How Companies Adjust to Different Environments - Samsung - Case Study Example

How Companies Adjust To Different Environments-Samsung As today’s business markets consistently change, many companies arefaced with the challenge of moving away from their markets in order to adjust to different markets. Samsung is arguably one of the most successful companies that has a path-breaking experience in different markets. Founded in 1938, Samsung is the largest company in the South Korea with an approximated revenue of $227.3 billion and 315,000 employees worldwide as of 2010 (Park, & Lee 2011). Indeed, very few people could have predicted twenty years ago that Samsung could be a transformative force by transforming itself from the low-cost original equipment company to the world leader in the R&D, design and marketing. Famously known for its flagship-Samsung Electronics (SEC), producer of the semiconductors, TVs, cell phones and LCD panels, the company’s highly diversified businesses spans quite a wide range of the industries including the information technology services, the financial services, shipbuilding, machinery and chemicals across the world. In order to adjust to the different market environments, Samsung exercises selective marketing strategies. For instance, the company narrowed the number of the countries that will have the first opportunity to get hands on the Samsung S6 to 20, down from the 120 countries for the Samsung S5. However, while the S5 was made available for testing in the 22,000 stores worldwide, the Samsung S6 has been sent to the 22,000 stores worldwide. For example, in Korea, about 1400 shops are displaying the Samsung the S6, compared to the 50 shops in the past. Due to the supply shortages and the difficulties in the marketing in the past, the company has opted for more focused and selective marketing on the key marketing areas. In order to adjust to the different market areas, Samsung has developed the radical marketing strategy. With favorable support from the Head Office in Korea, the company has introduce a number of initiatives to raise the brand awareness while also instilling good perceptions of its products in the different markets. It has achieved this by having seminars for the corporate customers together with the high profile press launch. In terms of advertising, the company practices selective advertisements that suits to the different business environments while carefully targeting the business users, especially in the cities and the product specific papers and magazines (Bae, & Lawler, 2000). In the emerging markets, Samsung uses the one-to-one marketing strategy and the mailing promotional material direct to the customers. This has helped the company to adjust to the different marketing environments. In order to reach out to the different markets outside the company’s home markets, Samsung have moved beyond its well-integrated system in engaging with the non-Koreans in the non-Korean contexts. In order to achieve this, the company has introduced the practices that are inconsistent with the status quo. However, the company has taken great care in changing the practices that only needed to be changed and to ensure that the company adopted the most appropriate practices in the manner that the customers could embrace and understand. To this effect, the company established the new organizations so as to seek out and adapt the best practices from across the world (Cho, 2002). This has helped the company to deal with varied customers in different areas. In order to boost the rate of acceptance in different areas across the globe, Samsung has made efforts to recruit and retain different employees from varied ethnic backgrounds. The employees are assigned to the overseas subsidiaries, in most cases they are assigned to their home countries. This is because the company realized that it was been hindered by the social, political and the cultural tensions that were magnified by the language barrier. This has led to the steady increase in the rate of the acceptance of the company in the different areas of the world. As part of the company’s continued dominance in the emerging markets, Samsung has developed design expertise that is critical for the company. Besides the company focusing on producing innovative products of the high quality, Samsung also ensures that costs are kept as low as possible. This has led to the Samsung electronics continue to be successful in developing the products every year. The production of the innovative products by Samsung has made it to gain considerable market share especially in the emerging markets. Samsung’s mission is to ensure continued innovation and production of the new products (Siegel, & Chang, 2005). Due to this, the company has developed quick development phase so as to ensure that the products reach to the markets faster. This is because the company’s management is organized into fewer layers to facilitate faster approval of the new product, marketing plan and the budget. This facilitates for more business opportunities for the company to enter into new markets at a faster rate and hence increase its market share. Samsung has been able to adjust to the different markets by focusing on the manufacturing of the existing products at a relatively lower cost as compared to its competitors. This helps the company to build the market share in the different markets. Additionally, the company is involved in the addition of the high-quality marketing strategy. The penetration to the existing markets is a critical source for Samsung. This increases the market share of the company with consideration to research in the different markets. In order to effectively achieve this especially to the different markets, Samsung uses joint venture in reaching out to the emerging markets (Leachman, Kang, & Lin, 2002). Use of the joint ventures by the company to reach out for the emerging markets is vital in that it helps it to reach out the local markets in a friendlier manner. Localization and partnering has played a critical role in ensuring that Samsung is able to adapt and adjust to the different business environments. In pushing for its brand awareness and innovation in the different areas across the globe, Samsung uses joint ventures, the partnering and licensing strategies in different areas to capture large market share (Jang et al., 2002). For instance, SEC has plans to ensure setting up of the joint venture with Suzhou local government in order to build LCD plant. This will ensure that the company builds greater presence in China whereby the market for the flat screens televisions is growing at a faster rate. Additionally, this will help the company build long-lasting ties with the Chinese vendors hence winning over the customers with the 3D TV technologies. As part of its plans in ensuring faster adaptation and adjustment of the company to the different markets, the company is taking the necessary steps to break into the huge markets through the joint ventures rather than through taking of the entire stake by itself (Joo, 2003). As part of the company’s continued partnering with the local agents in reaching out to the different markets, on April 5, 2011, SEC agreed with the Indian Media and entertainment companies-MoneyControl, Hungama, NDTV Convergence, and the Times Music to ensure delivery of their content on its Smart TVs hence allowing movies, news, business news and music through the TV applications. This is a clear demonstration of how the company is replicating the success of companies such as Apple Inc.’s App Store on the television through the building of the local partnerships with the content makers that is tailored for each of the domestic markets. This has played a key role in ensuring that Samsung reaches out to different markets both locally and internationally (Joo, 2003). Samsung’s Channel Management Excellency (CME) strategy focuses not only on the joint ventures, but also the enhancement of the distribution channels to reach different market areas. In Africa for instance, there exists a huge market growth of about 1.75 billion USD. With the current market share that is approximated to be 39.8% in the television market in Africa, Samsung is pushing for the collaboration with the LG Electronics so as to effectively obtain large market share in Africa before other competitors enter (Joo, 2003). This effort shows how the company is striving for the global expansion to different market areas through the use of the CME strategy. Other collaborations with the DreamWorks in order to ensure effective distribution of the 3D products and their agreement on the combined R&D efforts in connection Smart TV and 3D TV is an evidence of the company’s willingness in joining forces with the possible competitors to ensure that it dominates different markets (Joo, 2003). As the technologies and the components are becoming more modularized and standardized, the technological gap between the industry players is narrowing. Samsung as a leader in the mobile phone manufacturer has begun the outsourcing of the core technologies and the product modules in order to ensure that it maintains its market leadership. In order to ensure stimulation of the replacement demand, Samsung is actively involved in the introduction of the new mobile communication technologies and services that will ensure shorter lifecycle for the products (Joo, 2003). Additionally, due to the fact that the global market is diversifying at an increasingly faster rate, Samsung is actively involved in embracing of the new technologies, applications and features to ensure that all their customers in different areas are satisfied. Surprisingly, the color screens, multimedia messaging, Java, consumer applications and the enterprise applications now is the main feature in the market that was initially characterized by the high, middle and low tiers. This underpins Samsung’s decision to ensure continuous improvement of its products to reach to different areas (Joo, 2003). Samsung’s localization strategy has played a pivotal role in the company’s adjustment to the different markets. For instance in Germany whereby the service providers are always in competition for the mobile contents, Samsung launched the online community referred “Funclub”. The ‘Funclub’ brings the customer attachment for the Samsung hence strengthening the Samsung’s relationship with the service providers (Joo, 2003). In France, Samsung tries to ensure connection of the culture and technology through the culture marketing. The company tries to display the company’s products rather than the historical relics. This shows the company’s determination to exploit different market areas. Samsung’s design is largely targeted at the younger generation owing to the fact that the young generation is the largest and fastest growing customer base in the world. This has enabled the company not only to adapt to different market areas but also increase its market share. Samsung has modified some of the features such as enhanced battery life, the lightweight body, and the ability to capture the delicate sounds. This design is largely designed to target the young generation (Joo, 2003). Additionally, the company has developed the voice recognition functions that is embedded into its handsets. These features and among others have allowed the company to exploit different market areas. Recommendations Though Samsung has continued its success in the industry, it faces a number of the challenges to keeping the growth momentum in the future. The following recommendations can improve the success of Samsung in different markets; Due to the fact that Samsung is highly dependent on the foreign companies for the core technologies and modules such as core CDMA, it’s important that the company develops its own technologies to avoid uncertainty. Secondly, the company needs to strengthen its product portfolio in the next generation phones. Thirdly, Samsung should develop the global strategies. Looking at the in-depth analysis of the Samsung’s business activities and the technological advancement, it’s evident that the company should generate global strategies. Fourthly, Samsung should be more aggressive and ensure the acquisition of the BOP markets. This requires the restructuring of the strategies and the implementation of the extreme end pricing mechanisms. Additionally, Samsung Company should continue to invent new products in order to maintain dominance in both the existing and emerging markets by carrying out of the extensive research on the customer preferences and tastes. Though the company has proved that it’s able to surpass some of the greatest multinational corporations in the United States and Japan, the innovation of the new products will ensure continued success for the company (Joo, 2003). Lastly, some of the industry experts argues that most of the Samsung Company’s patents are on the applied technologies that are developed based on the other patent-protected core technologies. Sometimes back, the company experienced shortage in the supply of the camera-phone and Qualcomm chips modules. This is suggests that the company’s high dependency on the core technologies and the product modules can not only threaten its future profitability, but also its competitive position in the market. Other recommendations include; continued focus on the quality and introduction of the cutting edge technology, targeting of the high market segments, and movement of its products from the price driven stores such as Wal-Mart to the more focused retailers such as Best Buy. Conclusion Looking at the Samsung’s global presence, the company has a bright future especially in the Smartphone market. However, the company needs to carry out extensive research and invest in the BOP markets. The company has efficient and enough resources in terms of the labor to facilitate successful manufacture of the android phones to boost its continued success in the market. However, the greatest threat that is faced by the company is the sluggish rate of the diffusion of the android Smartphone that slows down the goal attainment. Ultimately, with the aforementioned strategies the company has been able to penetrate different global markets and increased its market share as evidenced from its global presence in different markets. Works Cited Cho, J. “Evolution of Mobile Telecommunications Devices,” LGERI (LG Economic Research Institute) Economy Weekly Vol.690. (2002). Joo, T. “Samsung Electronics Co., LTD.: Digital Convergence in the U.S. Mobile Phone Market (A), Darden Graduate School of Business Case, UVA-S-0106. (2003). Bae, Johngseok, and John J. Lawler. "Organizational and HRM strategies in Korea: Impact on firm performance in an emerging economy." Academy of Management Journal 43.3 (2000): 502-517. Jang, Seungkwon, et al. "Knowledge management and process innovation: the knowledge transformation path in Samsung SDI." Journal of knowledge management 6.5 (2002): 479-485. Leachman, Robert C., Jeenyoung Kang, and Vincent Lin. "SLIM: Short cycle time and low inventory in manufacturing at Samsung Electronics." Interfaces 32.1 (2002): 61-77. Park, H. S., & Lee, M. H. U.S. Patent No. D635,952. Washington, DC: U.S. Patent and Trademark Office. (2011). Siegel, J.I. & Chang, J.J. Samsung Electronics. Harvard Business School. (2005, June 30). Read More