Introduction
Samsung is one of the leading global producers of electronic devices. Lee Byung-Chull founded the company as a grocery trading store in 1938 in Korea. At that time, the company majored in selling noodles and other goods produced in various parts of its city of origin and would later export them to different parts of Chinese provinces (Zhou, 2020). The company name come from the Korean word for three stars. The company would come later, in 1969, to enter the electronic market, where it produced its first black and white television. Additionally, it would start producing its galaxy series phones around the 2000s. The company’s technological smartphone innovation has led to the growth of the company’s sales of mobile devices worldwide.
Samsung Principle goods and services
Samsung is one of the most diverse companies in the world, offering a wide range of products and services in multiple industries, including consumer electronics, home appliances, IT, construction, and healthcare (Zhou, 2020). One of Samsung’s major product categories is consumer electronics, which includes smartphones, laptops, televisions, and other personal electronics. The corporation is well-known for its Galaxy line of smartphones, which are widely regarded as some of the best in the market. Samsung also offers home appliances such as refrigerators, washing machines, ovens, and air conditioners. These products are designed to make everyday life easier and more convenient and are known for their quality and reliability. Samsung has also played a major role in the IT industry, providing products such as solid-state drives (SSDs), memory chips, and processors.
Global Market Share
In the smartphone market, Samsung is one of the principal players, with a market share of around 22%. The company’s Galaxy line of smartphones is widely viewed as one of the preeminent in the market, and it has a strong presence in both mature and emerging markets. Samsung has attained this success level through its innovative products, effective marketing, and strong distribution networks. Additionally, Samsung has a significant presence in the global TV market, with a market share of around 20%. Furthermore, Samsung has a solid presence in the home appliance market, with a market share of around 15%. Samsung is a key player in the memory chip market, with a global market share of around 40%.
Geographical Location
The company has set-ups in many countries worldwide, including North America, Europe, Asia, Africa, and South America. In North America, for example, the company has a strong presence in the United States, with its headquarters in Ridgefield Park, New Jersey. In Europe, Samsung has a strong presence in countries such as the United Kingdom, Germany, France, and Spain. The company’s operations in these countries include research and development centers, manufacturing facilities, and sales offices (Zhou, 2020). Asia, the birthplace of Samsung, continues to be one of the company’s largest markets. In addition to its headquarters in South Korea, Samsung has operations in countries such as China, India, Japan, and Singapore. Africa is a growing market for Samsung, and the company has established a strong presence in countries such as South Africa and Nigeria. In South America, Samsung operates in Brazil and Argentina, focusing on growing its business and serving consumers’ needs.
Competitors
Some of its main competitors include Apple: Apple is one of Samsung’s biggest competitors in the smartphone and consumer electronics industries. The company is recognized for its iPhone and iPad products. Huawei is another competitor, a Chinese multinational technology company that is quickly becoming one of Samsung’s biggest competitors (Cheng & Lee, 2014). Additionally, Huawei is known for its smartphones, laptops, and networking equipment, and it has a large and growing market share in many countries worldwide. Sony also competes with our focal company as it offers a wide range of products, including televisions, gaming systems, and cameras. It has a strong brand reputation and a large and loyal customer base.
Activity Based Costing
Activity Based Costing (ABC) is a method that assigns indirect costs to specific products or services based on their use of specific activities. Samsung could benefit from implementing ABC in several ways (Blocher et al., 2019). Numerous factors have informed my decision. These factors include complex products and services offered by Samsung in its wide range of products and services; thus, ABC can help the company understand the costs associated with each one more accurately. Increasing competition, thus necessitating Samsung needs to understand the costs associated with each product and service to remain competitive. Additionally, the need for improved decision-making in which ABC can provide more detailed and accurate cost information that can help Samsung make better decisions about pricing, product design, and resource allocation.
This approach may have its ramifications when implemented by the company. These ramifications include improved cost control. Samsung can better understand the costs associated with each product and service and make decisions to control costs and improve profitability. Better product pricing. Samsung can make better decisions about pricing, which can help improve profitability and competitiveness. Additionally, it can lead to improved product design. With the company understanding the costs associated with each product and service, it can make decisions about product design that can help reduce costs and improve quality. Distribution of costs using ABC for Samsung can be done by identifying the activities involved in producing each product and service, determining the costs associated with each activity, assigning the costs of each activity to the products and services that use the activity, and calculating the cost of each product and service.
Production Cost of Cellphones
The production of cell phones encompasses a multifaceted process that comprises the procurement of materials, assembly, testing, and packaging. These numerous stages of production carry costs, which are passed on to the consumer in the form of the final product price (Lee & Jung,2015). Materials costs are one of the major contributors to the production costs of cell phones. Samsung uses high-quality materials in the production of its cell phones, including apparatuses such as displays, processors, memory chips, and batteries. These apparatuses are sourced from numerous providers, and their costs can fluctuate based on market demand and other factors. Additionally, the assembly process of cell phones is also a complex undertaking that requires skilled labor, thus increasing labor costs and contributing to a significant portion of the overall production costs, as wages and benefits must be provided to the worker. Moreover, packaging and shipping costs must also be considered when calculating cell phone production costs. Samsung uses high-quality packaging materials to safeguard the cellphones during shipping, and the cost of shipping and delivery must also be considered.
The rising cost of Component Costs
For the production of quality products, the company must source components that are of high quality. Like many other technology companies, the company faces a new challenge: rising component costs for its cell phones (Lee & Jung,2015). The company has thus implemented various strategies to respond to this increase. These challenges include optimizing its supply chain management. The company has been securing long-term contracts with key suppliers to lock in stable prices for critical components, which can help mitigate the impact of price fluctuations. Additionally, the company has been investing in research and development to find alternative materials and technologies that can reduce the cost of production. Lastly, Samsung has also been concentrating on cost-saving procedures, such as reducing the cost of production by restructuring its processes and reducing waste.
Standard Cost System
Like many other large businesses, Samsung could profit from utilizing a standard cost system in its production process. A standard cost system is a management tool that helps companies control and manage their costs by setting preset standards for each component of their production process (Schroeder et al., 2022). Samsung would profit from this method in its production process. This fact is backed by various factors, which include the requirement for more correct and timely cost information, the desire to improve efficiency and reduce waste, and the need to be more competitive in the global smartphone market. By setting standards for each element of the production method, the business could better control and forecast its costs, thus improving performance. Additionally, consequences of amount, charges, and alterations are key to understanding the profits of a standard cost system. By setting standards for each element of the production process, Samsung could better control and predict its costs, which can help to improve its overall business performance. Additionally, using a standard cost system, Samsung could better control and predict its costs, which can help advance its effectiveness in the market.
Cost Plus concept and Future Plans
Samsung could benefit from using cost-plus concepts in product pricing as it would allow the company to more precisely determine the price of its products and ensure that it can maintain its profit margins. This approach defines the cost of producing a product and then adds a markup to that cost to generate a profit (Schroeder et al., 2022). One of the main features that would affect Samsung’s use of cost-plus pricing is the company’s plans, such as consolidation, expansion, or downsizing. For example, if the company is forecasting to expand into new markets or introduce new products, it would be significant to clearly understand the costs related to those creativities to make knowledgeable pricing decisions. This is where cost-plus concepts could be used to help Samsung control the price of its products and ensure that it is able to maintain its profit margins. In terms of decision-making, cost-plus concepts could help Samsung make knowledgeable choices about pricing by clearly understanding the costs associated with each product. These statistics would allow Samsung to set prices that are in line with its costs and warrant that it can uphold its profit margins. Additionally, cost-plus concepts could help Samsung determine the most efficient production processes. By clearly understanding the costs associated with each product, Samsung would be able to recognize areas where it could reduce costs and improve efficiency. This information could then inform decisions about the company’s production processes, such as which suppliers to use and which production methods to adopt.
In conclusion, Samsung is a Korean multinational company with various interests in several products and services. The company benefits from various approaches to controlling and managing costs, such as activity-based costing, standard costing, and the cost-plus concept. Additionally, the company has implemented various strategies to respond to the rising cost of components in the industry. The cost-plus concept can be important in determining costs related to products, thus making an informed decision.
Reference
Blocher, E. J., Stout, D. E., Juras, P. E., & Smith, S. (2019). Cost Management (A Strategic Emphasis) 8e. McGraw-Hill Education
Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2022). Financial accounting theory and analysis: text and cases. John Wiley & Sons.
Lee, K., & Jung, M. (2015). Overseas factories, domestic employment, and technological hollowing out: a case study of Samsung’s mobile phone business. Review of World Economics, pp. 151, 461–475.
Zhou, Y. (2020). The Samsung story.
Cheng , J., & Lee, M.-J. (2014). Samsung’s New Challenge: Rising Component Costs. https://www.wsj.com/articles/SB10001424052702304163604579531020479990260.
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