Read MiniCase case study entitled, “Struggling Samsung Electronics.” And answer the following questions:
1. What makes Samsung a conglomerate? What type of diversification does Samsung pursue? Identify possible factors such as core competencies, economies of scale, and economies of scope that were the basis of its past success as a widely diversified conglomerate (chaebol). Why is Samsung as a conglomerate struggling today?
2. Despite being a widely diversified conglomerate, Samsung prefers vertical integration: in-house design and development teams, manufacturing in large company-owned factories, and coordinating a sprawling global supply chain. In contrast, Apple concentrates on the design of high-end mobile devices, while it outsources its production to Foxconn and others. Do you think Samsung’s high degree of vertical integration contributed to its recent problems? Why or why not?
3. What would you recommend Samsung Electronics would need to do to revive and turn around its fledgling mobile division?
