Is Samsung Both Low Cost and Differentiated If Yes, How Does It Do Both?

Samsung is mild cost and differentiated. According to exhibit 7a-7i, it displace be seen that Samsung has a disgrace operating cost of $8. 50 as compared to industry average of $11. 03 as well as high remuneration margin 6. 6 times that of its competitors. This reflects Samsung ability to deliver desired grade to customers using lean and effective design and payoff. Samsung is able to maintain the low cost largely because of lower labor, R&D and raw real cost.Samsung has a relatively lower labor cost for each production unit because its meritocratic hiring and evaluation system, reward policies, employees welfare and bene turmoils to employees family allow employees to focalize on innovation and productivity. Hard carrying employees are always ready to work overtime, thereby eliminating wastage of resources needed to source for additional help or final stage minute hire. Also, its strategic location in Korea translates into some savings in labor cost compared to companies t hat operate in Japan and US.Samsungs collocation of its main R&D facility and fab lines is estimated to ask saved an average of 12% on fab construction costs. Living in concert at the Samsungs primary campus, R&D and production engineers pull in design and production engineering problems together and, indirectly encouraged faithful rapport. This may explain the lower R&D cost that Samsung incurs. Samsungs in advance(p) technology contributed to lower raw material costs and higher yield rate.Samsung currently uses the smallest process technology of 0. 11m which enables them to have a higher net dice per wafer compared to their peers who uses 0. 13m. Samsung needfully slight materials than others to produce the same product, reducing overall production cost. Its innovation not only reduced cost, but also formed its differentiated nub competency. Noticeably, its innovation has reduced defects in its product also help to lower wastage and hence lower cost of production.Samsung is also innovative in customizing to their customers needs by designing different offer for each segment. The strategic fit of the different activities formed Samsungs differentiated core competency that is by all odds valuable, rare, costly to imitate and nonsubstitutable. The activities include the presence of a productive and innovative human resource, strategic location, social complexity, good leadership and trusted curing name. With these synergistic factors, Samsung is both low cost and differentiated.