Samsung's Operational Performance - Example

Findings, Recommendations, and Conclusion This study examines the operational performance of Samsung and the ways in which this performance is affected by the current business environment. It examines the progress that Samsung has made since it was started in 1938 and recommends operational and business actions that Samsung can take to improve its performance in future. The study will also examine some of the key challenges and threats that the company is facing. To reveal the current and future strengths and opportunities, questionnaires were issued, and interviews conducted on 30 respondents. The study findings were used to draw recommendations that Samsung can use to improve its operational and business performance. Chapter 4 4.1. Findings and Discussions This chapter presents the principal findings from the research study and discusses these findings in depth to form a strong basis for recommendations. The findings have been divided into two groups namely quantitative (questionnaires) and qualitative (interviews). Questionnaires generated collected the quantitative data while the interviews generated qualitative data. The research attracted 30 respondents. More than half of the respondents (60%) agreed that Samsung is getting affected by some business operational means. A small percentage of the respondents (3.33%) believe that the company is not affected by the business operations. The percentage of respondents who totally agreed that Samsung business is affected by operations was also high (23.33%). This clearly shows that Samsung’s workers are in agreement (60% agree and 23.33% totally agree). The total percentage of respondents who feel that the performance of the company is being affected by business and operational means is 83.33%. This is a high number because it represents more than three-quarter of the total respondents. Therefore, Samsung should highly consider reviewing its business and operational aspects. In additional to operational and business factors, the respondents also felt that the company’s performance is also affected by financial aspects. A relatively high number of respondents (60%) agreed that the company’s performance is affected by financial aspects. 16.67% totally agree that financial aspects are also affecting Samsung’s performance. However, 16.67% of the respondents disagreed. Therefore, the total number of respondents who are positive that financial aspect is a factor in the performance of Samsung accounts for 76.67%. This percentage represents more than three-quarter of the total respondents. Therefore, Samsung should also consider financial aspect as another factor that is affecting its performance in additional to operations. Another factor that was found to affect the performance of Samsung is the social factor. A high percentage of respondents (43.33%) totally agree that social aspects are affecting the performance of the company. A high percentage (36.67%) is also witnessed in those who agree. Therefore, 80% of the total respondents are positive that social aspects are affecting the performance of Samsung. Only a small percentage of respondents (6.67%) disagree with 13.33% of the respondents saying that they are not sure. Therefore, social factor is also a strong determinant of Samsung’s performance. Another high number of respondents (53.33% - agree and 13.33% - totally agree) is positive that Samsung is losing its competitive advantage due to the impacts imposed by the working environment. A significant number of respondents (20%) are not sure whether the company’s competitive advantage is affected by the impacts imposed on the working environment. A significant number of respondents (13.33%) totally disagree. More than half the number of respondents (56.67% - agree and 6.67% - totally agree) are positive that the company will be restricted from enlarging its customer base due to its decreased level of performance. However, a relatively high number of respondents (30%) are not sure whether decreased performance will affect the enlargement of the customer base. Only a small percentage of respondents (6.67%) felt that decreased performance would not affect enlargement. As a result of those beliefs, a high number of respondents (63.33% - agree and 10% - totally agree) are positive that the Samsung should take effective measures in order to ensure it improves its performance. More than half of the respondents (16.67% - totally agree and 46.67% - agreed) indicated that effective decisions should be taken regarding operational, social and financial factors. An improvement on these aspects can help Samsung to realize possible improvements in its performance. A high number of respondents (27.59% - totally agree and 48.28%) is optimistic that Samsung can be able to enhance its overall performance in future. However, a significant percentage (10.34%) doubts the possibility of Samsung enhancing its performance in future. The interviews generated quality information concerning the company. The interviews revealed some strengths and weaknesses of Samsung as well as opportunities and threats. The respondents felt that Samsung is doing well performance-wise. They said that this performance can be evidenced by the acknowledgement of the company as an industry leader. However, the respondents said that there as some signs of hubris. There are numerous internal problems arising from increased workforce . Maintaining strong loyalty and organizational discipline has been cited by many respondents as one of the crucial factors to Samsung’s remarkable growth. The interviewees also indicated that Samsung’s strong brand in the market has been helping it to perform well in the market. The most dominant strengths of Samsung were cited as having its products as market leaders, strong brand and global presence, and strategic alliances. Most of these respondents indicated that Samsung has great opportunities if it ventures in the booming US semiconductor market, Chinese market, and the 3G market. However, other respondents indicated that Samsung has been inconsistent in sales growth due to product failure. In addition, high dependence on semiconductor business was also cited as one of Samsung’s weaknesses. The respondents who made the above observations in their responses also indicated that one of the greatest threats that are likely to be faced by Samsung is shifting from PC to MP3 market. One respondent said that, “Demand is shifting from performance-driven products such as personal computers to entertainment-driven products such as MP3s.” Samsung is not very exposed to MP3 market compared to its competitors such as Matsushita. This can weaken Samsung’s position in the market. Another threat for Samsung that revealed itself through interviews is the rising consolidation in the PC business. Major Samsung competitors such as IBM, Lenovo, Compaq, and HP are entering into mergers and acquisitions (Chen & Shih, 2008). The result is the formation of large clients who have higher bargaining power. The resulting effect is further reduction in margins of computer products. This may greatly affect Samsung’s margins. A significant number of respondents also indicated that Samsung’s growth momentum and profitability has slowed down. Many respondents indicated that Samsung’s performance is getting affected in the modern day context. Business environment has been changing rapidly. Samsung’s performance is thus affected by what happens in both local and global business environment. According to Smith, Grimm, Lee & Smith (2006), today’s business environment is becoming increasingly competitive and hostile. Most of the respondents indicated that Samsung is facing a hostile business environment ranging from patent wars to price wars and these factors are affecting the performance of the company. Most of the respondents who were interviewed cited organizational fatigue as one of the problems at Samsung. The respondent employees indicated that constant monitoring puts them under great pressure to achieve difficult goals. As a result, they become burned out. One interviewee said, “Employees know that they can be fired any time, and even suppliers feel similar pressure because Samsung demands tight deliveries, and it frequently slashes the prices it pays for supplies.” Such internal issues are affecting the performance of Samsung and may pose serious threats in future. Some of the possible improvements that were cited by the respondents are the technological improvement, internal management improvement, budgeting, production, and employee engagement. Most respondents indicated that these improvements had the ability to improve the future performance of the company. 4.2. Recommendations and Conclusion Operational and business performance issues that have been identified in this study are many and may affect the future performance of Samsung if they are not adequately addresses. This study recommends that Samsung should have an action plan to address these issues. This study recommends that Samsung should: i. Stabilize the internal management Today’s business and operational environment has become very turbulent (Barrows & Neely, 2011; Mason, 2006). To achieve success in such turbulent environment, there is need to stabilize company’s internal management. The internal environment is composed of the current employees, management, and corporate culture. The internal environment defines how the company will adapt to the external environment. The findings of this study have indicated unstable internal environment at Samsung in the context of employees. There is stiff competition in electronics market with powerhouses such as Finland’s Nokia, Taiwan’s High Tech Computer Corporation (HTC) and Apple among others (Mason, 2006). Therefore, this study recommends that Samsung should address the problems related to its internal environment in order to position itself well to adapt to external environment. ii. Conduct proper budgeting to ensure that issues such as too much employee benefit is not repeated. Samsung should also conduct proper budgeting to avoid giving too much employee benefit. Employee benefit is a motivator and can bring competitive advantage to the company (Blakely & Fronstin, 2013). However, too much or repeated benefit issuing can impact negatively on company’s profitability. iii. Proper market research and competitor analysis to ensure that their products are not outshined in the market. Samsung is a late entrant in the electronics market, and it has tried to maintain a willingness to learn from others. To understand the market and the entire industry, Samsung should invest more in market research. In conducting market research, Samsung will be able to stay ahead of its competitors because it will establish the products that are preferred more by the consumers. iv. Find mechanism to lower the cost of production. The low-cost actor has a strong overall cost advantage in the pricing war. Lo cost of production can contribute greatly to low pricing. Samsung should reduce costs such as labor costs and materials cost. According to Smith et al. (2006), a low-cost firm can earn high profits in an industry despite the presence of strong competitors. Technological advancements can help Samsung to lower the cost of production. New and advanced forms of technology are being used in total quality management. Investing in higher-grade technologies can help Samsung achieve notable improvements in product quality. Samsung should replace some of its machines with new equipment. Such a move can help Samsung to boost the quality of its products. v. Be more innovative since the electronic markets rely on affordability about the customer satisfaction. Samsung should also innovate in its unrelated diversified products. Samsung engages in businesses in electronics, machinery and heavy industries, chemicals, financial services, and other areas ranging from engineering consulting to hotels and home security products and services. Samsung is a good example of companies that have succeeded in unrelated diversification (Hill & Jones, 2013). However, Samsung should seek to be more innovative in the business it engages in since most of its competitors have also ventured in unrelated diversification. Failure to innovate will make Samsung be overtaken by its competitors in future. Samsung should also promote low-end electronic products that are affordable to customers. vi. Proper financial analysis and employee involvement so that they understand the gap that they need to fill. Samsung should invest in proper financial analysis and actively involve its employees. Profits and cash flow particularly from mature; a slow-growth business should be invested into newer, faster-growing businesses to reduce long-term risk. Employee involvement is a critical ingredient in total quality management (Mukherjee, 2006). Samsung should invest in quality-enhancement programs that can make employees responsible. This study recommends work teams at Samsung because they are common vehicles for increasing employee involvement. There are some weaknesses that have been revealed in this study. Samsung has become less inclined to correct its internal problems. Samsung is becoming large. Thus it is hiring a wider variety of people making employees’ loyalty become weaker than it was. One of the biggest challenges that are likely to face Samsung is maintaining its strong loyalty and organizational discipline. One respondent described that, in order for Samsung to achieve improved performance in future, it has to help its employees to improve both the quality and quantity of work produced and assist employees in meeting expectations and guidelines. It is expensive and disruptive to the company to keep paying severance to terminated employees and then to bear the costs of searching, hiring and training replacement employees. Therefore, Samsung should seek to help below-average employees to improve. Results from the questionnaire and the interview suggest that there is need for Samsung to clarify goals and expected contributions of all employees and other stakeholders. Samsung can achieve clear goals through idea visualization. Conclusion The main contribution that has been made in this study is the assessment of Samsung’s current operational performance in order to offer a solution for future. The study has concluded that forming effective teams in an organization can help to improve the overall performance of that particular organization both in the local and global market. Idea visualization helps to clarify the contribution expected from each player. In this way, all contributions are balanced. Samsung goals must be created from the contributions of all players in order to achieve a successful outcome that can contribute to improvement of company’s performance. Despite high competition in the electronics market and hostile business environment, Samsung can still realize improved performance in future. References Chen, J. & Shi, H. (2008). Mergers and Acquisitions in China: Impacts of WTO Accession. Cheltenham: Edward Elgar Publishing Barrows, E. & Neely, A. (2011). Managing Performance in Turbulent Times: Analytics and Insight. New Jersey: John Wiley & Sons. Blakely, S. & Frostin, P. (2013). Offering Benefits Still Gives Employers a Competitive Advantage. EBRI. Retrieved from http://www.ebri.org/pdf/PR-1050.14Nov.13.WBS.pdf Hill, C. & Jones, G. (2013). Strategic Management Theory: An Integrated Approach. Mason: Cengage Learning. Mason, R. (2006). Coping with Complexity and Turbulence: An Entrepreneurial Solution. Journal of Enterprising Culture, Vol. 14(4), pp. 241-266. Mukherjee, P. (2006). Total Quality Management. Delhi: PHI Learning Pvt Ltd. Smith, R., Grimm, C., Lee, H., Smith, R. and Smith, K. (2006). Strategy as Action: Competitive Dynamics and Competitive Advantage. New York: Oxford University Press. Read More