In the mid-1990s, one of the most significant threats facing Samsung was deterioration in low labor costs as compared to competing Southeast Asian countries. China had entered the competition for manufacturing of color TVs at lower costs. At the same time, the Korean government was discontinuing subsidies and export credits to Korean manufacturers.
The Chinese color TV market was the second largest behind the US and third largest behind NAFTA and the EU with respect to unit sales. With the increase in demand for color TVs in China, Samsung China Headquarters (SCH) has been created (in 1995). At this time, Samsung China currently has too many separate business strategies adopted by individual business units. The president is faced with the challenge of integrating the various business segments into a single corporate entity. He is also confronted with an unclear market segment and product line in the context of increasing competition from local producers in the low- and medium-sized color televisions and Japanese competitors in the high-end markets. Moreover, SCH faces intense competition in the color TV market. A premium-priced brand would not sell in large volumes.
The Color TV Industry – Porter’s Five Forces Analysis
The color TV industry witnessed an intense rivalry among the firms competing in China. The Japanese firms, Sony and Matsushita, dominated the high-end market with a combined market share of 75% in this segment. About 20 indigenous firms focused on the low-end market segment. Due to their low technology, insufficient capital and lack of promotion efforts, the Chinese firms could not compete with the foreign firms in the large screen color TVs.&nb ...