Samsung Electronics Case Review1. The memory industry (5 points). Conduct a five forces analysis of the memory industry. You will need to rate each of the five strengths of this industry as high, medium or low and then briefly explain why you selected this rating. A) Threat of new competitors (barriers to entry) (MEDIUM) Samsung, being a global company with net revenues of over $30 billion, had created an integrated supply chain with economies of scale and scope. New entrants were required to enter on a large scale to minimize costs, which Chinese companies managed to do. Samsung had economies of scale in chip research and manufacturing and was the world's leading manufacturer of memory for all types of PCs, digital cameras, and other electronic products. Samsung had scale advantages on the demand side as it demanded superiority in product quality and efficiency and was a well-established and trusted brand ($5.2 billion in 2004). High switching costs were associated with the industry as, due to consolidated production lines and multi-billion dollar commitments, it would have been extremely costly and time-consuming for a company to invest in multiple technologies and design commitments. When IBM, Toshiba and NEC discovered problems with their “trenching” method of embedding cells into tiny chips, they wasted years of development time trying to switch to the “stacking” method. The cost of manufacturing facilities rose to $3 billion and thus created a higher barrier to entry for lower-tier competitors. Since most of the capital required in the semiconductor industry is used in research and development, it is not recoverable and increases the effectiveness... half the paper... me the administrative barrier and enjoys the same advantages as a normal Chinese firm . They will also receive easier access to financing, tax incentives and other essential resources to help them reduce China's competitive advantage. In doing so they must take precautions to ensure that their technology and intellectual property are not replicated as there are several flaws in China's administrative system. They could also acquire an established local Chinese semiconductor company that has a recognized brand in the market that could give them a local presence. Ultimately, they could cede the lower end of the market to Chinese companies and invest in higher-value, cutting-edge memory products that are difficult to replicate. All three options would be viable in different ways and could help Samsung overcome major threats.