SAMSUNG PESTEL ANALYSIS
Samsung is one of the most well known electronics brand of the world. The market leader has continued to retain its market share for 10th consecutive year. Apart from several other market leading products, the brand is known for its SUHD televisions. The brand is also known for its IT and mobile communications businesses as well as medical and diagnosis equipments. The brand is present in 80 countries and employs more than 325,000 employees. Samsung also invests a very large sum in research and development of nearly 1.8 trillion. Samsun is a South Korean multinational company that was founded in the year 1969. In the recent period it has focused on making products that help people lead a better and smarter lifestyle. However, because of being operational in a global market, the brand is also subject to various kinds of pressures. This is a PESTEL analysis of the brand analysing how the brand is affected by the political, economic, social, technological, environmental and legal forces.
Political factors can have a deep and direct or indirect impact on businesses. The direct impact is felt in the form of regulation or trade relationships between countries. If two countries have good relationship, then a business from one country finds it easy to do business in the other and vice versa. In case relationships between two nations are strained then the impact can be bitter on trade too. In such a case a business from one country may not find the business environment in the other very conducive or profitable. Politics can affect business in many other ways too. Political disruption can disrupt the operations and supply chain and result in disrupted business. Any kind of political turmoil can result in business disruption and loss of business. Samsung’s business is spread over 80 countries and any kind of geopolitical turmoil in any of the countries results in loss. Moreover, the fear of terrorism also looms large in several areas. All these factors can have a negative effect on business. However, if the political environment of a market is good then that can be highly profitable for businesses.
Economic factors too have a deep and direct impact on the international businesses. 2015 was an year of economic uncertainties globally. The changes happening globally like changes in US monetary policy, higher volatility in the emerging stock markets as well as constant fluctuation in exchange rates. At the same time, the Korean economy also faced severe difficulties like higher household debts and the restructuring of shipbuilding and steel industries. However, despite these economic difficulties, Samsung had sales of KRW 200.7 trillion (South Korean Won). Such businesses on the one hand are impacted by economic forces and on the other hand they have an important impact on the world economy. These companies employ thousands. The condition has changed a lot since the recession and the level of employment and economic activity around the globe has gone up. This is a positive sign for international businesses like Samsung. When level of employment is high and people have enough dispensable income, they spend on electronics and entertainment. In this way, rising economic activity can be highly profitable for businesses like Samsung and falling economic activity bad.
Apart from others, the socio cultural forces also have a deep impact on businesses. Changing socio cultural trends can lead t a rise in profits for one business and fall for another. As these trends change they affect businesses and their sales. Moreover, these socio cultural factors have an important value in terms of marketing. Brands have to take care of these cultural forces in their marketing efforts. The socio cultural trends are favourable for Samsung and the brand is investing in the smart phone technology. Especially, its Galaxy series has been quite famous and popular. The demand for large screen smart phones and mobile gadgets has grown and Samsung’s smart phones and tablets have acquired quiet high popularity in most markets including the Asian markets. In this way, socio cultural factors can have both direct and indirect impact on businesses and their profitability.
Technology has come to play and increasingly important role in the context of business whether for the technological or the other brands. In the 21st century from operations to marketing and customer service, technology affects quality in every area. Every brand is in a race to adopt technology for attracting and retaining customers and to cast a better impression than the competitors. Samsung is itself a technology company that makes electronics, smart phones and other technological equipment including medical equipment. Apart from that it also makes use of digital technology for marketing and better customer service. The role of technology in its business is very big and the brand also makes heavy investment in research and development. Its SUHD televisions have become a special attraction. In this way, you can see that technology has helped Samsung overcome competitive pressure and maintain its position in the market effectively.
Sustainability is not just a trend but has emerged as key focus area for businesses which are not just working to save energy and minimize their carbon footprint but also to protect the environment. Apart from managing and reducing energy consumption, the brand has also focused on managing water resources risks. The brand has also enforced a chemical substance management policy. Samsung has also enforced a pollutant management program. In several other areas too, it has taken firm steps in the direction of sustainability.
Legal risks also abound for Samsung and these risks can be quite big and severe. From employment to environment and tax related laws, there are many that Samsung is required to follow and which can affect its profitability. Apart from its own operations, Samsung also ensures that its suppliers also abide to law and remain compliant in labor, operations and the other areas. Legal tussles can be quite costly and fine in any area can range in millions and therefore cause huge losses for any business. Samsung has framed and enforced rules and regulations to ensure that its staff remains compliant and no laws area violated at the workplace. In this way, you can see law has a major and direct impact on businesses and compliance risks can be highly costly.