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New entrants were
required to come in on a very large scale for effectively minimizing costs, which the
Chinese companies succeeded in doing. Samsung had scale of economies in research and
chip fabrication and was world leading memory producer for all types of PC’s, digital
cameras and other electronic products. Samsung had demand side benefits of scale as it
demanded superiority in product quality and efficiency and it was a well established and
trusted brand name ($5.2 billion in 2004). High switching costs were associated with the
industry as due to established production lines and multibillion dollar commitments, it
would be extremely costly and time consuming for a company to divest into different
technologies and design commitments...
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