Samsung Strategic Management free essay sample

1. Introduction 1. 1. Background The Samsung Group was founded by Byung-Chull Lee in 1938, in Taegu, Korea, as an exporter of dried fish, vegetables and fruits. Byung later established flour mills under the name Samsung, which means three stars in Korean language. He also produced confectionery machines in this period. In 1951, Samsung Moolsan, a holding company, was established which later The building of Samsung Sanghoe in Daegu in 1930s became Samsung Corp. in 1953, Cheil Sugar Manufacturing Co. was set up, which later became an independent company. In 1958, Samsung acquired Ankuk Fire and Marine Insurance (later renamed as Samsung Fire and Marine Insurance) and DongBang Life Insurance in 1963 which was later renamed as Samsung Life Insurance. In 1966, the Group founded Joong-Ang Development, an entertainment theme parks and services company, which was later renamed as Samsung Everland. In 1969, Samsung Electronics Manufacturing Co. (SEMC) was incorporated. In the 1970s, the Samsung Group forayed into the shipbuilding, chemical and petrochemical industries. We will write a custom essay sample on Samsung Strategic Management or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page In 1972, Samsung Electronics started to make black-and-white television sets for domestic and Original Equipment Manufacturer (OEM) markets in its factory in Seoul. In 1974, the Group acquired a 50% stake in Korea Semiconductor Co. a joint venture between Korean Engineering Manufacturing Co. and Integrated Circuit International. SEMC started exporting its products in the 1970s. In 1978, the Group’s electronics exports crossed the 100 billion won mark. In February 1984, SEMC was renamed as Samsung Electronics Co. Ltd. In 1980, Samsung acquired Korea Telecommunications and merged it with Korea Semiconductor, forming Samsung Semiconductor and Telecommunications, which then merged with SEC in 1988. In mid 80s, the small design was divided into three product areas – domestic appliances, telecommunications and computers serving an engineering driven culture in Suwon. When Byung-Chull Lee passed away in November 1987, his son, Kyun-Hee Lee, became Samsung’s chairman. In 1990, an industrial design department was established under Kook-Hyun Chung, who had joined the company in 1977 as an industrial designer. In 1995, Samsung began to mass-produce LCD Page | 5 isplays for both computers and TV sets and grew to be the world’s largest manufacturer of liquidcrystal display panels after a decade. By 2005, Samsung overtook Sony as one of the world’s most popular consumer electronic brands and now holds a position of 19 in the world rank. Samsung is considered to be the second largest by volume producer of cell phones after Nokia with a leading market share in the North America and Western Europe. 1. 2. Company Profile Samsung is the World’s largest multinational conglomerate corporation founded in 1938 by Lee ByungChul in Samsung Town, Seoul, South Korea. It has been the world’s most popular consumer electronic brand since 2005 and is best known South Korean brand in the world. Samsung is an ethical business as a digital leader with a responsible global citizen and a multi-faceted family of companies. At Samsung Group and Samsung Electronics, the products, people and approach to business are held to only the highest standards so that they can more effectively contribute to a better world. The Samsung Group is composed of numerous international affiliated businesses united under the Samsung Brand including Samsung Electronics, Samsung Heavy Industries, Samsung CT and Samsung Life Insurance. These businesses have always been able to hold a position in the world’s top business ranking providing the most powerful revenue and market share worldwide. Samsung Electronics is the sole monopoly dominating a single market in Korea and now around the world for its fastest design based products. The company has a powerful influence on the country’s economic development, politics, media and culture, being a major driving force with a total of 173,965 employees till June 30 2010 (Samsung Company Profile). Samsung Financial Highlights in 2009: Revenue: Total Assets: Net Income: Total Equity: USD 172. Billion USD 294. 5 Billion USD 13. 8 Billion USD 112. 5 Billion Source: Samsung Annual report 2009 Page | 6 1. 3. Values and Philosophy Samsung Philosophy â€Å"Devote talent and technology to creating superior products and services that contributes to a better global society†. Samsung Values: People Excellence Change Integrity Coprosperity Samsung Values, Source: Sam sung Official Page | 7 1. 4. Samsung Vision â€Å"Inspire the World, Create the Future† Creative solutions Industry New techonology Innovative Products Partner Employee Samsung Vision, Source: Samsung Official Website 1. 5. Samsung Principles comply with laws and ethical standards maintain a clean organisational culture Samsung Business Principles respect customers, shareholders and employees care for environment, health and safety socially responsible corporate citizens Samsung Principles, Source: Samsung Official website Page | 8 2. Competition As a global company, Samsung Electronics did not hold its business disciples within Korea but decentralised them locating them throughout the world. R D investment grew from $1. 81 billion in 2001 to $5. 34 billion with an increment 9. 4 percent of sales. With around 32,000 researchers in 16 research centres, Samsung had one of the largest RD organizations in the world. In 2005 alone, it registered 1,641 US patents ranking fifth at the US Patent Office (Freeze Chung, 2008). The following figures show the financial trends since 2000 to 2005: 2000 2001 2002 2003 2004 2005 Consolidated Sales 34. 6 35 48. 7 54. 1 78. 5 79. 5 Nonconsolidated Sales Domestic 27. 2 24. 4 33. 3 35. 4 55. 2 56. 7 8. 6 7. 9 9. 3 7. 8 9. 6 10. 2 Exports 18. 6 16. 5 24 28. 6 45. 6 46. 5 Net Income 4. 8 2. 2 5. 9 5 10. 3 7. 5 R D Expenditure 1. 59 1. 81 2. 42 2. 95 4. 59 5. 34 $ billion Samsung Electronics, financial highlights, 2000-2005. Source: Samsung annual reports. IMF Crisis of 1997 brought Samsung to the brink of bankruptcy. Samsung used the occasion to sell off some 100 business and to downsize the company’s workforce by 50,000 people. Samsung Electronics alone lost about 27,000 employees. But within a few years, the company was sustaining a sharp upward course on all fronts. Samsung increased its focus on its electronics division that has now become Page | 9 Samsung Electronics, which has gained global prominence as well as significant market shares worldwide despite from its Japanese and European counterparts. In 2005, the company reorganized into five businesses: Digital Media, Telecommunication Networks, Digital Appliances, Semi-conductors and LCDs. Many of its products enjoyed the leading market share worldwide. Below is the figure of Samsung’s market share in 2004 with selected categories of top three competitors: Samsung Market Shares 2004. Source: Samsung Company document The following figure shows the sales of Samsung Electronics in various regions in percentage. It largely enclosed the Asian market by 42% where as Europe being 24%, America 15% and Korea itself with 18% of sales. The least market share is held by Africa with just 1 %. Percentage of sales by region, 2005. Source: Samsung annual reports 2009 Page | 10 3. SWOT Analysis (Kamath et al. 2006) Strengths i. Market Leading Products: Samsung has a wide range of market leading products and enjoys a strong market position in most of its market segments. It is one of the leading manufacturers of digital TVs, memory chips, monitors, DVD recorders, printers, notebook PCs, DRAMs and much more. The company was the third largest cellphone seller with 12. 7 % global market share, as of the beginning of 2006. Being the market leader helps the company maintain strong brand image and attract customers. ii. Diversified Business Portfolio: Samsung manufactures a wide range of products. This enables the company to take advantage of opportunities within specific markets and locations and at the same time protects it from specific segment-related problems and makes it less vulnerable to a sudden decrease in demand for a particular class of products. The company operations are also spread over 5 major decisions: telecommunication network, semiconductor, digital media, LCDs and digital appliances, in addition to the plethora of products mentioned above. ii. Strong Brand and Global Presence: Samsung enjoys high brand awareness and reputation for innovation and quality. Its brand was ranked 20th in the world with over $ 14 billion value in 2005. A strong brand creates barriers to entry in the markets it operates in and helps guarantee future sales. The company operates in more than 30 countries whic h makes it a true global player. Almost 80% of its revenues are generated outside the Korean market. iv. High Returns: Samsung’s return on average assets, return on investment and return on average equity for the period of 2001-2005 were 10. 5 %, 18. % and 21. 9% respectively, significantly higher than corresponding electronics industry averages of 1. 9%, 3. 6% and 5. 1% respectively for the same period. High returns strengthen investors’ confidence and indicate the management’s ability to deploy assets profitably as well as take reasonable investment decisions. Page | 11 v. Strategic Alliances: Samsung has formed successful strategic partnerships with a number of well-known companies, examples being IBM, Microsoft, Toshiba, Sony and IMEC. Close relationships and cooperation with such companies provides Samsung with valuable technical knowledge. i. Focus on Research Development: Samsung’s strong RD operations enable the company to develop innovative prod ucts. The company’s research and development expenditure has grown from $1. 88 billion to $5. 44 billion over the last four years. The company filed 1,641 US patents in 2005, the fifth highest by a corporation in the US. Strong research focus has enables Samsung to develop several innovative products such as world’s largest LCD TV, the first Blue-ray player, the smallest colour laser printer and the first ultra-mobile PC. Weakness i. Poor Economic Performance: The company recorded poor operating performance in 2005. The operating profit declined by 36 % related to 2004. This decrease was mostly led by lower operating profit in LCD and digital media. Other divisions recorded diminished profits as well and the digital appliance division even had to face a loss. In the past few years the financial results were inconsistent, with repeated ups and downs concerning some crucial financial figures such as earnings before interest and taxes. Revenues declined mostly in America. Such under-performance can weaken the company’s financial position. ii. Bad Product Reception: The company’s sliding phones have not been well accepted in Europe, which affected sales and orders for components of these phones. Samsung may not be able to recover the expenses incurred from manufacturing the phones. iii. High Dependence on One Business: The company is highly dependent on semiconductor business to generate cash flows. The fact that one division contributes disproportionately to operating profit may turn into the firm’s disadvantage in case of a downtown in the sector. With the South Korea won strengthening and competition in the Page | 12 semiconductor business rising, Samsung may find it difficult to keep current profitability levels in this segment Opportunities i. Operating in an industrial with much possibility for innovation: Different electronic devices produced by Samsung offer countless possibilities in terms of their design and functionality. The company invests significantly in RD, so it is able to come up with new innovative products quickly which can satisfy the needs of various customers. It also improves Samsung’s image as an environment-friendly company as they boast of innovative energy-efficient refrigerators, mercuryfree backlights for LCD displayers or lead-free products as proof of their environmental concern. ii. Emerging Asian Markets: Leading technology companies are shifting their production base to Asia, particularly China and SouthEast Asia to take advantage of lower production costs and growing purchasing power of citizens. Those countries represent highly lucrative and attractive markets and provide good growth prospects for Samsung. Its products enjoy an excellent reception in these markets. ii. Growing Global Demand for Modern Technology: Wireless communication chips, LCD-TV panels, 3G technologies and so on are examples of products and industries with enormous growth potential. The LCD-TV market alone grew over 20 million units in 2005. Samsung is well-positioned to benefit from growing demand for those products and ready to win the correspond ing market share. Threats i. Consolidation in the PC Business: The PC business, the largest customer segment of the computer storage devices industry is consolidating. Mergers and acquisitions have resulted in the formation of large clients with higher bargaining power. This is expected to further reduce margins of computer products including monitors, LCD panels and printers thus affecting the Samsung’s margins. Page | 13 ii. Unfavourable Products Specifics and Market Developments: Electronic devices and especially computer hardware and software tend to have short lifecycles which makes their manufactures work on new improved ones all the time. Moreover the market developments in the sector may force a company to reconsider its strategy quite often. This may be the case for Samsung right now that demand is gradually shifting from performance-driven products to entertainment-driven ones like MP3. The demand for DRAM is related to the demand for PCs and for this reason the market for those products is also currently experiencing a slowdown. iii. Image Problems: After getting rid of its poor standing in America in the 1980s and 1990s, when Samsung was selling lowcost and unreliable TVs and microwaves in discount chains, there came the cases of stealing know-how and technology from Japanese competitors, price fixing in some of the company’s business and the chairman receiving an honorary doctorate of a university to which Samsung had earlier donated a large amount of money. These scandals have undermined the company’s image and proven that big and strong brands are vulnerable and exposed. Samsung is now on its way to recover its image; however similar situations in the future may result in a negative brand perception. This would have a lasting effect on sales and general economic performance. iv. Intense Competition: The company’s competitors include LG Electronics, Sony Philips, Nokia and Motorola which are large multinationals with global operations and strong performances. Most of these companies are wellpositioned to match Samsung’s capabilities, if not surpassing it. Intense competition can decrease its market share and adversely affect its already diminishing overall economic performance. v. High Raw Material Prices: The price of copper had soared up in July 2006 by four times compared to 2002 levels. During that period the raw material cost highly increased and hampered in the company’s profits. Page | 14 4. Sustainability Samsung Sustainability Performance, Source: Samsung Sustainability Report 2008 Samsung has designated Economic, Environmental and Social responsibilities as the key elements of their sustainable management. Integrating corporate management and sustainable development is an issue of increasing importance in the business world and in today’s increasing expectations for social and environmental responsibility. In response to it, Samsung has been improving the process of collecting stakeholder’s ideas and setting up corporate-wide vision and strategies for sustainable development. Samsung commits to give continuity: ? ? ? To identify various stakeholders Build positive relationships within Ultimately enhance the value for both the company and stake holders Page | 15 5. Strategy Samsung’s journey towards design excellence started in 1993 when Lee realized that Samsung was paying too much attention to volumes and the cost of production, while ignoring customer value. And therefore he decided to make high quality, exciting products in order to survive in the business world. Although Samsung had no problems in funding and creating the design infrastructure, it faced a more difficult task in convincing the rank and file at the company that design was necessary for survival and growth. Most of the employees were more concerned about costs and volumes than design because it was all about keeping the price down and outselling. In 1996, Lee announced the Year of Design Revolution declaring that design would be Samsung’s strategic edge and priority for investment. Their first Design Revolution was highly encouraged by the traditional Korean culture Taeguk, the dual principle of Yin and Yang, where the company enhanced it’s visualization on the basis of company’s tone and manner and design principles. The overarching theme was harmony expressed by the phrase â€Å"balance of reason and feeling† (Freeze Chung, 2008). REASON Life styling: Compared Lifestyle needs: Problems, trends, behaviour, Values, Unmet needs Innovative: Stay One Step Ahead: Differentiate, Fresh, Inspiring, Clever, unique ideas Coherent: Balance Consistency and Variety: Identifiable, Unified, Market-sensitive, Integral FEELING Harmonies: Harmonize with Environment: Systems, Safety, Green, Appropriateness, Accord Intuitive: Convey Agreeable Use and Meaning: Instinctive, Direct, Friendly, Simple Interactive: Design for the Experience: Exciting, Fun, Sensible, Cool, Satisfying Reason Rational Intellectual Technological Feeling Emotional Adaptable Humanistic Harmony An enterprise’s most vital assets lie in its design and other creative capabilities. I believe that the ultimate winners in the twenty-first century will be determined by these skills. I have designated 1996 as the year of Design Revolution for all Samsung products. Let us focus our strength in developing unique designs that reflect the Samsung philosophy and sou l. † – Chairman Kun-Hee Lee, New Year’s Address, 1996 (Freeze Chung, 2008) Page | 16 â€Å"The future is not to be predicted. It is to be created. – Samsung Analyst Day 2005 The second Design Revolution was into a real action by creating 4 principles: 1. Create remarkable designs and establish a user interface (UI) identity 2. Recruit and secure the world’s best designers 3. Nurture a creative corporate environment 4. Reinforce its casting technology infrastructure Concurrent with these design goals, by the end of the year Samsung had revealed technical powers in several domains, introducing world’s first in the memory, mobile phone and TV business. The World’s most valuable brands, 2006 Source: Interbrand Page | 17 5. 1 Manufacturing Strategy Samsung has implemented a strategy of in-house production and investment in manufacturing research and development. Samsung’s primary manufacturing emphasis is on the assembly, efficient movement of material in its logistics operations, precision assembly and packaging and it achieves speed and maximum factory efficiency through minimum capital investment through constant innovation geared towards productivity. For instance, we can take an example of the manufacturing strategies of mobile phones and digital media. a. Mobile Phones Samsung’s strategy is based upon mid and high pricing that leads to higher margins. Samsung is focusing on implementing the newest technologies thus its products are amongst the top in the handset market. Progressive technologies combined with avant-grade designs trends providing a strong foundation of its position specially the clamshell and slide exterior that fashionably package the latest technology. In addition the speed of implementing a new product is very short: 5 months in comparison to Samsung’s competitor’s timelines of approximately 14 months (Kamath et al. 006). Samsung envisions prevailing as the world’s leading brand in the handset area. The main strategy for reaching this goal is â€Å"Next Generation Technology Leadership†, whereby Samsung wants to be the first mover into new technology. b. Digital Media Revenues in the area of digital media have been growing for Samsung steadily by 10 % annually with more than 80% of sales being foreign markets since 1999. Samsung achieved aggressive cost reductions from $20 per inch to $7 per inch leading to sales of 100 million units in 2005 in the field of LCD monitors (Kamath et al. 2006). However this industry is characterised by short life cycle, increase in size, multifunction products, networking, greater accessibility and convergence of products. Other challenges include low entrance barriers which bring about countless competition, price erosion and decline in profit rate that creates rapid price decrease and constantly narrowing price gap between competitors in the industry. Its historical success in introducing several ground-breaking products such as the world’s largest LCD TV and world’s fastest colour laser printer position it well to achieve its objectives. Samsung intends to focus intensively on design rather than pricing. The impetus can be seen in the number of design awards won by Samsung between 2001 and 2005 (19 awards) surpassing design-oriented companies such as Apple, IBM and NIKE. Page | 18 5. 2 Marketing Strategies Using the mid and premium price portfolio, Samsung is focusing on marketing premium products. The higher pricing on these products helps achieve significant margins that lead to healthy revenues, which fund marketing activities, designing and technological improvements that improve Samsung’s position in the market. Samsung’s marketing strategy is shifting from awareness to preferences. The target audience of the brand is changing from sensible brand buyers to high life seeker. The brand focus is on promoting an easier, richer and more enjoyable life through technology allowing unlimited living (Kamath et al. 2006). The marketing is targeted towards an expected consumer pool compromising of young style-conscious, technology-savvy customers who pursue intuitive simplicity and appropriate passion, performance, creativity, excellence and fulfilment. Samsung wants to become an icon brand through product, brand and customer leadership. Product leadership can be achieved through meeting consumer needs and pioneer launches, brands leadership through premium branding consistency and strong emotional bounding and customer leadership through long-term partnerships with customer. 5. 3 Getting Close to Consumer Vice President of Design Research Lab Young Jun Kim explained the difference between marketing research and design research. According to him, marketing research is focused on the current solution like market share and so on but design research is focused on user behaviour and user experience. So Samsung designers visited people in their homes to see how they actually used products. This approach resulted in designs that translated into profits in the market and that won the designers respect and cooperation from the engineers and marketers. Samsung has learned to understand design as business. The core of Samsung is highly dependent on its product design. Samsung shows passion in the field of Future, Curiosity, Building, Growth, Challenge and Details by supporting communities, cultures and environment. Samsung believes respecting communication and encouragement are the keys to success. We have no crystal ball but we are working on many promising technologies in our labs†, states one of the designers of Samsung and promises to deliver hopes and dreams to the diversified cultures as well as disadvantaged group in society with satisfaction and happiness bridging great distances between people and products. Page | 19 â€Å"We believe in a better world† – S amsung Slogan The following are some basic artefacts of Samsung: New innovations and ideas help to make life more convenient, anytime, anywhere†¦ Samsung has always been a strong supporter of culture and artistic heritage. It takes great length to make products green by making them more energy efficient. Understanding customers’ need and anticipating how they are changing; always looking ahead to answer â€Å"What’s next? † Samsung Next is What? Source: Samsung Company Website Page | 20 6. Design at Samsung 6. 1 Design Management Team Organizational chart of the Corporate Design Centre, January 2006. Source: Company document Page | 21 6. 2 Award Winning Products Samsung had a string of design success in the 2000s. For example, the Syncmaster series of LCD monitors was lauded for its simple design and went to win several awards. Samsung Home Appliances Figure 1 three hinged, flat folding monitor Figure 3 refrigerators Figure 2 LCD TV Figure 5 vacuum cleaners Figure 4 washing machines and dryers Page | 22 Products: Samsung Electronics Figure 6 LCD monitors Figure 7 laptops Figure 8 MP3 players Figure 9 cameras and camcorders Figure 10 cell phones Page | 23 7. Samsung Mobiles The commercialization of Samsung handsets started in 1996 with CDMA Handset System gradually developing into GSM Handset in 1997. In 2000, Samsung commercialized World’s first Handset systemCDM A20001X. After gradual manufacturing of Samsung mobile series in 2008, it became the world’s second largest mobile phone maker after Nokia. With its continuous new technology and innovation, Samsung always created the newest and smartest design targeted to the youth. 7. 1 Samsung Mobile Competitions World Market Western Europe / Northern America 19. 1% 25% 36. 2% 21. 1% 9. 9% 16. 1% 6. 2% 9. 6% 5. 4% 6. 5% The market status 2009 shows that Samsung mobile leads the Western Europe and Northern America whereas in the world market, its biggest competitor is Nokia mobiles. Samsung holds second position in consumerism. Market Status 2009 Page | 24 7. 2 Criticism Jim Wicks, vice president of Motorolla Inc. said, â€Å"Samsung has improved, but I don’t see an identity in their design that really speaks to consumers†. Some critics commented that even if Samsung’s design capabilities had improved greatly, the company still lacked a coherent design. A lot of critics and business analysts criticized Samsung mainly on the idea of not appealing to the customer and not aligning their image properly. Other critics said that the company still did not have the design culture of Apple Computer Corp. or the breadth and depth in design that Sony possessed. During the past decade, this engineering-driven company had given way to innovative, design-driven company with a lot of focus on RD. however, despite worldwide design awards and engineering accolades, the â€Å"iconic† product available in the world such as the Apple iphone and Blackberry are much more popular than the Samsung phones. Page | 25 8. Samsung Visual Communication (Advertising) 8. Culture (Semiotics and Social Semiotics) I perceive Samsung as an international award winning brand, applicable to all users from the very sophisticated high level to the middle class group. It is compiled with latest technology, smartness, sleek and shine attitude, personality, elegance, distinctive, cool, wide colour range and affordable price. Samsung claims to be there for the whole family and not only for a special age group. Samsu ng electronics are designed in the simplest yet elegance style suitable from a housewife to an executive. From early teens to the old ones, all are Samsung’s target market with the range and varieties it provides with its holistic design approach for both gender. The main attraction of Samsung is the colour that it focuses on its every product and advertisement. The true natural colour reveals the power of Samsung and its effectiveness especially in its TV and LCD monitors. Black, silver, white, red, yellow are the primary colours that Samsung uses in its products. Page | 26 8. 2 Good life: Samsung provides an incredible valuable and luxury life by providing exclusive products in an affordable range for all people. It is bridging the gap between the product and its company so that everyone can dream of possessing Samsung to feel superior and powerful and rich. 8. 3 Gender, age, class: it mainly focuses on both genders equally depending upon the product design suitable to every age group, from cool teens to the high executive professionals. It demonstrates typical Asian style with cuteness and innocent personality for the Asian market and bold and beautiful stylish blonde models for the Western market. Samsung has a global audience in terms of its products. Page | 27 Bollywood superstar Amir Khan posing for the Samsung CDMA music phones. Similarly another celebrity, a female Pop singer and a Diva Beyonce Knowels is also seen in an advertising of Samsung mobile. It is trying to allure people towards the celebrity lifestyle by using celebrities as their brand ambassador and inspiring people to feel like a celebrity. By these advertisements, I feel that Samsung encloses all the diversified group of people from school and college students to the 8. 4 Celebrities Following advertisement is in the left is an Indian Samsung advertisement with a Page | 28 rofessionals, from housewives to independent career women. 8. 5 Psychoanalysis The other advertisement of Samsung TV focuses on the human emotions like love and Samsung is basically dedicated to the home and family so it more often communicates in a simple and more decent language for all age group. However in the above ad of Samsung Vacuum Cleaner, it shows a different aspect of communication to its au dience with a touch of sexuality and glamour in a very distinctive and appropriate way. Samsung visual happiness, relationships, togetherness and a dream. The graphic advertisement below is of Samsung washing machine, which shows the just the materials (shirt and colour) without any human activity but still it gives out the message about the characteristics and advantage of the product. communication is always criticized for being unappealing to the consumers but this ad has a very powerful message showing the effectiveness of the product. The focus is on the model who is shown naked from side in one image and the other image with her lingerie being held by the vacuum cleaner. It gives a clear meaning on the use and power of the products. This ad definitely appealed me and lured me to buy this product. Similarly, this one also shows the innovation and power of Samsung mobiles in a unique style encouraging people to express their talents and personalities. Page | 29 9. Conclusion Samsung Electronics have been trading and manufacturing electronic goods for nearly 70 years and today it has become one of the world’s leading electronics companies specializing in digital appliances and media, semiconductors, memory and system integration. Today Samsung’s innovation and top quality products and processes are world recognized. It is the only company to achieve the highest quantity of design awards in 2011 2005 for its cutting edge designs and styles (13 products including TFT-LCDs, monitors and CDMA mobile phones). Samsung is found No. 1 in customer loyalty for 8 years consecutively by Brand Keys of the USA. Samsung has built the World’s largest mobile phone as recorded in the Guinness Book of World Records. It also received a â€Å"Quality Management Award† in Malaysia. Samsung started its journey from 1938 and started diversifying in the field of industries and electronics since 1970. It entered into the Global market in the 1980s and enhanced itself competing in the changing Tech World from 1990. Since 1994 it implemented design theory into practice and evolved into becoming a Global force and by 1997 advancing into a Digital Frontier to become a Pioneer of the Digital Age today since 2000. Samsung sold more than 20 million full touch phones in shortest time ever and took up high share market in LCD monitors. It sold 500,000 units of its LED TVs in 100 days since its release. It released world’s first solar-powered mobile phone in India and first infrared video phone. It sold 50 million touch screen phones in 2 years. Samsung became No. 1 in the US digital TV market for the 4 th consecutive year. Samsung now has announced its â€Å"Green Management† strategy to sustain in the world of Competition. Samsung used Design based strategy to enhance their consumerism and revenue always coming up with new idea and innovation in every product especially in terms of cell phones. It holds second position in the World market after Nokia and is planning to become number one in the near future. Page | 30 10. Recommendation Samsung is a well established brand that has a diverse product portfolio and is aggressively pushing for RD so as to innovate stylish, user-friendly and functional products that are priced competitively. It is facing intense competition and rising costs of raw materials due to globalization. Therefore Samsung has recently experienced a decline in its performance. It needs to improve in brand image and continue diversifying its product portfolio to prevent overdependence on the semi-conductor business while concentrating on its core competencies in the electronics industry. It possess the capability of increased expansion in the Asian Market but needs to tailor its marketing and business strategies to better suit the tastes and circumstances of these markets. Especially India and China can be the best option for Samsung because they both possess an escalating middle class that is becoming more affluent, consumerist and brand conscious. India is the world’s fastest growing wireless services market and hence offers a huge market for mobile phones due to poor land telecommunication infrastructure. And it is the same with the rural part of China. So Samsung can fascinate the Chinese market by its cutting edge design since Chinese markets are becoming more design oriented with additional quality control measures, excellent customer service and brand reputation. I believe this will help Samsung to become number one consumerist and corporate in Asian market by leading these two huge markets in terms of brand image, customer service, innovative technology, extraordinary quality control and sleek and shine designs for today’s generation. Page | 31 11. References Freeze, K J. Chung, K 2008, Design Strategy at Samsung Electronics: Becoming a Top-Tier Company, Design Management Institute, Boston Case Study: Samsung Electronics: Success by Design, 2006 viewed 15 June 2011 Samsung Corporate Profile, Samsung Electronics 1995 2011, viewed 4 June 2011 Samsung History, Samsung Mobiles, viewed 5 June 2011 http://www. samsung-mobiles. net/history-ofsamsung. html Samsung Annual report, Samsung Official Website, viewed 20 June 2011 Luk e W, Design Vision: In Korean, viewed 20 June 2011, Rocks D Jhlwan M, Samsung Design, viewed 20 June 2011 http://businessweek. om Verganti R, Managing design-driven innovation for competitive advantage, viewed 20 June 2011 Wikipedia, Samsung, viewed 5 June 2011 Kamath S, Kulheyko I, Kuvik I Niziolek P, 2006, A Historic and Strategic Overview of South Korea’s Champion Chaebol: Samsung Electronics, viewed 25 June 2011 Page | 32 12. Appendix Managing Resources for Competitive Advantage Master of Design Assessor: Ross Spence Assignment Presented by Sushma Shrestha A worldwide leading electronic company Page | 33 Introduction Industry: Conglomerate Founded: 1938 Founder: Lee Byung-Chull Headquarters: Samsung Town, Seoul, South Korea Employees: 173,965 ( June 30, 2010) RD: USD5. 34 Billion Financial Highlights 2009 Samsung Financial Highlights 2009 Revenue: USD 172. 5 Billion Total Assets: USD 294. 5 Billion Net Revenue Income: Income Total Assets Total Equity Net USD 13. 8 Billion $ 13. 8 $ 112. 5 $ 294. 5 $ 172. 5 Billion Billion billion Equity: Billion Total USD 112. 5 Billion Page | 34 Philosophy evote talent and technology to creating superior products and services that contributes to a better global society Values People Excellence Change Integrity Coprosperity Page | 35 Vision â€Å"Inspire the World, Create the Future† Creative solutions Industry New techonology Innovative Products Partner Employee comply with laws and ethical standards Principles maintain a clean organisational culture Samsung Business Principles respect customers, shareholders and employees care for environmen t, health and safety socially responsible corporate citizens Page | 36 Achievements IDEA ( Industrial Design Excellence Awards) 2006: Gold Award for Touch Screen Messenger 2006: Silver Award for Portable Digital Projector 2001-2005: 19 Awards for Cutting Edge Designs surpassing the design Company like Apple, Sony and NIKE Competition Samsung Market Share 2004 Page | 37 Distribution SWOT Analysis Strengths i. ii. iii. iv. v. vi. Market Leading Products Diversified Business Portfolio Strong Brand and Global Presence High Returns Strategic Alliances Focus on Research Development Page | 38 SWOT Analysis Weakness . Poor Economic Performance ii. Bad Product Reception iii. High Dependence on One Business SWOT Analysis Opportunities i. Operating in an industrial with much possibility for innovation ii. Emerging Asian Markets iii. Growing Global Demand for Modern Technology Page | 39 SWOT Analysis Threats i. Consolidation in the PC Business ii. Unfavorable Products Specifics and Market Developments iii. Image Problems iv. Intense Competition v. High R aw Material Prices Page | 40 Strategy Design based STRATEGY ‘The future is not be predicted. It is to be created† Samsung Analyst Day 2005 Strategy â€Å"Balance of Reason Feeling† Harmony Reason Rational Intellectual Technological Feeling Emotional Adaptable Humanistic Page | 41 Products Design Centre Organizational Chart Page | 42 The beginning of Samsung mobile †¢ †¢ †¢ 1996: Commercialization of CDMA Handset/System 1997: Commercialization of GSM Handset 2000: Commercialization of World’s first Handset/System CDMA2000 1X 2002: Commercialization of World’s first Handset/System CDMA2000 1X EV-DO 2008: Samsung became the world’s 2nd largest mobile phone maker after Nokia Mobile Phones †¢ †¢ World Market Western Europe / Northern America 19. 1% 25% 36. 2% 21. 1% 9. 9% 16. 1% 6. 2% 9. 6% 5. 4% 6. 5% Market Status 2009 Page | 43 Dilemma Samsung’s Design vs. Market Page | 44 †¢ Touch screen †¢ 3 MP auto focus camera †¢ Video recording †¢ Voice Control †¢ Digital Compass †¢ Cut, Copy Paste †¢ MMS †¢ Spotlight Search †¢ Landscape keyboard †¢ Voice Memos †¢ Stay in touch †¢ GPS capabilities †¢ Entertainment on the go †¢ Camera and video recording †¢ Media player †¢ Roxio media manager †¢ Browse, shop and buy †¢ Blackberry wallet †¢ Ticket master Page | 45 What’s Next on Samsung? A design that would beat the iphone and Blackberry market Elegance, smart, and technology Page | 46 Competitive Designs Advertising Page | 47 Conclusions Samsung started journey from 1938 and diversified in electronics industry since 1970 Applied design based strategy to compete in the market Implemented design theory into practice since 1994 and won many awards becoming a Pioneer of Digital Age since 2000 Competitive Advantage RD Innovation Employee Culture Page | 48 THANK YOU Page | 49