Alfonso

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Samsung – Surviving in an Unstable Market
Alfonso
Posted on December 6, 2015 at 12:27 am
The story of Samsung in the unstable Argentina. How did the Korean company do to establish a dominant position in an economical unstsable country?

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On December 14, 2015, Alfonso commented on Cementing a Position :

Great article. It is interesting to see how powerful this company (and its founder) is. However, I’ve seen several big companies that were privatized by the government in emerging countries and later were re-bought by the government, making the private owner loose in a deal where they were forced to sell (several examples in Venezuela and Argentina). Do you think that the company’s power relative to local governments and their relationships will change significantly when the founder retires?

On December 13, 2015, Alfonso commented on Spirit Airlines: Ultra-Low-Cost, Ultra-Impressive-Profits :

Looks like a very efficient company, and that they have found a market willing to buy “unpleasant” flights. Do you think that big airlines can find a way to serve this market with one of their second/low cost airlines? If so, do you think that the barrier to entry this market is low or high for these bigger airlines?

On December 13, 2015, Alfonso commented on Tabasco: The Original Hot Sauce :

Wow! Just now I find out that Tabasco is the brand and not the product. It looks like the company has grown to be global, but it managed to remain a family business. That shouldn’t have been easy.
I see that one of the most important competitive advantages is the consistency of the formula. Do you know if this consistency policy has been established since the beginning of the company? If so, do you know how did they do in the early years? It doesn’t seem like an easy process with the 1860s technology.

On December 13, 2015, Alfonso commented on Samsung – Surviving in an Unstable Market :

Great comment. Yes, electronic goods (not only Samsung) are really expensive compared to the same product in a stable and open market, basically because of the high logistics and labor costs, as you mentioned. The problem here is that there is no other choice for customers. It is impossible to import electronics as finished goods and he only way to sell electronics goods in Argentina is through this model.
Samsung’s competitive advantage is the partnerships it built with the main local factories and retailers, and a high perceived value by the end customers that resulted from the heavy investment in marketing programs. Competitors moved later to adapt their operating models, but the main factories were already working (almost) at full capacity with Samsung products, and Samsung’s local office in Buenos Aires gave greater support to local factories and retailers than its competitors, so the local players had better profits.