Innovation is the key to growth, longevity and survival for many businesses in our current highly competitive and rapidly advancing technological era. Companies who cannot keep up with trends often times fall by the wayside as better products and better ways to accomplish things are developed and mass marketed. Business- disrupting evolution presents itself in a variety of ways, including from shifts driven by developments in technology like using Web 3 and dWeb directories with the help of www.dwebguide.com, or significant changes in economic or political circumstances. Regardless of the cause for need for innovation, organizations that do survive change are often those who adapt via innovation within their organizational strategy, structure, and culture.
The high-tech electronics industry today is a highly competitive and globalized industry, and covers an array of different types of products and services. Many of the leading electronics exporting nations come from the region of Asia including Taiwan, China, Japan, North & South Korea, Singapore, and Malaysia. Together, these countries count for over one quarter of the world’s production of electronic goods. In the past, a vast majority of Asian companies were known for electronic imitation rather than innovation within their business strategies and practices. Through time, this ideology has undergone a drastic metamorphosis as many of these Asian companies have adopted more innovative strategies, policies and managerial approaches to compete with their rivals.
One such Asian firm to adopt an innovative mentality within its business practices is Samsung Electronics based out of South Korea and headquartered in Seoul, South Korea. Samsung was founded in 1938 by Lee Byung-chul and became incorporated in 1951 under the name of Samsung Corporation. Primarily, Samsung Electronics (founded later in 1969) focused on manufacturing consumer electronic appliances such as televisions, calculators, refrigerators, air conditioners and washing machines. In 1988, the company merged into the semiconductor and communications industries as well. Today, headed by CEO Yoon-Woo Lee, Samsung Electronics generates revenues succeeding $103.4 billion dollars and employs over 138,000 workers in 57 countries. The company has been recognized by many sources for currently being situated as one of the world’s most profitable technology companies as well as one of the hottest and fastest growing brands of technology on the market.This paper will attempt to give an in depth analysis of Samsung Corporation and its best practices and strategies as they relate to innovation.
II. Company Background
Some of Samsung’s earlier mission statements, “‘Economic contribution to the nation,’ ‘Priority to human resources,’ and ‘Pursuit of Rationalism’,” resonate with the company’s existing innovative culture and values. Since its conception, Samsung’s core rationale has always been centered on contribution to society, considering both sides including the consumers who purchase their products and the individuals responsible for creating them. Samsung’s people-focused business philosophy coincides with innovation within the company because the company’s ability and desire to create such innovative products directly derives from the company’s desire to satisfy the ‘needs’ of the consumers. Today, Samsung operates under the mission statement, “To create superior products and services.” Samsung focuses primarily on the following five key business areas including semiconductors which comprise of semiconductor chips such as SDRAM, SRAM, NAND flash memory, and smart cards, telecommunications which include products such as mobile cellular phone devices, PDAs, and hybrid devices called Mobile Intelligence Terminals, LCD which include products such as computer monitors and television sets, digital appliances such as refrigerators, air conditioners, air purifiers, washers, microwave ovens, and vacuum cleaners and digital media which includes computer devices such as laptops, laser printers, DVD players as well as Blu-ray disc players, MP3 players, and digital camcorders.
Samsung Electronics is a part of Samsung Corporation, which is a conglomerate comprised of a number of affiliated companies which all operate under the key name ‘Samsung.’ Samsung is involved in a variety of different specialized industries including the electronics industry which includes Samsung Electronics, Samsung Electro-Mechanics, Samsung SDI and Samsung Networks. Samsung also has companies involved in the financial services industry which include companies such as Samsung Life Insurance, Samsung Securities, and Samsung Investment Trust Management. Samsung’s machinery and heavy industry companies include Samsung Heavy Industries and Samsung Techwin. The primary functions of these companies involve shipbuilding and engineering as well as construction. Samsung also owns companies involved in the chemical industry including Samsung Total Petrochemicals, Samsung Fine Chemicals and Samsung BP Chemicals. Lastly, the company also has a few other unrelated affiliated companies which fall into various industry categories. Some of these companies include Samsung C&T; Corporation, Samsung Engineering, Cheil Industries, The Shilla Hotels and Resorts, Samsung Medical Center, Samsung Economic Research Institute, Ho-Am Foundation, Samsung Welfare Foundation and the Samsung Foundation for Culture to name a few.
Samsung Electro-Mechanics Company supply’s Samsung Electronics with the components used in their products. Customers of Samsung Electronics range from everyday consumers to small and large businesses and organizational entities. For example, recently, as of Nov. 2008, the company has announced a major deal done with European Hotel chains such as the Wyndham Hotel Group and the More Than Group involving installment of Samsung’s award winning 4 and 6 Series Flat Screen LCD TV’s for use in their hotel rooms. Samsung has an infinite number of strategic partnerships. The goal of these partnerships is to provide mutual benefit for both parties in the form of innovation and growth for both companies. Below is a table describing some of the specific partners of Samsung Electronics, their date of partnership, and their areas of collaboration with Samsung.
Samsung Strategic Alliances Chart
Date of PartnershipCollaboration Effort from Samsung
Supply’s multi-functional laser printers
Supply’s “Movie Beam” set-top box for VOD
Supply’s retailing network of 500 retailers with side-by-side refrigerators
Co-developed digital household electronics
Expanded and consolidated memory stick business
Co-developed and marketed the Samsung-Napster Player
Standardized technology, co-produced and jointly marketed DVD recorders
Supplied household electronics to over 1,100 Lowe’s stores
Co-developed cable broadcasting receiver and set-top box for digital TV
Co-developed technology for handsets and DVB-H standardization solutions
Established a joint venture for developing a Linux platform (Samsung Electronics, Vodafone, DoCoMo, Motorola, and NEC)
Co-developed and marketed technologies for industrial printer solutions
Intel & Microsoft
Cooperated with Discovery on high-definition contents
Developed and marketed optical storage devices
Mar. 2004/Jul. 2006
Established a joint venture for 7th generation LCD line/jointly invested in 8th generation LCD line
Bang and Olufsen
Partnered in the home theater business
Co-developed nano-logic process technologies
Cooperated with Mobile Display Data Interface technology
Cooperated with Netflixx in adding streaming media capabilities to Samsung’s blue ray disc players (BD-P2500, BD-P2550)
Yahoo & Google
Cooperated with Yahoo & Google by installing mobile search software onto cell phone products
Kent State University
Co-developed display technologies
Technological change has taken place within the electronics industry in the form of a digital revolution. As a result, Samsung has adopted the new vision of positioning itself as “leading the digital convergence revolution.” The company calls its concept for achieving this vision as “Digital-e-Company.” Requirements for the completion of this vision include the production not only of digital products but digital products which will inspire digital integration throughout the company. Also, the vision involves using e-processes which connect research and development, production and marketing to all stakeholders in the company including customers. III. Company Profile
- Technology Strategy
Going along with the company’s “Leading the Digital Convergence” theme, Samsung’s technology strategy is centered heavily on integrating digital technology within its 5 key areas of business: Semiconductors, LCD, Digital Media, Digital Appliance, and Telecommunications. Samsung describes this integration throughout 4 strategic areas of focus: First of all, Samsung intends to strengthen its semiconductor core components business, which is involved in the design and manufacturing of core components such as memory chips, in order to focus on creating higher valued products such as the system LSI, small & medium sized LCD television sets, and optical components. They also intend to increase the future production of SOC (System on a Chip) and SOP (System on a Panel) components to facilitate the production of some of their new networking and telecommunications products. Samsung’s network businesses include their home network business which is centered on the formation of digital TV, home servers, and home gateways businesses. Secondly, Samsung also has a mobile network business which is based in creating wireless handsets for mobile phone devices. The company also intends to stretch this wireless technology into their PDAs and laptops as well, in order to create a newer generation of telecommunications entitled the IMT-2000 system. Lastly, Samsung’s office network will be focused on building new printers, IP Terminals, and info mobile (WiMax).
Samsung’s main goal concerning its technology strategy is to maintain its development of tier 1 products within its global electronics market. Currently, the company has 9 tier 1 products including its memory chips, TFT-LCDs, CDMA handsets, display devices, etc. From implementation of their technology strategy, the company plans to add digital TVs, IMT-2000, computer peripherals, and digital home appliances to their list of new tier 1 products in order to strengthen the company’s core competencies even more. Samsung’s current core competencies include being number 1 in semiconductors and CDMA technologies, which are what fundamentally enables their products to have seamless communications within their telecommunications devices, facilitate business transactions, and offer digital entertainment. Samsung Electronics is also a world-leading electronics company in the fields of telecommunications devices, flat panel display products and digital convergence technology.
Another element within Samsung’s technology strategy is their plan to integrate e-process which includes facilitating the reduction of lead time on their supply chain via improvement within their customer management process, research and development management process and their supply chain management process. Through this initiative, the company hopes to unite R&D;, production, marketing and customers to make them coincide with one another more efficiently. The company does this by electronically, via an elaborate internet-based network. Because of this, they also plan to improve their IT infrastructure within their company in order to further strengthen these four elements.
Another crucial contributing factor to Samsung Electronics’ technology strategy is in their decision to focus on manufacturing hardware products and components as opposed to software. The reason why Samsung chose to do this rather than the latter is to save themselves from the hassle of dealing with piracy of their proprietary content as well as give them the advantage of being able to collaborate with other rival companies such as Sony or Apple, who are involved in creating software products as well. As part of their technology strategy, Samsung Electronics’ executives label this concept ‘open architecture.’ The overall gist behind this concept goes along with the fact that customers of Samsung’s products are able to use and access various software on a Samsung device than they would be able to on a competitor’
- Six Themes of Success
Regarding the six themes of success described in the Strategic Management of Technology and Innovationtext, Samsung definitely fits into every one the business categories defining them as a successful organization. Samsung is a highly business focused entity which creates large numbers of varying but yet closely related and even sometimes intertwining products. They also place a high value on research and development, placing investment equaling to at least 9% of the company’s annual total sales revenue each year. The company definitely sets consistent priorities for itself by setting the organizational theme of ‘digital convergence’ throughout all levels of the company. This allows the overall company to stay focused on the strategic vision of the company and not to go off on tangents of creating unrelated products. Samsung definitely has proved itself to be a highly adaptable company due to its strategy of molding itself as well as recreating itself along with new technology. At the present moment, digital technology is the most recent invention which the company is basing itself on. In the future, with the ongoing development of newer forms of technology, Samsung Electronics will most likely mold itself towards that technology also, making it a highly adaptable organization. Samsung’s fundamental values of having an “a company is its people” philosophy as well as placing high values on input from all members of the company including outside contributors, show that the company strives to maintain successful organizational cohesion and good communication. The company shows great demonstration in its activism in promoting entrepreneurial culture through its many innovative and creative partnerships with other outside businesses. Also, Samsung Electronics being part of a huge conglomerate which consists of many other businesses involved in varying industries also displays an entrepreneurial culture within the organization. Samsung definitely would be expected to be an entity which has a high sense of integrity attached to itself because their main motto, “contribution to society” definitely emanates that point. Finally, top-management involvement within the innovation processes at Samsung seem to be a highly respected and a common occurrence evidenced by the CEO, Yoon-Woo Lee, who is highly knowledgeable about his products due to his qualifying attributes as an engineer.
Truly a world leader in the realm of innovation, Samsung has proven this yet again by achieving attainment of 46 honorary awards from the prestigious International CES Innovations 2008 Design and Engineering Showcase. DJ Oh, president and CEO of Samsung Electronics in America had this to say about it, “These prestigious awards reinforce Samsung’s ongoing efforts to bring to market the most groundbreaking technologies and products that enrich the lives of our customers.” Anticipated features to be included in the next generation of Samsung products include enhanced user interface with touch screen devices, messaging devices with QWERTY keyboards, higher megapixel digital camera phones, smaller and lighter laser printers, Auto-Motion Plus 120Hz and LED technology for HDTVs. Also, as part of Samsung Electronics’ contribution towards the ‘green movement,’ Samsung will also be coming out with products which are more environmentally friendly. Below is a chart displaying several of Samsung Electronics’ award-winning newest developments within their product offerings, broken down by categories of consumer electronics, information technology products, telecommunications products, and blue tooth headsets.
Samsung Electronics Latest Product Developments (2008)
The YA-BS900 Bluetooth Speaker System is a three-channel speaker system which is capable of providing room encompassing sound. It also has the feature, facilitated by the blue tooth technology, of being able to automatically switch itself on upon entering within the range of the device. The product also features something called ‘Hyper three-Channel Surround Sound with Euphony Technology’ which is stipulated to have the ability to allow the listener to hear music as if from a center of a soundstage, regardless of their actual position in the room. Samsung’s Q1 Ultra Premium Mobile Personal Computer is a personal computer which weighs less than 2lbs. It also has a battery life capacity of lasting for 4.5 hours along with faster speeds, flexibility and mobile functionality. The Q1 Ultra Premium is designed as an alternative for personal computing instead of a desktop computer or a laptop. Intended for on-the-go use, this computer features a QWERTY keyboard as well as digital camera technology and an LCD screen to facilitate seamless communication. The Samsung Ubicell is a telecommunications product which is intended to provide homes or SOHO with call coverage in areas where there are dead spots or weak reception. In addition, the product is also stipulated to enhance pre-existing call quality. Benefits of the Ubicell include cost effectiveness, convenience and ease of use and installation, and continuous customer value creation. Samsung’s ultra-miniature bluetooth headset the WEP500 is one of the smallest and high quality bluetooth headsets of its kind, featuring noise reduction and echo cancellation as well as a volume button. Along with these products, some other new key products featured by Samsung include their Series 6 models for LCD television sets, their premium designed monitors, their Blue-ray players and home theatre systems, their HD camcorders, color laser printers, drum washing machines and French door refrigerators.
Samsung Electronics innovation within their products stems from various aspects of design and marketing. Along with their engineering innovation capabilities, Samsung Electronics is also highly known for their innovative product designs which make their products more esthetically appealing and fascinating for consumers. Samsung has also created extensive globalized brand value which also contributes to the high-quality perception of their products and gives them competitive advantage above some of their rivals. The products described above can definitely be considered as innovative due to these same reasons of not only including cutting-edge digital technology within the composition of the products, but also having the sleekest designs with the powerful name attached to them.
- Technical Intelligence
Samsung Electronics’ competition includes a vast array of electronic companies from countries all over the world. Of those, some of the major competitors include companies such as Panasonic, Sony Corporation, Matsushita Electric Industrial Co., Toshiba Corp., Royal Philips Electronics, Sanyo Electric Co., Sharp Corp., LG Electronics, Pioneer Corp., Alps Electric Co., RCA, Insignia, and Sylvania to name only a few. These companies are monitored via public sources such as press publications, annual reports and website information. With Samsung’s mission of positioning itself as a leader in its industry, the company strives to be the trendsetter for its competition. One of the ways Samsung Electronics pursues to gain advantage in their technical intelligence is by forming strategic partnerships or purchasing equity shares with some of the companies which may have posed competitive threat against them. For example, in 2005 Samsung Electronics and Qualcomm, a leading developer and innovator in CDMA and other hi-tech wireless technologies, formed a manufacturing partnership with one another. Samsung has also done partnership deals with Sony, Matsushita and Toshiba which are all also competitors of Samsung. Through these kinds of partnerships and business dealings, Samsung truly fits the classification of a learning organization. This is shown through the degree of their willingness to not only share their information and technology with other companies that they cooperate with, but also to learn and grow as a company from outside input as well. Overall, Samsung’s intelligence activities contribute to innovation within the company because the company is able to draw and learn from its competition in order to continuously come-up with new ideas.
- New Product Development
Samsung Electronics places a vast amount of emphasis on research and development of their new products and technologies. The company invests roughly 9.5% of its revenues on research and development each year. Last year, 2007, the company invested over $6,082.6 million dollars into its research and development. The company also possesses a vast amount of intellectual property rights, in 2006, securing 17,377 patents worldwide and over 2,500 patents in the US exclusively. As part of its intellectual property, Samsung is taking aim at fusion technology and biotechnology patents.
As part of their process for transferring products from research into development, the company operates a network of specific research and development centers around the world. Currently, the company has 6 centers in Korea itself and a total of 16 more in 8 other countries. Some of these centers include: The Samsung Information Systems of America, Inc. which is responsible for developing strategic parts and components and core technologies, Samsung Electronics Research Institute, which is responsible for developing mobile phones and digital television software, Samsung Electronics India Software Operations, which is responsible for developing system software for digital products, protocols for wired and wireless networks and handsets, and Samsung Electronics China Research and Development Center, which develops software, digital TVs, and MP3 players.
As part of its intelligence and developmental strategy, Samsung also places emphasis in seeking out and finding new resources for development of technologies. The company uses universities, other research institutes besides its own and venture startups who have created new technologies which haven’t been introduced yet, in order to affiliate with them and help them develop their technologies into useful and marketable products under Samsung’s name.
Before a product is ever introduced onto the market, it goes through three layers of Samsung’s Research and Development organization. These include the Corporate Technology Office which identifies growth engines for the future, and oversees the management and security of Samsung’s intellectual property. The Research and Development centers are primarily focused on developing the technology for each of the different 5 key areas of business. Finally, division product development teams are responsible for commercializing the products and getting them ready to hit the market with one to two years.
Coinciding with the industry, speed is a very important factor within the product development phase at Samsung. Samsung Electronics’ total product development phase can go from start to finish in as quickly as five months. The company labels or rates their most significant products ‘pillar products’ which may consist of 4 to 5 main products to be sold during a particular season or year. Products which are labeled as ‘pillar products’ are those which receive the most amount of money and support from the company in order to ensure the product does well on the market. In order to be considered as a ‘pillar product,’ Samsung Electronics’ marketing division uses three phrases: ‘Wow,’ ‘Simple,’ and ‘Inclusive.’ The meaning behind these phrases comprise that the product should not only be able to intrigue consumers, it should also be simple to use and accessible for the consumers in terms of its ubiquity, availability and affordability.
- Change Management/Leadership
Samsung Electronics definitely confirms itself as being a highly focused change-oriented organization. This is because not only are they able to withstand changes, such as in the case of the digital convergence movement within technology, but the company also displays a high degree of value for innovative leadership within management and teamwork. From its beginnings as a strict manufacturing company of consumer electronic products such as TVs and washing machines, the company has transformed itself into delivering not only more authentic, innovative gadgets, but also breaking the ‘commoditization trap’ of creating monotonous products by giving their products more of a design flare and a uniqueness to distinguish themselves from competitors.
Change is a crucial element within Samsung Electronics’ organization. As part of their statement of core values they respond “We rapidly take the initiative in executing change & innovation with a sense of crisis: we cannot survive if we do not constantly strive to innovate.” Samsung strives to secure and cultivate creativity and intelligence within their managers in order for those managers to, in-turn, create a positive influence of change throughout the company’s management structure. The company aspires to employ and foster qualified experts within their industry who are able to recognize change as well as potential opportunities which can come about because of change.
Leadership is encouraged throughout the company through a respect for individual creativeness. “We create an open culture where employees are encouraged to make decisions and act proactively with a sense of ownership, based on the mutual respect of individuality, trust & credibility.” The company also has an affinity for challenges and cultivates leaders who are able to readily face those challenges and formulate solutions.
- Culture, Power, Politics
Samsung’s organizational culture is defined by its human resources. As a company with locations all around the world, Samsung truly has a value for diversity in its employees. From the Samsung Electronic Company’s global code of conduct it says, “The Company will respect the laws, culture, values and beliefs of the local communities in which it operates, and shall contribute to the improvement of the quality of life of local residents.” The company also fosters what they call “a spirit of co-prosperity” as the cornerstone of their management ideal. The gist of this concept goes along with the company’s underlying goal of contributing to society through the welfare of their customers, employees, and all citizens of the world in general. The company is very active in humanitarian efforts outside of business, offering social welfare programs, cultural and arts programs, and academic and educational programs within various communities. Samsung is also very proactive in environmental preservation as well as the ‘green movement.’
By being an organization which is centered heavily around people and international relations, Samsung has a high degree of respect for human rights as well as social responsibility and ethical conduct on their part. The company strives to maintain stable employment for its employees, and they endeavor to improve the quality of life for their employees by supporting continuous learning and development as well as rewarding personal initiative and creativity.
As part of their global code of conduct, one of the company’s principles is to maintain a ‘clean’ organizational culture. By this, they imply that the company intends to maintain transparency within some of their business operations and also make a strict distinction between private and public information within their company. They value respect and protection of intellectual properties of their own as well as other companies that they affiliate with. They also choose to remain neutral and not get involved in any political matters, refraining from offering opinions about any candidates as well as from giving any campaign contributions or donations of any sort towards governments. About their value for integrity within their company they respond, “We act in a right and ethical way in all manners, ensuring fairness with honour and grace.”
Samsung’s corporate values and culture affect the strategy and innovation within the company by fostering a climate of constant idea-generation and respect for those ideas. This translatesinto inventive technologies which are transformed into great products. The decision making process is headed by the CEO, Yoon-Woo Lee as well as the board of directors and the top executives from each of the Samsung Electronics Company locations around the world. The decision making process is also facilitated by members within the company including the research and development division as well as the marketing division. Government regulations can affect Samsung’s business operations heavily, depending on the country which the company is operating in.