International Trade Of Samsung Electronics Economics Essay

foreignist Trade Of Samsung Electronics sparings Essay global diversification is very serious for an foreign enterprise, it is a corpo post strategy. It is designed by higher sales of unused products and in the sensitive commercialises, and increase profitability. Diversification faecal matter occur at the business unit level and corporate level. In this essay, we will focus on the advantages and disadvantages of transnational diversification for the lodge. At present, m all companies ar outside(a) based which authentic their business to the diametric countries and regions, of course, they besides facing a lot of attempts and opportunities, in the fol miserableing, I will analyze the advantages and disadvantages of exploring business outside(a)ly. This process involves polar strategies. For the different sectors of the business, the different countries essential be developed and implemented. The wariness of the high message of these strategies must be develop ed, the huge luck to enter advanced apportion of business regardless of the implementation of the big challenges and difficulties, cross-b separate diversification to attract the caller-ups long-run growth, and growth in existing business on the grocery in former(a) countries.IntroductionInternational diversification is a basic and the much or less important principles in the business valet de chambre. In the past decade, the usurpation of the honour of corporate diversification has become the focus of attention of the research signifi crumbtly. The capacious majority of this article has focused the manufacture on this issue. Diversification is a strategy to increase profits for selling the new products in new merchandises of a corporate. In fact, all strategy has its advantages and disadvantages, one of the companys management stave will be used to succeed different purposes of these advantages and disadvantages. Diversifying globally is a concept to nurture the m easure out of the connection, which is a source of foreign manoeuvre enthronisation (FDI). Enterprises to invest overseas, the use of company assets transferred abroad, reached the economies of sub due and the economies of scope. Through the available flexibility associated with a multinational corporate system, value creation from international operations stop in addition be created. Now a day, international environment is really uncertain, an internationally diversified network bottom of the inning gives the opportunity to the firm to exploit market conditions. Diversified corporate marketing, it bathroom be used in a developed market, the establishment of new enterprises, so as to increase the profits of the company. Also, it freighter be used to transform the investment of the companys assets, in cabaret to prevent the downturn in the market of their uncouth. There are two character of diversify, the first one is the infixed tuition, by means of the internal ex pansion and diversification of mathematical product, creation of different products and brands. It can be achieve the perfect internal culture. On the other prepare across is the external development, external expansion through acquisitions or strategic alliances to rear the visibility of the enterprise in the global market, to expansion of profits and achieve the international standards. In the following, consumer electronics giant Samsung Electronics is taken an example to illustrate the advantages and disadvantages of international diversification.Case field of view Samsung ElectronicsConsumer electronics giant Samsung Electronics is an international corporate, It is the flagship subsidiary of the Samsung Group. Samsung Electronics the largest electronics industry in South Korea, engaged in liquid crystal display, semi contributeor, mobile auditory sensations, digital media business, it is the biggest sales of the electronics industry manufacturers in the worth. Inspire the World, Create the Future. is the vision of Samsung Electronics. In the mobile phone market, Samsung Electronics is the number one of the market share in the world, successfully acquire a traditional mobile phone manufacturers much(prenominal) as Nokia, Motorola, Sony. Sights on future market trends to the touch smartphone, Samsung also argue to launch the products corresponded to the contentions, much(prenominal) as Galaxy S2, to compare with the biggest adversary orchard apple trees Iphone.3.1 International trade of Samsung ElectronicsInternational trade across borders the transactions of goods and services, general import and export trade, therefore, it also call import and export trade. International trade directly fall the complete(a) domestic product (GDP), it is very important for many countries it can adjust the economic structure of the land and increase the fiscal revenue.In order to reduce the issue monetary value, Samsung Electronics employ global procurem ent, they looking for the say-so suppliers, is committed to enhance product development, corporate culture, and contributions to the global society. Samsung Electronics and Suppliers as swell up as the manufacturers can cooperate to shed the best product. Global procurement not only can reduce the production salute, it also can enhance the productivity. Samsung Electronics has an absolute advantageover another in producing a good in Korea and the other country. It can break that good using fewer resources than another country. Samsung Electronics can jazz the absolute advantage when they conduct the international trade. In additional, Samsung Electronics conducted international trade, which also produced of foreign direct investment (FDI), FDI is direct investment into production in a country by a company in another country, Samsung Electronics investment in china or the other country, the both countries have brought some Advantages.Now, we can give tongue to about what is t he advantages and disadvantages of Samsung Electronics when the corporation diversifying internationally.Advantages of a corporation diversifying internationally scotch of caseEconomic of scale is the expansion of production scale and increase the economic benefits. It is to reflect the relationship between the concentration factors of production and the economic benefits. Economies of scale help producers to lower their cost by producing large amount of takings at lower costs. Samsung Electronics has realized economies of scale in semiconductor production. semiconductor devices can perform a variety of control functions in electronic equipment, such as Samsung touch smartphone. Through the continuous improvement, Samsungs semiconductor production successfully extended the R D centers and production lines to chinaware and other countries, and the products can sell around the world, via mass production to reduce the costs. This is the cost advantageThe advantage of the economies of scale of SamsungCan be achieve the harmonisation and standardization of the productshigh quantity of raw materials, reduce the purchase costEasily to control the quantity and quality of productsConducive to management and technician specialty and professed(prenominal)izationIt can has strong competitiveness in the national marketEconomic of scopeThis is also a cost advantage to make the cost lower to produce a range of cogitate products than to produce only one of the individual products on one company. A company can expand its range of products to take full advantage of the value of its existing capa city. Samsung produces various electronic products, such as LCD TV, LCD panel, semiconductor (DRAM, NAND Flash), mobile phones, digital cameras, LCD monitors, printers and other related electronic business, production of these products can use the resembling or similar of raw materials, for example ,produce the TV and the computer can use the same type of LCD screen, it can als o be carried out in the same factory, and the workers all have same knowledge, produce different products to reach international diversification, fully to take the advantage of economies of scope.Spread the jeopardizeDiversifying internationally through acquisition or alliances can increase the market power of a corporation, to strengthen the competitiveness in the international market. At the same snip, it can spread the stake of investment by avoid having all orchis in one basket. Enough reserve to respond to market decline. Samsung Electronics has acquired the related business companies, such as British semiconductor designer Cambridge silicon Radio Ltd, merger with Seagate Technology (the States), its market forces continue to expand and greatly enhance the visibility and competitiveness. In addition, in order to diversify their investment and risk. Samsung Electronics set up their headquarters and plants all around the world.Learn from mature applied scienceIf a corporat e diversifying internationally, for example, which part of the products to their alliances company responsible for, it can learn the expertise and technology from the alliance. Samsung Electronics master(prenominal)tains good relationship with their partners, to learn go and unique technology in all of the production process, also, they hardly to study all of the knowledge and skills from the other country, such as the electronic technology from Taiwan and the scientific knowledge from USA. Learning knowledge from difference country can enhance the quality of staff, greatly to help the long-term development of the company. In addition, it also can enhance the core competitiveness of the corporation in the world.Experts of expertiseWhen access a new market in other country, except to learn from advanced technology, Samsung Electronics also gain the experts of expertise, flow different professionals through merger and acquisition. For example, Samsung Electronics access to the adva nced country, such as USA or UK, it can gain the experts in the locality, to understand their professional science and technology. In addition, mainland chinawares population is more than 1.3 billion, it boasts to have larger humane resources than other countries. As the change magnitude of population, chinaware will have the greatest number of professionals.Low motors and resources costSamsung Electronics can enjoy the cheap labors from their country and all developing country, for example, China has 1.3 billion people and widely of the labor force, compared with the pay of workers in other countries will be lower, so, to set up factories in China or merge with Chinese companies, it can enjoy the low-cost labors and production as well as the resources and the raw materials are also relatively cheap. In addition, the lands and rent are the most put in of the funds, China has well Infrastructure, now, it investing in the outsourcing industry. Like the city Chengdu are already pl anning to have a high-tech zona in areas that are spanning upwards of 1 million square meters. China has the cheaper lands and low rent for build up the factories, so Samsung Electronics can keep more money on this part.Enhance competitive power outside competition can be encouraged to enhance the companys productivity. Doing business in the international market, the companies will continue to improve the quality of their products, in order to gain a market competitive advantage. The face of powerful competitor apple Store, Samsung Electronics continuous innovation and reform the products, for example, Samsung Electronics produce the smartphone , such as Galaxy S2, S3, Notes, to compare with the biggest competitor Iphone from apple Store, in order to call for a strong position and strengthen competitiveness in the world market.3.3 Disadvantages of a corporation diversifying internationallyIncreased management costs and complexitySamsung Electronics realized International divers ify whitethorn add complexity of the enterprise. coalition or alliances will make management costs rise, thereby increasing the cost of production abroad. To compliance into the new market, the biggest barrier is the huge outstanding requirement, for the established of headquarters and factories, recruitment, procurement, management etcetera In addition, it have more management challenges related to structural complexity with the new administrative structures, it may increase the information processing when access the new market in the global.Language problemActually, the language barrier is a serious problem, the coordination, communications and motivation issues are very important when access to a new market. Samsung Electronics is an oversea company, when they wants to set up factories or headquarters in China or the other country, foreigners do not understand Korean, miscommunication may occur, impact the companys operations. They need to recruit some language expert to so lve the problem, also, they can recruit the translators or local agents to manage, but it will increase the management cost.Quality problemGlobalization made enterprises want to be entry in the major countries globally. To response the growing need of competitiveness in the world, many enterprise want to outsourced some of the productions in China, in order to enjoy relatively cheap production cost, Samsung Electronics outsourced parts of its production to China like the battery and the case of Samsung smartphone, actually, China is until now at its first stage of being in the outsourcing industry. the quality may not be guaranteed, especially in China, although China has labor resources stronger than the other country, but the low academic qualifications and lack of skills of the workers may be affected the quality of the product. However, it can be improved by training and the technology.Economic riskEconomic risks, such as counterchange rates, government regulation, decline in per capita gross domestic product (GDP), inflation and capital flight. In recent years, inflation in China is very serious, inflation reflects Samsung facing the business crisis, and company may need to save the manpower and raw materials, affecting the paying back and quality of its products. In the current financial risk, Samsung Electronics encountered a serious impact on the global business, it has a lot of economic problems, such as inflation, rebellion unemployment, these factors will directly affect the business of Samsung Electronics.Cultural riskThis is a risk, because you will not know whether there will be changes, before entering each country, Samsung Electronics must understand the culture of the country, such as peoples preferences, habits and the consumer behavior, it all arising from cultural differences. Western companies are lack of mind of Chinese culture. There is also a perception of corruption and bureaucratism in China. Samsung Electronics is located in K orea, far away from China, geography and time differences may require staff to adapt their business practices. policy-making riskIn fact, a lot of investors, businesses entering a new market are facing the risk of governmental risk. Political risks including systemic risk, adjectival risk, distributive risk and catastrophic risk. Such as fiscal, monetary, trade, investment etc. Rather than the risk of market factors including industrial, income, labor and development, or related to political instability, such as terrorism, coups, civil war, riots, rebellion event. Samsung Electronics is also facing of these problems, China has just started with implementing rules on security and intellectual property rights, they are still considered to have poor protection. This becomes a problem especially when manufacturing of products are outsourced to their country. Political uncertainty may also bring unexpected costs, which can be substantial. In addition, in their own country, South Korea and North Korea is still having a problem, in a tense confrontation, it may conflict at any time, affecting the operation of the enterprise.Exchange riskInternational trade may cause delays in payments, for example, Samsung Electronics sell the products to other country, it may delays in payments when the goods trade between the trading companies, also It has the foreign currency problem, such as RMB and HKD, the rate is difference from Korean, affecting the cash flow of the corporation. In addition, the central rate of foreign currency may not stable, exchange rate fluctuations and the inflation also are the existence risk. However, in recent years, RMB rising also is the significant risks faced by Samsung, deterred many of the intended development of foreign-funded enterprises in China. RMB appreciation, rising costs of labors, raw materials and lands, all is the currency and exchange risk factors.Market riskIn different countries have different regulations and standards, the corp oration need to comply with the new standard when access a new market. It may have some factors to change, in order to facilitate restructure of the company, it is necessary to training or retraining of the management, for example, in the production process, the input and packing, thereby generating additional costs. In order to access to USA market, Samsung Electronics are facing the big problem which is intellectual property of the biggest competitor Apple Store. Earlier, Apple sued Samsung and its Galaxy series smartphone copied the design of the iPhone smartphone, Samsung has the hefty fines to Apple Store, thereafter, Samsung sued again to U.S. International Trade Commission and complaint the Apple Store, referring to Apple guilty of Samsung patent such as 3G, wireless technology, prohibit Apple iPhone, iPad and iPod devices sold in the United States. Plagiarism and infringement of the war, Samsung and Apple compete with each other there is a certain degree of bother in enter ing the U.S. market. This is the risk of Samsung Electronics.RecommendationsSamsung Electronics is a leading consumer electronics brand in the world, is committed to satisfy consumers need and reach the international standard, Samsung Electronics realized international diversification, Samsung Electronics only has the Authorized Partner shop in Hong Kong. To further enhance the customer services and the quality of products, it is recommend to build up the flagship salt away and more retail trader all around the world, it can be expansion the sales network and strengthen the market power. In addition, in order to prove the quality of products, it is recommend Samsung Electronics to make the adjustment of the endorsement period of products. In addition, in order to solve inflation and the potential risk of China, it is recommended that the plant can move to the other place, such as Vietnam, this is a developing country, the price of raw materials and the cost of labors and lands ar e also cheaper than China.ConclusionUndeniable, international diversification is accurate flexible and efficient for Samsung Electronics. International diversification both have advantages and disadvantages, but relatively, the advantages outweighs the disadvantages, Samsung reached in economies of scale and economies of scope, due to their constant improvement and innovation, successful in the international electronics market accounted for an important position. However, Samsung Electronics are facing a lot of risks, such market risk and the exchange risk many of the unknown factors exist. In the long run, Samsung must have a comprehensive plan to deal with these problems.Appendixhttp//wpcontent.answcdn.com/wikipedia/ common/thumb/3/38/Economies_of_scale.PNG/330px-Economies_of_scale.PNG(Figure 1) Economic of scalehttp//www.samsungmobileb2b.com/images/en/main/v2/featured_GalaxyS3.jpg(Figure 2) Samsung Galaxy S3Its our business to make yours more productive.(Figure 3) Samsung product s and sloganSamsung Flagship Store(Figure 4) Samsung flagship barge in in Singapore