Introduction in addition grown its capital from 8.31

Introduction

2003 was a golden year for Samsung
since its establishment because the company successfully positioned itself as a
one of the best mobile company among its competitors in the world.

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Samsung’s primary focus had been
in semiconductors and home appliances the achievement of Samsung was
particularly remarkable in these units. Afterward when it made the first
decision to become a part of cell phone productions business. Other industries
observers Samsung as a foolhardy and reckless but it was surprising that after
getting entrance into market it turned out to be not only an immense success
and also contributing significantly to brand reputation and the company’s
profit growth.

After Samsung entered into mobile
business market the net profit of 5 billion won from 6 trillion won and from
annual sales of 43.3 trillion won gain of 37.9 billion won after one year form
its market capitalization gaining of 87.4 billion won from 100 Trillion won.

In 2003 Samsung has built its
brand around the world and it was ranked 25th in the annual business
Week and become one of the most valuable brand, in addition grown its capital from
8.31 billion USD in 2002 to 10.85 billion USD in 2003.

The objective of this assignment
is to analysis the internal and external changes that occurred since the
establishment of Samsung mobile till 2003, Areas where the change needed, the
resistance or difficulties of applying those changes, and applying of the
change model for Samsung mobile.

 

 

 

 

 

Samsung Electronics Background

Samsung Electronics established in
1969 the main propose was to provide an engine of the future growth of Samsung
group in that time none of the Korean firms had advanced technology and Samsung
began its first electronic device which was black and white televisions in a
joint venture with a Japanese electronics company like Sanyo and NEC. After
three years of working with these Japanese firms, company began producing of it
black and white televisions under it is own name “Samsung”, and other home
appliances including, microwaves ovens, refrigerators, color televisions and
washing machines.

In 1980s Samsung started to expand
its business lines to personal computer like semiconductors, telecommunication
networks and devices for years, on those years Samsung remain as a low end
products manufacturer which was a good and cheaper alternative for high end
Japanese products, its products were not line up to be very reliable in
addition it did not have strong reputation compare to other electronic firms
for consumers.

At the start of 1993 the company began
as leading semiconductor producer of DRAM (Dynamic Random Access Memory)
market. It was unique in case of Korea that Samsung achieve success in
producing of Computer Chipsets “RAM” which was a domestic and latecomer in such
competitive market even became better than them in worldwide market and it all
happened because of Samsung management and strong drive to develop the
semiconductors business into a truly world class business.

Samsung start to concentrate on
its resources in semiconductor business because of group wide coordination and
governance that enabled Samsung to invest in technology transfer, technology
licensing and establish of R&D (research and design) center in Silicon
Valley and also in order to secures Human recourse in company invited Japanese
engineers to Korea and instruct Korean engineers in semiconductors in addition
recruit American engineers with semiconductors expertise.

Samsung company got busy with
semiconductor business and declining of it is home appliance business which started
during the mid-1990s on the other hand could not manage to improve the quality
and image of its product, it continued until 1997 more over because of Asian
financial crisis and the internal problem of company in late 1997 the profit of
company drops from 194 million won to 87 million won.

To came up with difficulties and
standardize the company as the global standards restructure of company was in
priority so the company laid off 1600 employees during the first year, sold
those business units those were being unprofitable, and started to shift its
resources to LCD and mobile phone business in order to diversify its revenue sources.

The main emphasis was on
profitability and unyielding emphasis on quality innovation and globalization
and it resulted a remarkable change in organization due result of these and
reorganization of Samsung has four major divisions Telecommunications Devices
and network solution, Digital Media Network and Digital Appliance Network,
because of these major changes now Samsung held leadership of Chipsets
production like DRAM, SRAM mobile phone etc.

Samsung currently has 25
production units and 22 branch office all over the world.

Samsung’s Mobile Phone Business

Samsung has been decided 1983 to
start a new business unit, Samsung mobile telecommunications business that It
might be a growth and profitable unit for the future of the company. At the
start Samsung had only forty engineers each of them were involved with
previously projects like wireless telephone division and facsimile machine and
they assigned to a new unit which named wireless development team.

The engineers of Samsung had no
idea how the phone works and what to do first, so they decide to call the japan
branch of Samsung asked them to send a car-phone after disassembling and
reassembling the sample car phone made by Samsung engineers but it was
disastrous, because it was so poor in quality that most of the customers
complaint many times because these complaint reduction happen in number of
employees from forty to ten and later on the head of wireless development team
Ki Tae Lee , could have not decided whether to continue the mobile business or
not.

Ki decided to stay on track and
asked to buy ten Motorola mobile phones for benchmarking, on that time each
mobile cost too much and it like put the money on water but they bought 10 phones,
so engineers disassembled the phone and did many experiment like dropped or
thrown away, product design, quality durability test and so on.

Finally, Samsung released its
first Samsung mobile phone or hand phone in Korea it was the first mobile that
was designed in Korea however customers still thought only Motorola is the best
phone according the quality design and durability then Samsung phone although
introduced new models every year and each model sold only one thousand units which
was disappointing sales for Samsung, once again dropping of mobile line arose.

After 1990s, growth of mobile
telecom market was rapidly, and many other players came into market, but only
Motorola was the star of the market that Motorola held 60-70% of market and
only 10% was share of Samsung.

New Management

In late
1993, a member of Samsung marketing team was hiking in mountains when he saw a
man is calling with his Motorola phone. He tried to make to call with his
Samsung phone but he could not succeed to call, afterward he realized that
increasing connectivity would more vital factor, and he got that connectivity
is most important factor in Korea because 2/3 of Korea is surrounded by
mountainous and radio waves not properly transmit over mountains compare to
flatter areas and Samsung mobile failed during that call made.

Development
team started focusing on improving connectivity. After applying many methods to
solve this problem they finally found that using gold between connect point of
antenna with communication circuits it would be significantly reducing
resistance of conductivity in addition they developed the wave searching
software that help Samsung to make their phone more stable in term of
connectivity.

Chairman
of the Samsung group triggered an event in Tokyo over that event he took a
meeting with his top executives and advisors over the future technology and
development in the Samsung company. Right after the chairman of Samsung asked
to have additional private meeting with several Japanese advisors the meeting
agenda was about management and Design, the report was more about the problems
in design practices, design management appropriate technologies and development
procedures. 

On late 1993 in Frankfurt, more than
200 Samsung executives gathered by Lee and the executives point out every
problem that Samsung struggled since entrance in the mobile business, the new
management was all about management philosophy that conveys Lee’s strong drive
for change mostly it was about quality of product, Lee’s famous comment “change
everything except your wife and children”.

Lee was so confident that his
development team could achieve goal, and from hundreds of tests over the
Motorola mobiles, development team on that time came up with the twenty ideas
for improvement.

After carrying the heavy equipment’s
on the mountain and testing of every aspect of the mobile working on
connectivity and quality finally the development team unveiled a new model of
the mobile, when lee got the first phone from development team he threw the
phone on the floor and stepped on it then he picked the phone fortunately the
phone worked, Lee was aware that the people carry the phone in their rarer
pocket so it must bear the pressure, the phone which developed by development
team it endure 870 kg of pressure.  

result of development team in term
of design and improvement finally answered and it was quite remarkable the
weigh was less compare to any other company in addition it was much thin and
also product quality was impressive, that happened because product manufactured
was tested piece by piece to assure that is prefect in quality.

If any kind of problem occurs
during the developing of a mobile phone that phone was burned infant of all and
it became mind set for every individual to works more on quality and design of
phone.

in 1994 the new model of this
product introduced by Samsung and it named Anycall it was an upgraded of
previous model with some new function and improvement of quality, now Samsung
was aware that branding is more important in order to build trust among their
customers. More over aggressive marketing campaigns was there as well.

In this stage not only Samsung
worked on the quality and improvement of the mobile but also the immense
objective of Samsung is the marketing stagey to break that pervious bad
perception of the customers about Samsung mobile devices, so Samsung started to
launch a marketing campaign known as “Cheon-wang-bong” project, company held
free trail event in those places that other mobile company had problem in
connectivity like mountains areas island, in addition many celebrities was a
part of this event.

Later on company focused on
building good relationship with distributors in order to influence costumer to
buy Samsung mobile through sales agents, also the employee targeted 3000
distributors in the country in addition Samsung oriental health supplements as
gift in order to feel them they were being taken care by Samsung. More over
Samsung began referral program in that program distributors permitted to test
the quality of product and Samsung published their name with their picture in
Samsung’ newspaper advertisements.

A huge advertising campaign was run
by Samsung like famous Korean actors, getting Samsung customers and sharing it
through news, televisions and advertisement billboards, as all efforts of
marketing team the market share of Samsung increased from 25.8 percent to 52.2,
share of Motorola dropped from 52.5 percent to 42.1.

Global Management

Research and Development

Samsung invested 3 billion which
is 8% of it is total revenue in research and development in 2003 and saved 1313
US patents on that year Samsung ranked 11th in the world on US patent award,
Samsung stated 19700 researches while start working in R.

Every year100 new technologies are
developing in the R by engineers of Samsung in addition engineers were
involved in core technology and also in 4G technology and 5G in order to conquer
the mobile phone industry.

The company headquarters are
located in Suwon so Samsung build information and telecommunication R
center in that location main reason of R was that all development of
products like semiconductors, electronic components, telecommunication and
multimedia to be in a one place in addition it would be under control of their
business specialists. More over the R center is not only located in Suwon
but also it has branches in Korea and other part of the world.

Global Marketing

Samsung smartly played an
important role in term of strategy marketing in order to lift his low ended manufacturer
to a leader of global technology. For more effectiveness Samsung establish a
new organization in order to integrate a global marketing activities and
branding. Company recruit one of the best IBM manager who used to work with IBM
to lead the global marketing department, one of the most important of his decision
was contracting of 400 million USD with FCB worldwide ad agency along 55 adverting
agencies.

Samsung expanded the branding
strategies like sponsor of Olympic in 1996 and unofficial sponsor of Atlanta,
Samsung Expo, Samsung became a partner of Olympic which made Samsung more
popular.

Afterward Samsung was an official sponsored
of winter Olympics and the all mobile technology that were needed for this
games provided by Samsung.

Samsung also participated the
Sydney 2000 Olympics and Salt Lake 2002 Olympic winter Games which all
telecommunication equipment category provided by Samsung in addition 2004
Torino 2006 winter games and 2008 Beijing through all these sponsorships
Samsung made his brand more valuable and reputed.

Movies were another strategy for
Samsung that played significant role in global marketing, shown its products
such as mobile phone, monitors in different movies.

Innovative designs and products

Because of their innovative
designs and product functionality Samsung achieved the market shares from Motorola
and it has been the key factor for Samsung. Designing of unique product with
innovative concept it made them to launch many new mobile with different
design.

In 1996, the Korean newspaper by
Fukuda Reported about the design of product from that time the importance of
design has been rosin, chairman of Samsung named that year the revelation of
design for Samsung, main objective of this declarations to reposition design of
products in order to support the core products market strategies and also brand
strategy.

In 2001 design came under
organization structure of the company and had focused not only on product
quality but also on design of product that differ them from other product like
Nokia and Motorola, afterward the design organization has been changed to
design management center which has been being under control of CEO, executive
position and chief of design officers, to manage the frim overall design
strategy, which allowed designer to be involved with entire product development
process and R engineers.

More over Samsung was concern
about customized design for deferent markets so worldwide design network
created by Samsung and started branches in San Francisco, London, Tokyo, and
Los Angles.  

A practice which applied by the
design management center is precedent design system which a sample of product
is mandate for designer to design before the actual product is developed, and
those sample design were stored in database called Design bank.

Applying the change model

In late 1990s, the expansion of Samsung
group got rapidly it made business problematic and start conflicts with
management in order to prevent from these problem and be sustain in the market
it became a priority to apply a long scale change management for long term
development so, Samsung group despite of convincing the immediate action for
their employees started to help their employee to understand the need for
change in Samsung organization, mainly Samsung followed the Kotter’s 8 step
model and categorized these 8 steps into 3 groups, firstly creating climate for
change which includes establish a sense of crisis and corporate positioning
secondly emerging and enabling which includes organizational structure and
enterprise culture and finally implementing and sustaining which includes human
resources, performance appraisal system and marketing strategy.

In order to establish the sense of
crises among its employee Samsung laid off 1600 employees during the first year
and sold those business units those were being unprofitable, and started to
shift its resources to LCD and mobile phone business in order to diversify its
revenue sources, chairman Lee for a corporate positioning gathered 200 Samsung
executives and role of these executives was, constant evolution, communicators,
decision makers, provide guidelines, communication, transformation in addition
maintain of a clear vision and strategic planning for employees to laid
successful change management.  invested
8% from it is total revenue on a research and development center was another
step for Samsung a change in organizational structure and changing of
enterprise culture because this center has many branches in all over world.

After succeed of Samsung in these
steps, his management team decided to take forward steps and started emphasis
on the development of products with advance technology and attractive designs
therefore chairman start recruitment of new managers and engineers mostly those
engineers and managers was considered that they had development experience in
the united states, the all engineers and managers empowered by Samsung to start
developing their own product to be innovative.

Another major change by recruiting
one of the best IBM manager who used to work with IBM to lead the global
marketing department, one of the most important of his decision was,
contracting of 400 million USD with FCB worldwide ad agency along 55 adverting
agencies

Samsung expanded the branding
strategies like sponsor of Olympic in 1996 and unofficial sponsor of Atlanta,
Samsung Expo, Samsung became a partner of Olympic which made Samsung more
popular.

Afterward Samsung was an official
sponsored of winter Olympics and the all mobile technology that were needed for
this games provided by Samsung.

Samsung also participated the
Sydney 2000 Olympics and Salt Lake 2002 Olympic winter Games which all
telecommunication equipment category provided by Samsung in addition 2004
Torino 2006 winter games and 2008 Beijing through all these sponsorships Samsung
made his brand more valuable and reputed.

Conclusions and recommendations

The competitiveness of marketplace is made organization to become
more innovative not only in product quality, design and also in management
approaches and changing and implementing of new strategies. Indeed, Samsung’s
success returns from innovating within the organization, involvement of
employee of the company and marketing strategy.

Providing of incentives and training of employee made innovations that
employee felt empower at their work place.

Samsung has continued growing in its mobile phone business there
are some challenges that Samsung face might in future, Firstly Samsung should
more focus on its competitors because the mobile market is becoming more
intense, and also digital convergence will more accelerate the competition if
Samsung want to lead in mobile market mainly work on 5G network, secondly in
order to compete with apple should improve its branding strategy and its
marketing strategy, in addition for gaining more profit so company have to focus
on emerging markets (China, Brazil, India and eastern Europe), most of the
Samsung patents are on applied technologies which are developed based on others
patent core technologies Samsung should focus on core technologies patents. 

 

 

 

 

 

Learning outcomes

By clarifying of the problem and gathering data, from different
source it helps to solve problems in better way in addition assembling the appropriate
and right team and right tools it enables to know cause of failure and treat
for the business prevent for avoid making same mistake.

if a change come in an organization like change strategic,
tactical, technology based change leadership change it effects people protocols
and performance, how to maximize successes and minimize problem because of that
change, learn about different change methods that helps organization.

 

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Hyun, S., Han, M., and Yeh, J., “Anycall: Building a Powerful
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Joo, T., “Samsung Electronics Co., LTD.: Digital Convergence in the
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Kim, JH., “Success Strategy of Advertisement: Samsung Anycall,”
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Lee, B. et al., “Samsung Rising,” The Korea Economic Daily Press,
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Na, J., “Three Paradox in the Digital Convergence Era,” LGERI
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Na, J., “Camera Phones, a New Growth Engine in the Mobile Phone
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Na, J., “Critical Assessment of Growing Mobile Phone Industry,”
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Nam, D., “Securing Competitive Advantage in the Mobile Convergence
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“The 30-Year History of Samsung Electronics,” Samsung Electronics
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Appendix