Q1: Perform a PEST on Samsung and Identify the Change Drivers

The group has identified the following analysis on SAMSUNG, one of South Korea’s key income contributor from the electronics industry that has resulted on a positive impact to the growth of the nation. The following table will highlight an analysis from Samsung’s perspective with regards to the nation’s political, economical, social and technology areas, where we have identified the change drivers, be it negative or positive, from the PEST analysis.

|SCOPE |Samsung PEST Analysis |Change Drivers |
|POLITICAL |Government: |Government: needed to improve the situation and|
| |Was the second poorest country in the World (in|ensure the quality of the people rise at par |
| |1954) and this was a huge concern. |with its other neighboring countries ie Japan, |
| | |China and Russia. |
| |Government strategy was to leverage on Samsung | |
| |by promoting the company during the Seoul |Education: Improvement in the education was |
| |Olympic games (1998) to showcase how S. Korea |also another change driver to ensure it became |
| |was technologically advance in the World |the platform to maximize human potential at the|
| | |early age |
| |Samsung was considered the backbone of South | |
| |Korea due to its high margin profits which in | |
| |turn accelerated the nation’s growth. For the | |
| |government to achieve national competitive | |
| |advantage, Samsung was an example of how the | |
| |people worked hard and efficient. | |
| | | |
| | | |
| | | |
|ECONOMIC |Korea has limited natural resources hence the |Economic Crisis: |
| |strategy was to tap the human resources and |This happened in 2009- where S. Korea took a |
| |build the people of the nation to be |dip from other industry but survived because of|
| |outperformers |Samsung. |
| | | |
| |As, Samsung is the backbone that supports South|Samsung: |
| |Korea economy growth- In yr 2000 Samsung’s |They were the change drives for S. Korea as in |
| |sales was at 132 US Billion and grew to 161.8 |2010 –which helped the country become the 15th |
| |US Billion. |largest economy in the world |
| |Samsung’s brand ranked 21st among the world’s | |
| |leading company. | |
|SOCIAL |The founder of Samsung, Gun –Hell Lee practices|Leadership Commitment: |
| |a philosophy “We would devote our human |The founder had set the right values and |
| |resources and technology to create superior |philosophy to create a unique and performance |
| |products and services, thereby contributing to |base culture. The successor, Gun-Hell Lee |
| |a better global society”. |continued the culture while strengthening its |
| | |core values. |
| |Samsung employees felt a sense of belonging and| |
| |pride and understood their accomplishment was a|Collectivist and Confucian tradition and |
| |direct impact to the society and nation |values: |
| | |A crucial change driver as it glues together |
| |The culture of Samsung created the employees to|member of the family and organization by |
| |be open to ideas, technology and innovation |emphasizing harmony, pride, loyalty and |
| |from the outside. Knowledge sharing , |cohesive spirit |
| |teamwork and networking amongst the functional | |
| |divisions were important. | |
|TECHNOLOGY |Samsung creatively combined technology and |Technology: |
| |management for better communication |Is used to connect the various functional |
| | |departments to deliver efficient working |
| | |performance. |

Based on the above PEST analysis and Change Drivers identified, we are able to categorise SAMSUNG’s IFE (Internal Factor Evaluation Matrix) under Strength and Weaknesses and calculate the weighted average to assess Samsung’s capability as detailed in the table below. (Pls Check with Dr, Mohan on the calculation and the rating and weigh given?—Im not to sure if this is correct)

|No. |Strengths |Weight |Rating |Weighted Score |
|1 |Samsung's solid reputation and brand value was estimated to be US $18 billion |0.2 |4 |0.8 |
|2 |Samsung's strong leadership and compelling values: economic contribution to the |0.05 |2 |0.1 |
| |nation, top priority to the people and pursuit of rationality | | | |
|3 |Human Resources Department: |0.05 |2 |0.1 |
| |- People is its Asset Philosophy. | | | |
| |- Hiring competent employee is the key success of Samsung | | | |
| |- Samsung's hardwork and speed culture | | | |
|5 |Diversified business portfolio |0.2 |3 |0.6 |
|6 |Samsung's technologically advanced |0.15 |3 |0.45 |
| | | | | |
| |Grand Total |0.65 | | |
| | | | | |
| | | | | |
| | | | | |
| |Weaknesses |Weight |Rating |Weighted Score |
|1 |Values differences between older employee and young employee |0.05 |4 |0.2 |
|2 |Hierarchical structure and high power distance |0.15 |3 |0.45 |
|3 |Samsung products are always perceived as low quality product because Samsung sets |0.2 |1 |0.2 |
| |low price to cater mass market. | | | |
| | | | | |
| |Grand Total | | | |

From the assessment calculated from Samsung’s IFE, the Grand total weighted score is ??. Looking at the scores we can address what needs to be recommended and done for Samsung. One possible solution is to foster an aligned culture as Samsung needs to maintain the values and philosophy as well as ensuring that the gaps are bridged or closed. However, before we discuss the possible solutions to foster an aligned culture let us look at what are the basic cultural components of an effective Organization. Organizational effectiveness results from the alignment of three main components:

1. Culture: How we do things around here in order to succeed.
2. Leadership: Creating a vision and direction for the organization and mobilizing people to accomplish them.
3. Strategy: Establishing the fundamental focus for action that the organization must take it in order to provide significant added value to customers.

Successful leaders, therefore, develop and maintain the culture that will deliver their organizations strategic objectives. This approach takes leadership development and performance to the strategic and system level. It links leadership behaviour to the marketplace, to business strategy, and to the culture required to implement that strategy.
The central emphasis in this approach is leadership versatility.
Bill and Kristine Schneider of the Corporate Development Group (CDG) discusses how core strategy, culture and leadership must be aligned, how this drives bottom line success and organizational sustainability and how it harnesses the energy of the people and unleashes their productivity.

The Four Core Cultures
Core refers to the elements of the business that drive competitive advantage and shareholder value. All other internal core functions need to function in support of the core. CDG defines them as follows: 1. Collaboration – Diversity, human involvement, harmony etc.
2. Control – Systematism, objectivity, order etc.
3. Cultivation – Growth & Development, dedication, commitment etc.
4. Competence – Professionalism, freedom, concept etc.
Culture is important because it limits or enables strategy. It provides consistency, order and structure, and sets internal ways of life and patterns for internal relationships. It determines conditions for internal effectiveness and drives effective performance. The most important thing that leaders can do is create and manage culture. (Edgar Schein) It has everything to do with organizational implementation, and is the foundation of an organization’s identity. The wrong culture can hold your strategy hostage.

The Four Core Strategies
Strategy is the fundamental focus for action that the organization must take in order to provide significant added value to its customers. It is the unique value proposition, the magnetic north, the decider for all decisions. It determines the right culture and the right leadership. In a successful company, strategy is likely to be in alignment with culture and leadership. 1. Synergy – Close partnership, high personalization etc. 2. Certainty – Dependability, predictability convenience etc. 3. Enrichment – Raising of human spirit, take customer to another plateau etc. 4. Superiority – Create market niche, unmatched product/service etc.

The Four Core Leadership Practices 1. Participative – Team builder, coach, close partner with customers etc. 2. Directive – Authoritative, conservative, realist etc. 3. Charismatic – Cultivator, commitment builder, idealist etc. 4. Standard Setter – Conceptual visionary, spurs competition, tough task maker.

An important element in choosing leaders is to match them to the core culture and strategy of the organisation.

Now, in order for Samsung to grow, it needs to maintain an aligned culture to ensure that the performance of the organization is sustained if not improved. The impact of an aligned culture, not only a possibility of organizational performance, the potential for employee satisfaction and balance is likely to be higher. In the case we would go in detailed of the recommendations that we propose to bridge the gaps. But in the meantime, we believe that Samsung will need to questions themselves in the following areas
1. Analyze: Which of the four core cultures is dominant?
2. Focus: How clear is the organization’s core culture to your colleagues? To employees? How does this affect relationships?
3. Alignment: How aligned are the organization’s strategy, culture and leadership?
What are the areas of cultural match? Where are the potential pitfalls?
4. Integration: Do leaders behaving in a way that supports taking the organization to different heights.

Before we can address the above and propose the recommendations, we need to look at the national and organizational culture that plays a big influence on Samsung’s philosophy, strategies, systems and processes that can be driven by the HRD philosophy. What we like to do is to look at the generational identities in South Korea – and how the culture has developed accordingly.

South Korean culture

According to Hofstede Theory, South Korea culture is defined as hierarchical and is known as high power distance society. This means that people accept a hierarchical order in which everybody has a place and which needs no further justification.

Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat.

The long term orientation dimension is closely related to the teachings of Confucius and can be interpreted as dealing with society’s search for virtue, the extent to which a society shows a pragmatic future-oriented perspective rather than a conventional historical short-term point of view. South Korea scores as one of the long term oriented societies. Notion of the one and only almighty God is not familiar to South Koreans. People live their lives guided by virtues and practical good examples. In corporate South Korea, you see long term orientation in the higher own capital rate, priority to steady growth of market share rather than to a quarterly profit, and so on. They all serve the durability of the companies. The idea behind it is that the companies are not here to make money every quarter for the share holders, but to serve the stake holders and society at large for many generations to come.

South Korea is considered a collectivistic society. This is manifest in a close long-term commitment to the member 'group', be that a family, extended family, or extended relationships. Loyalty in a collectivist culture is paramount, and over-rides most other societal rules and regulations. The society fosters strong relationships where everyone takes responsibility for fellow members of their group. In collectivist societies offence leads to shame and loss of face, employer/employee relationships are perceived in moral terms (like a family link), hiring and promotion decisions take account of the employee’s in-group, management is the management of groups.

Samsung’s strong foundation lay in its values with the nation’s philosophy of an intense development of human resources. These values used to develop the Samsung culture and develop various organizational systems.

The Byung-Chull Lee founded the company on three values:

i. Economic contribution to the nation

Samsung business served and contributed to the national economy and the global community

As a leader, Byung-Chull Lee had a clear vision & mission to create the opportunities to make contribution to Korean society with high-tech-oriented structure.

ii. Top priority to the people

It created an environment where humanity was respected and believe in potential for both individual and societal development.

The chairman’s belief that “a company is its people” inspired Samsung to value its people and fostered a strong commitment to attracting, retaining, and training talent. To hiring the competent people with the best talent was the key development of Samsung as company.

iii. Pursuit of rationality

This was to indicate conscious efforts to develop mindsets for rational decision makers with the purpose of ensuring sustainable growth for the company.4

Samsung’s commitment to observing ethical principles, eliminating inefficiencies and cleaning up irregularities was the outcome of its long-standing heritage of rationality.

Samsung Philosophy read, “We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society,” Gun Heng Lee articulated the Samsung spirit as the need “to actively participate with our customers, to recognize and confront the global challenge and to create a better future for all.” The Samsung Philosophy & Spirit were instrumental in establishing corporate values and developing employee behavior that facilitated building a first-class company in the 21st century with the time-honored corporate heritage of Samsung.

A strong commitment to Samsung’s values was achieved through Samsung’s human resource development (HRD) philosophy, which focused upon respecting people and living by the belief that “a company is its people.”

Samsung’s HR played as a strategic partner have a deeper understanding of the company’s business environment-past, present, and future, to influence the organization’s strategy to meet the demands of the marketplace. Besides, HR team was able to assess the organization’s capabilities on how all the organization’s subsystems interact to create & maintain alignment, rebalancing the organization as the market shifts.

The Organizational capabilities index (OCI), it’s a tool to measure organizational effectiveness and to “map” company’s human capital aligned.

There are 5 key organizational variables can be used to determine alignment.

1. Strategic alignment & cohesiveness - how well the strategic priorities are transmitted, shared, and made consistent with people’s value & behaviors.

2. Customer focus - the strategic, performance, and people approaches needed to successfully focus on the customer relationship

3. leadership & talent management - how the leadership style, communication, motivation, commitment, and behavior create the climate that’s necessary for the organization to be productive. 4. performance - how the processes and day-to-day behavior & activities match & support the strategic priorities 5. Culture - the value & beliefs of employees & the processes that directly link them so that their behavior supports the strategy

Byung-Chull Lee had modeled the HRD philosophy on his deep involvement with his employees to develop their talent, to encourage employees and express his appreciation for their extraordinary efforts. This applied to leadership & talent management in the development of HRM system. The Samsung Human Resources Development Center (SHRDC) which established by HoAm-Kwan in 1982 also implemented the “Samsung with high potentials” vision and foster its commitment to employee development. SHRDC played an important role in maintaining and developing a cohesive Samsung culture through people.

As Samsung’s global ambitions strengthened in the late 1990s, it realized the need to build competitiveness in its management and HRM practices for greater success in the global marketplace. Samsung adopted a new management paradigm to foster an environment of creativity and innovation. A new HR policy (Shin In Sa) that revamped a number of critical HR functions, including promotion, compensation and performance appraisal, was introduced in 1995. Its purposed was to create the maximum possible value for the employees and the company through a strategic alignment.

Another critical area that Samsung would need to analyse is the impact of globalization in shaping the individual and organisational values that has helped transform South Korea’s societies. It is interesting to note the theory by Hofstede on “Uncertainty Avoidance” and another aspect of “Long-term Orientation’

Uncertainty Avoidance
According to Hofstede Theory, South Korea exhibited high uncertainty avoidance where they maintain rigid codes of belief and behavior. South Koreans are intolerant of unorthodox behavior and ideas. However, societies have transformed and demand for higher technologies gadgets are increasing every day. As such, Samsung’s corporate has developed a culture different from South Korea because of one of their values “Economic contribution to the nation” where Byung-Chull Lee was driven by a passion to make a meaningful contribution to Korean society and to meet with all the demand. They are open to ideas, technology and innovation from the outside which is totally different from the South Korea original culture. Samsung’s values consisted of five factors which are People, Excellence, Change, Integrity and Co-prosperity. Samsung provide opportunities for the employees to perform to their fullest potential and because Samsung believed that it could only survive if it constantly strove to innovate, it has taken the initiative to execute change and innovation with risk awareness. Byung-Chull Lee spent 80 per cent of his personal time to develop talent and he often sat down with several groups of middle managers to share his ideas and/or seek their input that has displayed their values that have been developed in the company for years. Samsung even developed a program know as New Employee Orientation (NEO) to help employees to adapt to the Samsung culture and values

Long-term Orientation
South Koreans followed the teaching of Confucius where the society shows a pragmatic future-oriented perspective rather than a conventional historical short-term point of view. The companies in South Korea believe that there are to serve the stake holders and society instead of making monies. Samsung culture is much different and it can be commented as having a short-term point of view. Samsung has developed a lot of programs and training courses for the employees in order for them to adjust to the Samsung culture and as explained by one of the executive-level employees they have sacrificed themselves for Samsung, obedient and followed the rules set by Samsung. But Samsung has not expected that globalization will affect the South Koreans thinking and the problem arises when there is a generational gap between Samsung and the new employees. The new employees known as the “digital natives” described the current Samsung culture as “conservative” because Samsung would like all the employees to follow their culture. The new employees have a different thinking and behaved contrary from Samsung culture which the older generation in Samsung can’t accept it. The digital natives prefer Samsung to be more open and communicative. Samsung did not consider the globalization when programs were developed but focusing solely on their cultures and how to input those cultures into new employees to continue with the spirit of Single Samsung. The consequences that Samsung will have to bear is to re-evaluate its program to better bridge generational gaps but having the new employees embrace the culture of Samsung as well.

How should Samsung approach the current issues. Should it remain to uphold the single Samsung Sprit and Values?. Our team looks closely into this and recommend our proposal in bridging the gaps to further strengthen the culture alignment with in the organisation. But before we elaborate our recommendations, lets detail out the current Samsung Values and Spirit.

Current Samsung values:

With the new Samsung Leader in placed, Gun- Hell Lee. He revolutionised the existing 3 core values set by the founder, Byung- Chull Lee and enhanced it to Five main factors/areas: “People, Excellence, Change, Integrity and Co-prosperity”. These values evolved from the original values that looked at three important areas which were the values used as the key ingredient to set the right culture

1. “Economic contribution to the nation”- serves the national economy and global community

2. “Top priority to the people”- to ensure strong commitment to attract, retain and train people as core asset

3. “Pursuit of rationality”- develop mindset to think of sustainable efforts in ensuring growth .

Looking at the existing values, we believe that the Samsung spirit and values (ie 5 factors) should remain, as it addresses the core substance of sustaining any organisation. However, what could differ is the meaning and explanation behind the factors which needs to be relooked at to address the diversity of generational as well as new demographics of Samsung’s current workforce ie non Koreans, American Koreans, expat, etc.

The Samsung spirit:

What is it? It was a genius way, advocated by Byung to gel and portray the workforce of Samsung people in comparison to the normal/conventional South Korean corporation which reads “ We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society.” It sets a tone and inculcates a different pioneering spirit and sets a culture where employees understand the purpose of its existence and the end goal of contributing to the well being of society.

To ensure that the motivation, loyalty and commitment to the company still stand, there needs to be a few areas where the Samsung Human Resource Development Centre (SHRDC) should focuses are on. These efforts will be addressed in the “Bridging Strategy” which hopefully will be able to address the value differences in diversity for Samsung. There is definitely a need to change. We have highlighted above some of the issues that the management is going through and the team has come up with some recommendations to apply appropriate intervention plans to help. One suggestions is to relook at the current values statement- what we recommend is to strengthen the meaning so that it reach can address not only the old and loyal employees but the new generation and the non Korean employees—together the people in Samsung can internalize and institutionalize it better. Hence, in the below tabulation we have outlined the improve value statement as one of our proposal on bridging the generation gaps.

|Values |Current Statement |Bridging Strategy- Improved Statement |
|People |We value our people with a strong belief in “ A|We value our people as we strive to create a |
| |company is its people” philosophy and providing|culture that fully understands its sense of |
| |opportunities to perform their full potential |belonging, duties and responsibilities and how |
| | |this contributes to the well being of peoples |
| | |and nations wherever Samusng operate. |
|Excellence |We give our best efforts with endless passion |Strive for excellence, we need to uphold |
| |and a challenging spirit to become world best |professionalism- to ensure our commitment, be |
| |in every ways |innovative, be proactive and a have a |
| | |continuous pioneering spirit |
|Change |We rapidly take the initiative in executing |We need to understand the changing environment |
| |change and innovation with risk awareness; we |that would set us a part from our competitor to|
| |can not survive if we do not constantly strive |ensure we are the benchmark for best practices |
| |to innovate |and evolving |
|Integrity |We act in a right and ethical way in all |Honest, transparent and upright in our approach|
| |manners, ensuring fairness with hone and grace |to ensure that all levels of people in the |
| | |organization is acting in a professional |
| | |manner. |
|Co- prosperity |We take full responsibilities as a good |To create a harmonious balance not just on a |
| |corporate citizen in pursuit of mutual |global scale towards mankind but also towards |
| |prosperity with our community, nation and human|sustainability development |
| |society | |

Its important to note that an appropriate medium is used to ensure that when Samsung drives the changes through its transformation programme—the management needs to ensure that it properly plans, synthesize and facilitate the change. Management is the KEY to ensure a difference can be made and seen.

Another recommendation that we would like to propose the Samsung’s management is to relook at the NEO Programme and suggest some slight changes that needs to be infused into the programme. This is to address SHRDC’s new strategy of hiring Korean-American engineers, expatriate, recruitment of high caliber operators who were ranked among the top at leading high schools in South Korea--whereby the compensation and benefit scheme is different compared to the local package. This could create some tension and could in the long run demoralize the people who are the core asset of Samsung. SHRDC would need to realign its compensation, promotion or bonuses to be fair to the loyal and hard working Koreans as they may not have the opportunity of leading complex and large scale projects for the company

We believe that the NEO, original intent and the core objective of the programme is a crucial step for new employees to adjust to the Samsung Culture as well as inculcate Samsung Spirit among new employees. The steps are as follows:

1. Learn the Samsung Spirit –incorporate Samsung’s history, philosophy and values

2. Modules on Etiquettes of working with senior colleages

3. Exposure to understand how to solve problems the Samsung Way

4. Exposure to real life business challenges through simulation

5. Mentor-mentee programme

We have tabled out in the new and improved intervention that we believe can tackle the challenges and issues from the current NEO Programme if not addressed.

|NEO Areas |Current Programme |Challenges/ Issues |New and Improved Intervention |
|Target Audience: |Was designed for fresh South|Profile of new employees changing drastically. |To ensure that a sense of belonging is |
| |Korean college graduates. |2008-2009: An increase up to 50% of experienced |consistent throughout, the programme would |
| | |employees recruited |need to incorporate for the different |
| | |Foreign Employees recruit in 2009: Up to 34% |demographics. |
| | |The Gen-I or the “digital natives” are linked less | |
| | |to tradition. Influenced to market forces and IT |Some of the modules and approach needs to be |
| | |Savvy. |revisited and re-engineered in a creative |
| | |Attitude is open, dare to challenge and communicate|way. The normal way of communication |
| | |whats on their mind. Believes of work- life |through lectures will need to incorporate ie |
| | |balance and usual are money oriented compared to |live communication, videos, social networks, |
| | |loyalty |current affairs. |
| | | |Senior Colleagues will also need to undergo a|
| | | |“change” to understand and accept the |
| | | |generation gap and how to adjust and be more |
| | | |open minded |
|Programmes |Designed to focus on | |Need to also include: Innovation and |
| |philosophy value and culture| |creativeness ie up to date technology or |
| | | |processes/system |
| | | |Competitors- Samsung workers need to view |
| | | |themselves in a competitive manner- |
| | | |pioneering spirit |
| | | |Benchmark- best practices from industry |
| | | |Develop Competency |
| | | |Mentor Mentee can remain |
| | | | |

Nevertheless, we believe that other programmes in Samsung can still be sustain, especially with their three main programmes

1. Samsung Shared Value Program (SVP)

2. Samsung Business Leader Program (SLP)

3. Samsung Global Expert Program (SGP)

Last but not least, and effective change needs to be wholesome in manner. Our recommendations above can be summarise through the commitment of the leaders, through proper and right medium of communication, the enablement are supported and last but not least the program management properly implemented.

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