanced schedule management functions that can process a wide variety of information. Some users require knowledge learning functions and demand services such as real time news, digital dictionaries and mobile web capabilities. Location based services such as public service, navigation and others are also often demanded alongside life-convenience services such as healthcare and personal safety management. Finally, users can also be perceived through their demand for business software and logistical support.
Korean mobile phone companies have now begun to concentrate extensively in the areas of user interface in order to align them to modern demands such as touch pad interfaces and advanced customization options. However, the international market is one that is influenced considerably as a result of continuous innovation. For instance, the early 2000s saw an increased demand for low priced mobile phones that provided entertainment in the market and mobile phone manufacturers around the world began to introduce low priced handsets with functions designed for consumer entertainment. By 2005, this focus had shifted to concentrate on the need for a user friendly interface and mobile phone manufacturers continued to concentrate on developing easy-to-use interfaces. By 2007 and 2008, this focus had shifted to the compatibility of a cellular device with internet services.
3.2 Profile of Korean Mobile phone manufacturers
As noted earlier, the following paragraphs shall present profiles of Samsung and LG since these two companies have been selected in this study as companies that can be considered as representative of Koreas telecommunication industry in the world market. This selection was based on the fact that the Samsung and LG hold significant position in the global telecommunication industry as well as in the Korean telecommunication industry.
3.2.1 LG Mobile
LG functions in the Korean Mobile Phone Industry through LG Telecom which is LGs wireless division. LG is recognized in the Korean Mobile Phone Industry for its advanced Mobile Banking services that it offers through collaborations with major banks. LG holds the position of a pioneer when considered in light of the fact that it was the first company to introduce mobile banking in 2003. Most of LG Telecoms sales take place through agents however, not all revenues pertain to handset sales. Sales of handsets account for only 30 of LG Telecoms revenues.
Based in Seoul, Korea, LG telecom is a part of the LG group and provides telecommunication products and services to consumers. LG Telecom was formed in 1996 and acquired authorization to perform research and development as a national centre for industrial research. 1998 saw LG Telecom enter into a partnership with Venezuelan PCS Consortium and separately with British Telecom which brought a 23 stake in LG Telecom. Commercial services were launched in 1998 and eventually become a pioneer with regard to the services offered by a mobile and telecommunication company. LG Mobile is responsible for launching several unique and innovative programs to consumers. However, it was not until 2008 that LG Mobile became a part of the Korea Composite Stock Price Index. According to statistics taken in 2009, LG employs over 2300 employees in Korea alone. LG Mobile faces competition from KT Freetel, the KT Corporation, SK Telecom Co., Ltd. and the Samsung Group. Services offered by LG Mobile include Mobile Internet services, Global roaming phone rental service, OZ 3G data service, BankOn and mobile payment service, Gas discount, PassON toll payment service and Home zone service.
LG telecom is a service provider for CDMA based telecommunication services for mobile telephones, commercial mobile communication and wireless internet amongst others. LG telecom employs the brand name, ez-i to market its products to its consumers. Besides products and services, LG Mobile also sells commercial mobile communication services that are customized to the client. Alliances with overseas CDMA operators allow LG Mobile to provide its services on a global scale.
3.2.2 Samsung
The Samsung Electronics Company, which is commonly known as Samsung Electronics, is a constituent of the Samsung Group. Samsung Electronics began functioning in 1969 through its manufacturing of black and white television sets. Expansion came in the 1970s when Samsung Electronics began to manufacture other appliances such washing machines and refrigerators. This expansion in the product line was followed by an almost simultaneously occurring expansion in geographical coverage as Samsung Electronics began to setup new plants. In 1978, Samsung Electronics carried out an acquisition in which Korea Telecommunications was bought. Korea Telecommunications was subsequently renamed to Samsung Semiconductors and Telecommunications after a few years of the acquisition. However, in the late 1980s, Samsung Electronics and Samsung Semiconductors and Telecommunications were merged together to allow for a further expansion in its product line and facilities. Samsung has formed strategic alliances with Yahoo, Microsoft, AOL and IBM amongst others but the most profound of all of Samsung Electronics joint ventures is the one that took place with Sony in 2005. A cross-licensing agreement took place as a result of this joint venture, and Samsung Electronics and Sony are now engaged in extensive sharing of information. Besides these, Samsung Electronics also has partnerships with Time Warner Cables, IMEC, and Vodaphone on numerous other projects.
It is recognized as one of the world leaders in consumer electronics and operates in Asia and America as well as in Europe. Samsung Electronics is based in the city of Seoul in South Korea. Samsung electronics employs over 150000 people and operates in four key areas. Semi Conductors is Samsung Electronics key area of functioning. Beside semi-conductors, Samsung electronics also deals in home appliances, consumer electronics and communication products and services. It is important to note that a considerable amount of Samsung Electronics operations occur through subsidiaries.
The sector of communication products deals with telecommunication products and services which are sold in the form of products and solutions to consumers. This sector of Samsung electronics manufactures an expansive variety of mobile phones besides network systems, computer systems, Music players and key phones amongst others. Telecommunication systems is a much larger combination of product and services that this sector provides.
Hitachi, Ltd., Hynix Semiconductor Inc., Koninklijke Philips Electronics N.V., Panasonic Mobile Communications Co., Ltd., LG Electronics, Inc., Motorola, Inc., Nokia Corporation, Photronics, Inc., Siemens AG, Sony Corporation, Whirlpool Corporation, Texas Instruments Incorporated.
Currently, Samsung Electronics holds a strong market position in the Korean mobile industry and the global mobile industry through an expansive product portfolio and a global reach. Continuous focus on research and development has allowed Samsung Electronics to engage in a large scale of operations. Samsung is engaged in numerous strategic alliances and is experiencing a positive market outlook with regard to global consumers if it continues to launch new products. However, product recalls and declining profit margins as a result of the increase in price of raw materials tends to come across as significant weaknesses.
Also, government regulations imposed by governments of different countries and patent based lawsuits tend to slow down growth in an already highly competitive business environment. When considered in a global perspective, Samsung Electronics faces off competition from.
Chapter 4 Findings and Analysis
4.1 Primary Findings
It was observed that the majority of the respondents were male as they constituted fifty seven percent of the total survey samples while female share of the respondents comprised of forty three percent of the survey sample. It is imperative to highlight at this point that the survey questionnaire was designed to allow the respondent to maintain a neutral stance in response to the inquired questions. However, it was observed that a very minute share of respondents chose to remain neutral in their responses and this share of respondents was not one that came forth as one that could possibly influence the findings if it took a position in the future.
It was observed that a majority of the respondents considered advanced technology to be the most imperative criteria when they consider making a purchase of a cell phone. The second most important attribute that the respondents considered imperative was price while the third most important attribute that the respondents considered imperative was design. Other notable preferences included user friendliness, level of advertisement and durability while considerably little significance was given to attributes such as level of availability in convenient locations and availability of unique functions.
4.1.1 Primary Findings for LG Mobile
In terms of style, it was observed that a total of fifty two percent of the survey respondents agreed to the hypothetical question that LG mobile phones are very stylish. However, forty six percent of the respondents chose to disagree while two percent chose to remain neutral in response to the question. In terms of pricing, it was observed that a total of fifty percent of the survey respondents agreed to the hypothetical question that LG mobile phones are reasonably priced. However, forty four percent of the respondents chose to disagree while sic percent chose to remain neutral in response to the question. In terms of presence of preferred added features, it was observed that a total of fifty eight percent of the survey respondents agreed to the hypothetical question that LG mobile phones incorporated preferred added features. However, forty once percent of the respondents chose to disagree while one percent chose to remain neutral in response to the question.
When questioned for durability, it was observed that a total of forty nine percent of the survey respondents agreed to the hypothetical question that LG mobile phones are very durable. However, another forty nine percent of the respondents chose to disagree while two percent chose to remain neutral in response to the question.
In the area of customer service, it was observed that a total of forty percent of the survey respondents agreed to the hypothetical question that LG mobile phones offer excellent customer service.
However, fifty seven percent of the respondents chose to disagree while three percent chose to remain neutral in response to the question. In the area of promotional activities, it was observed that a total of fifty eight percent of the survey respondents agreed to the hypothetical question that LG mobile engage a lot of promotional activities. However, thirty seven percent of the respondents chose to disagree while five percent chose to remain neutral in response to the question. In the area of advanced technologies, it was observed that a total of forty nine percent of the survey respondents agreed to the hypothetical question that LG mobile phones are in the forefront in the application of advanced technologies. However, fifty one percent of the respondents chose to disagree while none of the respondents chose to remain neutral in response to the question. In the area of user friendliness, it was observed that a total of forty four percent of the survey respondents agreed to the hypothetical question that LG mobile phones are very user friendly. However, fifty four percent of the respondents chose to disagree while two percent chose to remain neutral in response to the question.
With regard to availability, it was observed that a total of forty seven percent of the survey respondents agreed to the hypothetical question that LG mobile phones are available in very convenient locations. However, forty seven percent of the respondents chose to disagree while six percent chose to remain neutral in response to the question. With regard to advertisement, it was observed that a total of fifty two percent of the survey respondents agreed to the hypothetical question that LG mobile phones are widely advertise. However, forty five percent of the respondents chose to disagree while three percent chose to remain neutral in response to the question. With regard to the overall satisfaction of consumers with LG Mobile phones, it was observed that a total of fifty six percent of the survey respondents agreed to the hypothetical question that they are satisfied with LG mobile phones. However, forty two percent of the respondents chose to disagree while two percent chose to remain neutral in response to the question.
4.1.2 Primary Findings for Samsung Electronics
In terms of style, a total of fifty three percent of the survey respondents agreed to the hypothetical question that mobile phones manufactured by Samsung are very stylish. However, it was observed that forty six percent of the respondents chose to disagree to the hypothetical question whereas one percent chose to remain neutral in response to the question. In terms of pricing, a total of fifty six percent of the survey respondents agreed to the hypothetical question that mobile phones manufactured by Samsung are reasonably priced. However, it was observed that forty percent of the respondents chose to disagree to the hypothetical question whereas four percent chose to remain neutral in response to the question. In terms of preferred added features, a total of fifty nine percent of the survey respondents agreed to the hypothetical question that mobile phones manufactured by Samsung have many preferred added features such as games, ringtones and email. However, it was observed that thirty nine percent of the respondents chose to disagree to the hypothetical question whereas two percent chose to remain neutral in response to the question.
With regard to durability, a total of forty nine percent of the survey respondents agreed to the hypothetical question that mobile phones manufactured by Samsung are very durable. However, it was observed that forty eight percent of the respondents chose to disagree to the hypothetical question whereas three percent chose to remain neutral in response to the question. With regard to customer service, a total of thirty three percent of the survey respondents agreed to the hypothetical question that mobile phones manufactured by Samsung are followed by excellent customer service. However, it was observed that sixty five percent of the respondents chose to disagree to the hypothetical question whereas two percent chose to remain neutral in response to the question. With regard to sales promotional activities, a total of thirty three percent of the survey respondents agreed to the hypothetical question that Samsung are engages in extensive sales promotional activities. However, it was observed that forty four percent of the respondents chose to disagree to the hypothetical question whereas two percent chose to remain neutral in response to the question.
When questioned about advanced technology, a total of fifty four percent of the survey respondents agreed to the hypothetical question that mobile phones manufactured by Samsung are in the forefront to apply advanced technologies. However, it was observed that forty four percent of the respondents chose to disagree to the hypothetical question whereas two percent chose to remain neutral in response to the question. When questioned about user friendliness, a total of thirty seven percent of the survey respondents agreed to the hypothetical question that mobile phones manufactured by Samsung are very user friendly. However, it was observed that sixty percent of the respondents chose to disagree to the hypothetical question whereas three percent chose to remain neutral in response to the question. When questioned about availability, a total of forty six percent of the survey respondents agreed to the hypothetical question that mobile phones manufactured by Samsung are available in very convenient locations. However, it was observed that fifty percent of the respondents chose to disagree to the hypothetical question whereas four percent chose to remain neutral in response to the question.
In the area of advertisement, a total of fifty four percent of the survey respondents agreed to the hypothetical question that mobile phones manufactured by Samsung are widely advertised. However, it was observed that forty four percent of the respondents chose to disagree to the hypothetical question whereas two percent chose to remain neutral in response to the question. In the area of the overall satisfaction of consumers with Samsung Mobile Phones, a total of fifty eight percent of the survey respondents agreed to the hypothetical question that they are satisfied with the mobile phones manufactured by Samsung. However, it was observed that forty percent of the respondents chose to disagree to the hypothetical question whereas two percent chose to remain neutral in response to the question.
4.2 Interview Findings
Even though Samsung had been operating in the international market for decades, Samsung identified the early 1990s as the time when it acquired its desired recognition in the International market. However, it is necessary to note that Samsung, in its original form, was an export based company.
LG also came into being as a strong company that chose to engage in operations that involved extensive engagement in selling to the international market. However, LGs perception of its international presence was found to be similar to that of Samsungs since it was not until the mid 1990s that LG acquired the brand name from which it is now known across the globe.
Samsung identified its core competitiveness as its capability to bring innovative products and services to its consumers through joint ventures that allowed it to offer its consumers augmented products while LG identified its core competitiveness as its ability to develop products aligned with ever changing consumer demand. Therefore it was observed that Samsung finds its competitive advantage in its augmented products while LG finds its competitive advantage in technological innovation.
In response to the question pertaining to the kinds of obstacles faced by the companys in the industry, it was observed that both Samsung and LG experienced intensive competition as one of the most significant obstacle in the industry. It was perhaps because of the same reason that both companies identified continuous innovation and market penetration measures as key success factors in the global mobile phone industry. Also, both companies expressed the necessity of the realization of changing consumer demand as an imperative element of success.
Samsung identified LG as its main competitor in the Korean market while LG identified Samsung and the KT Corporation as major competitors who were most innovative and competitive. Both companies expressed that they still have a long way to go to acquire the degree of market share that they desired.
4.3 The resource based view for LG
Resources and related elements singled out for the sake of this Resource Based View are ones that were found to be favourable to the subject companies. As criteria, it was established that only those resources can be acknowledged in the Resource Based View that provide a competitive advantage to the companies and serve to reduce weaknesses. The resource has to be of an un-substitutable nature and is rare such that it is not easily available to acquire.
4.3.1 Physical capital resources
LG is officially located in numerous locations across the globe however LG has a strong presence in Korea that shows the degree to which LG chooses to concentrate its efforts and establishment on the Korean market. Its locations include Seoul, Busan, Gwangju, DaeGu, Daejun and Incheon (Data Monitor 2009). It is imperative to note that these locations do not represent LGs areas of operations but the central nerves of its global business.
4.3.2 Human capital resources
The LG group employs over 177,000 employees across the world (LG Corp., 2010). LG Telecom Korea employs 4987 personnel (LG Telecom 2009). LG gives a considerable degree of attention to the acquisition of talented human capital. Personnel once recruited are subjected to extensive and continuous training in order to ascertain that their utility to the company continues to increase with time. To LG, the development of human capital is more a strategic question than it is a question of filling positions with suitable personnel (Business Standard, 2010). LG ensures that personnel once hired are subjected to the degree of HR enrichment that is required to ensure that they give perform their tasks with dedication and sincerity to the company.
4.3.3 Organizational capital resources
LG gives a considerable degree of attention to organizational capital resources and much of the organizational capital is channelled towards the assurance of swift completion of internal procedures. For instance, in 2009, LG employed an extensive renovation of its internal functioning on a global scale in order to bring down the time required to carry out the global accounting procedure (Mitchell 2009). Also, LG diverts organizational capital towards the reduction of costs incurred in the maintenance of the ERP system. Similar measures include those such as the reduction of repetitive work and the assurance of aligned and coordinated team effort in internal processing of administrative and accountancy processes. Measures such as software implementation for the purpose of bringing are commonly performed in LG in this regard.
4.4 The resource based view for Samsung Electronics
4.3.1 Physical capital resources
Samsung has a strong and formally established presence ten different locations around the world. These include Budapest, Texas, Suwon Gyonggi-do, Noida, Jiangsu, Kwangsan-gu, Moscow, Tokyo, Barcelona, Cleveland, Amsterdam and Tijuana (DataMonitor 2009).
4.3.2 Human capital resources
Samsungs human capital resource is perhaps the most expansive part of Samsung Electronics. Samsung Electronics chooses to concentrate extensively on the acquisition and retention of capable human capital. Samsung Electronics concentrates the most on personnel employed in the area of research and development in order to ensure that they are fully equipped and excel in areas of technological innovation.
4.3.3 Organizational capital resources
Samsung Electronics focuses on research and development to carry out expansion in product range. Most of Samsung Electronics organization capital is channelled towards the development of ideas and the materialization of concepts that pertain to new innovations in its products.
Chapter 5 Conclusions and Recommendations
5.1 Summary of findings
The research was carried out to determine the key success factors of Korean mobile manufacturers that have led them to acquire success in the international market. The research initiated by establishing a background through the introductory chapter and continued by establishing the aims and objectives of the research. The next stage dealt with the establishment of the research methodology in which a thorough elaboration on the significance of the research methodology to the research and the adopted research methodology was provided. Once the research methodology had been established, the research proceeded to carry out a review of the literature available on the subject of the research. Numerous publications and official reports were consulted for the purpose of the writing of this literature review. The literature review allowed for a comprehensive understanding of the numerous intricacies of the Korean mobile phone industry to be developed. The industry was analyzed in terms of its domestic trends and in terms of a global perspective. This was followed by establishing profiles of Samsung and LG in terms of their presence as Korean mobile phone manufacturers. Once this has been done, the next step was to implement the research methodology and collect the data. The findings from the survey and interview were presented in this chapter and a resource based analysis of Samsung and LG was carried out as well.
In response to the survey questionnaire with regard to the responses received for LG Mobile, the majority of the respondents believe that LG cellular phones are stylish and are priced reasonably. The majority of the respondents who answered for LG Mobile also expressed that LG Mobiles incorporate preferred features and are widely advertised. LG Mobile was also observed as one that exercises extensive promotional activities. However, a majority share of the respondents did not consider LG Mobile phones as ones that were complimented with excellent customer service or that were in the forefront of innovation and technology. Also, most of the respondents did not consider LG Mobiles to be highly user friendly. Nonetheless, the overall satisfaction level for LG Mobiles was observed to be of a positive nature.
In response to the responses received for the section of the survey questionnaire designed for consumers of Samsung Mobile Phones, it was observed that majority of the users of Samsung Mobile Phones considered Samsung Mobile Phones to be stylish and reasonably priced. The majority of the respondents expressed that Samsung Mobile Phones are equipped with preferred features and are in the forefront of technological development in their phones. It was observed that the majority of the respondents consider Samsung Mobile Phones marketing and promotional strategy to be one that is aggressive in nature and therefore incorporates wide advertisement.
Most of the Respondents found Samsung Mobile Phones to be weak in the areas of customer service and convenience in terms of the offered user-friendliness. A majority share of the respondents also expressed that Samsung Mobile Phones are not available in convenient locations. Nonetheless, it was observed that the consumers are satisfied with Samsung Mobile Phones.
5.2 Concluding Remarks
It was observed through this study that the key reason because of which Korean Mobile Phone companies have managed to acquire success in the international market is technological innovation. It was observed through the literature review and the primary findings that consumers give a considerable degree of attention to the functionalities that a cell phone incorporates and consumers demands addition functions that are customizable and of an easy-to-use nature in their functioning. It is evident that the extensive engagement in research and development in CDMA technology carried out in the Korean Mobile Phone industry allowed the industry to acquire a competitive edge in the global mobile phone industry. This edge later translated into the ability of manufacturing advanced mobile phones.
With regard to the particular success factors that dictated the success of Samsung and LG in the international market, it was observed that Samsung and LG have succeeded in provided consumers with reasonably priced stylish phones that provide users with the additional features that they demand. It was also observed that Samsung and LG both engage in extensive promotional activities which came forth as a factor of undeniable importance for both companies.
It was observed that both Samsung and LG choose to give a considerable degree of attention to ensuring that their product line continues to develop in accordance with the evolving nature of consumer demand. Another attribute observed to be common between Samsung and LG was the fact that both chose to ensure that the consumer was educated about product innovations through continuous and aggressive promotional activities. The Resource Based View, much like the interview, served to prove that Samsung and LG both give considerable relevance to their human resource and consider their human capital to be of strategic relevance to their performance and eventual success in the industry.
5.3 Recommendations for further research
The research, although not meant to be an exhaustive one, was one that touched numerous areas pertaining to the mobile phone industry nonetheless. It is for the same research that it was felt that it felt that there are certain areas that are although not within the scope of this research, are ones that merit research in the future. One such area is that of the implication of the Smartphone on Korean mobile phone manufacturers. Even though this research was not responsible for channelling time and energy towards this area, it was observed that there was a lack of literature on the implications of the Smartphone on the Korean Mobile Phone Industry. This research therefore recommends that research is carried out on the technological trends in the Korean Mobile Phone industry and the degree to which the Korean Mobile Phone industry has realized the significance of Smartphones.
