...Samsung: Uneasy in the Lead By ERIC PFANNER and BRIAN X. CHEN December 23, 2013 Lee Kun-hee, the man who built the most successful, most admired and most feared business in Asia — a $288 billion behemoth that is among the most profitable in the world — had a message for his employees this year: You must do better. At other companies, congratulations might have been in order. His companies were headed to another extraordinary year. But this was Samsung, the South Korean industrial group that Mr. Lee, an elfin man with a stubborn will, transformed from a second-rate maker of household appliances into a conglomerate with a flagship electronics business that has left most rivals eating its silicon dust. There would be no pat on the back for Samsung’s 470,000 employees. Instead, in June, he sent a companywide email sternly urging them to raise their game. “As we move forward, we must resist complacency and thoughts of being good enough, as these will prevent us from becoming better,” Mr. Lee, who is 71, wrote. Samsung’s management, he said, “must start anew to reach loftier goals and ideals.” Two decades earlier, having taken over the company from his father, Mr. Lee met with dozens of his executives and gave them a similar order, one that remains embedded in company lore: “Change everything but your wife and children.” That message was effective. Samsung’s sales are equal to about one-quarter of South Korea’s economic output. Samsung Electronics, the flagship, posted $190...
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...Samsung The Memory Industry Threat of New Entrants: High Because the barriers to entry in the DRAM industry are quite high, it makes the threat of new entrants high as well. These barriers to entry include, extremely high fixed costs, economies of scale, and high switching costs. Huge capital is invested into the first two stages—the design and fabrication stages—of the process, but in addition to that, the investment for human resources is particularly high since they need highly skilled human resources for each of these stages. This implies that as new entrants coms, they need to take a capital risk premium, making barriers to entry high. Another burden for new entrants in this industry is economies of scales. If new entrants only enter on a small scale, this causes a great cost disadvantage for them. Furthermore, since most DRAM producers are vertically integrated, these firms face a cost advantage in procurement and sales. Threat of Substitutes: Low For the DRAM industry, the threat of substitutes is relatively low because there are virtually no substitutes for DRAM that have the same functions. However, in the future, flash memory chips may be a potential substitute for DRAM. Bargaining Power of Suppliers: High The power of suppliers is moderately high since the timing of the supply getting to the producers and the quality of the equipment producers are using to manufacture these chips are critical factors to developing and producing DRAM. On account of the high...
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...SAMSUNG ELECTRONICS CASE STUDY Attention: Chairman Kun Hee Lee Ariadna Torres Niubo 2016400073 Corporate Strategy - What recommendation would you make to Chairman Lee regarding Samsung’s response to the threat of large-scale Chinese entry? Why you make such recommendation? Samsung should defend its technological leadership and its benefit advantage, investing in R&D, strengthening its superior product, design and process efficiency to fight against the Chinese competitors. The company has to focus more on Flash and less in DRAM or SRAM, should start winding down PC chips and focus more on mobile and should defend the older generation of the legacy market for the next decade. If we talk about DRAM, in terms of frontier products we can see that Samsung has a core competence in design while China has a lack of technology and will need at least 10 years to catch up them. Due to this, Samsung should continue developing new frontier products in DRAM. Moreover, in terms of legacy products this are the ones that will take the biggest hit due to the ability of China to cheaply produce mass older generation chips. Despite that fact, Samsung can still defend its position near-term. They should produce for more or less 10 years until China gets good. After this, they should wind this down and outsource this production to Chinese MFGs by sharing blueprints. Finally, in terms of specialty products this are the ones that should require to be produced to...
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...“Samsung” case study 1. Introduction: Samsung Electronics Company, henceforth called “Samsung” in this case, was established in 1969 to manufacture black-and-white TV sets. In 1974, Samsung, which was a producer of low-end consumer electronics, purchased Korea Semiconductor Company and began its semiconductor industry. Under the leadership of the chairman of Samsung Group, Kun He Lee, Samsung has risen, with a remarkable speed, to become the world’s leading memory producer, ranking 2nd just behind Intel. Meanwhile, Samsung used the earnings from memory division to invest in various technology products like mobile phones, liquid crystal displays and so on. These businesses made Samsung generate the second-largest net profit of any electronic company outside the US. In spite the current success, Samsung was facing the competition from Chinese producer that would sacrifice profits for market share by providing cheap DRAM products. So what should Samsung do? There are 3 potential options: 1. Directly confront the competition from Chinese companies, perhaps by driving down DRAM prices, offer favorable service or coalescing with other memory producers. 2. Cede the DRAM market and shift to other businesses. 3. Collaborate actively with Chinese companies, maybe by expanding joint investment in China. And at the same time, increase its investment in cutting-edge products, particularly for new niche markets. The following paragraphs will first focus on analyzing memory market...
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...parts which is the third industry sector. Next sector is the computer manufacturers like Apple and Dell. After this the value chain has service companies for the computers as well as the retail network to sell the computers as the next industry sector. Betz in this case study reviews Samsung Electronics, an electronics company which created laptop components but moved through the value chain to become a leading laptop manufacturer (Betz, 2011). Figure 1: Industrial value chain (Betz, 2011) Betz describes the evolution of laptop computers from without disk drive earlier model to the heavy IBM and Toshiba models in 1986. Toshiba redesigned the laptop to lighter version and became successful by 1990. With the advance of laptop adoption, operating system company Microsoft and chip manufacturer Intel grew alongside. Samsung became a major global parts supplier for laptops by 2001 (Betz, 2011). In 2001 Samsung proceeded to cross the chasm from being a parts supplier to a computer manufacturer when it sent its laptop, which was thinner and lighter than the market leader Sony Vaio, to Michael Dell. This laptop was sold by Dell in U.S. under the Dell label and helped Samsung move up the industrial value chain. Samsung also displayed how they were eager to get...
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...Case 1: Samsung Electronics 1. As for the success of Samsung today, do you think it is related to its international human resource management strategies? If the answer is yes, please explain how and why? Samsung has seen tremendous success in recent history, and 2012 has been nothing short of stellar for the consumer electronics vendor so far. So what made these successes for Samsung? In my opinion, there are some factors that bring the success to Samsung, which are: leadership, product, technology and international human resource management strategies. ➢ The Samsung’s chairman: Kun Hee Lee is ambitious, risky man and he has a very good vision to future so that he decided to invest in newly high tech in Korea which called Semiconductor by just his own personal savings. Thus, he led Samsung to be pioneer in this field. ➢ In Samsung, reliability and product quality are always considered to bring perfect products to its customers. Moreover, “Customized architectures for niche market” was also used for producing. ➢ Besides, the international human resource management is still concerned with the following strategies below: - Expatriate strategy in which it highly appreciated the foreign employees is used. - Focusing on Global strategy group by encouraging talent from around the world. - Investing a lot of money on training its own expertise to be global by sending the potential one to foreign countries to learn local language and culture. - Using Reward...
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...Company Case 8 – Samsung: From Gallop to Run 1] How was Samsung able to go from copycat brand to product leader? Samsung started out as a maker of cheap consumer electronic knock-offs. CEO Lee Kun-hee has taken major strides to make Samsung the company it is today. In 1993, Lee unveiled what he called the “new management,” which was a top-to-bottom strategy for the entire company. Under Lee’s new management, he took Samsung Electronics in a very ambitious new direction. His goal was to make Samsung become a premiere brand that would dethrone Sony as the biggest consumer electronics firm in the world. Instead of being a copycat, Samsung was to become a cutting-edge product leader. As part of Samsung’s revamped strategy and positioning, along with developing stylish and innovative new products, the company altered distribution to match. Samsung quickly abandoned low-end distributors such as Walmart and Kmart and built strong relationships with specialty retailers such as Best Buy. 2] Is Samsung’s product development process customer-centered? Team-based? Systematic? Customer-centered new-product development focuses on finding new ways to solve customer problems and to create more customer satisfying experiences. Samsung uses the product development process by using market testing. Samsung created the “Wow!” test which every new product had to pass. If the product did not pass the “Wow!” test it went straight back to the design studio. Team-based new-product development...
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...Samsung case I. How attractive is Samsung’s primary (core) industry? Founded in 1938, Samsung is one of the industry leaders in a multitude of industries from power generation through to smart phones (Kovach, 2013). Each of their business units adhere to the same vision of becoming the preferred supplier of products and/or services to their clients, but the methods used to achieve this vision are tailored to suit the specific market focus, therefore demonstrating the adaptability of the company. The biggest players are Apple, Samsung with well over 50% market share. Samsung has achieved these amazing results due to its success in the mobile business, which contributed more than two-thirds of its operating profit. Anyone following Samsung, however, should not overlook its other businesses. In Samsung's non-mobile businesses, the company holds a leading position in solid industries and has consistently increased its year-over-year operating profit for the last several quarters. Most of the innovation for the Samsung products shared the same core design. Samsung flexible product line able them to materialize those ideas to end products with minimal cost occurred. For every new invention and innovation, Samsung does not need to set up a new facility. The results, higher yield against the cost of the production. Lower cost of productions allowed Samsung to offer attractive and competitive price for the consumer. The relatively lower cost gives lots of rooms for the pricing...
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...Marketing Case: Samsung Samsung, is a Korean consumer electronics company. Originally, Samsung was a provider of valued priced commodity products that original equipment manufacturers sold under their own brands, now, is a global marketer of premium-priced Samsung-branded consumer electronics such as, flat screen TV’s, digital cameras, digital appliances, semiconductors and cell phones. Some of the Marketing Strategies that Samsung uses are: Growth and Innovation: the first combination of strategies that this company has used is growth and innovation. Samsung’s cell phones, have been a growth engine for the company that allow the company to innovate in the market with unique products, such as the PDA phone, the first cell phone with an MP3 Player, and the first Blue-ray disc player. All these products have positioned Samsungs as one of the most innovative technology brand. Financial Strategy: During the Asian financial crisis of the late 1990’s when other Korean chaebols collapsed beneath a mountain of debt. Samsung, cut costs and reemphasized product quality and manufacturing flexibility, which allowed consumers electronics to go from a project phase to store shelves within six months. This was a financial strategy that Samsung’s company used in order to perform well during the crisis. Innovation: during the same crisis, the company invested heavily in innovation and focused intently on its memory chip business, which rapidly made the company the largest chipmaker...
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...justification in 2-3 sentences (5 points) In this case, I think the marketing challenges that Samsung would be faced to are the local companies rising and costs increasing. In the part of local companies rising, for example, in China and India there are many local companies already have technology to produce products with low price to sell local customers. Besides, they have more ability to manufacture customized products to cater to local customers. In the part of costs increasing, along with the increase of global raw material costs, the low-cost advantages will be decreased in China. 2a.The pros and cons of alternative solution 1 to address these marketing issues/challenges. 2b.The pros and cons of alternative solution 2 to address these marketing issues/challenges. Status quo or doing nothing is not an option. Be sure to consider ALL relevant environmental variables: sociocultural, technological, economic, demographic, natural, regulatory (legal), political, and competitive. (10 points) 2a. The solution of first challenge is that Samsung can cooperate with local companies. Pros: Reduce costs, spread risk, access to local information quickly and meet the expectations of Governments. Cons: It may train potential competitors and it is difficult to control the business activities of cooperation company. For example, if Samsung cooperate with Xiaomi Technology in China to develop mobile phone, the technology of Samsung may be stolen by Xiaomi. 2b. The solution...
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...Introduction 1.1 Research Object Overview 1.2.1 Company History Samsung is a South Korean multinational conglomerate company that headquartered in Samsung Town, Seoul. It was founded by Lee Byung-chul in 1938 as a trading company. Over the next three decades, the group diversified into some division including food processing, textiles, insurance, securities and retail. In the late 1960s, Samsung entered the electronics industry and expand its business to the construction and shipbuilding industries in the mid-1970s. These expansion would drive the business growth over the next years. After the Lee's death in 1987, Samsung was separated into four business groups – Samsung Group, Shinsegae Group, CJ Group and Hansol Group. Since 1990s, Samsung has increasingly globalized its activities, and electronics, particularly mobile phones and semiconductors, have become its most important source of income. Nowadays, Samsung is acknowledged as a big company that has numerous subsidiaries and affiliated businesses. Most of them are united under the Samsung brand and it becomes the largest chaebol in South Korea. Figure 1.1.1 Logo 1.2.2 Vision and Mission a) Vision Statement b) Mission Statement Samsung Galaxy is a series of Android-powered mobile computing devices designed, manufactured and marketed by Samsung Electronics. At the latest of 2008, Samsung started to develop the idea of branded, full-touch smartphone interfaces in the Instinct and Omnia...
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...Case Study of Samsung’s Mobile Phone Business Boon-Young Lee∗ aliceboon@kdischool.ac.kr and Seung-Joo Lee∗∗ sjl@kdischool.ac.kr Abstract: This paper examines Samsung Electronics successful growth strategy in the mobile phone business. It examines its early efforts at developing a competitive product in the domestic market, its globalization strategies, and some of the key challenges it faces today. The paper provide insights into how a late-comer to an industry can overcome certain disadvantages and successfully position itself as a widely respected and successful brand. JEL classification: L 63, M10 Key words: Samsung, mobile phone, strategy ∗ MBA student, KDI School of Public Policy and Management Professor, KDI School of Public Policy and Management ∗∗ I. Introduction For Samsung Electronics, 2003 was a watershed year. It successfully positioned itself as one of the world’s best mobile phone manufacturers and its products were featured all over the media. Many were calling its mobile phones as “the best gift for Christmas”1 or “the Mercedes of mobile phones.”2 Samsung’s achievements were particularly remarkable considering that its primary focus had previously been in semiconductors and home appliances. Indeed, when it first made the decision to enter the mobile phone business, industry observers viewed the move as foolhardy and reckless. But, much to their surprise, Samsung’s foray into the market turned out to be a great success, contributing...
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...BACKGROUND This Samsung Electronics (hereinafter referred as “Samsung”) case illustrates the history of Samsung’s success in their strategy in getting into the Dynamic Random Access Memory (DRAM), the high growth memory market segment in 1980s when then-key player, Intel had chosen to exit the business. Despite Samsung’s high internal production cost ($1.30 for a single 64K DRAM chip) which exceeded the prevailing market price which is below $1.00, consistent with its strategy, Samsung went ahead to build its large manufacturing fabrication facility amidst Samsung’s unproven technical knowledge in memory manufacturing business, uncertain industry performance then, harsh environment to build the semiconductor facility from ground zero which is highly sensitive to dust and electronic shock. All these coupled with Samsung’s vision, perseverance and determination has seen Samsung grown to a $25.1 billion of semiconductor exports as of 2004 commanding a 10.4% of the country’s export volume. In this report, we will analyze in depth Samsung’s production cost advantages that brought this chaebol to where it is today, and how Samsung’s competitive advantage has translated to Samsung commanding a price premium in DRAMs in 2003 before providing recommendations to Samsung’s senior management to respond to the threat of large-scale Chinese entry into the industry in order to continue differentiating itself as a market leader over its competitors. QUESTION 1: WHAT ARE THE SOURCES OF SAMSUNG’S...
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...SAMSUNG Case 1. What kind of advantage are the Chinese entrants seeking? How close are they to achieving that advantage? Chinese firms have cost advantage to jump in growing market. While Samsung and the other innovative companies had focus on inventing new territories stuff, they positioned in cost advantage with using rather cheap labor. Even though they didn't have flourish experiences and tacit knowledge to require getting enough market share, still they have easy access to outside finance and talented local engineers to lead success of potential market. 2. How much of Samsung's performance is based on its reputed low-cost advantage? The biggest challenge for Samsung recently, Chinese firm has been positioned with similar strategy that Samsung did at late 80's against Japan and US market. So that they need to choose their price value for competing with Chinese market, this lead company to have cost advantage in their market. Furthermore, with based on their reliable technology, cost value will give enforcement to Samsung market barrier against Chinese competitors. 3. Can Samsung's low-cost advantage withstand the Chinese threat on costs? Samsung's major business strategy is to be innovative market leader, they have anticipated to future potential market, not just rely on short term profit. They had move faster step forward than other competitors. The reason Samsung's low-cost advantage can withstand the Chinese threat on costs is that, as one side, they actually...
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...Maintaining the “Single Samsung” Spirit: New Challenges in a Changing Environment Caryn Ng Kar Yan B1102572 Keah Mei Sian B1102580 Nur Fathiha Bte Johan Ariffin B1100381 Mohd Roshan bin Mohd Yusop B0101223 Sarkunarajah S B1001971 Wan Arjunaidi Bin Awang @ Wan Abdul Halim E0300073 Abstract Samsung portrayed a very interesting and impressive success story in every aspect of development. Although they were hit hard by financial crisis in 2009, Samsung survived the ordeal with their impressive financial performance. The astonishing part of their achievement is mostly guided by internal management capability, positive aligned culture and belief system that empowering human capital is the foundation in building and maintaining a great organization. Their strong belief system in emphasizing and investing on employees well being pays off when they become the leading company beating some of the top companies such as Sony, Apple and HTC. The process and development of human capital was never an easy matter for Samsung, in fact the culture has been practiced and improvised regularly ever since 1950 to fit to the demand and maturity of the current society and technology. Nevertheless at the end, Samsung indeed make a marked in the world with sustaining a Single Samsung culture. 1. Perform a PEST on Samsung and identify the change drivers POLITICAL | ECONOMIC | * Work hand in hand with the government; consist the same agendas and values.Change...
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