TECH NEWS: A case study about the reasons for the success of Samsung

Thursday, May 30, 2013

A case study about the reasons for the success of Samsung

Samsung Success case study on the reasons for the success of Samsung

A brief overview

Many people believe that Samsung is one company that produces all these products that we see the Samsung logo on them today, but this is not true, as the Samsung group where a large number of subsidiary companies, one of which is the Samsung Electronics which is the focus of our conversation.
Samsung Group started its business in 1938, after almost thirty years founded Samsung Electronics Co., and was mainly produces TVs cheap black-and-white. In the seventies acquired the semiconductor sector and a semiconductor which defined the future of the company.
The Samsung Electronics Co., one of the largest technology companies in the world in terms of revenue, and present its subsidiaries and its plants and operations in 61 countries around the world and employs about 300 thousand people.
It also is the largest manufacturer of mobile phones and the second largest manufacturer of semiconductors and semiconductor segments. Since 2006, the largest manufacturer of TVs and LCD screens.
Samsung Group is working in a large number of sectors, including heavy industry, shipbuilding and even build skyscrapers such as the Burj Khalifa in Dubai.

Success behind the growth of Samsung Electronics

Samsung has followed a different strategy in their work compared to other competitors in South Korea. In the early stages realized the importance of research and development in the company and wanted to recognize the world as a global brand.
In the eighties, the company focused on manufacturing high quality products, while most competitors are focusing on the large-size production to meet growing demand, regardless of the quality of those products.
Samsung was re-invest their profits in research and development and improve the supply chain to ensure the supply of the market with high quality products and without obtain interruptions.
In 1993 launched the Samsung chairman Kun Hee Lee what he called "the initiative of the new administration," an initiative that aims to deliver the Samsung business leadership in the world. This initiative is what saved Samsung from large losses suffered by companies in the Asian financial crisis that hit the region in 1997 and named after then the Asian Tigers crisis.
Changed this initiative launched by the President of the Board of Directors of the route of Samsung and transfer of ordinary company in consumer electronic products sector to become a leading global company in the sector.
Samsung had planned because is committed to the long term by investing in innovation, brand and distinctive products, while the Koreans competitors are more focused on short-term goals, such as maximizing profits products.
But what initiative includes new administration?

1 - Focus on long-term

Samsung has changed the thinking and outlook of the company be designed to achieve short-term goals, to be a company focused on long-term goals. In 1993, Samsung changed the logo and became the company name written in English in order to be of interest to consumers around the world. And focused on that manufactures high-quality products and invest its resources in research and development, continuous access to the benefits of new products is always high quality and always.
In one of the stories told on the subject of quality that after the gifted director of Samsung, South Korean President device cellular and emerged as some manufacturing defects very simple, it was the reaction of the Director that he burned the entire batch produced and the number was 25 thousand sets in front of the eyes of the workers, and this position has had a great psychological impact they have confirmation of the company's commitment to the highest possible quality in accordance with the standards set by.

Commitment to manufacturing

Samsung emphasizes that manufacturing in the company is one of the essential points in its business model, and focused Yun Jong 
Yong, Vice president of the company in 1997 on Samsung's internal manufacturing instead of outsourcing manufacturing operations to outside suppliers. And the primary focus of Samsung at the end of the nineties is to develop segments and connectors within the company. Between 1998 and 2003, Samsung invested $ 19 billion in the construction of new factories for processors and chipset, and this confirms the company went to compete by manufacturing their own products ranging from hardware processors and connectors. This self-help provided the company a large number of competitive advantages the most important reduction in costs and to secure the pieces necessary number and time compared to other competitors who were asking these materials from external suppliers as well as they do not put themselves at the mercy of the market and the resource and therefore controlled.


Samsung factories distributed not only in South Korea but has factories in China and India to take advantage of cheap labor there and the proximity of these countries to headquarters and provide transport capabilities and international shipping.
This great flexibility in manufacturing enjoyed by Samsung, allows them to make products that are not typical and adjusted according to demand, so more than half of its sales of memory chips to be random special requests from major companies such as Dell, Microsoft and Nokia.
Although the prices of Samsung products to these companies is higher than average available in the market, but Samsung can provide orders in a timely and appropriate quantity and required amendments completely, and this is what no other company can offer.

Focus on gear

Samsung decided to move away itself from the development of software and systems and content so as not to fall into a spiral of piracy and intellectual property rights, among others. So I went in focus entirely on the gear industry. They are today able to develop new products and new technologies efficiently and without reliance on external suppliers.
And because the nerve control in the manufacture of electronic devices, especially smart phones and personal computers and TVs and computers tablet is the processors of these devices, we find that Samsung is sparing no effort in the development of the industry processors to provide better products from a large number of competitors, and sometimes the best of companies specializing in processors only. This prompted Apple to rely on Samsung for making her iPhone processors over the years.

Many and varied products

It is clear that a company the size of Samsung are not dependent on one sector of the products pursuant to the principle do not put your eggs in one basket, they are today manufactured TVs and smart phones and chip RAM and flash and MP3 players and players, DVD ... etc. This is only at the level of electronic products.
Samsung not only manufacture different products to meet different sectors, but also be a leader. It is the best day in the Gaza processors and DRAM memories used in PC and NAND used in cameras that store 3 times more than the storage NOR memories manufactured by Intel and offered at a little like her.

Innovation in digital products

We talked in a previous article about the secret of innovation at Samsung , which dates back to the called Acronym TRIZ methodology which is based on solving administrative problems in the company in a creative manner.
As a result of this approach is innovative began Samsung launched products, open new markets, such as the first device flat-screen LCD and the size of 57 inches, which submitted in 2003 and was the first of its kind, which set new standards for the industry coming to TVs where no longer accepts user quality of less than provided by Samsung, and here suffered other TV companies like LG, Panasonic and Sony, where it had to tread for innovation is far from Samsung.
Samsung did not only draw new industry standards, but they offer new products to market twice as fast as the rest of the competitors. Samsung aims of this high rate of new product launches for the markets to reduce the prices of their products the old thus put pressure on competitors and their products vigorously price makes it harvested a larger market share.
And according to this competitive strategy other companies find themselves losing its focus from product development to catch up with Samsung's and to respond to their products thus lose its position in the market gradually.
The Samsung Company has the lowest level of bureaucracy and red tape in spite of its huge size extended worldwide, the company is doing technology and تطوعها to speed up the decision-making process at various administrative levels.

Focus on marketing

Before the adoption of new management initiative Samsung did not have adequate vision of the proper marketing of the company and its products, and product managers who control marketing budgets and always spend less than normal limits and designing their marketing strategies to achieve short-term goals.
In order to transfer the Samsung "a company that makes hardware cheap" to "a company that provides high-value-added products," the Samsung brand development significantly, so it was necessary to focus on effective marketing. And the كلت Samsung this responsibility on the Vice-President of the Board of Directors, who led the company's efforts to focus shifted production line instead of making products unusual for consumers to make good products, and in 1999 hired the company Eric Kim as deputy chief marketing officer and began emphasizing the importance of looking at the brand Samsung as part a fundamental and vital role in the company is as important as factories and experiences, and thus it should be to establish global Samsung brand, not to be the Samsung brand Korean.
And move even more of the world, has sponsored the Olympic Games in Seoul, which helped Samsung to draw the attention of the world on its brand and create awareness course. At the ends of the nineties the company entered into several marketing alliances with international companies and has sponsored a number of events and effectiveness to increase awareness about global brand for Samsung.
Before 2001, the company Samsung Electronics employs more than 55 advertising agency around the world, announces its products were more than 20 different logo.
This consolidation has helped Samsung to develop a general picture is one of the global brand as well as easy access to them and distinguish its allocation according to the local market because it is necessary and as long as one agency holds it is better than distracting it.
After the adoption of a new administration initiative Samsung to pump more money into marketing budgets, and here comes the role of the so-called M-Net program, which helped Samsung to put money in the right place. Where this program analyze the results of marketing campaigns earlier carried out by the company and the money that has been spent on them, and then propose the new method to be followed and funds appropriate for disbursement in each market and each product or classification of what makes the reallocation of budgets, marketing a new, more efficient.
And gave Kim what he called a "market-led change," an idea that has helped Samsung managers to look at marketing as a vital and important function of the company's business rather than being a series of actions that you follow them every now and then to promote products. As a result of this idea Samsung focused on listening to customers and identify their needs and divided into categories and to identify the classification, which can pay higher prices to meet to get the products and go to a proper marketing strategy.