@ 2012Global operations and strategy of samsung Introduction Samsung’s history can be traced back to March 1 1938 when Byung-Chull Lee set up a trade export business dealing with exportation of Korean vegetables, fish and fruits to China and Manchuria from Taegu, Korea and within slightly over ten years, it had acquired confectionery machines, flour mills and elaborate sales and manufacturing operations that over time grew out to become the great global Samsung corporation (Lee 2006). The company has since diversified and evolved into a leading company dealing with various kinds of business (Michell 2008).
Samsung has managed to retain its competitiveness through appropriate response to economic and competitive pressures. This paper discusses Samsung and its successful adaptation to global challenges. During the 1970s, the company set out its strategic foundations that would guide future growth through investment in the petro-chemical, chemical and heavy industries. At the time, the company implemented steps that were aimed at enhancing its competitive position within the global textile industry while ensuring an integration of manufacturing processes, right from the raw materials stage to the end products.
Consequently, there was the creation of several new companies for instance Samsung Heavy Industries Company as from 1974, Samsung Precision Company and Samsung Shipbuilding in 1977 (Fan & Kim 2004). Chang (2011) adds that there was also a lot of growth because of a boom in the sales of home electronics. Samsung Electronics, a firm that had already firmly established itself within Korea started for the first time exporting its products during this time. It also took up a 50% stake in another company, Korea Semiconductor, and as a result solidified its market position as a global business leader. Koontz & Weihrich (2007) explains that in the decade after 1980, there was a great expansion and diversification of Samsung's basic technology units.
As from 1978, there had been a separation between the Samsung Electronics and Samsung Semiconductor business units. In 1985, the company got itself into the area of systems development when it set up Samsung Data Systems which would later to evolve into one of the leaders in the provision of Information Technology solutions such as systems management, systems integration, networking services and communications consulting.
There was afterwards the setting up of Samsung’s Aerospace Industries in 1987, leading to a rapid expansion in its aerospace development capability. Because of a greater emphasis on technology, there was the establishment of two Samsung Research and Development institutes which facilitated its expansion further into the various segments of the business. The company then successfully ventured in semi-conductor, electronics, genetic engineering, aerospace, optical telecommunications, high polymer chemicals and newer areas of technology for instance Advanced Network Architecture and nanotechnology (Khanna et al. 2011).
Lee (2006) suggests that with change of leadership in 1987, Samsung took up the challenge of restructuring its businesses and getting into new ones in the hope of achieving a standing as among the best five electronics manufacturers globally. By the time of Lee Kun-Hee’s rise to leadership in 1987, the company had a standing as the market leader in Korea. However, the overseas position that it held as a low-cost producer tended to be increasingly unsustainable because of an intense competitive pressure from Japanese manufacturers of electronics that were investing in the setting up of manufacturing plants across Southeast Asia, together with increasing domestic wages within the South Korean economy which was newly liberalizing.
During the early 1990s, Samsung identified a business opportunity in the slow pace at which Japanese companies, who were also market leaders in analog production to take up digital technology to which customers were going for their audio equipment, cameras and other forms of electronics. This offered a chance for Samsung to overtake all its rivals through the adoption of the innovativeness, agility, and creativity which was needed to ensure success in the digital market (Brown & Doebele 2004).