Samsung has grown from an idea hatched up in a small village in Korea to a tech giant and one of the greatest success stories in the corporate world. Founded in 1938, the proprietor Lee Byung-Chul endeavored to develop it as just a small trading company in Su-dong near Daegu city in South Korea producing and distributing groceries within Daegu city. Created with only about 30, 000 won, Samsung only had forty employees but now has thousands of employees across the globe with a number of subsidiaries and holding companies under the brand name Samsung. Lee Byung-Chul being an enthusiastic industrialist ventured into other business such as sugar refining, retail, insurance, and securities with the goal to make Samsung an industrial leader in several sectors, this thus made it easy for Samsung to enter the electronics industry.
Samsung relied on the huge capital it had from the already developed industries to release a black and white television set which was its first product. Soon, Samsung acquired Hanguk Jeonja Togsin a telecommunications giant in 1980. Under this umbrella, Samsung started producing fax machines, telephones, and switchboards which resulted in the great success of the Samsung brand and in the '80s, all the production units merged to become one company under the name Samsung Electronics Co. Ltd. Lee handed the baton to his sons before he died in 1987 but he did not die with his dream and philosophy to make Samsung one of the greatest brands in the world. His son's invested millions of dollars in the growth of their electronic products and research for advanced technology.
Management and Strategy
Samsung's success can only be traced back to their management and business planning and strategy; these have further been backed up by collaboration, excellence, and creativity in its leadership. Samsung has among the world's most praised managers and has a continuously evolving culture to encourage innovative ideas to create new products, advanced technology, create new markets and continue improving the daily lives of their loyal customers while at the same time attracting new ones and working to maintain them by endeavoring to satisfy their needs.
Samsung is a global brand and that requires that it has management across the globe, Samsung has its main headquarters in South Korea with other headquarters in North America, Southwest Asia, Europe, Latin America, Middle East, China, Southeast Asia and Africa. This means that most of its managerial roles including decision making are decentralized. Samsung management delegation depends on employee empowerment and employees are awarded more power and authority to make decisions. A decentralized management ensures that they get the most from every region and that way it is easier to determine the unique needs of each region.
Strategic management is defined as the process in the formation and also the implementation of the initiatives and goals undertaken by the organization top management representing the owners on the basis of resources and also the external and internal environment where the organization competes. Strategic management usually lists the various steps which a manager of an organization should undertake so as to create a full strategy and be in a position to make sure the strategy is implemented successfully in the organization. The main strategy that has been seen to work for Samsung is their effort to build great relationships with their employees. For any company eyeing prosperity, it is very advisable for the company to ensure that their employees are satisfied with their management and Samsung seems to realize this. Samsung endeavors to develop a subordinate plan that evaluates employees work and rewarding hardworking employees at the same time building a positive environment in the workplace. This ensures that employees are satisfied and are encouraged to come up with innovations.
Advantages of Samsung over Competitors
Samsung has been successful in attracting a large customer base with most of its customers being loyal customers. What gives Samsung the large customer base and the large market it enjoys compared to its competitors? Samsung embraces a culture that acknowledges cultural differences and gives preference to local markets; with headquarters in all continents, and Samsung offering support in community activities, Samsung customers feel that they are valued and thus have trust in the brand. Samsung has also amassed a good reputation over the years and many now see it as a great brand, Samsung the brand is respected all around the globe, mainly because it is an old and verified brand that took billions and many years to build.
Analysis of the Situation
Samsung is able to identify its mission and vision; there should also be an assessment of the current market situation. This usually involves evaluating the organizations internal and external environments and also analyzing the status of the competitors. During the analysis of the external environment, the Samsung managers usually consider the external key forces: micro and macro competitions and environment. PEST framework usually represents the factors of the macro environment which are influenced by Samsung in the world environment. The analysis is usually done using Porters 5 framework forces. Competition is usually another external force which is uncontrollable and also influences Samsung operation. Samsung usually assesses their competitors by using the matrix profile of the competitors and also benchmarking for the purpose of evaluating their weaknesses and strengths and the level of their performance. The internal analysis usually involves the assessment of the organization resources, activities and core competencies. The company is able to hold both intangible resources: brand equity, patents, culture, trademark, knowledge, and copyrights. And tangible resources: land, capital, and equipment. The organization core competencies can be superior skills when it comes to customer relationship and the efficiency of the supply chain in management. In analyzing the organization activities, the managers usually look at the whole process in production and value chain. Effectively, the situation analysis is able to identify the weaknesses, threats, strengths, and opportunities for the company and also to show a clear image of the organization situation in the current market.
Fruitful situation analysis is usually followed by the creation of objectives which are usually long term. These objectives act as directions for the selection of specific strategy. In a company, the strategies are usually chosen at three different stages. Samsung has one of the best supply chains and is very distribution efficient which is ensures that they have a market force in most markets around the world; it also ensures that all its stores are stocked up with their latest products giving their customers a wide variety to choose from. Samsung also enjoys the economies of scale and is thus able to carry out quality production at low cost. Samsung also enjoys a diversified portfolio and has multiple investments and shares in many industries, the failure of one single industry would not affect their profitability greatly.
Samsung BCG Matrix
Samsung Galaxy Note 7 Crisis
From stories of mobile phones being produced from cheap child labor to the production of phones which are not environmental friendly Samsung has now entered the abyss of controversy with building controversy over its galaxy note 7 smartphone which is so far its best and latest phone but at the same time the most scandalous. Multiple explosions of the galaxy note 7 have led to growing fears that the phone is a fire hazard. This led to a recall of the smartphone but apparently, this was not enough to fix Samsung's manufacturing issues. A return of the smartphone in the market which was now thought to be safer did not go well as the phone kept blowing up, this led Samsung to recall all sold phones and discontinue the smartphone which was only in the market for two months.
This explosion of the galaxy note 7 has been thought to be caused by the company accidentally squeezing the batteries harder than they should, the manufacturing error placed pressure on the battery plates which brought the negative and positive poles in the phone into contact. According to Korea's Agency for Technology and Standards from a technology perspective, the defect was caused by several contributing factors mainly caused by deficiencies in assembly, for example, the use of insufficient insulation tape which led to the bursting of the phone in frames during charging.
Samsung recalled all the devices and asked customers to return their smartphones for a replacement did not work quite well as the situation was already uncontainable and airlines worldwide and aviation authorities had already published warnings that the galaxy note 7 is not allowed on board.
How the Crisis impacted Sales, Personnel, and Reputation
It has been argued that the Samsung galaxy note 7 crises will not hurt the brand in the long run but we cannot downplay the fact that this crisis affected the brand negatively. Some market commentators have forecasted that competitors will benefit from this crisis by poaching Samsung customers. Actually one of the market analysts projected an increase of Apple customers to over 5 million, which would be a large setback for the brand which is already facing great losses from the recall of the phone. With the exodus of its customers who are very likely to never come back even after they are assured of quality, it is very likely that Samsung sales will drop greatly.
The employees and personnel at Samsung are not left out too, the backlog on the quality question and the production of a phone that explodes due to manufacturing errors drops on their court. The company can only blame their employees on the issue but among the personnel there are those who are not directly or never involved in production at the company but their reputation has been destroyed together with the brand name but they have the task of protecting Samsung's reputation because they are the same people who bask in the company's glory when it prospers. Samsung still remains a major player in the smartphone market and this is not likely to end anytime soon. In the second quarter of 2016, Samsung sold over 70 million phones globally and it is very likely that they will not fall anytime soon. From the above statistic, it is observed that Samsung still remains a preferred brand and they are set for a major comeback soon.
How the Crisis Affected Samsung's Relationship
One of the major impacts of this crisis is that it has greatly affected Samsung's relationship with AT&T which is by far the second largest mobile service provider in the world. AT&T has discontinued all its exchanges of sales and exchanges of the galaxy note 7 smartphones, this has mostly been aggravated by the fact that even after a recall and the second release of what was thought to be a safer galaxy note 7 still exploded. AT&T released a statement that they are currently not exchanging the new note 7 until further investigations are conducted over the incidents reported. Most of the major carriers have agreed to accept the return of the note 7 but AT&T which is a major market force has stopped the sale of the phone entirely. This shows that AT&T lacks confidence and trust in Samsung which could be a major blow to the giant brand. It is very likely that other carriers may follow suit which will hurt Samsung even more mostly impacting on their sales and their customer base. For Samsung to convince buyers again, it is very likely that they will focus on their pricing strategies which would mean that they would hav...
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