...A Conversation Driving Culture Change at Samsung Semiconductor Dr. Ho-Kyoon Chung and Grant Gustafson Samsung Electronics Co. Ltd., since its foundation in 1969, has developed a broad range of electronics and related items from semiconductors and finished home appliances to telecommunications hardware and multimedia products. A listed company on the Korean Stock Exchange, Samsung Electronics’ sales reached US$20 billion in 1996. Samsung Semiconductor, the largest of Samsung Electronics’ four core business divisions, is one of the world’s leading semiconductor makers. In 1995, Arthur D. Little conducted a corporate assessment of Samsung Semiconductor in Korea. The assessment delivered one essential message – while the company’s historical success was based on being an exceptional technology/product follower with a mass production focus, future success would require technology/product leadership and a strong customer focus. One key characteristic of the historic success model was a rigid, authoritative organization and culture. In workshops with Samsung Semiconductor’s top executives, it became evident that a more fluid organization and culture is required for Samsung Semiconductor to achieve its future success model. Samsung Semiconductor recognized the need for guidance and facilitation in implementing a process to enable it to achieve this challenging vision. It turned to Arthur D. Little for assistance. The challenge for Arthur D. Little was to identify the critical cultural...
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...A Conversation Driving Culture Change at Samsung Semiconductor Dr. Ho-Kyoon Chung and Grant Gustafson Samsung Electronics Co. Ltd., since its foundation in 1969, has developed a broad range of electronics and related items from semiconductors and finished home appliances to telecommunications hardware and multimedia products. A listed company on the Korean Stock Exchange, Samsung Electronics’ sales reached US$20 billion in 1996. Samsung Semiconductor, the largest of Samsung Electronics’ four core business divisions, is one of the world’s leading semiconductor makers. In 1995, Arthur D. Little conducted a corporate assessment of Samsung Semiconductor in Korea. The assessment delivered one essential message – while the company’s historical success was based on being an exceptional technology/product follower with a mass production focus, future success would require technology/product leadership and a strong customer focus. One key characteristic of the historic success model was a rigid, authoritative organization and culture. In workshops with Samsung Semiconductor’s top executives, it became evident that a more fluid organization and culture is required for Samsung Semiconductor to achieve its future success model. Samsung Semiconductor recognized the need for guidance and facilitation in implementing a process to enable it to achieve this challenging vision. It turned to Arthur D. Little for assistance. The challenge for Arthur D. Little was to identify the critical cultural...
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...I. SIEGEL JAMES JINHO CHANG Samsung Electronics Introduction Kun Hee Lee, chairman of the Samsung Group, contemplated his company’s strategy while sitting in the basement office of his home. His office had a one hundred-inch screen on the wall, and in front of the screen there was a short desk, just one foot in height. Lee spent much of his day in this room, studying the strategies of his competitors and overseeing multibillion-dollar investment decisions. Beside his desk were hundreds of DVDs and videos, many examining his competitors’ histories and strategies. Every new product made by Samsung and its competitors sat along the walls. Trained as an engineer, Lee eagerly picked apart every product, examining its design and quality of manufacturing.1 As he sat next to his low desk and sipped a cup of Korean green tea, Lee wondered whether his legion of Samsung employees was following his stern advice to always demand superiority in product design and process efficiency. He had grave concerns about complacency in his company. He remembered how he mentioned in a senior management meeting: “To an outsider, reprimanding a manager whose division racked up [billions of dollars] in profit might seem bizarre. But I don’t see it that way. Our abilities and efforts did play a role in our success, but we must realize that most of it came from the leading companies’ negligence, pure luck, and our predecessors’ sacrifice.”2 Under Lee’s leadership, Samsung had risen to become the world’s...
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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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...Samsung Electronics Prepared by: M. O. Prepared for: Dr. N. C. Course: Organizational Strategy, MGM 6123, Fall 2009 [pic] Date: October 5, 2009 H. State University Samsung Group is one of the leading global conglomerates originating in South Korea, termed chaebol in native terms. Their sales in 2004 climbed to $134billion with 337 overseas operations in 58 countries and they employed 212,000 people worldwide. They have myriads of businesses in a wide variety of industry sectors including electronics, finance, trade and services (Siegel and Chang, 2005). In 1974 a semiconductor company in South Korea started ‘wafer’ production. This was purchased by Samsung Company who merged the semiconductor company with their electronics division to form a ‘global powerhouse’ (Siegel and Chang, 2005). They started with producing watch chips. In the 1980s, semiconductor was decided to be the future of Samsung Group. And the company gave most of its resources to this ‘star affiliate’ (Siegel and Chang, 2005). During 1983 to 1985, Intel exited the DRAM market. Samsung still held on despite incurring losses hoping that it would someday pay off. Their persistence paid off in later years. Samsung built its first large plant in the mid 1980s. Building a semiconductor facility is difficult and time consuming, because of high sensitivity to dust and electric shock. But the Samsung workers, from the executives, engineers, down to the field laborers, were highly dedicated. One memorable...
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...1. Develop a cause map depicting Samsung’s situation at the end of the case. See Exhibit 1 2. Strategy: a. Research & Development (R&D): b. Human Resource: c. Finance/Capital: d. Production: e. Marketing/Sale: 3. Cost and differentiation advantage: Samsung had both cost and differentiation advantage over its rivals. Kun Hee Lee, chairman of the Samsung Group, stern advice to his employees were to always demand superiority in product design and price efficiency which were directly related to cost and differentiation advantage. As a high-volume buyer, Samsung benefited discounts offered from raw material suppliers which had resulted Samsung’s cost to manufacture a DRAM chip to be lower than its competitors. Samsung’s ability to produce over 1,200 different variations of DRAM products was a huge advantage which was unmatched by its competitors. Samsung also provided “Specialty products” using customized architecture for niche markets. 4. Describe the resources and capabilities that form the basis of Samsung’s cost or differentiation advantage. a. Resource: Samsung had three types of resources: tangible, intangible and human resources as shown in Exhibit 2. Samsung’s R&D facility and its fab lines were collocated at a single site as opposed to its competitor’s facilities which were located at various locations. Samsung had the capital to invest in its R&D to master new technology, design and marketing of advanced technologies; and which contributed to produce...
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...economic activity. One remarkable change lies in the once widely used investment development path (IDP) paradigm. In many newly industrialized countries, MNEs have accelerated their internationalization, leading to an increase of outward FDI from those countries on a scale earlier than the IDP would suggest. This report introduces some IB theories such as OLI and IDP, and explains why these theories are more useful for describing the internationalization process of large established IB firms but less so for IB firms from newly industrialized countries. Also, the role of globalization in changing the predictions of IDP paradigm as well as how Samsung took a major role in enabling Korea to outpace its IDP position have been illustrated in this report. 2. IB theories (IDP, ILO) and their invalidation for IB firms from NICs In this case, IB theories are essential for describing the internationalization process for established IB companies, while they are less valid for NICs IB companies. This part mainly introduced the two theories and the reasons why those IB companies from NICs do not follow the rule of the theories. 2.1 IDP paradigm: In this paradigm, countries have a...
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...Samsung Case After reviewing Samsung’s current position in the semiconductor and memory chip industry, Swift Consulting has come up with a full analysis on the threats and opportunities facing the company. The primary threat facing the firm is the entry and growth of Chinese semiconductor companies. To respond to this threat, it is our assessment that Samsung should allocate less production to capacity to Dynamic Random Access Memory, and increase production and research to the more rapidly growing higher end Dynamic Random Access Memory, Static Random Access Memory and Flash memory markets. When Samsung entered the memory chip market, they gained market share by initially taking a loss on DRAM, because the company believed they would see future profit. The Chinese companies are following the same strategy to gain ground in the industry by their ability to produce at a high level, and sustain a loss. Samsung’s biggest threat in the semiconductor industry is the Chinese company Semiconductor Manufacturing International Corporation. By licensing agreements with German based Infineon, Japan based Eplida, subsidies from the Chinese government and private investment; SMIC has had profit increase of over $300 Million from 2002 to 2003. The secondary threat in facing Samsung is that China is expected to become the world’s second largest purchaser of semiconductors, after the United States. SMIC and the Chinese markets are deeply invested in lower end DRAM. By extensive research...
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...Competitive Intelligence – Samsung Electronics Project 4 Sarah Stottsberry Samsung Electronics is one of Samsung Group’s multinational corporations. Samsung Group is South Korea’s largest conglomerate that serves several major global industries including but not limited to electronics, machinery, chemical, financial services, engineering, and entertainment. Company Vision "Leading the Digital Convergence Revolution" Outstanding financial returns during the semiconductor boom of the mid-1980’s gave Korean firms, like Samsung Electronics, the financial capacity to devote funds to R&D that has ultimately made them the leaders of the digital convergence era. As a leader, Samsung is dedicated to providing a world that is networked together including core components such as memory chips, along with, A/V equipment, computers, telecommunications devices, home appliances and other products that will offer a total solution for the digital convergence era.[1] This Digital – eCompany focuses on networking devices together, along with streamlining productivity in order to maximize R&D return. Business Areas CTO (Corporate Technology Operations): Leads R&D activities at the corporate level by defining mid to long term range strategies, enhancing R&D efficiency, and by developing shared technologies across software and production. • It strives to acquire better foresight than competitors • Company-wide R&D action plans provide better technological readiness...
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...ELECTRONICS INDUSTRY IN ASIA Research Paper Series No 3 In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea Jiwon Han, Wol-san Liem, and Yoomi Lee Research Institute for Alternative Workers’ Movements, South Korea In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea © 2013 Asia Monitor Resource Centre Asia Monitor Resource Centre Flat 7, 9/F, Block A Fuk Keung Industrial Building 66-68 Tong Mi Road Kowloon Hong Kong Tel: (852) 2332-1346 Fax: (852) 2835-5319 Website: www.amrc.org.hk The paper may be reproduced in any non-profit publications; credit is requested. In the Belly of the Beast: Samsung Electronics’ Supply Chain and Workforce in South Korea By Jiwon Han, Wol-san Liem, and Yoomi Lee (Research Institute for Alternative Workers Movements) February 2013 Edited by Asia Monitor Resource Centre Research team: Jiwon Han, Wol-san Liem, and Yoomi Lee The Research Institute for Alternative Workers Movements (RIAWM), Seoul, South Korea, was established in 2010 to contribute to the revitalization of the workers movement in South Korea and beyond. RIAWM is working to critically analyse the conditions workers face amidst the structural crisis of capitalism, and develop concrete policy for workers movement that both improves workers’ lives and strives towards an alternative political-economic system. RIAWM is affiliated to the social movement organization People’s Solidarity for Social Progress, founded in...
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...rights reserved. Case Summary Korea Semiconductor company founded, began with Wafer production. And acquired by Samsung latterly Crisis : 2001 – 2002 Semiconductor Industry Crisis Growth : Semiconductor Industry has 16% of growth rate On average, 1960 - 2000 1980s, Samsung Group more focus on Electronics market and found Samsung Electronics, manufacturing in South Korea built 8” Wafer technology developed, dramatically shift to Samsung of production capacity Recovery : Samsung survived crisis with their competency and Branding strategy Samsung Brand being listed as 21st valuable brands in the world by Interbrand Corp. Samsung Group started Electronics industry in television market 1960 1969 1974 1980 1992 Copyright © 2012 by College of Management, Mahidol University. All rights reserved. 2004 2005 Industry Summary Semiconductor Industry Market Size ตลาด DRAM in 2003 ($19.5 Billion) Avg. Growth rate = 16% Sales = $200 Billions (1996 – 2000) 68.2 521.5 896.4 535.3 Logic Chips 672.8 19% Samsung Micron Infineon Hynix SMIC 3% 33% Sales = $166.3 Billions 20% Memory Chips Production Volume in million unit 256 Mbit equiv. EXHIBIT 4 Sales = $33.7 Billions FLASH 32% Mobile devices SRAM 10% Server & Workstation DRAM 58% Desktop Copyright © 2012 by College of Management, Mahidol University. All rights reserved. 25% Samsung Micron Infineon ...
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...Strategic Management Case Analysis: Samsung Electronics Memory chips were further classified into DRAM (Dynamic Random Access Memory), SRAM (Static RAM), and Flash memory. Flash memory, which was the hot-growth area, was used heavily in digital cameras and mobile phones. While DRAMs lost data when power was turned off, Flash memory could continue to store data in the absence of a power source. Considering the fact above, the flash memory market in the future will be very attractive. Along with the technology development there will be so many electronic devices using flash memory. Samsung started to create the advantage in Flash memory that it enjoyed in DRAM. Started in 1999, Samsung was seeking to move some of its production capacity from DRAMs to flash memory. Nowadays, people are always looking handy electronics device with multifunction ability and able to store huge data. Therefore, if Samsung makes investment in Flash memory technology, then it would be their advantage in the future. Foundry companies, whose sole business is manufacturing, have recently come to the fore, providing attractive outsourcing options. In addition to foundries, the ranks of increasingly specialized designers and chip testers are starting to swell. Chip companies are emerging leaner and more efficient. Four main product categories: Memory: Memory chips serve as temporary storehouses of data and pass information to and from computer devices' brains. Companies: Toshiba, Samsung and NEC Microprocessors:...
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...Segmentation * Macroeconomic indicators * Competitive forces * Market forecast * Competition * Key drivers * Challenges CORPORATE ANALYSIS The company that has been analysed is Samsung Electronics. Samsung electronics is the flagship subsidiary of the Samsung group. The reason we chose Samsung is that it is also conglomerate similar to AVG group with diversified interests in manufacturing, shipping, petrochemicals and financial services. The company has been able to venture successfully in alien businesses and soon become a major player in the industry. Since its entry in India in 2002, there has been no looking back for the company. It has grown from strength to strength. It is now one of the largest companies in consumer electronics and is also among the most profitable ones. It is now the leader in the TV market and is among the top three in most of the consumer durables segment. It has eight subsidiaries under the electronics division and each responsible for one product Eg Samsung Mobile display: This SBU is responsible for the manufacture of LCD’s, TFT’s and the support products for all Samsung products. Samsung SDS : This SBU is responsible for consulting, BPO and Information Communication Technology outsourcing and solutions. Samsung Corning Precision Materials: This SBU looks...
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...Samsung Electronics: An Analysis Swati Poddar H13115 Situational Analysis * Samsung has become the world’s leading memory producer for all types of PC’s, digital cameras, game players and other electronic products in terms of low cost and productivity * Samsung offered 1200 variants of DRAM products with products ranging from “frontier products” to “legacy products” and “speciality products” * Memory chip industry is expecting to experience a cyclic downturn * Chinese counterparts are attacking Samsung’s DRAM market * Because of the amount of resources they had attracted from Chinese and foreign investors, these Chinese competitors could afford to sacrifice profits for market share Porter 5 Forces Analysis Threat of New Entrants The threat of any new entrant can be measured by the number of barriers to entry of new players. In the case of semiconductor industry, Samsung possesses very high economies of scale, which leads to lower production costs i.e. cost to company. Any new entrant not is able to match these prices. Moreover, setting up a new production unit for an entrant will incur high fixed costs. This too serves as a barrier for a new entrant as compared to an incumbent industry player. Samsung also has a number of design patents as well as technological superiority which cannot be matched by a new player. Hence, threat from a new entrant is low. Threat of Substitutes For Samsung, there are not any substitutes for memory chips in the market...
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...company headquartered in Samsung Town, Seoul. It comprises numerous subsidiaries and affiliated businesses, most of them united under the Samsung brand, and is the largest South Korean chaebol . Samsung was founded by Lee Byung-chul in 1938 as a trading company. Over the next three decades, the group diversified into areas including food processing, textiles, insurance, securities and retail. Samsung entered the electronics industry in the late 1960s and the construction and shipbuilding industries in the mid-1970s; these areas would drive its subsequent growth. Following 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. Notable Samsung industrial subsidiaries include Samsung Electronics, Samsung Heavy Industries, and Samsung Engineering and Samsung C&T . Other notable subsidiaries include Samsung Life Insurance, Samsung Everland, Samsung Techwin and Cheil Worldwide . Samsung has a powerful influence on South Korea's economic development, politics, media and culture, and has been a major driving force behind the "Miracle on the Han River". Its affiliate companies produce around a fifth of South Korea's total exports. Samsung's revenue was equal to 17% of South Korea's $1,082 billion GDP. In 2013, Samsung began construction on...
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