Samsung Electronics
The emergence of a Korean flagship company
1. Which internal and external factors have helped Samsung Electronics to grow into its current position?
Internal factors including:
First of all,the gradual achievement of technological independence internally from Sanyo Electric in the 1970s.Secondlay,Kun-hee Lee’s successful management strategy including:
o Re-allocate more resources to high technology products especially emphasis on semiconductors
o Achievement of global leadership in memory chip market by 1992
o Aggressive investment in R&D and production facilities
o He transferred much of the responsibility to professional managers and focuses himself on the formulation of long-term. over-arching strategies.The third,Company’s ability to dominate rivals through shorter development and ramp-up cycles in its early development stage.Then,Successful counter-cyclical behavior: the company aggressively built new capacity during the global memory chip market recession of 1990-1.The last one,Managerial policies have been pursued since the late 1990s:
o Great investment in technological leadership and innovativeness, as well as become the leading patent producer
o Efficiency drive through internal competition
o Enhanced global marketing and brand management
o Further globalization
These external factors also contribute to Samsung’s grow:
The first wave of internationalization in the 1980s: the expansion of international market from overseas production and sales affiliates.Also,The global memory chip market recession of 1990-1 gives the opportunity for Samsung’s expansion of its capacity while drags its main rivals cut or delayed their investments.
2. In which aspects has the management of Samsung Electronics throughout the past decades been typical for Korean management? In which aspects has it been atypical?
Typical management including:
Start with being attached to larger technology companies and relay heavily on technology outsourcing, but struggled to develop their own technology.Value global market and pay heavy attention on branding.Build on an core division but development its relative divisions.And spend money on R&D for future development
Samsung mainly differentiated itself mainly from the following perspective:
Aggressive investment in its R&D expense, it is one of the leading R&D expenders and accounts for more than one quarter of Korea’s total business R&D.Then successful risk management: put more money to increase capacity while its competitors cut or delay their investment.Extended and deepened expansion for its global network, giving Samsung a strong presence in all parts of the world.And Samsung leader’s visionary leadership style: his emphasis on future strategy creation and current strategy execution management.
3. Do you think Samsung Electronics has to transform itself fundamentally to remain the future? Why or why not?
I think big changes might be necessary but some key factors may still be maintained. In other words, Samsung has to strength its core competency according to industrial trend while search for blue ocean strategy to create a new market ahead of its competitors.
Firstly with the development of the industry technology, Samsung may need to identify the potential technology trends and make good use of existing technology. According to a report, 90% of the technology in the next ten years will be the technologies that had been well developed in the past ten years. It reminds that Samsung may want to put more efforts on identify trends and deeper develop current technology. Therefore change its R&D expense structure.
Secondly, try to find its new market, which means a blue ocean strategy is important to its future. It should move from head-to-head competition to blue ocean creation. Samsung may put more efforts on industry, change from focuses on rivals within its industry to look across alternative industries. At the same time, according to its current division and margin structure, Samsung should also move from maximizing the value of the product and service offerings to look across to complementary product and service offerings.
Thirdly, inside its current business division structure, the difference of division margin should be trade-off carefully. Cut down some of its less competitive business may provide Samsung larger opportunity to grow its core business.
In terms of development investment in future, the focuses on adapting to external trends as they occur should be moved to participate in shaping external trends over time.
However, some factors that contribute to Samsung’s success may still be valued as important as they are before. For example: The emphasis on R&D expense and Samsung’s awareness of branding and building global relationships is still important as the international market tend to continue expand.