Question

1. When considering the company's supply chain, explain the degree to which Samsung controls its supply chain and distribution.
2. Then explain the degree to which Samsung engages in related and unrelated diversification

Answer 1

When considering the company's supply chain, explain the degree to which Samsung controls its supply chain and distribution.

Samsung completely controls its production, suppliers and channels. It has complete degree of control over production so that the risk of creating future rivals due to sharing technology with suppliers is negligible. This is achieved as almost of components and parts are produced by Samsung's subsidiaries. Samsung key of success is technology improvement and managing production network. Samsung operates from 2 nodes and all operations are run from single point globally. Samsung keeps most of the process in-house. Samsung is involved in the whole production process, from design, manufacture of components and parts to final product assembly. Samsung is able to control all aspects of its production from chips, to screens, to software, to assembly.

Samsung has a philosophy of fairness, openness, and win-win cooperation for suppliers and distributors adhering to ‘Samsung Supplier Code of Conduct’.

In terms of distribution it varies from location to location depending on demand. Some places there is a single distributor taking care of whole region. In some areas multiple distributors are present to cater market demand. Samsung has also started retail shop or franchise and selling their product directly.

Then explain the degree to which Samsung engages in related and unrelated diversification

Samsung is highly engaged in continuous research development based at South Korea. Samsung Electronics started as a TV producer than memory and hard drives for personal computers. Nowadays, Samsung Electronics is a global IT leader. Samsung Electronics consists of three main divisions: Consumer Electronics, IT & Mobile Communication, and Device Solution. Samsung is also venturing into healthcare sector which is unrelated diversification.