Asymco has made an indeep analysis into Samsung’s spendings for Sales, General and Administrative expensive (SG&A) over the last three years to analyse why Samsung’s SG&A expenses has not shown any significant change. A lot of critical information of how Samsung differs from Apple in few of its major operations were revealed in the report. Typically, when any company grows its sales rapidly its SG&A expenses grow slowly as the hiring requirement is comparatively much slower than the revenues earned but Samsung seems to have had almost a stable SG&A percentage over the last three years whereas Apple’s declined by almost 50% over the past 6 years.
When Asymco tried to break down all the expenses made by Samsung in the past three years it is evident that Samsung actually outsourced most of the activities like sales, marketing, advertising, after sales activities etc. This move might be beneficial in some ways but would also pose a threat on a longer term. When a company is expanding rapidly it will have to increase its head count rapidly as well but the expansion might not be guaranteed over a period of time thus causing major losses due to huge number of employees. To be on a safer side Samsung relied on third party agencies for most of sales and marketing activities thus increasing its expenses spent compared to in-house activities.
The statistics reveal that Samsung actually had to spend almost 4 times higher than Apple did on Advertising alone in the year 2012. In earlier posts it was revealed that Samsung is planning to increase its overall marketing budget in the US by four times in a move to capture the top spot in smartphone sales in the US.