Three Alternative Strategies For Samsung Essay Example

a Chinese partner is uncertain.

If Samsung cannot solve the Intellectual Property rights problem mentioned earlier, it will face difficulties. Another issue is the coordination and culture problem that arises when building plants in China and abandoning the integrated Korean production site. In Korea, close collaboration has enabled quick resolution of design and process engineering problems. The third and final strategy is for Samsung to maintain its current position until it encounters a real threat from a competitor. However, we suggest reducing the production of outdated technology DRAM chips and instead concentrating on the high-end memory market. Furthermore, increased investment should be made to advance Flash memory development.

Exhibit 5 reveals that the low-end DRAM market (SDRAM ; DDR DRAM) is saturated, while Samsung dominates the high-end DDR2 SDRAM market. The entrance of Chinese company SMIC adds even more competition to the low-end market, reducing profit margins. It is advisable to invest more into flash memory, which is closely tied to the thriving markets of digital cameras, digital phones, and LCDs. The "Hwang's Law" suggests that flash memory density doubles every 12 months, making it a more appealing market compared to DRAM. Considering the pros and cons of partnering with a Chinese company, we conclude that even if the negative consequences of a failed partnership are minimal, they outweigh the advantages. Additionally, Samsung's technological superiority and superior performance against competitors makes the strategy even riskier. Therefore, the opportunity cost of partnering is substantial.

Our recommendation is to proceed with strategy three, which both strengthens Samsung's competitive advantage and adjusts for the decreasing margins in the DRAM market. This approach can potentially avoid the IP rights problem and avoid

hampering one of Samsung's key competitive advantages at a time when it does not need to do so.