[Source-www.smartprix.com]
Did you know that Samsung’s business empire stretched across the world for its technology and its construction sector has built the tallest building in the world, the famous “Burj Khalifa”. Samsung is a South Korean company, mainly recognized as an electronics producer, actually started as a grocery trading store. Through this case study, we will learn about the company’s history, growth and challenges throughout the years.
The Early days of Samsung
Samsung used to trade noodles and other goods produced in and around the city and export them to China and its Provinces. The company expanded its business into textiles after the Korean War and opened the largest woolen mill in Korea. It decided to focus on industrialization to redevelop the country after the war. The company benefited from 3 new protectionist laws by the Korean government. These laws shield the company from competition and provide easy finance. In the latter part of 1950, it purchased three of Korea’s largest commercial banks, an insurance company and a firm. In the 1960’s it acquired an Oil refinery, a nylon company, and a departmental store.
In the 1970s, the company grew its interest in textile manufacturing, including processes that covered all the production from raw materials to end products. During the same period, branches of Samsung, like Samsung Heavy Industries, Samsung Shipbuilding, and Samsung Precision Company, were entrenched. It also invested heavily in the chemical and petrochemical industries.
About the Founder
[Source – www.letsdiskuss.com]
Lee Byung-Chull belonged to a huge landowning family in the Uiryeong Region. He moved to Daegu and founded Samsung Sangoe. When the organization succeeded, he moved his head office to Seoul. Initially, Lee founded a trucking and real estate business in Daegu on 1st March 1938. By 1945, The company was so well established that it could transport goods to Korea and other countries.
With the conquest of Seoul by North Korea, he was forced to leave Seoul and relocate his business to Busan. The next year turned out to be beneficial for him as the US army demanded massive equipment. Overall, the one and half years seemed quite beneficial for his Trading Company. Lee founded an association named “The Federation of Korean Industries” for cultural purposes. He also established “The Samsung Cultural Foundation” and promoted programs that enriched Korean culture.
The Growth in the 20th Century
The company opened a development Centre in Warsaw, Poland in 2000. It started with Set-Top Box technology before moving to TV and Cell Phones. In the first trimester of 2012, Samsung Electronics surpassed Nokia to become the world’s largest cell phone creator. It got U. S. Patents from other organizations like IBM, Google, Sony, Microsoft, and Apple.
Business Strategy
Samsung has applied “Great Business Strategies” over the years. A while ago the company wasn’t as famous as it is now, but it has advanced in such a short period that it is now competing with Apple. Inc. Its growth is so significant that it has made the company the most profitable tech company and 7th most significant brand. The effective marketing strategy changed a cost-driven system to reform its structure to a power producer.
[Source-adriashistory.wordpress.com]
Key Strategic Decisions
- Vertical Integration: One of the company’s core strategies has been vertical integration, where the company manufactures a significant portion of its components. This includes semiconductors, displays (LCDs and OLEDs), and batteries. By controlling these critical components internally, it ensures quality control, increases self-dependency, and maintains competitive pricing.
- Global Expansion: The company has set up manufacturing facilities and established strong distribution networks worldwide. It has adopted an aggressive international expansion strategy. This global footprint not only helped market penetration but also diversified risk across various regions and economies.
- Brand Building and Innovation: The company invested in marketing and brand-building efforts to establish itself as a global leader in technology and innovation. It is now synonymous with quality, reliability, and cutting-edge technology, which drives consumer trust and brand loyalty across diverse product categories.
Challenges Faced
Despite its remarkable success, the company has encountered several challenges along the way:
- Legal and Ethical Issues: It faced legal challenges, including patent disputes with competitors like Apple, allegations of corporate governance issues, and scandals involving top executives. These legal battles have, at times, damaged its reputation and resulted in financial casualties.
- Market Saturation and Intense Competition: The consumer electronics market, particularly smartphones and televisions, is highly competitive with thin profit margins. It faces constant pressure from competitors like Apple, Huawei, and Xiaomi, necessitating continuous innovation and differentiation to maintain market leadership.
- Brand Deformity: In 2016 some smartphones reported deformity causing extreme heat and resulting in flames and blasts. It reviewed the reported smartphones and found out that they had faulty batteries. The company replaced the reviewed phones. Later it was found that all the Samsung Galaxy Note 7 had the same problem. So the company recalled all the phones and forever ended its production on the same day.
Impact on Global Markets
[Source -delco-construction.com]
The company’s influence on global markets is profound and multifaceted:
- Technological Advancement: The company’s continuous pursuit of innovation has set industry benchmarks in consumer electronics, semiconductors, and display technologies. Its advancements in mobile phone technology, such as foldable screens and 5G connectivity, have pushed the boundaries of what is possible in consumer electronics.
- Economic Contribution: As one of South Korea’s largest conglomerates (known as chaebols), it contributes significantly to the country’s economy through job creation, export revenues, and technological advancements. The company’s economic impact extends beyond South Korea, influencing global supply chains and contributing to technological progress worldwide.
- Supply Chain Dominance: It’s position as a leading supplier of semiconductors (especially memory chips) gives it considerable influence over global supply chains in technology. Fluctuations in the company’s production output can have ripple effects across industries dependent on these critical components.
Conclusion
Samsung’s evolution from a local trading company to a global powerhouse exemplifies strategic foresight and innovation. The company’s commitment to vertical integration, global expansion, and continuous innovation has enabled it to overcome numerous challenges and maintain its leadership position in diverse sectors. Its strong brand equity, robust R&D capabilities, and diversified business portfolio position keep the company well to continue shaping the future of technology and maintaining its pivotal role in global markets.
