Contemporary issues in management - Assignment Example

Presently, Samsung produces and exports electronics products around one fourth of the total export of South Korea. Samsung had decided to diversify in terms of product diversification as well as market diversification into the foreign market especially into the emerging markets across the world. The main reason behind this is to diversify the risk of single industry. It is noticeable that the company’s current revenue is larger than the many countries’ GDP. So, the parent company has diversified into different industry from electronics and semiconductor production to advertising agency.

Business from this wide range of business areas Samsung has able to make a powerful influence on the economic development of South Korea. The companies like Samsung always believe in expansion. Although the Samsung group is recognised for the digital electronics and semiconductor product but it has diversified into wide variety of industry and formed many subsidiaries like Samsung heavy industries, the second largest shipbuilders in the world, Samsung engineering, Samsung life insurance, Samsung Everland a theme park in South Korea, Cheil Worldwide the 19th largest advertising agencies in the world.

Internal diversification This blue chip company was founded as “Samsung Sanghoe” which was a small trading company of food products especially noodles and other grocery products. In terms of business diversification there are two different types of it like the product diversification and the market diversification. The company started the need and opportunity diversification after the war. After the war the economic condition of the country was very weak and many companies could not able to run their small companies.

Samsung got the opportunity to buy some of those companies which had future prospect and growth. The company started diversifying into many areas insurance, securities and retail. At that time founder Lee discovered the opportunities in industrialization as there was a higher need of industrialization in the country after the war. He thought that by this step the company might also get major support from the Korean government. For this reason Lee started concentrating on industrialization and focused on economic development strategy with the support of large domestic conglomerates.

The strategy behind this diversification to consumer electronics was to become world’s leading brand in consumer electronics programme. The company’s diversification into Samsung Electronics’ was one of the most important diversification strategies of the company. The group become much better in terms of brand recognition and this is the only subsidiary by which the company has become a worldwide popular digital electronics brand. External diversification According to Williams, Samsung set on a path of unrelated external diversification activities where it focused on creating and gaining of companies completely unrelated to each other.

This diversification strategy was aimed by the concern through enhancing the portfolio of business and service or product offerings. Samsung is thus found to expand into diversified business areas like production of memory chips, hardware equipments and computer peripherals pertaining to information technology industries,