In this report the analytical model that will be used to analyse the five key environmental drivers is PESTLE. This report will be including an analysis of Samsung Mobile’s macroenvironment. Samsung is a multinational conglomerate company, its headquarter located in Samsung Town, Seoul. Their vision is to inspire the world and create the future. The report will be explaining and analysing Samsung Mobile’s key environmental drivers which are Political, Economic, Socio-Cultural, Technological, Legal and Ethical factors.
Key Environmental Drivers:
Political factors can have a deep and direct or indirect impact on businesses. One of the Political factor that effects Samsung is the one of the direct impacts that political factors have on businesses is in the form of regulation or trade relationship between countries. For instance, if two countries have good relationship, then a business will have less problems doing business in the other country and vice versa. In some cases, if the relationship between the two countries isn’t that good the reasons could be that one country may find the business environment less conducive or profitable. If Samsung does not have good relationships with other countries they will be at a loss in that country as the country would not allow Samsung to make a lot of profit this could be emphasised by reducing the amount of manufacturing products, the number of branches in that country which will cause Samsung’s expansion in that country. One of the big factors is the Politics, this can affect the business in many ways one of which is that a political disruption can make a mess of the operation and supply chain which results is disrupted business. The reason of a business disruption or a business loss is due to political turmoil. Samsung’s business is spread across 80 countries and any kind of geopolitical turmoil in any of countries will result in a loss. For example, if there is a geopolitical turmoil in India, Samsung will be making less profits in India, which will lead into reduction in profits as India is one of the most populated country. Moreover, Terrorism can also affect Samsung as the fear of terrorism materializes in several areas. Samsung will be make less profits in these areas therefore all these factors can have a negative impact on Samsung Mobile. (Pratap, 2018)
Strategic Response to Political Factors:
One of the strategic response that Samsung could do to prevent weak relationships with other countries is by ensuring they have discounts during their festival times which will show the country that they respect their beliefs. For example, In India Samsung could have discounts on their phones or sim contracts during Diwali and other major festivals that the country celebrates.
One of the biggest economic factor that could impact Samsung are the exchange rate in foreign countries. Currency exchange rate fluctuations could impact the company’s consolidated balance sheet, cash flows and income statement when foreign currencies are exchanged or translated to Korean Won. The company’s attempts to reduce the effect of exchange rate fluctuations through a variety of hedging activities may not be sufficient or successful, resulting in an adverse impact on its results. (Eds.a.ebscohost.com, 2018). Another economic factor that is critical for Samsung is that opening up markets in developing world has meant that the company has expanded its global footprint. However, this factor can affect the business as the ongoing global economic crisis has severely diminished the purchasing power of consumers in many developed markets forcing Samsung to seek profitable ventures in the emerging markets. One of the crucial point is that the macroeconomic environment in which Samsung operates globally is beset with uncertainty and volatility leading to the company having had to reorient its strategies accordingly. (Managementstudyguide.com, 2018). Another economical environmental driver that impacts Samsung is that their sales fell in some quarters in 2016 due to growing volatility in some economies, notably China, as well as in the turmoil in currency and financial markets. For companies like Samsung, the economic factor is one of the most important dimension as the more the states will develop the more chances there are for the business to expand which will lead them to open its new units in the newly developed zones. If a country has a positive GDP it will mean that people have more income and will be prone to buy the latest models of the phone. In this way the profit of the company increases and so does the expansion of the business globally. (Marketing Dawn, 2018).Economic Factors have a strong impact on international businesses like Samsung. One of the impact was when changes in the US monetary policy, higher volatility in the emerging stocks markets as well as constant fluctuations in the exchange rates, even the Korean economy faced a lot of difficulties like higher household debts and the restructuring of shipbuilding and steel industries. Despite these economic difficulties, Samsung had a huge sale of KRW 200.7 trillion. This emphasises that rising economic activity can be highly profitable for Samsung, whereas falling economic activity could be really bad. (Pratap, 2018)
Mintel is market research company based in London. According to Mintel there is a behavioural shift in the way customers are using smartphones that is progressively causing tablets to lose their Unique Selling Point. The rise of phablets which are smartphones bigger than 5 inches has meant that were more prone to use their phones as they would perform more complex and time-consuming tasks. These time-consuming tasks could be shopping online, playing games or watching a video. This had lead to cannibalisation as the phablets were taking over tablets, which explains why tablets sales have been declining in the last 2 years for phone companies like Samsung. (123writing.com, 2018). Socio cultural factors can also have a deep impact on business such as Samsung as changing trends can either lead to a rise in profits for one business or fall for another business. As these trends change they affect the sales of businesses. In terms of marketing socio-cultural has an important value as brands like Samsung have to take care of these social factors in their marketing efforts. (Pratap, 2018). The social environment is one of the factor that has an impact on operational businesses like Samsung. These effects consist of customs, practises and traditions which varies from one environment to another. Samsung has succeeded in overcoming the social challenges which are a big threat to the success of the company by constantly incorporating itself into new markets. Samsung has incorporated the approach of thinking globally while staying locally with the aim of keep socio-cultural factors into consideration that influence their business. Another soci-cultural factor that impacts Samsung is the rise in information age which has made the telecommunication industry in which Samsung operates to be more vital for people both in business and pleasure. Samsung needs to ensure they have the latest form of technology in their phones as the society is becoming more receptive to the advancements in technology, especially the smartphones. (Academicscope.com, 2018)