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497
Session 9: Samsung
| Question | Answer |
|---|---|
| Semiconductor products are classified into two broad categories of chips: | Logic chips used to process info and control processes (e.g. Intel CPUs) Memory chips store info More emphasis on production process technology than product design for memory chips, More emphasis on product dsgn for logic chips |
| Semiconductor Product Mix 4 | 1. Frontier Products: cutting-edge tech 2. Mass-Market Products 3. Legacy Products 4. Specialty/Niche Products |
| Chinese Threat | -Cheap finance, inexpensive, high quality engineers -SMIC focusing on most popular product (256Mbit DDR SDRam -Positioned at low-end with respect to using older tech Can afford to lose for several yrs Low cost strategy |
| How would you measure the importance of Samsung’s reputed low-cost advantage? | cost advantage of $1.39 |
| Differentiation Advantage | In 2003, Samsung enjoyed a price premium $0.72 |
| Samsung's Dual Adv | Samsung is (roughly) driving two thirds of its profit from being low-cost, and the other one third from being differentiated |
| Does Samsung’s low-cost advantage derive from cheap inputs? | Samsung’s low-cost advantage does not derive from cheap finance compared to Chinese counterparts But they are productive with labor. Their labor cost per unit is .20 lower |
| Cost Advantage Per Unit | [(Comp input cost per unit)/(Samsung's Input Costs per unit)] x[(Samsung's Productivity)/(Comp productivity)] |
| What is Samgsung's primary source of cost advantage | higher productivity. China has biggest adv in labor costs |
| Samsung’s Differentiation Strategy Is Samsung’s differentiation strategy more important? | Operating margins on Samsung's frontier/specialty products are quite large but they are a rare company that achieved both low-cost and highly differentiated products on a global scale |
| Samsung Style, if they are both low-cost and differentiated how do they do both? | 1. Favorable access to local labor market 2. Collocation of R&D and production creates synergy 3. Performance based incentives 4. Encouraging fierce debate and post debate unity (corporate culture) 5. Rapid decision making |
| Why can’t more firms in other industries do the same? Big Takeaway: if there are no trade-offs, companies should try to gain dual advantage. The problem is: | Most industries have trade-offs, dual advantage can be temporary Most advantages based on scale economies, favorable access to human capital, and operational effectiveness can be imitated in the long run |
| China is a (blank) threat to Samgsung | real threat as a low cost competitor |
| Samsung has dual advantage: more advantage from | low cost |
| Only when is it possible to secure a dual advantage | When a differentiation adv is combined with large-scale investments in productivity |
Created by:
oechsel