Samsung - Strategies, Product and Services, Improvements Made in Line with Business Paradigms - Case Study Example

Samsung Student ID: Module: 102 KM Course: Surname: First Name: Date: Table of Contents 1. Business Information ………………………………………………………….3 1.1 Background ……………………………………….……………….4 1.2 - Industry Sector……………………………………….………….5 Main Competitors Position in regard to performance. Scale of operations. 1.3 Product or Services offered by Samsung……………………..…..6 Main selling points of Samsung products 2. Samsung Strategies…………………………………….……………………….6 2.1 Management 2.2 Leadership 2.3 Project Planning 2.4 Strategic management systems 3. Recommendations 3.1 Improvements made in line with current business paradigms…..10 4. Bibliography……………………………………………………………………..12 5. Appendices………………………………………………………………………..13 1.0 Background Samsung is a company that has its origins in South Korea. It was founded in the year 1938 by Lee Byung-Chull who, like any other businessperson, wanted to create a unique product for a readily available market. Originally, Samsung dealt in agricultural produce. As time went by, it became apparent that agricultural produce would need another angle to it. In appreciating this fact, Samsung began value addition to agricultural produce and came up with a manufacturing plant for producing noodles. This was not only well-received, but it also created a need for auxiliary products that were to be consumed alongside noodles. A rapid growth of Samsung ensued, ensuring that the company set up shop in Seoul and expanded operations from its original location in Su-Dong. After the World War II, political instability between North and South Korea forced the two countries into war. This saw a magnitude of destruction that would later require a heavy reconstruction of infrastructure. Unbeknown to most people, this provided a perfect opportunity for Samsung to venture into unlikely industries. The textile industry may have had a direct link to agriculture, but the others did not. Samsung ventured into textile industry, construction industry and later on in the 1960s, the electronics industry. All these subsidiaries form the now larger Samsung Group. Samsung’s venture into electronics first started through production of television sets. Later on, due to its high quality semiconductors, it started producing telecommunication devices like phones, computers and so on. Currently, Samsung Group has diversified its portfolio to include production of most household electric goods, mobile phones and computers. They also produce mobile phone accessories and components for other mobile phone manufacturers like Apple. For instance, most processors in Apple products are manufactured by Samsung. The household goods produced by Samsung include refrigerators, home theatres, DVD players, VCRs, watches and cameras. They also manufacture equipment used in medical procedures. The industry sectors in which Samsung prides in as a leading manufacturer of quality products are electronics and telecommunication. In the electronics sector, Samsung is a leading manufacturer of home appliances and equipment that make life easy around the house. Some of these products include heaters and air conditioners. Kitchen appliances also feature here. In the telecommunication industry, Samsung currently enjoys the hugest market share in the sale of smart phones produced by its subsidiary Samsung Mobile. It has also ventured in the production of tablets and other mobile telephony devices considered as important in internet access. Its new line of smart phones, SII – SIV series, produced to suit both the smart phone and tablet categories, aptly named phablet, is a pioneer in the telecommunication sector. Samsung currently receives a lot of competition in both the electronics and telecommunication equipment sectors. For a start, right at home in Korea, LG serves as the strongest competitor in both electronic and telecommunication equipment manufacturing. They both equally enjoy a huge market share within Asia and worldwide in both sectors. A second competitor that has maintained a very steady competitive environment for Samsung in the telecommunication sector is Apple’s iPhone. Currently, the S-series of Samsung smart phones is locked in a tight competition with Apple’s iPhone 4s and 5s series. This battle has seen Apple and Samsung both sue each other for infringement of several copyrighted and patented components and designs of their mobile phones. It is no secret that Samsung takes the cake when it comes to the electronics sector. Currently, its sales can only be compared to those of LG both at home and worldwide. Samsung just overtook Nokia as the leading seller of mobile phones. In the electronics sector, general sales currently stand at 26%, beating LG electronics by a single percentage point. Other competitors that may have significant shares are Sony and Hitachi. These companies do not offer much competition against Samsung in comparison to Nokia and LG in the given categories. As established, Samsung is a leading manufacturer of electronic and telecommunication equipment, specifically household equipment and mobile phones. For Samsung to remain a leading producer of the above-mentioned products there are a series of activities and product quality that it guarantees for every one of its products. For instance, innovation does not come at a cheap cost in the current market set-up where customers demand products with the latest technology. It is in this line of thought that Samsung has come up with unique products to meet the consumer needs. For instance, the production of digital television sets has to be done in accordance with the latest technology. Currently, LED technology and internet TVs is the trend, and the company would not allow the market segment in need of this specific product to go unsatisfied. The innovativeness that is practised at Samsung has ensured that it takes up the best spot as a leading manufacturer of LED TVs. As it stands, the sales of Samsung LED TVs is unrivalled in the whole wide world. Sony has held a huge market share in the electronics market. However, Samsung’s capacity to provide more electronic equipment at comparatively cheaper prices has sounded a death knell for Sony as a leading manufacturer of electronic equipment. On the other hand, LG, almost the only company that has managed to survive Samsung’s onslaught in the electronic sector, may not be going down, but cannot keep up with Samsung’s innovative nature as it also produces cheap goods just like Samsung. Lastly, Samsung’s ability to cater for a wide range of customer needs sets it apart as a force to reckon with in both the electronics and telecommunication industry. For example, it produces both high-end and low end mobile phones to cater for both its high class customers and those of modest means. This is a tactic that its main rival in the mobile phone sector, Apple, has not mastered. Instead, Apple only produces phones for high-end users. 2.0 Samsung Strategies Any company that needs to stay afloat in any competitive industry needs to employ strategies that may ensure its position as a profitable entity. As such, various departments tasked with working in harmony to ensure products are made to a certain specified quality must employ strategies that will keep the organization in business. Samsung uses several strategies in its various departments to ensure that their products maintain the already-established standards. In line with this, the management, leadership, project planning and strategic management systems at Samsung have different ways of going about their tasks. 2.1 Management Management of a company is responsible for the general running of its operations, human resources and projects. To this end, Samsung uses several strategies in management of its resources so as to end up with nothing but the best quality. First off, the 1990s saw an upsurge in the rate at which new technologies were being invented. For a start, the new DVD technology and improvements of epic proportions in mobile telephony provided a challenge to companies that were not ready to innovate. For instance, the traditional Japanese giants in the electronics industry did not venture fast into this new technology in comparison to Samsung. The only Japanese company that may have taken up the task was Hitachi. However, in comparison to Samsung, it could not manufacture cheap products. The political environment then also favoured a company that was innovative and raring to go. In essence, policies enacted for cross-border businesses made it easier for Samsung to engage a wider market through untested segments like Africa and Australia. This gave it a bigger market, implying need for more production. On the other hand, a fast growing middle class both at home and in these foreign prospective markets created an easier segmentation of markets so that Samsung could then produce electronics and mobile phones for both ends of the consumer divide. Khanna et al (2011) posits that Samsung’s management may have employed a mix of Japanese traditions in management and with the rise in product-specific customers’ need to come up with products that address particular needs. This, together with product differentiation, ensured that more goods, specifically tailored to suit specific markets, reached specific customers, not only at the right time, but also made to suit trending technologies. 2.2 Leadership To achieve the above-mentioned feat, Samsung needed to have a leadership that would be up to the task before them. To develop innovativeness, a company would need to acquire human resources with the right techniques and training. As a start in this journey to come up with products manufactured with the latest technology, Samsung hired a host of technicians from several IT product companies. And to make it even more rich in the range of technology, it hired engineers from different backgrounds. As chance would have it, these brains would go a long way on providing leadership to the indigenous employees, who in turn gained competencies in not only technologies developed from within Korea, but also those that were invented from outside of the country. In the electronics and mobile telephony sector, new technology is frequently discovered in different parts of the world. However, credit is taken by the respective developer. For instance, the iOS, a Linux-based mobile phone operating system, was developed by Apple for the iPhone. In turn, Google developed the android OS, which is open for many mobile phone manufacturers to use. This is only possible with a leadership that allows its employees to take charge of their work as every phone company has to structure the android OS to fit its phones’ specifications. Another way of doing it would be to allow employees to develop what they would consider as a better OS for their specific phones. In this respect, Samsung developers have been working together with programmers from other leading mobile phone manufacturing companies in creating a new OS, Tizen, which will not only be like android OS, but will rival it. The leadership at Samsung has also made sure that simplicity is embraced so that when assigning roles to employees, a critical quality of being observant is used. The employees are specifically taught to scout around for the best technologies that can be applied to new gadgets. This would be best as a strategy in further beating other market leaders like Apple. A clear result of this is Samsung’s ability to pioneer a digital age where smart phones with big screens ranging between 4.5 – 8.0 inches, technically referred to as phablets as earlier stated. 2.3 Project Planning Several projects carried out by Samsung are done in line with the company’s plans for expansion. The regular projects in a company, particularly those that may not require large sums of money to carry out, always get attention from low-level managers. However, plans to introduce subsidiaries or maybe acquire bigger premises follow a procedure as is now a tradition in Samsung Group. An example of such large-scale projects that may have needed to be handled by high-level management in line with company policies is the tentative plan to expand its semiconductor plant in San Jose. The community around San Jose needs to be made aware of such plans so that they are not affected negatively during the process. This is done through acquisition of the right permits at the local county offices and other relevant authorities. Other details included the training of employees in readiness for any issue that would arise as a result of the expansion. Woolfolk (2013) reiterates that such keen steps in planning for a relatively big project may earn Samsung a significant amount of tax holiday due to the fact that during such expansions, the communities residing around the area are engaged in what can be equated to community social responsibilities. 2.4 Strategic Management Systems Samsung employs strategic information management systems in its companies. This is done specifically with the goal of beating the levels set for any large-scale company to produce harmful gases. In doing so, not only does Samsung get to keep safe from being charged highly for carbon released from its production plants, but it also ensures that its customers get only the best in terms of product safety. The Green Management Information System, GMIS, has proved critical in regulating all the plants’ carbon production. Consequently, Samsung products also meet several of the standards set by international bodies for environmental conservation. For instance, apart from Samsung, it is only Nokia which collects spoilt and “dead” phones from users who would want to dump them through accepted means that are eco-friendly. After collection of these particular handsets, they are shipped back to a central point where they are dismantled and parts which can still be used are put to use. The others which may not be used are destroyed using the GMIS. The GMIS also features prominently during production of equipment like refrigerators. Samsung refrigerators are now among the most environmentally friendly in the whole world. Before employment of the eco-friendly components of the refrigerators, most companies used chemicals and components that would prove not to be eco-friendly. The GMIS has so far set Samsung apart as a leader in producing environment-friendly goods. Another feature common with its big capacity refrigerators is the LED lighting, which consumes less power but keeps the food well illuminated for refrigeration. A final strategy employed by Samsung is the availability of diverse IT-enhanced systems that regulate spending of resources within its facilities. Activity-based costing is the best way to go about such a procedure. ABC keeps a company profitable as it minimizes the wastage of resources at any one point in the whole company’s operations. It also ensures that a company does not go beyond projected expenditures. 3.0 Recommendations The electronics and telecommunications sectors are very dynamic. This means that Samsung has to keep up with the ever-evolving trends that are evident in the sectors. It is important that for a company to keep making profits, then it has to ensure that it matches or does better than its competitors. The later would serve as the best strategy since it will ensure that the other companies strive to keep up with Samsung instead of the other way round. In line with this thought, Samsung should ensure that the current market shift that focuses on user-interface and OS-specific needs are met. For instance, the android OS proves to be more popular worldwide, though it gets a sound beating in the US where more iPhone enthusiasts would rather go for an iOS device than an android OS device. As things stand, iOS has a 96% preferred loyalty by its enthusiasts, while android OS, which Samsung uses for most of its mobile devices, enjoys a comparatively lower percentage loyalty at 76%. Secondly, Samsung needs to check an emerging trend among other manufacturers in the electronic industry. Sony and Hitachi are now collaborating in producing customer-friendly equipment that plays the latest blue-ray DVD technologies. This would dent Samsung’s reputation as an industry innovator if it does not act fast to match its competitors. The LED TVs produced by Samsung may have been well received by the prospective market. It is now time to produce a cheaper version of the same product so that more people can get to enjoy the same without necessarily having to part with lots of cash. Thirdly, the shipment of old products received from customers needs to stop. In turn, recycling plants should be built in all the continents considered as major consumers of Samsung products. This would be the only sure way to ensure that the goal of building manufacturing plants across these continents is achieved faster. The other way of doing this would be through the shipping of resources used in manufacturing goods to those locations. This seems like an expensive option and may not be in line with the company’s goal of minimizing costs where possible. An amalgamation of subsidiary companies that produce similar products would be great. For instance, the electronics sector may accommodate the semiconductor subsidiary, but in line with specified goals. For instance, lately, Samsung has been embroiled in court battles with its erstwhile competitor Apple Inc. While Apple utilizes Samsung components for its phones and other devices, Samsung has to engage itself in providing Apple with specifically produced semiconductors and processors. It would be prudent to merge such a venture with the other mainstream semiconductor business while continuing to produce for Apple. Home appliances are a very important part of Samsung business as it manufactures a lot of them. A specific threat has emerged in the name of Chinese manufacturers that produce goods of lower quality, which are still received well in continents like Asia and Africa. This is bound to dent the market share that Samsung has been enjoying in these regions. The best approach would be for Samsung to approach some of these companies and acquire controlling stakes where possible, so that they can use their already-established market to further their interests in controlling more of the market. This would go a long way in settling a looming battle that may leave Samsung with a bad taste in the mouth, so to speak. Finally, in keeping with emerging trends, Samsung needs to continue with its innovative nature while keeping its prices low so that it carters for all of its customers. 4.0 Bibliography Khanna, T, Song, J & Lee, K 2011, “The Paradox of Samsung Rise”, The Globe: Harvard Business Review, pp 142 – 149. Woolfolk, J 2013, Samsung Details Plans for San Jose Expansion, Mercury News, viewed 26th April, 2013, 5.0 Appendices Read More