Samsung Electronics Company Profile

Samsung Electronics Company Profile

Part 1: Research Sources

Samsung. (2016). Samsung Sustainability Report 2016. Retrieved from https://images.samsung.com/is/content/samsung/p5/uk/aboutsamsung/SAMSUNG_SUSTAINABILITY_REPORT_2016_ENG-PEOPLE.pdf

The article is a sustainability annual report of Samsung Electronics (SE) and majorly revolves around its human resources (HR). The report is broadly organized into three sections: our people, compliance, and human right. The article recognizes the critical role the HR is playing in attaining the corporate’s mission for integrating the human resources and technology to create superior products in the consumer electronics industry. The first section provides a detailed look into the human resource management system, compensation and benefits, learning and development, and recruitment and selection systems. The compliance part of the report gives information about the firm’s compliance system, the organization’s structure and its contribution to legal and regulatory compliance, and also acknowledges the corruption cases related to compliance. The last part of the content discusses the human rights assessment system the firm deploys. Results of the human rights assessment and an improvement plan is provided. It is evident from the sustainability report of SE that the company is acknowledging its flaws despite its novel excellences in various aspects of human resource management.

AmCham. (2013). Samsung to spend $1.2 billion on a 2nd Thai Nguyen plant. Retrieved from https://www.amchamvietnam.com/samsung-to-spend-1-2-billion-on-vietnam-chip-plant/

It is a common practice that companies always want to reduce their operation cost in attempts to improve their financial performances. One of the strategies of achieving this objective is through outsourcing of human resources and establishing the manufacturing plants in the countries they operate if they happen to offer cheap labor. This article provides a snapshot of SE’s decision to construct a manufacturing plant in Thai Nguyen, Vietnam in 2013. According to the author, the complex consumed US$2 billion of the company’s budget. The project was commissioned end of 2013 and was a gateway for the company’s entry in the smartphone and tablets and could later be declared the largest manufacturing plant in the world of these products. The main motivating factors of the decision of the company to construct the manufacturing base was due to the availability of cheap labor and raw materials besides being centrally placed in the Asian market.

Lee, C., Kang, S., Kim, H., & Kim, I. (2019). Background and Activities of the Samsung Ombudsperson Commission in Korea. Journal of Preventive Medicine and Public Health, 52(4), 265-271. doi: 10.3961/jpmph.19.033.

The article aimed to explore and document the health and safety state of the company under the initiative of the Samsung Ombudsperson Commission. The project was established to assess issues related to leakemia incidents that had been reported earlier. The Commission achieved this objective by performing a series of activities in the attempt to review and evaluate the condition of the occupational accidents in the company’s management system as well as risk management strategies within its facilities. The review results indicated that the safety and health management system of the company is fairy doing well. However, the Commission recommended action plans the company may consider to improve its state of safety and health management as well as the risk management system. To ensure full implementation of the action plan aimed at addressing the identified issues, the Commission will monitor the implementation of the proposed tasks, offer the required advice, and ensuring safer delivery of the action plan in the company’s semiconductor and liquid crystal display product lines.

Jang, S., Lee, S., Kim, T., & Choi, D. (2019). Planting and harvesting innovation – an analysis of Samsung Electronics. International Journal Of Quality Innovation, 5(1), 1-12. doi: 10.1186/s40887-019-0032-x.

High tech companies are left with limited choices and are only required to devise effective innovation project life cycles as the only way they can remain relevant in the field. The study explored strategic planning of firms in managing their life cycle innovations through various projects under the continuum of planting and harvesting innovations. The article discussed many aspects of planting and harvesting innovations. One of them is the need to have adequate resources aligned to achieve an effective process of innovating new products. The article also argues that firms could enhance their financial performance with new products, which again draws back to innovations through planting and harvesting. The authors used Samsung Electronics (SE) as a case study to analyze life cycle management of new products. Results showed that SE has made plausible steps in utilizing co-innovation in maintaining various planting and harvesting innovation projects. These findings contribute to the growing literature regarding using innovation projects to create new products and services to improve organizational performance.

Choudhury, S. R. (2019). Samsung says quarterly profit fell 56% from a year ago. Retrieved from https://www.cnbc.com/2019/10/31/samsung-q3-2019-earnings.html

Hi-tech companies require massive capital investment and sustainable profit-margins to compete with their rivals. Hence, when their profit margins start to decline, they engage in aggressive strategic planning processes to ensure the identified anomalies are solved. This article highlights the financial year that SE did not perform to expectations. According to the Choudhury (2019), the company declared that its operating profit fell 56% in September 2019 compared to that of 2018. However, it acknowledged that this was an increase by 18% of the previous quarter. The company also expected the last quarter of 2019 will come with better returns as the number of sales it will sell will increase due to a growth in the project demand. With this, it could be believed that the company has devised all measures in place to take advantage of the expected growth in demand of the components. This might include deploying the right number of human resources and driving more innovation projects.

Part 2: Complete Company Profile

1. Company Introduction

Samsung Electronics Co., Ltd is a South Korean-based multinational company operating in the consumer and industrial electronics equipment and products. Headquartered in Suwon, the company deals in a vast range product such as personal computers, semi-conductors, televisions, peripherals, home appliances, and monitors. The company also produces and sells internet access network and telecommunication devices such as cell phones. Functioning as the chief subsidiary of Samsung Group, Samsung Electronics was created in 1969 as the means of moving the conglomerate company into the burgeoning television and consumer electronics industry. The sector was fast-growing and Samsung Group wanted a bridge that could facilitate its entry, whereby Samsung Electronics division was conceived. Samsung has an ambitious mission statement that is focused committing its human resources and technology to produce products and services that portray a superior quality, thereby contributing to the betterment of the global society.

The emphasis of the company on products that surpass the expectations of the customers through the superiority of its products explains that the company is devoting its resources and technology to meet the needs of the sensitive clientele base. Samsung serves customers of a wide range of age bracket, but with a closer watch on the technologically savvy individuals, mostly above the age of 18 years. The company’s ability to meet customer’s expectation is aligned with the strong team of Board of Directors. Currently, Sang-Hoon Lee, Ki-Nam Kim, Hyun-Suk Kim, and Dong-Jin Koh constitutes the board membership as chairman, vice chairman, President & CEO (CE), and President & CEO (IM), respectively (Samsung, n.d). The company maintains a high profitability margin, but has had its backdrops as witnessed fell of the operating profits by 56% versus last year December compared to 2018 (Choudhury, 2019). It implies that the chipmaker must constantly review its strategic plans to maintain a higher profitability mark.

1. Company Analysis

Globalization Strategy

Samsung Electronics (SE) operates in a highly competitive landscape, which means that it must devise strategies that can improve its ability to wage a competition war against its key competitors like Sony and Apple. Samsung operates in what South-Korean language is “Chaebol,” which means a conglomerate of a large family-owned business. This is evident through the company’s focus on a higher global integration rate and cost efficiencies. The company is highly selective when it comes to choosing the location it operates. Samsung establishes R&D centers in convenient places based on local costs to increase cost-effectiveness in its operations. For instance, it started the construction of a large mobile phone plant in Thai Nguyen, Vietnam to take advantage of the low labor cost strategy (AmCham, 2013). Working as a Chaebol helps the company both amass the huge required operation cost, produce and sell a variety of products and equipment for the consumer market.

Company Competitive Advantage

SE generic strategies are characterized by the company’s commitment to both create superior product and make them affordable to consumers. The generic strategies as utilized by SE include low-cost marketing, broad differentiation, and cost focus. According to Moon (2010), a farm must choose wisely one or a combination of these strategies or else it will be stuck in the middle. The author also recognizes that Porter, the main proponent and proposer, devised these strategies with the notion that they will help businesses achieve a competitive advantage against their rivals depending on they apply them. This primarily because of their elegant design and compatibility if applied in interactively. The low-cost leadership helps SE to maintain a low-cost position in the market. However, this does not mean that company’s products demonstrate inferior qualities, but rather, a strategy of presenting itself attractively to the marketplace while maintaining a superior quality. Samsung achieves this strategy through a vast market share, operating in many countries in the globe, and establishing its plant in countries that offer cheap labor and endowed with large sources of the raw materials. The construction of a production plant in Thai Nguyen gives a supporting example.

The broader differentiation strategy cements the low-cost leadership strategy by manufacturing and selling products with superior features sold in a broad market. The company has global reach which enables it to enjoy the economies of scale. This ensures that the company stays ahead of innovation curve viewed from the perspective of the products and services it presents to the market. SE’s Sustainability Report (2017) portrays the commitment of the company to remain as innovative as possible by investing heavily in human resources and technology to deliver value for the customer’s money (p.68). This is premised on the recognition that the company operates in a highly competitive industry, requiring it to maintain a top-notched creativity is it must outpace competing firms such as T-Mobile and Apple to name a few.

The cost focus generic strategy requires that firms target a niche market and offer the lowest price possible. Businesses must choose their target markets decisively and by a better understanding of the dynamics and customer needs, they ensure that costs are maintained at a low level. Samsung understands that quality is a top priority in an era characterized by advanced interactive features in the electronics they buy. SE achieves this objective through a heavy investment in its R&D business unit and ensuring that its products and services are simply better at a highly affordable price compared with its competitors. The focus on a smaller niche ensures that the company focuses on commercializing and customizing its products to match with the specific needs of the customers.

Internal and External Environmental Scanning

SWOT Analysis

Strengths. These enlists the internal environment of SE that acts as its strongholds. The striking strength of SE lies in its global presence. The company’s news website indicates that it operates in 74 countries and 216 global bases besides employing 309, 630 people (Samsung Newsroom, n.d). The company has also invested substantially in its research and development (R&D) unit. Statista (2019) showed that the company has spends annual budget of $17 billion in R&D. Besides, SE is an advocate ecologically friendly innovations. In 2016, it was ranked 10^th in the Top 30 Tech and Telecom companies for its commitment to help Environmental Protection Agency achieve its goals for green energy through its Green Power Partner program (EPA, 2016). In addition, SE has strongholds in the Asian markets. Its decision to construction a manufacturing plant in Vietnam demonstrates the premise. Lastly, SE portrays a synergistic support between its subsidiaries and divisions. The use of a global strategy of Chaebol supports the notion that divisions working under Samsung Group are bound by oneness.

Weaknesses. Even though SE demonstrates superior strengths that have consistently supported global successes, it has weaknesses that it must address for continued excellence. For instance, Samsung shows an overdependence on Android Operating System. The fact that the Android OS is a product of Google and it has a strong influence in the market weaknesses SE. The company also heavily relies on markets that have already reached maturity point of life cycle. Samsung depends on consumer electronics sales in the U.S and Europe, which have limited growth potential. Besides, a vast base of smartphone customers view Apple’s products as superior to those offered by Samsung. Apple’s iPhone XR made most sales last year globally (Banerjee, 2019). Lastly, there was a decline in the number of Samsung smartphones sold in the Chinese market partly due to price sensitivity (Banerjee, 2019).

Opportunities. Despite the weaknesses, there are still opportunities SE can exploit to pursue further advances in the world market. Firstly, SE can exploit diversification for a competitive edge. For instance, it may consider focusing on expanding markets beyond the U.S. and European niches to emerging markets like China and Africa as a way of diversifying its operations. Secondly, many companies continue to see mergers and acquisitions as the path to their global success, something SE should consider in its strategic planning. Thirdly, the company should consider more partnerships with software developing firms. Its partnership with Google is an informed one but since it poses competition it should think at potential collaborations. Fourthly, there is an increasing demand of quality products. SE should exploit its R&D capabilities to meet the dynamism in the global market. Lastly, the new technologies like the wearable tech presents an opportunity SE should take for its advantage.

Threats. The emerging threats in the consumer electronics industry should particularly keep SE weary. Firstly, the competition in the industry has a reached a record high following a growing entry of new competitors that are quickly taking position in the market. The Chinese market could become a hotcake for SE, but the emergency of firms such as Xiaomi and Huawei could become a significant impediment. Secondly, there are changing legal and regulatory to improve the environmental protection. This might affect SE’s ability to operate since it will need more resources for compliance. Thirdly, Apple is becoming a recognized brand due to the quality and reliability of its products. Fourthly, with Apple’s reputation, it might consider entering the consumer product lines such as home appliances, which could affect SE’s market share. This explains why SE has defeated Apple in terms of reliability. Lastly, the Android operating system is not popular among the majority middle income compared to Apple’s iOS.

PESTEL Analysis

Political Factors. SE operates in countries that are politically stable. Despite, there the world sometimes facing instability, political headwinds are benign in its operations hubs.  have negatively affected its business activities. However, in the 2002 presidential election, SE found itself in the middle of involvement in South Korea’s, where it funded Roh Moo-hyun Uri Partys’s aspirant and who in the elections and the Grand National Party’s candidate 2.47 billion (Ji-young, 2010). This tainted the reputation of the governing board and the company as a whole.

Economic Factors. This aspect of operating in the international market is particularly critical for SE since expanding its operation globally has meant widening its global footprint. Unfortunately, the SE should be weary on this dimension since the U.S. and European markets have been thought of as having reached their maturation in the life cycle continuum. It implies that some of the microenvironments where SE are beset with volatility and uncertainty, forcing it to reorient its strategic planning.

Socio-cultural Factors. SE is a South Korean Chaebol multinational conglomerate company. Hence, it means that it is still influenced by the culture of the country of origin despite its global footprint. This affects its workforce where it has to outsource employees from its headquarters to other countries of operation. Besides, this has frequently forced SE to tailor its products to match the dynamic consumer needs.

Technological Factors. SE is regarded as one of the innovative leaders in the consumer electronics industry. It means that the company continue to regard R&D as its sources of innovation. This is tied to its mission of integrating its human resource and technology to produce superior products. The company has also been forced to integrate technology in its operation management to enhance communication between the heads of department and sharing of information among the employees all aimed at establishing a seamlessly synchronized management of business activities.

Legal Factors. There are a wide range legal and regulatory obligations bound to the operations of Samsung. Partly, this is influenced by the broad reach the company operates globally. Each country has unique legal processes of comply to business laws through licensing and taxation. The increased concerns of global warming are also influencing new changes on the expectations of multinational companies. Besides, has to compiling to laws on packaging and marketing unique to countries of operation. This requires the company to constantly train its workforce on specific country’s expectations based on different laws.

Environmental Factors. As aforementioned, the growing concerns about global warming are reshaping on how countries contributes to environmental protection. This has led to changes in the environmental-based laws that SE has to constantly review. Besides, there is an increased awareness about ethical consumers, where customers have plausibly acknowledged that firms must produce and sell products and services embracing practices that are both socially and environmentally responsible. With this, SE has been constantly come under watch to ensure that remunerates its employees competitively and engage in manufacturing and labeling practices that are ecologically sensitive.

Issues Priority Matrix

There are issues that SE must address to effectively manage its HR. The issues priority matrix provided below provides a summary of the problems that the company must put into consideration in its strategic management.

Table 1: Issues Priority Matrix

Table 1 above provides priority issues SE need to address, marked as high priority, medium priority, and low priority. The red boxes indicate imitation, business ethics, and business diversification as key areas the company need to address. Apple has sued SE in the past for imitating its iPads and iPhones, a case that was settled with Samsung compensating Apple $539 Million (The New York Times, 2018). The company has also involved itself in the political campaigns in South Korea, something that affected its reputation. There is also an increasing competition in the industry, an issue that SE would solve by diversifying its operations to emerging marketing. Leadership succession, compensation and benefits, and alternative work arrangements are all classified as low priority areas since the company is doing well in these areas. The Commission indicated that occupational safety and health require improvements following the earlier cases of leukaemia. The same goes to risk management and corporate social responsibility planning of the company.

Past Mergers & Acquisitions

The merger of the company with Google could be considered a successful one since the company continue to use Android operating system through the existing partnership. All SE’s smartphones and tablets use the Android operating system, which offers customer easier-to-use features.

1. Human Resources

Organizational Chart/Structure

Samsung is headed by a CEO whose roles are set by the Board of Directors. The CEO is the director, decision-maker, manager, leader, and plan executor. There are two co-CEOs who are also presidents of product divisions. The Board of Directors manages the overall running of the organization. The rest of the structure is organized according to the technology, markets, and consumers. These are Digital & Media Communications (DMC) or Device Solutions (DS). DMC is divided into two divisions Consumer Electronics (CE) and IT & Mobile Communications (IM). CE heads departments like visual display business and home appliances departments, while IM manages wireless business, Network Business, Media solution, center IT solutions, and digital imaging displays. Figure 1 below gives the organizational chart of Samsung.

Human Resource Strategic Plan

Succession Planning Methods. Samsung Group is mainly a family conglomerate global business, which also finds its way to the leadership of the organization. The heirs to the leaders assumes power when their fathers retire. An example is Jay Y. Lee, who replaced his father, Lee Kun-hee, upon his retirement.

Recruitment and Selection Strategy

The process of hiring new employees starts when there are vacant positions. These could be due to promotions of the existing staff or subordinates, retirement, and termination of employment due to non-competence. Then, individuals are welcome to make applications, which is followed by screening of the documents of the candidates. The applicants are expected to qualify all the four rounds, including, global Samsung aptitude test, technical test, technical interview, and the hr interview. In terms of demographics, the company offers equal opportunities to employees of both genders, mainly based on one’s qualifications. In South Korea, where the company was founded, Caucasians and Asians or Pacific Islanders are presented within a close range. The company hires annually to add new talents, especially young graduates to fill various positions.

Training and Development Strategy

Samsung offers training to the newly employed individuals throughout the induction period to ensure they are attuned to their operation management system. The has established institutes or partnered learning institutes to ensure its workforce is nourished with relevant aspects of education and knowledge based on their roles. Examples include the Samsung Innovation Campus and Samsung Institute of Global Marketing (Samsung Newsroom, n.d). The company also offers alternative work arrangements to enable the workforce live a balanced life.

Compensation and Benefits Strategy

Samsung has been evolving its compensation and benefits strategy to ensure it remains relevant in the labor market. Apart from offering competitive salaries and wages, SE’s employees enjoy a vast pool of benefits ranging from flex benefit plan, discount dining card, pension, and health cash plan to name a few (Crawford, 2014). Compensation and benefits are thought as sources of employee satisfaction, and hence, improved performance. The company seem to have taken a better stance into the issues related to remuneration to rekindle the performance of its workforce.

Performance Management Strategy

SE is an innovation oriented company and ensures it support an environment where employees are motivated to produce to their best. The company has creative performance-based system, guided by the philosophy that there is a reward where there is performance. The system takes the employees through the process of setting their performance goals, which are evaluated annually. Then, evaluation of the results enables the management to select individuals deserving rewards, promotions, developments, and leadership selection (Samsung, 2016, p.46). People at SE are motivated to enter the list of exceptional performance for rewards or promotion under this system.

Internal or External Factors

The HR department of SE are affected by both the internal and external factors to its environment, which in turn influences their performance. Internally, the corporate mission requires that there should be a seamless integration of the human resources with technology to produce high-quality products. Hence, it becomes mandatory the HR department recruit competent individuals and constantly offer training and development opportunities to improve their knowledge and skills. It is also expected of the HR department to adopt creative performance-based system to ensure that the subordinates entering leadership roles or rewarding list are deserving. Externally, the HR department’s practices must be compliant to the labor laws of recruiting and terminating employment contracts. Besides, compensation and benefits packages must meet the international standards since SE is a multinational company.

1. Overall Analysis and Originality

The HR practices demonstrates a strong support of the corporate mission statement, which emphasizes on integrating the human resources with technology to produce products and services with superior features in the industry. The HR practices involves a rigorous process of recruitment and selection, whereby an individual must pass the four rounds as stated above. The training and education opportunities provided by Samsung Innovation campus and many other partnering institutions are steered towards creating talents. The creative performance-based system is also designed in a manner that challenges employees to embrace higher levels of innovativeness.

However, there are a couple of HR metrics that SE should analyze to revamp the performance of the employees. They can be broadly categorized to talent acquisition, learning and development, performance management, benefits, and organization effectiveness. Talent acquisition involve metrics such as cost per hire, turonoer rate, and acceptance rate. The learning and development category constitutes elements such as the rate for participating in training and readiness of employees to learn. As for performance management, the company should consider the average performance rating. Organization effectiveness include metrics such as employee engagement and worker’s compensation claims.

References

AmCham. (2013). Samsung to spend $1.2 billion on a 2nd Thai Nguyen plant. AM Cham. Retrieved from https://www.amchamvietnam.com/samsung-to-spend-1-2-billion-on-vietnam-chip-plant/

Banerjee, P. (2019). Mid-tier phones lead in top 10 smartphones sold in 2019: Counterpoint. Live Mint. Retrieved from https://www.livemint.com/

Choudhury, S. R. (2019). Samsung says quarterly profit fell 56% from a year ago. CNBC. Retrieved from https://www.cnbc.com/2019/10/31/samsung-q3-2019-earnings.html

Crawford, R. (2014). Samsung evolves benefits strategy. Employee Benefits. Retrieved from https://employeebenefits.co.uk/issues/november-2014/samsung-evolves-benefits-strategy/

Environmental Protection Agency. (2016). Green Power Partnership Top 30 Tech & Telecom. Retrieved from https://19january2017snapshot.epa.gov/greenpower/green-power-partnership-top-30-tech-telecom_.html

Jang, S., Lee, S., Kim, T., & Choi, D. (2019). Planting and harvesting innovation – An analysis of Samsung Electronics. International Journal of Quality Innovation, 5(1), 1-12. doi: 10.1186/s40887-019-0032-x.

Lee, C., Kang, S., Kim, H., & Kim, I. (2019). Background and Activities of the Samsung Ombudsperson Commission in Korea. Journal of Preventive Medicine and Public Health, 52(4), 265-271. doi: 10.3961/jpmph.19.033.

Moon, H.-C. (2010). Global Business Strategy. Singapore: World Scientific Publishing Co Pte Ltd.

Samsung. (2016). Samsung Sustainability Report 2016. Retrieved from https://images.samsung.com/is/content/samsung/p5/uk/aboutsamsung/SAMSUNG_SUSTAINABILITY_REPORT_2016_ENG-PEOPLE.pdf

Samsung. (n.d). Investors Relations: Board Composition. Retrieved from https://www.samsung.com/global/ir/governance-csr/board-of-directors/profile/

Samsung Newsroom. (n.d). About Us: Fast Facts. Retrieved from https://news.samsung.com/global/fast-facts

The New York Times. (2018). Jury Awards Apple $539 Million in Samsung Patent Case. Retrieved from https://www.nytimes.com/2018/05/24/business/apple-samsung-patent-trial.html

Yu, G. (2017). Succession Planning at Samsung: The Merger Formula of Cheil Industries and Samsung C&T.  Harvard Business School Teaching Note 117-069.