Samsung was founded by Lee Byung-chul in 1938 as a trading company exporting various products from South Korea to Beijing, China. Samsung means “three stars” in Korean. The word three represents something “Big, Numerous, and Powerful”. For nearly 30 years Samsung focused on areas of food processing, textiles, insurance, securities and retail. In 1969, Samsung Electronic was born. The company continued to acquire different business establishments which included a hospital, paper manufacturing plant, life insurance company, a department store and many others. In the 1970's Samsung Electronics started serving the international market. Samsung was destined to become a household name both locally and internationally.
Samsung's success continued through the 1980's as Samsung electronics merged with Samsung Semiconductors and Telecommunication. This merger gave Samsung a stronger hold on the international market with their high tech products becoming a staple in every home. Through the 1990's Samsung keep moving beyond its boundaries restructuring its business plan to accommodate global changes. Samsung's products continued to make their way to the top of the list of must haves, selling TV's, picture tubes, printers, and other high tech products. The products were known for their high quality and in 1993 when Samsung ventured into the LCD industry it quickly became the world's best. Samsung provides a “Line Stop” system in which anyone can stop the process of production in the event that second-rate products are discovered. This method of quality control makes Samsung successful in providing only the best products. From June 2012 through the present Samsung is led by Vice Chairman and CEO Dr. Oh-Hyun Kwon. In 2013 Samsung reorganized into three key divisions IT and mobile communication, Consumer Electronics, and Device Solutions. By the end of 2014 Samsung maintained operations in 213 offices across the globe.
Porters five forces can be used to analyze how each of the market driver's impact Samsung and help give them direction for suitable future business strategies. There is fierce competition and rivalry in their market. The consumer electronics market is oversaturated and Samsung has to contend and compete with a multitude of players both domestically and internationally. The threat of new entrants into this industry is low being that high capital is required to enter this industry and existing brands have well established reputations. The bargaining power of buyers is high although switching costs may become high in some cases. It is important to gain loyalty from customers. The bargaining power of suppliers is low as they are competing against themselves to become the preferred supplier. Samsung is also known to be vertically integrated, whereas they supply their own components. The threat of substitutes is high because the products Samsung makes are almost interchangeable.
Samsung follows the philosophy “We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society”. This philosophy helps Samsung to maintain its status as the world's best technology provider. Samsung's success is due to its constant improvement in its management structure and focus on the global society.
Samsung is guided by its strong values and high ethical standards. Samsung's vision to date states “Samsung is dedicated to developing innovative technologies and efficient processes that create new markets enrich people's lives and continue to make Samsung a digital leader”. Samsung's values focus on people, excellence, change, integrity, and co-prosperity. Samsung business principles include complying with laws and ethical standards, respecting customers, shareholders, and employees, being a socially responsible corporate citizen, caring for the environment, health and safety, and maintaining a clean organized culture.
Corporate social responsibility (CSR) is the vision to build a society where people, society, and the environment exist in harmony. Samsung is committed to this vision. One approach to achieving CSR is through philanthropy. This would include monetary donations and aid to local and non-local not for profit organizations and communities. Samsung philanthropic initiative Hope for Children is focused on helping children lead healthier, smarter and more sustainable lives. Solve for Tomorrow programs through Hope for Children help with national education by giving schools across the United States the opportunity to raise interest in Science, Technology, Engineering, and Math through contests.
Samsung practices environmental responsibility throughout its operations for the benefit of the global community by helping the world create a sustainable and green environment. Samsung has clear guidelines for protecting the environment while assessing their partners who supply their raw materials on the worksite safety and environmental protection practices. Samsung is sharing its green management vision with both its consumers, employees and stakeholders by minimizing energy consumption and in the reduction of carbon emissions.
Samsung supports employee health and safety by constructing ergonomic applications in the working environment and prohibiting business trips to areas with high risk for infectious diseases. Health and safety management for employees is a matter of priority at Samsung. All of Samsung's production plants have obtained OSHSAS18001 certification for occupational health and safety management system. Samsung runs emergency scenario drills of possible harmful chemical spills, fires, explosions, and natural disasters.
Samsung diversity vision states “Create the future by developing a diverse and inclusive culture that attracts and grows the world's top talent”. Samsung is an equal opportunity employer who offers meaningful employment opportunities. Samsung has upgraded its policy and systems removing any factors that may cause inequality and provides active support to allow people with diverse traits to work creatively.
Samsung believes that ethical management is not only a tool for responding to change in the global business environment, but a vehicle for building trust with its customers, shareholders, community, business partners and employees. Samsung practices fair and transparent corporate management. Some of Samsung's ethical programs include maintaining an independent audit team to monitor and encourage the ethics practice of the company and its employees. Samsung also conducts regular anti-corruption education programs for all employees to encourage them to practice ethics in their daily duties.
Samsung's vision for 2020 is to “Inspire the World, Create the Future”. This vision is at the core of Samsung's commitment to lead innovations in technology, products and solutions, which inspire the people around the world to seek to create a better world full of richer digital experiences. Samsung is dedicated to offering new values to its customers and industry while fulfilling shared values of its employees and stakeholders. The goal is to create a future that is both promising and exciting for all together. Quantitative goals include USD 400 billion in sales, becoming predominantly number 1 in the global IT industry and global top 5. Qualitative goals include innovation, respectability, becoming top 10 world's best workplaces, becoming creative leaders by building new markets, and becoming a global enterprise that attracts the world's best talents. Samsung has three key strategic pillars that make up of this vision “Creativity”, Partnership”, and “Great People”.
Samsung believes in transparency and delivering important information to its stakeholders to continuously build up confidence and trust. Samsung actively communicates with its stakeholders to fulfill its social responsibility as a global corporate citizen. Samsung operates diverse communication channels to establish long term cooperative relationships. A functional unit responsible for communication with each stakeholder group related to their specific field has been set up to listen to their voices through surveys, stakeholder forums, and on-site visits.
Samsung Electronics follows an employee first approach to personal management. The human resource team advances the company's employee policies and initiatives to recruit, retain, and develop talented employees. The Samsung Electrics Leadership Center (SELC) has been established to operate a diverse range of training and development programs to build a pipeline of talent and future leaders. A wide range of practices and programs are designed to give employees the freedom to be creative and help drive innovation.
To ensure Samsung employees reach their full potential they are evaluated and rewarded for great performance with competitive compensation and benefits. A variety of performance based rewards programs that motivate employees to demonstrate their ability and maintain their performance are in place. A performance based annual salary system that was adopted in 2010 enables employees to receive better bonuses. Employees that demonstrate outstanding achievement may receive the “Proud Samsung Employee Award” yearly. Diversified employee welfare benefits and allowances concerning health, education, housing, and retirement are not only provided to their employees but also their families. Samsung supports a regular employee pension plan until retirement, equivalent to 3% of the employee's monthly wages.
In July 2009 Samsung Electronics announced a new green management team that established a comprehensive set of goals intended to make Samsung a leading eco-friendly company by 2013. Samsung's mid-term Eco-Management initiative 2013 focused on four key green management objectives and the slogan “Planet First” was born. The reduction of greenhouse gas emissions by 50% in manufacturing facilities and cutting the total indirect greenhouse gas from products by 84 million was the first key objective. Second, Samsung wants to ensure 100% (up from 50%) of all of their products will be eco-friendly and exceed global eco-mark standards. Samsung plans to invest of 5.4 trillion Korean won towards these various eco-management initiatives through 2013. This includes 2.3 trillion won for energy saving technologies and the greening of manufacturing facilities and 3.1 trillion Korean won for the development of eco-friendly products. Lastly Samsung planned to enhance green partnerships with partners and suppliers.
Some of Samsung's Green Management policies included the green global management system, life cycle responsibility for products and services, green manufacturing process, zero-accident green operations site, and preservation of the global environment. Water management and waste management policies were also incorporated to focus on preservation of sustainable water resources and reduction of waste generation. More than 1000 of Samsung's products carry the ENERGY STAR label. In 2013 Samsung was recognized as the ENERGY STAR partner of the year for the prior 3 years receiving the Sustained Excellence Award in 2013. Samsung has the highest level of management support involved in their Eco-Management initiatives. The CEO oversees the Green Management committee himself.
After successfully reaching the environmental performance mid-term Eco-Management 2013 goals Samsung established Eco-management 2020 in 2014. The objectives of Eco-management 2020 is to reduce 250 million tons of the total compounded greenhouse gas emission at the phase of product usage by 2020 and to reduce the total greenhouse gas emissions at Samsung's production facilities by 70% compared to the 2008 level. Samsung deserves an A for its vision 2020 framework. This vision expresses the company's commitment to creating a new future that positively impacts the entire global community through innovations in technology, products, and solutions while maximizing value for customers, stakeholders, employees, and society as a whole.
The triple bottom-line approach states that business goals are inseparable from the societies and environments in which they operate. The triple bottom line refers to three types of performance metrics: economic, social, and environmental. The goal is to succeed in all three simultaneously. Economically, Samsung focuses on its customers, developing environment friendly products and improving on customer satisfaction. Samsung maximizes corporate value by following sound economic activity thus benefiting their Shareholders. Socially, Samsung focuses on their business partners through win-win partnerships and the Government by following fair trade and compliance. The main focus of social contributions is making the lives of children better by promoting education and health. Environmentally, Samsung addresses global issues and the local communities through many operations focused on the global community.
Using the SWOT analysis we note that Samsung's strengths include great positive impact with initiatives within the green management their focus on innovation and eco-innovation and strong market position. Weaknesses include focus on too many products, falling customer satisfaction ratings, and bad publicity related to accusations of anti-union management, failing to improve quality of life in Korea, forcing low prices on partners, child labor, and the semiconductor business include handling of carcinogenic chemicals. Samsung was accused of 140 cases of cancer and 70 deaths due to unsafe working conditions.
Opportunities include developing a competitive advantage through new innovations. With the importance of their current CSR initiatives they could become a great leader for corporate citizenship. Threats include rival competition and the management of their CSR. Some of their CSR mistakes were mediatized. With no improvement opportunities may be missed through other mistakes.
Overall, Samsung reports full year 2015 revenue of KRW (South Korean Won) 200.65 trillion and full year 2015 operating profit of KRW 26.41 trillion. Expecting challenges in 2016 to maintain earnings due to the difficult business environment and slowing IT demands Samsung needs to strive to improve performance. I propose Samsung pursue new investments in innovation and technology fostering high tech product innovation. This strategy will help Samsung keep and increase its position as a barrier to competition. Samsung needs to review its business model, technologies, products, and processes to continue to survive within its industry.
I suggest that Samsung continue to have a heavy focus on customer satisfaction dedicating to continuously providing services beyond the customer expectation. Customer satisfaction has positive and significant impact on brand loyalty. By supplying higher quality services, it will lead to a strong competitive advantage for the organization.
Samsung may also look review its marketing strategy. Possibly changing the company logo will help change customer perceptions. Marketing strategies can be geared to individual products and customized to specific products and regions.
I recommend that Samsung needs to continue to repair its reputation and credibility through CSR activities. Although Samsung, through a Meditation Committee, has agreed to compensate
100 billion won ($85.8 million) to employees who became ill while working at Samsung they have rejected the core recommendation to fund an independent non-profit group. I believe they should rethink this decision. Samsung's CSR and ethical department should become involved in a variety of CSR initiatives including donations, community projects, social contributions around the world, and the adoption of codes of conduct. These activities will help Samsung be viewed as not only a leading electronic corporation, but an entity that values the power of the community/environment now and in the future.
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