The Development of Samsung Group - Assignment Example

Samsung Group-Case Study To what extent do you think Samsung has moved from copycat brand to product leader and how was Samsung able to make this change? The history of Samsung Group dates back to 1938 when Byung-Chull Lee of Taegu, Korea founded the company, according to Michell (2010, p.3). Michell (2010, p.3) reveals that initially Samsung manufactured items such as black and white television sets and calculators. In fact, people knew very little about Samsung during the early years since its products rarely sold beyond its regional market. This is because most of its products were still inferior to those of other companies such as Sony, Nokia, and Siemens, which commanded a huge electronic market worldwide, according to Michell (2010, p.3). Nevertheless, this have since changed as Samsung has transformed from a copycat to a product leader worldwide. In fact, there is no doubt that Samsung is today the biggest electronic company in the world, according to Lee (2010). However, the growth of Samsung from a copycat to a product leader has surprised many including its competitors like Hewlett-Packard (HP), Sony, Panasonic, Sanyo, and Apple among others. Report indicates that Samsung surpassed Hewlett-Packard in 2009 to become the leading technology company in the world. This is after the company posted sales revenue totaling $117.8 billion in 2009 (Lee 2010). This was more that the revenue posted by HP which totaled only $114.6 billion the same year. The company also projected its sale revenue to increase to about $127 billion. This is a very remarkable improvement to make in just a year. Gookin (2012, p.8) notes that the turnaround of Samsung began in 1993 following the unveiling of a “New product development” strategy by Lee the company’s chief executive. The new strategy introduced is said to have deviated from the old strategy in which Lee introduced a top-to-bottom approach for the company. The strategy has since helped turnaround the fortunes of the company making it the leading technology company in the world today (Gookin 2012, p.8). This is because the new strategy adopted by the company enabled it achieve its objective of dethroning Sony which used to be the giant electronic company in the world. Samsung emerged has since emerged as the premier and household brand in the world. The new product development adopted by Samsung entailed the development of its original products, making improvements and modifications as well as rebranding through the company’s product development (Michell 2011, p32). To ensure that the company is revamped at become a leader in the electronic industry, Lee Kung Hee, the company’s CEO in 1993 set high goals for employees and management and developing a strategic plan aimed at accomplishing the objectives (Lee 2010). Chang (2011, p.16) reports that indicates that the high goals set enabled Samsung to achieve its objectives in just less than two decades since it is currently the market leader in electronic industry beating its rivals like Sony by far both in terms of customer base and revenue. Samsung employed a series of strategies to transform itself from a copycat to a product leader, according to Hughes (2011, p.14). Idea generation was the first major step taken by Lee towards revamping the company. To ensure that new and innovative ideas are introduced in the company, Lee hired young and innovative designers to generate new ideas that could help in directing Samsung towards the achievement of its objectives. Report indicates that Samsung’s main intention was to produce sleek, bold, and appealing products targeting high-end consumers to the company (Hughes 2011, p.14). The company also introduced idea screen in its development stage. In this regard, each product manufactured by the company had to be taken through the “Wow” test (Hughes 2011, p.14). As a result, only those products that passed the ‘Wow’ test were passed to the next stage. Those that failed the test were to be taken back to the drawing board for improvement. The company then performed a test on its new concepts. In this regard, Samsung was finally able to manufacture Eco-fit monitors fitted with transparent stand, which gave the monitor a floating appearance (Hart-Davis2012, p.65). The new innovative ideas also resulted in the development of Blue-Ray players, with the capability of changing colors. Finally, from the test, Samsung also proved having been capable of developing a small Pebble MP3 with simple features that can be understand and used by people of all generations (Hart-Davis2012, p.65). These developments showed what differentiate it from its competitors in the industry thereby transforming it from a copycat to a product leader. Samsung also improved its distribution methods by stopping the use of low-end distributors it initially relied on such as Kmart and Wal-Mart. Instead, Samsung opted to build a strong relationship with other special retailers such as Circuit City and Best Buy (Johnston 2012, p.98). Johnston (2012, p.98) notes that this strategy enable Samsung reach its targeted high-end users. Samsung has since then maintained this principle adopted by Lee by becoming the most innovative technology company in the world. Report indicates that Samsung has established a research center whose main mandate is to ensure that the company leads in terms of technological advancements (Michell 2010, p3). In fact, Samsung has been ranked among the most innovative company presently. For instance, Samsung is arguably the first company to adopt the use of touch screen in electronics such as mobile phones and television sets (Michell 2010, p3). At the same time, Samsung products lead in terms of the latest technology, because of the innovative nature of the company. Certainly, it might take too long for its competitors such as Sony, Siemens, Panasonic, and Sanyo to reach where Samsung is today. However, Samsung still have to do a lot in order to have a competitive edge of emerging Chinese companies such as Apple, which is also very innovative electronic company (Hill and Jones 2009, p.41). Explain the importance of concepts such as customer-centered, team-based, and systematic efforts in successful new-product development? Compare and contrast these aspects with Samsung’s product development process? Customer centered concept has a number of advantages that it can bring to an organization that adopts it at the stage of new product development. Customer-centered approach is a concept, which aims at discovering new ways of solving problems customers are facing and finding a solution to the problems by creating a more satisfying experience (Capon and Hulbert 2007, p.33). This concept is indeed very important because it helps in increasing sales and profitability of the company. This is because the customer-centric concept enables a company do business with customers it understands their needs (Lee 2006, p.99). This helps in lowering the cost sales while improving sales staff leverage. Customer centric concept is also very important during new product development because it is one way of creating customer loyalty. Normally satisfied customer easily abandons a company when a problem occurs regardless of how small it might be. This is contrary to loyal customers who will remain even in a competitive environment. Doole and Lowe (2005, p.78) argue that this is the reason why the adoption of customer-centered approach is important because it helps in building customer loyalty (Capon and Hulbert 2007, p.33). Customer centric approach is also important for a company because it enables the company produce in accordance with the needs of its customers. This helps in avoiding introducing products, which may not sell well. In this way, the concept also helps in reducing the cost of managing inventory and product development (Chang 2011, p.16) Samsung is one of the companies whose success is also attributed to the fact that it adopts the customer-centered approach in its new product development process. For instance, it emerged that market testing is one of Samsung’s product development process (Doole and Lowe 2005, p.78). In this regard, the company ensured that it analyzed the reaction of its customers before coming up with the final product that satisfies the needs of all its customers (Doole and Lowe 2005, p.78). This is evident from the fact that for a product to be declared acceptable in the market, it had to be taken through the ‘Wow’ test stage. Therefore, products that failed the test of “wow’ was required to be taken back for amendments and improvements, according to Doole and Lowe (2005, p.78). Team-based new product development refers is a technique employed in product development where several departments in a company team up and work in unison. This approach has a number of advantages during product development. Firstly, team-based approach helps saves time because each department within a company does its part where it specializes (Epstein 2012). Team-based approach is also advantageous for new product development because it increases efficiency during the product development stage. This is because the approach allows for specialization, in which every department does part, which best fit it. Samsung also benefited from the adoption of team-based approach, which helped revamp it from a copycat to a product leader in the electronic industry. This is evident from the fact that Samsung did use team-based approach when it introduced the “new product development” strategy in 1993, according to Wilcox (2012). In this regard, Lee the company’s chief executive sourced for a team of talented designers who worked as a team to create the best products that met its objectives, according to Chang (2011, p.23). Through team-based approach, Samsung managed to create a top-to-bottom strategy for the company as a whole. Based on the Product Life Cycle (PLC), what challenges does Samsung face in managing its high-tech products? Samsung had had over 20 years of success since Lee began transforming the company into a world-class electronic company. Nevertheless, the company is now on a decline stage of its product, according to Lee (2006, p.48). This has been occasioned by a myriad of challenges the company is facing now. In fact, the decline has prompted the company’s CEO to develop a new strategy aimed at turning around the prospects of the company. In this regard, the CEO has since adopted the “mabuljungje,” Chinese word meaning the horse does not stop (Xiang 2011). One of the major challenges that Samsung is facing today include stiff competition offered by emerging already established and emerging companies. The company has acknowledged facing stiff competition from low cost Chinese electronics. China being one of the fastest growing companies has established a number of electronic companies charging relatively low prices on their products. This had diverted some of the company’s customers to the emerging Chinese companies (Mohr, Sengupta, and Slater 2009, p.68). Apple is one of the companies that currently offer Samsung a very intense competition in terms of technology. Like Samsung, Apple has also been very innovative something that has seen it takes some of the Samsung customers (Mohr, Sengupta, and Slater 2009, p.68). However, not only does Samsung receive stiff competition from Apple alone, but also from other companies such as Nokia and Sony. Report indicates that Nokia has improved its technology in recent years. This has seen many customers Samsung used to have before changing their loyalty to Nokia. On the same note, Samsung reportedly experiences significant competition from Sony, its former rival, which has also significantly improved its electronic manufacturing technology, notes Mohr, Sengupta and Slater (2009, p.68). Samsung is also faced by political and economic challenges, which has resulted in a decline in its operation and profits over the last few years. This is because most of the company’s production plants are set up in low cost areas, which are normally subject of economic and political instability, notes Capon and Hulbert (2007, p.38). The instabilities being experienced in some of these areas have affected the production and operation of the company, which has also impacted negatively on the overall performance of the company. It is noted that governments of many countries where Samsung commands huge market niche have become very sensitive on health issues. Some of the health laws being enacted are against innovative technology. This has affected the company because the new laws have barred it from introducing new innovative ideas that can enable compete favorably with emerging technology savvy companies like Apple (Chafkin 2013). The other major challenge Samsung has been facing in recent years pertains to intellectual property rights. In this regard, report shows that the legal framework of Korea is creating many problems of Samsung Group. This follows the recent move by the Korean government to stop plans for the company’s Life insurance division from going public, citing legal issues. Since Samsung is manufacturing several new products every year, the company is also experiencing challenges in protecting its intellectual property rights which is very important for maintain a competitive edge over other companies. Despite the many challenges facing Samsung, the company is keen on improving the company performance by introducing new technologies that conform to the needs of the customer. In fact, the company has set aside billions of U.S. dollars in a big to improve its operation and beat Apple Inc. as leading mobile phone manufacturing. It is worth noting that Samsung currently stands at position two after Apple Inc. in mobile phones (Mohr, Sengupta, and Slater 2009, p.71). In fact, Samsung also intends to diversify its products into the computer industry, a move that will certainly make the company gain competitive edge over other companies. Based on Samsung’s reputation, it is highly expected that the emergence of Samsung in the computer industry will see many customers that have been loyal to the company shift their allegiance from the competitors to Samsung products. This will also help increase the company’s sales revenue and profits (Capon and Hulbert 2007, p.41). References Capon, N., & Hulbert, J. M 2007, Managing marketing in the twenty-first century. Wessex Incorporated, London. Chafkin, M 2013, Lets just say it: Samsung is a copycat, viewed 18 April 2013 http://www.fastcompany.com/most-innovative-companies/2013/samsung. Chang, S 2011, Sony v.s. Samsung: the inside story of the electronics giants battle for global supremacy. John Wiley & Sons, Upper Saddle River, New Jersey. Doole, I., & Lowe, R 2005, Strategic marketing: decisions in global markets. Cengage Learning EMEA, London. Epstein, Z 2012, Samsung’s president says the company will shed its ‘copycat’ image – but he still uses Apple products at home, viewed on 18 April 2013 http://news.yahoo.com/samsung-president-says-company-shed-copycat-image-still-145028393.html. Gookin, D 2012, Samsung Galaxy Tab 10.1 for dummies. John Wiley & Sons, Upper Saddle River, New Jersey. Hart-Davis, G. 2012, How to do everything Samsung Galaxy Tab. McGraw Hill Professional, New York: NY. Hill, C., & Jones, G. R 2009, Strategic management: an integrated approach: theory. Cengage Learning, Manson, Ohio. Hughes, B 2011, Samsung Galaxy S for dummies. John Wiley & Sons, Hoboken, New Jersey. Johnston, C.J 2012, My Samsung Galaxy Nexus. Que Publishing, London. Lee, D 2006, Samsung electronics: the Global Inc. LEE Dongyoup, Oxford, UK. 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