Samsung first product dried fish

Running head: SAMSUNG ELECTRONICS CO, LTD. 1

SAMSUNG ELECTRONICS CO, LTD. 18

Strategic Plan

Samsung Electronics Co, Ltd.

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Developed by Jason Fontenot

BUSN 620 Strategic Management

American Military University

Table of Contents

Overview ....................................................................................................................................... 3

Values and Philosophy.................................................................................................................. 5

History............................................................................................................................................ 6

Leadership .................................................................................................................................... 8

Products and Services.................................................................................................................. 9

Competition................................................................................................................................. 11

Strengths, Weaknesses, Opportunities & Threats................................................................... 14

Key Strategies.............................................................................................................................. 15

References.................................................................................................................................... 17

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Overview

For more than 70 years, one company has revolutionized the technology market, and that has been Samsung. The vast success of this company has proven dominance of the South Korean market, despite a small geographical location and shaky history. Starting in 1969 with originally selling black and white televisions, this company has grown beyond anyone’s comprehension at the time. Samsung is a multi-billion dollar company that produces products ranging from cars, computers, fashion, hotels, and even skyscrapers. Samsung is hugely popular throughout the world and is on the fast track to becoming one of the valuable brand names in the world. In reference to Forbes (2014): Samsung is #24 in market value, #139 in assets, #9 in profit, #12 in sales, and #8 for world’s most valuable brands.

Company Name: Samsung Electronics

CEO: Oh-Hyun Kwon

Employees: 90,700

Sales: $208.9B

Country: South Korea

Headquarters: Suwon, Gyeonggi-do

Profit: $27.24B

Figure 1: Samsung Overview. This table displays current information about Samsung as of 2014 (Forbes 2014)

Samsung Electronics Company has many divisions in order to break down the type of consumer products they will be producing. One division is the Consumer Electronics (CE) division. This section is in charge of typical consumer electronics, i.e. (televisions, microwaves, printers, computers, monitors, etc.). The second section is the Information Technology and Mobile Communications (IM) division. This division is primarily focused on computers, cell phones, digital cameras, and network systems. A third division is the Device Solutions (DM) division. This division provides parts and products for semi-conductors.

As noted previously, Samsung Electronics is in the process of expanding its operations in order to provide a larger long-term investment income stream. Samsung is known for their willingness to adapt to the changing economic conditions and remains one of the most well-known and diverse companies to this day.

Board of Directors

Vice Chairman and CEO: Oh-Hyun Kwon President and CEO: Boo-Keun Yoon

President and CEO: Jong-Kyun Shin President and CFO: Sang-Hoon Lee

Independent Director: In-Ho Lee Independent Director: Han-Joong Kim

Independent Director: Kwan-Soo Song Independent Director: Byeong-Gi Lee

Independent Director: Eun-Mee Kim

Core Values

As with any business and large company, Samsung is built on a solid foundation of high moral values that resonate throughout the company. Samsung clearly defines their values, vision, and philosophy. Samsung knows that their largest asset and their ultimate tool to their success is their people. Their quote for their people resource says it all “Quite simply, a company is its people” (Samsung Electronics, 2014). Samsung’s core values are ordered very strategically to show the importance of each item. The following are their values: People, Excellence, Change, Integrity, and Co-Prosperity.

There have been no infringements to the company’s core values, at least in the large scale, for this company that would suggest that they do not practice what they preach. A company with a staggering 90,700 employees must be able to effectively inhibit any negative culture trends that may infringe their values or their philosophy. Their high standards for excellence are upheld every day.

Philosophy

Samsung has a simple philosophy that defines their reason for being. It states “to devote our talent and technology to creating superior products and services that contribute to a better global society” (Samsung Electronics, 2014). As has been a customer myself of Samsung, I can personally verify their intentions behind this philosophy. Samsung truly wants to connect the world with their superior technology, product name, and their service that reaches out to almost every country in the world.

History

Samsung has a very rich history of being a company that can adapt to the changing times. As for the inception of Samsung, it started as a food exporter in Korea in 1938. The original mastermind behind the company was Byung-Chull Lee from Taegu, Korea. The food they exported at the time was fish and flour that they traded to China. This is a product and service has completely changed since the Samsung Company was founded. However, the company started to tread another path that was likely to increase profits and also increase the customer base.

To increase their customer base and revenue stream, they started investing into other business means. This started with life insurance and textiles that were run by large production plants. Suddenly, Samsung started dipping their hands into a whole new world of products and services that seemed very promising at the time. The success of the textile and insurance business allowed the company to expand into the ever growing area of electronics.

The continued success of Samsung’s expansion was allowing them to expand and diversify their product market even more. Starting in 1969, the modern company name, Samsung Electronics had officially taken effect. Their strategic and long-term vision at the time allowed them to ultimately see how well the electronic market would perform in the future. This had been a risk at the time, but they also knew that this would also allow for a large reward.

Samsung’s first electronic product would be the black and white television. At the time, television sets were the up and coming new item that everyone had to have. Samsung had made their black and white television sets affordable as well. Their affordability and high production turn out, allowed the company to sell more than four million televisions by 1978. In addition to producing black and white television sets, they also added washing machines, refrigerators, and microwaves by 1974. Judging by the success of their electronic sales, the expansion of electronic products continued throughout the company. Soon, Samsung would be producing color televisions, personal computers, VCRs, and tape recorders by 1980. One of the huge turning points for the company came when they began manufacturing cell phones in the 1990’s. Since this was an emerging market, Samsung had to be very careful with the quality of their products because it could determine whether they survive the cell phone industry or not.

Fortunately, minus one fault they had initially with their first cell phone product, they cell phone brand name began to soar. These phones would be internet capable and would eventually grow into one of the largest products that Samsung produces. Samsung continued to expand, ever increasing their products, technology and quality. Leading into today’s Samsung, the company produces the most advanced products in the world. This ranges from their smart phones, tablets, computers, cars, televisions, and even their skyscrapers.

The company itself has had some setbacks with their emerging technology, but they have since learned from their mistakes and have listened to customer demands. Their innovation has skyrocketed them through the history books and into today’s world where they will continue to be the superpower of modern electronics.

Leadership

Current Chief Executive Officer of Samsung Electronics Company is Dr. Oh-Hyun Kwon. Initially appointed on June 8, 2012, he spent the previous 27 years in the Samsung Company. Dr. Kwon has a very qualified education background, starting with his B.S. in electrical engineering from Seoul National University, M.S. in electrical engineering from Korea Advanced Institute of Science and Technology, and finally, a Ph.D. fin electrical engineering from Stanford University. (Samsung Electronics, 2014)

Dr. Kwon initially started in the semiconductor business that was part of the Samsung Company back in 1985. Since then, he has moved up the ranks because of his superior expertise on the technical side of Samsung. He improved and produced great products and services since his time serving in the semiconductor industry. His large success and technical knowledge has provided him the opportunity to lead one of the largest electronic company’s in the world.

Dr. Kwon revolutionized the industry with his bold, innovative ideas for the electronic market at Samsung. Despite the tough competition, Dr. Kwon has been able to introduce the ever popular Samsung Galaxy. One of Samsung’s most successful smart phones to date, it has produced billions of dollars of revenue. After his release of the Galaxy 4, the profits raised from the sales have topped charts. For example, the second quarter of 2013 from the Galaxy 4 came out to $5.2 billion, compared to the iPhone launch with a profit of $4.6 billion (Phone Town, 2013).

Like other electronic greats, Dr. Kwon has proven a name for himself as the CEO of Samsung. Samsung continues to post record profits from all of their products and it’s all from the great leadership of Dr. Kwon. With all of his awards and recognition, Dr. Kwon was also cited by Time Magazine (2013) as one of the top 100 most influential people in the world.

Products and Services

As aforementioned, Samsung produces a wide variety of products. Samsung is essentially broken down into divisions that help control the type of products and services they produce. An easier question for this company is what don’t they produce? Samsung is in the business of helping everyone, no matter what type of product or service they require. This is also acts as a safety net for the company because it allows a lot of long term investment into other areas of products/services. The revenue from these side products/services could be used to substitute for failed profit margins in case of failed product or service. They also help cushion any kind of large upset, such as bankruptcy and other such financial upsets.

Figure 2: Samsung organizational chart for the product divisions. (Stefantica 2014).

As shown in Figure 2, the division of products and services are very numerous under Samsung Electronics but are essentially broken down into three main divisions. One being Consumer Electronics (CE), second IT and Mobile Communication (IM), and last, Device Solutions (DM). The Consumer Electronic division is responsible for televisions, monitors, printers, air conditioners, refrigerators, and laundry machines. The IT and Mobile Communications Division (IM) supplies network systems, cell phones, smart phones, and digital cameras. Lastly, the Device Solutions (DM) division handles the semiconductor and display business parts. The semiconductors are all the technical hardware that is used by computers, televisions, and various other electronic applications.

In addition to all the products listed above, Samsung Group has also many other affiliated products and services. These are machinery and heavy industries, chemical industries, financial services, and various other miscellaneous products that range from hotels, cars, and even medical centers.

Without a doubt, Samsung is known for their electronics, and most specifically, their smart phones. Since the introduction of their first cell phone in the 1990’s, they have become an industry leader in the mobile phone market. Some of their most popular products are the Samsung Galaxy (1-6), Samsung Galaxy Tabs, Samsung smart TVs, Blu-Ray system, Samsung smart watch, and theater system.

The geographical span of products and services that Samsung serves is enormous. This ultimately displays the full power of this company. In their 2013 Samsung report, the number of countries that they serviced was 90. These 90 countries span the whole width and length of the globe. Samsung does not discriminate when it comes to trying to help everyone.

Samsung also likes to alter their products to reflect the local country needs and desires. For example, the Samsung Galaxy is a much bigger hit in the United States than any other country. In South Korea, there are Samsung cell phones that are only available in South Korea due to being only designed for the Korean people. This is a common business tactic that has been seen by many other businesses all over the world.

Figure 3: Samsung Galaxy S5 broken down by country. (Mojandroid 2014)

Competition

With a company as diverse as Samsung, you’re bound to have a significant amount of competition. Hoover, 2014 notes that there are three big competitors that Samsung faces in the electronic industry. These are Panasonic Corporation, Sony Corporation, and LG Electronics Inc. Each one of these three competitors has very similar business practices as Samsung. They are all in the general electronics industry and provide relatively the same kind of products.

However, Samsung has made huge strides in the competitive market by slowly taking over the cell phone industry. Samsung is becoming a household name compared to the competition. At one point, LG and Panasonic were household names, but have since stepped down from the limelight to be just below Samsung. This will continue as long as Samsung keeps progressing technology forward and listening to the customer reviews. Sony on the other hand, has a much firmer grasp on the electronic market than Panasonic and Sony. Sony is in a very tight competition with Samsung.

Figure 4: Top 10 Semiconductor Design by Company (Gartner, 2013)

The following chart shows semiconductor design profits for the top 10 companies in 2012. Semiconductors are processors that are used in cell phones and other electronic devices. Unlike HP or Dell, Samsung builds all parts necessary for their product under the Samsung name. HP and Dell, for example, use a third party company to produce some of their product parts. The in-house build and design allows Samsung to pocket more money and also proves to everyone that they have all the necessary divisions to handle their semiconductors. This all-in-one system of creating products allows Samsung to jump ahead of the rest of the competition.

One other primary competitor is Apple in the smart phone arena. Right now, the top two smart phone competitors are Samsung and Apple between the iPhone and the Samsung Galaxy. Both companies have seen the number one spot and the number two spot. These changes relatively frequently throughout the years, but one thing will most likely always stay the same, you can expect Apple and Samsung to be at the top.

It has been an all-out battle to develop the best and most popular smart phone between the two companies. While the Samsung Galaxy revolutionizes the screen size, camera quality, and customizability, the iPhone leads in all around integration and function fluidity. Every year, both companies try to outdo each other by introducing a new phone. Most of the new phones only have slight upgrades, probably due to the level of technology not moving as fast.

Worldwide Smartphone Sales to End Users by Vendor in 2014 (Thousands of Units)

Company

2014

2014 Market Share (%)

2013

2013 Market Share (%)

Units

Units

Samsung

307,597

24.7

299,795

30.9

Apple

191,426

15.4

150,786

15.5

Lenovo*

81,416

6.5

57,424

5.9

Huawei

68,081

5.5

46,609

4.8

LG Electronics

57,661

4.6

46,432

4.8

Others

538,710

43.3

368,675

38

Total

1,244,890

100

969,721

100

Figure 5: Worldwide Smartphone Sales to End Users by Vendor in 2014 (Gartner, 2014)

As shown above, worldwide smartphone sales in both 2013 and 2014 have been led by Samsung. This could be because of a more popular use in Asian countries with the Samsung devices and the breadth of geographic locations under Samsung is slightly higher. Samsung needs to keep up with delivering a quality product that not only meet customer needs but also exceeds them. Samsung has the tools, the knowledge, and the ability to stay at the top.

SWOT

The following will display the strengths, weaknesses, opportunities, and threats (SWOT) surrounding Samsung Electronics.

Strengths

· Adapts well with change

· World recognized brand name

· Very diverse amount of products and services

· Cutting edge engineering and production division

· Low production costs

· All-in-one product build

Weaknesses

· Lacks own operating system

· Low profit margin

· Brand name revolves around only smartphones/tablets

· Patent infringement

· Integration with other products

Opportunities

· Growing market in India

· Growing mobile advertising industry

· Growth of tablets and TVs

· Obtaining patents through acquisitions

Threats

· Saturated smartphone market

· Rapid technology change

· Smartphone technology not keeping up with production

· Price wars w/competitors

Key Strategies

Strategy 1: The smartphone market is becoming overly saturated between many different companies. Soon, most people will not be able to tell the difference between them all because of the smartphones catching up with the technology progression. In order for Samsung to stay ahead in the smartphone market, they need to take a step back, reassess their phone and the direction they want to go. Take their time building a whole new, revolutionary phone that will trump all other smart phones for the next few years, instead of these very minor upgrades when a new phone comes out every other year. Samsung has the technology and the expertise in order to create a new phone that can top even the best iPhone, they just need to take their time and find the right moment to strike.

Strategy 2: Samsung has focused real heavily on the smartphone market, that their name has become synonymous with smartphones. Since my assignment in Korea, I’ve realized that they also produce cars, buildings, and appliances. These items happen to be much more advertised in Korea than anywhere else. Samsung should start expanding their services to other countries, becoming an even larger name. There are many different products and services that Samsung provides, but no one outside of Korea sees these. The advertising campaign must also be expanded.

Strategy 3: Full integration. One area that the iPhone surpasses the Samsung smartphones with is their ability to fully integrate with all other Apple products. Samsung needs to start developing ways of integrating their smartphones into their TVs, tablets, computers, cars, etc. Once people see an all-in-one integration, they will see a need to buy all Samsung products.

Strategy 4: One thing that Samsung has to rely on with their smartphone market is their lack of an operating system. Currently, they’ve been going off of the Android operating system. I don’t believe there are any real big negative areas of the Android OS, Samsung could use their own operating system so that they can do what they want with the phone. Having their own OS opens up the doors to many more possibilities to making the Samsung phones better. Look at the iPhone and all Apple computers. They all have their own operating systems that Apple controls. It was a revolutionary idea that Apple has been banking off of for the past few decades.

References:

Gartner Says Smartphone Sales Surpassed One Billion Units in 2014. (2015, March 1). Retrieved April 26, 2015, from http://www.gartner.com/newsroom/id/2996817

Jurevicius, O. (2013, February 16). SWOT analysis of Samsung. Retrieved April 26, 2015, from http://www.strategicmanagementinsight.com/swot-analyses/samsung-swot-analysis.html

Kovach, S. (2013, February 9). How Samsung Went From A Dried Fish Exporter To One Of The Top Names In Tech. Retrieved April 26, 2015, from http://www.businessinsider.com/history-of-samsung-2013-2?op=1

Organizational Complexity for SAMSUNG ELECTRONICS. (2014, February 26). Retrieved April 26, 2015, from https://stefantica.wordpress.com/2014/02/26/organizational-complexity-for-samsung-electronics/

Samsung Electronics Co Ltd (005930.KS) Company Profile | Reuters.com. (n.d.). Retrieved April 26, 2015, from http://www.reuters.com/finance/stocks/companyProfile?symbol=005930.KS

Samsung Electronics. (2014, May 1). Retrieved April 26, 2015, from http://www.forbes.com/companies/samsung-electronics/

Samsung Galaxy S5 tvorí už viac ako 0,7% všetkých Androidov. (2014, April 23). Retrieved April 26, 2015, from https://www.mojandroid.sk/samsung-galaxy-s5-07-podiel-medzi-androidmi/

Samsung Mobile Phone Sales Stats 2013 (Q1 & Q2). (2013, August 15). Retrieved April 26, 2015, from http://www.thephonetown.com/samsung-mobile-phone-sales-2013/

Scully, J. (2013, April 18). Oh-Hyun Kwon: The World's 100 Most Influential People | TIME.com. Retrieved April 26, 2015, from http://time100.time.com/2013/04/18/time-100/slide/oh-hyun-kwon/

Values & Philosophy. (n.d.). Retrieved April 26, 2015, from http://www.samsung.com/us/aboutsamsung/samsung_group/values_and_philosophy/