The Role of Samsung in the Global Pattern of Trade - Case Study Example

SАMSUNG by Student’s Name Code + Course Name Professor’s Name University Name City, State Date SАMSUNG Samsung Group is made up of about 80 companies. This makes the company to have diversified business activities that include consumer electronics, medical services, construction, financial services, and shipbuilding. The company is a global leader in the digital media, technologies, and advanced semiconductor solutions. The significance of the company in the global market has made it to invest more resources in research and development towards coming up with innovative products and services to its huge customer base. The company has transformed massively the worlds of smartphones, televisions, home appliances, LED solutions, printers, semiconductors, personal computers, cameras, cameras, and medical devices. The company has a workforce of about 227000 individuals across 75 nations (Eid, Elbeltagi & Zairi, 2006). The objective of the company is to open up new possibilities for people everywhere. The aim of the paper is to explore the global business activities of Samsung. The role of Samsung in the global pattern of trade Some of the factors that have contributed towards selecting Samsung Company are due to its role in the global pattern of trade. The company carries out its operations globally thus have a huge influence the competitive business environment. The global pattern of trade is transforming over time due to the new opportunities that are arising. Largely, this is due to the opening of the global market, as well as communication, transport, and innovative information technologies. Samsung has employed strategies over time to enhance efficiency in its operations. This has made it easy for the company to exploit on the arising opportunities through investing on research and development. Samsung focuses in the global pattern of trade to ensure that it optimizes on its potential to increase the sales and revenue returns (Gökmen, 2014). The firm operates in the competitive global trade with the aim of meeting the needs and expectations of its clients while receiving optimal revenue returns. Samsung has identified the global pattern of trade through optimizing on opportunities in the available opportunities in both developing and industrialized nations. The firm identifying the gap between the nations ensures that proper and effective measures are employed to have an advantage edge in the competitive business environment. New Trade Theory New trade theory states that essential factors that determine international patterns of trade are the extensive economies of scale and network effects that take play in key industries. Economies of scale and network effects may be significant hence outweighing the traditional comparative advantage theory. For example, two nations in a business environment may have no distinct differences in the opportunity cost, but if one firm specializes on a particular product or service it may gain economies of scale and other network benefits due its strategy of specialization. Another element of new trade theory is organizations have the advantage edge of venturing early and becoming dominant in the firm. This is because the early entrants gained substantial economies of scale implying that new companies will not have the much-needed potential of competing effectively. This means that these organizations operating globally have large economies of scale (Gökmen, 2014). Therefore, the market environment will be characterized by limited competition from rival firms and may lead to a form of monopolistic competition new trade theory has also played a role in the growth of globalization in the business environment. This implies that poor and developing economies find it challenging in developing particular industries, as they are very much behind to the economies of scale used in the developed nations. The business activities of Samsung represent some aspect of new trade theory for it focuses on particular business segments through the strategy of specialization, for example, smartphones, televisions, home appliances, LED solutions, printers, semiconductors, personal computers, cameras, cameras, and medical devices. The company invests heavily in research and development to ensure that its products are of high quality. The company increases the available space to expand open innovation efforts to allow incubating and acquiring of innovative technologies. This plays an important role in strengthening their position in the competitive business environment, as they can work with early stage firms and have an influential role. This enhances their dominance over a long period, as they give small businesses to utilize their technologies, as well as, having a huge influential role (Arnold, 2013). This provides an opportunity for Samsung to enhance their dominance in capturing a wide segment in the competitive business environment. Another aspect of new trade theory in Samsung is the long period the company has been operational since its inception in 1938. The long period has offered the company and advantage edge in research and coming up with products and services that are superior and proved to be of quality for a long duration. Creating a perfect product or service that meets the needs of customers is very challenges. Samsung has gained the economies of scale in establishing itself with quality and effective products and services compared to new entrants who find it challenging to compete effectively. Theories of Foreign Direct Investment and the Eclectic Paradigm Theory of foreign direct investment involves investment made by an organization based in one nation into an organization based on another nation. Firms that make foreign direct investment usually have a significant amount of control and influence into the company being invested. Countries that have open economies featured with good growth prospects and skilled workforce tend to attract huge amount of foreign direct investment. A company may invest to a different company in another country through various ways that include setting up an associate or subsidiary, through a merger or joint venture or purchasing shares of a company in a different country (Kameda, 2014). Theory of eclectic paradigm offers a three-tiered framework for an organization to observe when deciding if it should pursue direct foreign investment. The theory argues that firms avoid open market when internal transactions are characterized with lower costs. It is also referred to as OLI-framework or OLI-model. Theory of eclectic paradigm further explores internalization theory that was published in 1980 by John H. Dunning. Samsung group has invested in many foreign companies. The company aims at enhancing its influence in the global business market, which is critical in increasing overall sales and returns. The company focuses on nations that have immense opportunities to enhance their potentials. This has made Samsung to use various approaches in initiating foreign direct investment, which includes joint ventures, purchase of share, financing star up business, and much more (Neiman, 2013). For example, it is among the companies offered in the establishment of nuclear power plants in Asia and many other joint ventures. Samsung Internationalization Samsung represents an example of stages of internationalization, as it operates worldwide. This can be portrayed by the way, in which Samsung has opened strategic regional headquarters, research and development centers, and hub centers. The company utilizes talent and skills from individuals of different nations (Arnold, 2013). The company is also investing heavy in the Silicon Valley to enhance its research and development capabilities. Therefore, this portrays the internationalization nature of Samsung group. Samsung Organizational form Samsung is innovative and has organic structures with open and dynamic system. The organizational form of Samsung is reduced in size to control the operational costs. The company optimizes the use of information technologies, for example, internal blog, email, and much more leads to the elimination of middle management. This makes the company to be competitive in the global market as it is characterized with faster responsiveness, more flexibility, higher competitiveness, and reduced processes between divisions. This makes it easy for top management to communicate with employees on design, ideas, and knowledge on improving products and services. The innovation team is obligated to make decisions to enhance rapid innovation and avoid delays in the organizational structure. This fosters innovation, as multi level hierarchy has a negative implication due to the many approvals it has to go through, as well as, the possibility of a rejection. Effects of and implications of culture, legal and economic systems in the countries in which Samsung operates Samsung carries out its operations worldwide. The company finds it challenging to ensure that it adapts a common business strategy globally to meet its set goals and objectives. Different aspects affect the global business market due to varying beliefs, culture, economic systems, and much more. This has made Samsung to be a learning organization to align with the different culture, legal and economic systems to avert possible negative implications. This is important to the firm, as it needs to meet the needs and expectations of the different business markets to attain the intended goals and objectives easily (Arnold, 2013). The varying culture, legal, and economic systems that exist in the global business market makes the management of Samsung to articulate on the importance of sharing knowledge and skill among the local employees and expatriates, which is crucial to attain innovative performance. This makes it possible for expatriates to learn the new culture, legal and economic systems to avoid in operations that may affect negatively the company. Different markets in the globe have varying legal and economic systems. Learning and understanding the economic system is critical for it will determine the market strategies that will be adopted by the company. This will also provide a beneficial avenue for Samsung to learn new business systems that can be employed in other markets thus attaining optimal sales and revenue returns. The company observing the legal systems in the business markets will ensure that they observe the set laws and legislations regarding business activities (Lev-ram, 2013). This will make businesses to carry out their operations without breaking any law that will be regarded as illegal. This makes Samsung to hire local advisors that understand the local legal system to guide, advise and observe the operations of the firm. Therefore, it is important for the firm to observe the varying culture, legal and economic systems in the different business markets. References Arnold, DG 2013, 'Global Justice and International Business', Business Ethics Quarterly, 23, 1, pp. 125-143 Eid, R, Elbeltagi, I, & Zairi, M 2006, 'Making Business-to-Business International Internet Marketing Effective: A Study of Critical Factors Using a Case-Study Approach', Journal Of International Marketing, 14, 4, pp. 87-109 Gökmen, A 2014, 'A Theoretical Study on the Concept of Risk in Enterprises, Dynamics of Risk in International Business, Investing in Turkey & Evaluation of Macro Risks Abstract', Ege Academic Review, 14, 2, pp. 175-187 Kameda, N 2014, 'Japanese Business Discourse of Oneness: A Personal Perspective', Journal Of Business Communication, 51, 1, pp. 93-113 Lev-ram, M. (2013). SAMSUNG'S ROAD TO MOBILE DOMINATION. Fortune, 167(2), 98. Neiman, P 2013, 'A Social Contract for International Business Ethics', Journal Of Business Ethics, 114, 1, pp. 75-90 Read More