Week 17

1.       Can you think of an organization that has implemented a 'high risk strategy' that has resulted in success (why was it high risk at the time and why was it a success- was it good luck or good judgment)?

'High risk strategy' are those strategies that can either make a company very profitable or put it into a dangerous position. In my point of view Samsung has implemented a 'high risk strategy' that led them to success. 

Samsung was founded in South Korea in 1938 by Lee Byung-chul as a Trading company. Now it is a multi-billion dollar company with cell phones, gadgets and technology as its major products. Earlier in 2010-11, Samsung was not able to keep up a good brand image regarding its smart phone market. And at present, it is best known for world's largest mobile phone maker and user friendly technologies. Thus, this is because Samsung always focus on its competitors and never underestimates them.

Samsung's best business strategies:

The Android market:

Samsung managed to apply Google's Android system and generated a smartphone  in the market. It became a huge success and more than 50% of the smartphone market was in its hand which no other companies could achieve. People liked their product as it was flexible and user friendly in comparison to Windows and Apple

Samsung: Brand Image

The branding strategy of Samsung is to improve the product value and in order to do that, they created an identity on the product towards the consumer's mind.  The phones they created under the name Samsung GALAXY have a psychological and qualitative impression in people's mind.  

Price:

Samsung has been able to develop variety of smartphones considering its consumers of different class. They have kept the price in such a way that everyone can experience the services it provides. The low prices Samsung mobile like Samsung Champ and Samsung Galaxy Young are targeted for the South Asian market and this has become a huge success. Thus, the company literally knows its customers and their wants.

Design:

The design of the phone is a big touch screen one. Hence, the market liked the idea of carrying a big flat touch screen phone and it also helped Samsung to compete with Apple.

Thus, Samsung has the courage to apply new strategies to develop their new product and introduce in the market with success.

2. Now, do the same for an organization who embarked on a high-risk strategy that resulted in some sort of failure (why was it high risk and why did it fail – bad luck or poor judgment?)

In my point of view, Kingfisher Airlines is one of the examples who embarked on a high-risk strategy which resulted in failure. 

Kingfisher Airlines was set up in 2003 but hasn't seen a single year of profit since it got listed in 2006. (The Hindu)

 Kingfisher Airlines is an Indian based company established in 2003. In 2005, it became the first    and only company to order Airbus for over $3 billion. However, the company is dealing with its financial crisis in recent years. In 2009, November 4, Kingfisher reports a net loss of Rs. 418.77 crore during the second quarter of the fiscal. Its income from operations also declines by 13.6 per cent during the quarter compared to the same period last year. In view of the huge losses  and capacity reduction, Kingfisher decides to lay off nearly 100 pilots. The air-carrier later hiked fuel surcharges . (The Hindu Online April 24 2013)

  The market share of the company went on decreasing and its debt increased up to Rs 6,500 crore in 2012. 

Some of the major factor for the company to fail are:

·         Strategy to apply low cost model. This changed the brand image of premium business class airline.

·         Lack of focus to the consumer needs and requirement.

·         Lack of managerial authority.

·         Economic crisis: Increase in fuel price and depreciation in Indian currency.

 Thus, the Kingfisher Airlines suffered heavy loss due to its risky strategies

References:

Branding Strategy of Samsung [Online] Available at: http://sales-management-slides.com/branding-strategy-of-samsung/ [Accessed on 25th November, 2013]

Samsung's Android success story [Online] Available at: .  http://www.zdnet.com/samsungs-android-success-story-7000007470/ [Accessed on 25th November, 2013]

Seeking Alpha. Samsung's new strategy is a worry for Apple Nov 13 2005 [Online] Available at: http://seekingalpha.com/article/1860001-samsungs-new-strategy-is-a-worry-for-apple [Accessed on 25th November 2013]

The Hindu. Kingfisher Airlines Crisis: Timeline [Online] Available at http://www.thehindu.com/business/Industry/kingfisher-airlines-crisis-timeline/article4636635.ece [Accessed on 25th November 2013]