The Rise of Samsung Electronics

The Rise of Samsung Electronicss

The Samsung Electronics (SE) story is a remarkable one. It was founded in 1969 when South Korea was one of the poorest countries in the world and had no access to advanced markets or firms operating in high technology industries.

Initially, SE could not produce even simple products and faced strong entry barriers in the electronic market. Yet by 2005, SE was a market leader in the flash memory market; by 2008, it was a leader in the LCD market; and by 2011, it had become the market leader in smartphones, surpassing smartphone legend, Apple. In 2012, it sold 215 million smartphones, compared to Apple’s 135 million. In this case, Volrad Wollny and Roman Maurer, University of Applied Sciences Mainz, trace SE’s rise to dominance and the ‘follower’ strategy it used to achieve its success. Volrad explains the challenges involved in writing the case and the key ‘takeaways’ for students.

Starting question

Samsung Electronics, never an innovator or standard setter, became the market leader ahead of Apple in 2011. This is the most striking fact about the company and provided us with our starting question: How could it succeed so rapidly in competition with an overwhelming and market-dominating company like Apple?

Published sources

The case is based on published sources, which does make information gathering easier and faster, however, it is usually only those issues seen as the most interesting that get publicly reported. In addition, published information is often filtered through the authors’ personal insights, conclusions and assessment or they address only specific interests. It’s vital to bear this in mind.

It is usually very difficult to obtain information from inside a company, apart from when former employees publicise their experiences and opinions. In relation to Samsung, there is very little information publicly available about cultural and organisational issues, and so we had to be more generic when referring to these in the case.

K2: Against All Odds

It was definitely a big challenge to select which facts and data from the publicly available sources to include. I’m afraid there might still be too many in the case, but I think the story is interesting enough to maintain readers’ attention and prevent boredom!

Samsung and advertising

By 2012, Samsung Group’s marketing budget was an extraordinary 12 billion USD. It’s very interesting to compare this with Apple’s approach. Samsung was initially unknown to its potential customer base and from a country not yet recognised for high-tech products; its products were cheaper, but still a little behind the market leader in terms of technology and design. In that situation, marketing expenses were absolutely necessary and obviously achieved the company’s goal.

In contrast, Apple never did a lot of advertising – but having lost market share, they started a huge advertising campaign with costly full-page ads in German newspapers showing a young couple at the beach with an Apple product, and the slogan ‘Designed in California’. Are these marketing expenses wasted? I think it will be more difficult to convince the customers to buy an expensive but already well-known product (without giving clear and convincing arguments) than to make consumers familiar with an unknown product from an unknown manufacturer.

Involving students

Smartphones are a status symbol for students and the product can be used as a starting point for discussion by asking them which brand they have and why. We have tried this approach twice in the classroom and it worked well; students are familiar with smartphones and it’s a high interest product for them. A telling illustration of this is that German carmakers are concerned that young people are no longer interested in cars and prefer to spend their money on smartphones. Now the industry is trying to ‘pimp’ the cars up so they can be electronically linked with smartphones. In addition, the surprising success of Samsung, the popularity of the product and the highly competitive and innovative nature of the industry make the case an interesting one.

Learning objectives

The key ‘takeaways’ for students from studying this case are:

  • building up resources takes time and requires strategic thinking (as well as a lot of capital)
  • don’t underestimate the know-how gained in production
  • don’t underestimate the forward integration option of suppliers
  • don’t be afraid of market leaders
  • protect your technology with legal patents, but understand that in fast-developing and innovative markets the legal protection is often much too slow.  

Widely applicable

The lessons learnt from this case are also applicable to other industry sectors. For example, the Japanese industry acted in a similar way starting in the 1950s and achieved huge success in the electronic, optical and automotive industry. Toyota became the market leader in cars. The Chinese industry is closing the technological gap by acquiring know-how from joint ventures and hiring foreign experts. Chinese photovoltaic (solar-generated electricity) producers have destroyed the German industry (but are suffering now under their own success); and the Chinese automotive sector will become more competitive in developed markets.

Background reading

The case includes a detailed list of background reading, but I would particularly recommend Robert M Grant’s Contemporary Strategy Analysis which provides an overview of the pioneer/latecomer issue, and should be sufficient in most teaching and learning situations. Additionally, the timeline on Samsung’s website is very illustrative in relation to the case. 

Case details

The Rise of Samsung Electronics
Volrad Wollny and Roman Maurer
University of Applied Sciences Mainz
Ref 313-214-1
Also available:
Teaching note
Ref 313-214-8

About the authors

Volrad Wollny is a Professor at the University of Applied Sciences Mainz, School of Business, Germany.

Roman Maurer now works for the Volksfürsorge AG insurance company, Hamburg, Germany.


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