The Demand of Samsung

I. The demand for smartphones worldwide. – The worldwide mobile phone market grew 1. 9% year over year in the fourth quarter of 2012 (4Q12), as the number of smartphone sales raised to levels nearly equal to those of other phones. 219. 4 million units in 4Q12, which represents 45. 5% of all mobile phone shipments, the highest percentage ever. On an annual basis, 712. 6 million smartphones were shipped globally in 2012, which was 44. 1% more than in 2011. Top Five Smartphone Vendors, Shipments, and Market Share Calendar Year 2012 (Units in Millions) Vendor2012 Unit Shipments2012 Market Share2011 Unit Shipments2011 Market ShareYear over Year Change 1. Samsung215. 830. 3%94. 219. 0%129. 1% 2. Apple135. 919. 1%93. 118. 8%46. 9% 3. Nokia35. 14. 9%77. 315. 6%-54. 6% 4. HTC32. 64. 6%43. 68. 8%-25. 2% 5. Research In Motion32. 54. 6%51. 110. 3%-36. 4% Others260. 736. 5%135. 327. 5%92. 7% Total712. 100. 0%494. 6100. 0%44. 1% Source: IDC Worldwide Mobile Phone Tracker, January 24, 2013 - The huge demand from all over the world -> the need for expanding the production facilities as well as the employees. II. Production plan -Over the world,Samsung has plants in 5 countries: China,Korea,Brazil,India and Viet Nam. – The Vietnam unit of the company has started construction on the plant in Yen Binh Industrial Park in Thai Nguyen province.Operation of the plant, which will mainly produce mobile phones, is expected to start from the end of the year, and production is projected to be boosted since 2014 to hit 120 million units by 2015. -Together with the current plant in Bac Ninh Industrial Area in Vietnam, the completion of the new plant will lift production capacity of Samsung's Vietnam unit to 240 million by 2015, accounting over half of Samsung's total projected capacity. Prime Minister Nguyen Tan Dung (2nd, R), leaders of Samsung and guests press the button to start work on the hi-tech complex of Samsung in Thai Nguyen >The locations of the factories have major effects on the firm’s performance as establishing factories in these countries helps reduce the cost of renting space as well as the labor cost than in other countries due to the fact that they are big countries with a high population. ->helps increase the revenue of the firm. -The more factories they build, the more benefits they gain because according to economies of scale, the average cost per unit produced declines as the firm produces more units as the facilities stay the same. ->helps sell more products-> more profit.