Samsung Mobile PESTLE Analysis
This report will identify the six key environmental
drivers that currently have an affect on Samsung Mobile, and will analyse
Samsung Mobile’s responses to them.
Samsung Mobile is the mobile
division of Samsung Electronics, a multinational electronics company
headquartered in Suwon, South Korea. Samsung is a South Korean chaebol ( a
large conglomerate that is run, controlled, and owned by a family)( https://en.wikipedia.org/wiki/Chaebol) . Samsung
mobile is a key player in the mobile phone industry currently owning 23.3%
market share as of Q2 2017. (https://www.statista.com/statistics/271496/global-market-share-held-by-smartphone-vendors-since-4th-quarter-2009/) Using
PESTLE Analysis, I will be able to analyse the environmental drivers that are
affecting Samsung Mobile, and how Samsung Mobile are responding to them.
Using the PESTLE analysis, we are able to analyse the six
external Macro environment in which companies must operate in, and the factors
that have an impact on a company, in this case, Samsung Mobile. These are:
Political, Economic, Socio-Cultural, Technological, Legal and Environmental.
Samsung may face many political
pressures in developing countries as the political environment there is
unstable, and prone to many changes in governing structures. In addition
tensions with South Korea and North Korea should always be a concern for
Samsung. If war were to start, this would have significant impacts on the
Mobile industry and especially Samsung Electronics, that owns 23.3% of the
mobile market industry. (Baker, S. and Chau, M. (2017).)
Samsung have also been through many
political scandals in South Korea involving then president Park Geun-Hye, which
led to Samsungs co-chairman, Lee Jae-Yong and President Park Geun-hye arrest
and trial. This came at a key moment, right after the note 7 debacle.
South Korea uses a free floating
exchange rate system, meaning that the value of the Korean Won depends fully on
the market forces of supply and demand.
Given the fact that there was a
Global Financial Crisis in 2007-2008, and an US Recession, the Korean Won
decreased over 9% in value against the US dollar from January to June 2008. Samsung
has to be aware that the quick changes in the exchange rate can lead to their
products being relatively more expensive compared to other countries. This can
have a massive affect on mobile companies, especially on mobile companies that
are so reliant on importing components and exporting final goods.
In addition, Samsung Mobile has to
take note that “China, Brazil and India will be among the top four smartphone markets
in the world by 2018” (https://www.abiresearch.com/press/bric-four-of-the-top-seven-smartphone-markets-in-2/)
( look at pdf file, Samsung talks about entering these cheap markets.)
This is of great importance to the mobile
industry as Mobile companies need to develop cheap smartphones for the high
numbers of low income households in these countries.
Samsung Electornics has had to
change its products to match the changes in consumer preferences in certain
developing Markets. Samsung has the largest market share for mobile phones and
smartphone in the Chinese market. They need to take into consideration changing
Consumer preferences. The Chinese have become more IT savvy, demanding cheaper
and more innovative consumer electronics. This means that Samsung has to design
products that are in line with these changes in consumer preferences.
Virtual Reality Handsets and
wireless charging technology have proven to be the next Battleground of
innovation as many of Samsungs competitors have hit the market with their own
products and features. However, Samsung is way ahead of their rivals when it
comes to the development of smartphone technology. This is evidenced by the
fact that Samsung was the first smartphone maker to develop smartphones with
wireless charging capabilities beating rivals such as Apple in terms of
adaptability. They also owned a 98% share of the active matrix organic
light-emitting diode” (Farhoomand.A
Samsungs main Competitor Apple INC
amongst others, have many registered patents, therefore Samsung electronics
must pay attention to Patent infringements. They lost a patent infringement
case in 2015, ending up paying Apple”$548 million before December 14th
2015″ (Vincent 2015)
There has been a rise in how
Ethical Consumers who want their goods and services to be sourced in a socially
and environmentally responsible manner, meaning that Samsung must not take
advantage of workers in developing countries, and must lower its Carbon
They also need to take notice of
how they source their Cobalt. 60% of the worlds Cobalt supply comes from the
Democratic Republic of the Congo, where Cobalt miners are not working in
optimum conditions. In addition, “children as young as 7 are working in the
mines” (Collins, 2016) This is relative to Samsung Electronic as Cobalt is an important raw
material for Lithium-ion batteries which are found in their phones, tablets,
and laptops. This
has led to increased pressure for Tech companies such as Samsung electronics to
investigate their suppliers. However, Samsung has ” set up its Environmental
Chemicals Integrated Management Systems to operate its eco-partner
certification system”( Farhoomand.A
2013) to help prevent non certified
parts or raw materials from being used in manufacturing.
After analyzing all the Macro
environmental factors using PESTLE, we are able to see that one of the most
powerful macro environmental factors was the political landscape. The South
Korean political scandal has dragged Samsung’s share price and reputation down
the drain during a period of serious competition across many of its core
businesses. This political scandal has also affected South Korean Society as it
has fueled discontent against the government, political elite, and family run
conglomerates such as Samsung which dominate South Korea’s economy. In addition
the social environment is a very important factor to keep in mind as consumers
tastes and preferences are being changed faster than ever. We live in a world
where Consumers are becoming less loyal to brands, so Samsung has to make sure
that new developments are in line with the changes in consumers tastes before
they end up like Nokia who responded too late to a change in consumers
Baker, S. and Chau, M. (2017). IDC: Smartphone Vendor
Market Share. online www.idc.com. Available at:
https://www.idc.com/promo/smartphone-market-share/vendor Accessed 13 Nov.
Vincent, J. (2015). Samsung finally agrees to pay Apple
$548 million, with a few caveats. online The Verge. Available at:
Accessed 6 Nov. 2017.
Collins, K. (2016). Apple, Samsung and Sony under fire
over child miners in Africa. online CNET. Available at:
Accessed 9 Nov. 2017.
BBC News. (2017). South Korea’s presidential scandal.
online Available at: http://www.bbc.com/news/world-asia-37971085 Accessed 16
BBC News. (2016). Samsung raided in corruption probe.
online Available at: http://www.bbc.co.uk/news/business-37904802 Accessed 7
(2013) “Samsung Electronics:
Managing Innovations in an Economic Downturn” Asia Case Research Centre, pp 18