Sample Management Reflection Paper on Samsung Company

Samsung has warned of a decline in the profits garnered in the fourth quarter of 2018. The profits are lower than those predicted by analyst by 18.2% and lower than for the same period last year by 28.7% (Meyer, 2019). the explanation for the decline in operating profits is the weak demand for memory chips in the marker coupled with intense competition in the smartphone market. The market share for Samsung has gone down in during the period hence the lowered revenues (Meyer, 2019). Further, customers are wary of the chip prices in the market whilst a trade war between china and the United States looms over their heads.

As an investor, it is important to understand the operations and portfolio of the company that one is investing in (Davidson, 2016). if I were to invest in Samsung, I would be interested in knowing how a drop of sales in the smartphone market or the PC market would affect the shares of the company. Samsung indeed has a very diverse portfolio and is a supplier of parts to competitors such as Apple. The outcome in the fourth quarter of 2018 reveals that the market for memory chips is weakening, while the market for smartphones is getting sluggish. The analysts seem to have forgotten to look at the expected trends for memory chips and the smartphone market while they were making predictions for that period. Overlooking some aspects of the company, be they internal or external, would lead to an incorrect prediction. The lower profits are not caused by the operations of the company but by factors that are beyond the control of the management. Hence, an investor cannot blame the management.

 

 

References

Davidson, A. (2016, Jan 11). Investing in funds & ETFs: A quarterly analysis — sustainable investing: ‘do good’ investing turns corner — sustainable investing is no longer a niche, but questions remain. Wall Street Journal.

Meyer, D. (2019). Why Samsung and LG Just Shocked Analysts With Dire Profit Warnings. Retrieved from http://fortune.com/2019/01/08/samsung-lg-profit-warnings/