Samsung Case Assignment
1) Compare and contrast Samsung’s strategy in consumer electronics with Philips, Panasonic, and Sony.
Samsung is a prominent global leader in the scope of consumer electronics industry. Its leadership era started in 2000 and superseded Sony from the principal position in the field of interest. The company was founded in 1938 by Byung-Chull Lee and started its long way to international leadership as a small trading organization. The scope of professional activity of the company at the initial stage of development covered food products, which were replaced by security service, insurance business, and retail performance. The corporation entered the industry of electronic devices as Samsung Electronics Company (SEC). Its course of performance was based on a neo-Confucian culture “that led engineers and designers to imitate the masters of their industry, Japanese firms such as Panasonic and Sony” (Dyer et al, “Samsung: Overtaking Philips” 377). Hence, the company started its development and growth in the area of concern as an ordinary organization that was oriented to the innovative and advanced technologies in electronics industry. Nonetheless, SEC did not rely on the imitation practice entirely since it had own exceptional domain, i.e., manufacturing area.
Similarly to Samsung Electronics Company, Philips, Panasonic, and Sony were initially introduced as small companies. Nevertheless, the founder of Sony Corporation solemnly proclaimed the course to global significance and advanced technologies. Appearance on the worldwide stage as small companies confirms the significance of the strategic and constructive approach to the course of development in terms of globalization and success of the organizations. For this particular reason, each company had to achieve certain level of development, credit, and authority in order to make a decision to expand internationally and aim at attaining global leadership.
One more essential aspect for comparison is the motivation and the major reasons for the decision to expand on the global scale. Philips demonstrates a vivid example of successful development. The process of globalization of its activity was predetermined by the need to leverage the costs of investment policies which were targeted at development, research, and production improvement. In such circumstances, it was a logical and pre-expected stage of the corporate evolution. In turn, Panasonic demonstrates a similar approach to the globalization expansion: “as the company looked for growth options, it decided to expand internationally and leverage economies of scale from its large-volume factories in Japan” (Dyer et al, “Samsung: Overtaking Philips” 376). Both aforementioned companies have been looking for new sources of revenue in order to achieve the corporate goals and aims, whereas is considered to move to the global market as a direct result of its innovative technologies and advanced products. The prevailing majority of the industrialized states were in search for the qualitative innovation and permanent improvement. Therefore, the dramatically increased level of demand automatically led Sony to the global level of the professional performance. On the other hand, Samsung may be regarded as a company that approached global expansion with every step of professional activity, improvement, and development. This process finally resulted in the “Global Localization” strategy. Hence, it was a conscious, planned, and predetermined outcome of Samsung business performance.
At the same time, the currently discussed companies also differ in actual strategies implemented in the process of global expansion. Philips is known worldwide for its constructive and perspective focus on research and development as the key priorities in terms of its professional performance. The company even introduced own research laboratory in 1914. Such an approach provided the corporation with the sufficient background and potential to become a leader in the field of consumer electronics. Moreover, consistent course of research and development (R&D) activity guaranteed permanent renewal of the range of product diversity and allowed to experiment and find new solutions in the form of advanced product designs. A vivid example of the efficient R&D process is a Philips radio. It became the most successful product manufactured by the company that managed to cover 20% share of the global market in 1936.
Philips followed a decentralized strategy in terms of control and management. Such an approach was motivated by the rapid and vast expansion of the company to different countries of the world. The course of business performance led the authorities of the corporation to the conclusion that it was necessary to improve the aforementioned strategy. Consequently, it resulted in establishment of national organizations in each state. This approach guaranteed maximum independence and emphasized localization significance and orientation to the customers of the given country along with their needs, preferences, and priorities. This process included all the aspects of manufacturing such as research and development process, course of production, design of the items, as well as sales and distribution courses. The decentralized system was quite flexible and targeted to fit the local market as the primary concern. In fact, a big number of countries where Philips expanded finally became a drawback and an obstacle for consistent and efficient corporate performance. The CEO of the company accounted for it in the following way: “How can we compete with the Koreans (new competitors Samsung and LG)? They don’t have 350 companies all over the world” (Dyer et al, “Samsung: Overtaking Philips” 375).
On the other hand, the strategy of Panasonic was apparently contrary to the one Philips followed since it adhered to a centralized form of the management control. Only the headquarters in Japan were responsible for the key regulations, decisions, and alterations the company made on the global level. Primarily, the products were preliminary investigated, designed, and produced in Japan. The representatives of other countries’ affiliates could suggest improvements and changes in order to fit the local customers, but it was ultimately a headquarter’s decision whether to accept or reject them. “In order to ensure efficient control of international operations, the company sent hundreds of expatriate Japanese managers and technicians abroad” (Dyer et al, “Samsung: Overtaking Philips” 376). At the same time, Sony is a representative of an absolutely decentralized strategy. It gave much freedom to the local divisions of the corporation, which resulted in breakthrough technologies, innovative products. In addition, it may also distribute the overall efforts of the globalized company personnel.
Finally, Samsung demonstrates significant adherence to decentralization as one of the constituent elements of the prominent new management initiative along with development course targeted at globalization, innovation, and outward-looking management. The course of decentralization was actualized by means of “establishing more production and R&D centers around the globe” (Dyer et al, “Samsung: Overtaking Philips” 378). Therefore, Samsung introduced new factories in the most important strategic regions of the world, namely, China, Japan, Brazil, India, the United States of America, Hungary, Mexico, and Slovakia, which aimed at provision of the most relevant and perspective products considering the peculiarities of a particular country.
It is quite challenging to conclude which strategic approach is more efficient and constructive in the given context since the analysis revealed comparatively equal potential of both centralization and decentralization to contribute to the globalization of the company.
2) Compare and contrast Samsung’s smartphone/tablet strategy with Apple
The key factors which promote the overwhelming success of Apple are orientation to innovation and striving for permanent growth and development. Hence, both Apple and Samsung companies have identical priorities. One more important aspect of the Apple’s strategy is efficient channel of distribution. The company incorporates a strategic vertical integration in the process of professional performance. Such an approach provides the corporation with excellent opportunities to choose “its own store locations, price its own products, and educate customers on the specifics of their products” (Mrak-Blumberg, Renery, and Bundgaard 37). Furthermore, the currently discussed company is a brilliant example of centralized strategy in terms of decision making and management control processes. It is an adverse position in comparison with Samsung strategy. Nonetheless, Apple is also a global leader, and centralization is one of its key prerogatives. To be more precise, there may be a compromise in terms of technique development aiming at meeting the needs of the local customers, but the course of the final decision making is strictly centralized. For this particular reason, Apple demonstrates a solid and perspective advantage as far as the company has a significant and universally recognized brand name.
3) Considering your responses to question 1 and 2, what do you recommend for Samsung?
The overall strategic approach demonstrated by Samsung is constructive, efficient, and perspective. The strong sides of Samsung strategy include innovative approach to every sphere of professional performance, namely, research and development, product design, decision making, and manufacturing course. Moreover, Samsung targets at globalization and confirms its relevance to the leading position by means of permanent growth, improvement, and advanced technologies. Nonetheless, the company is recommended to decrease decentralization strategy in order to develop a brand with not only international but also a global name. Moreover, the company should continue further gradual expansion into global market in the scope of consumer electronics.
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