Factors influencing decision making in organizational change: a case study of Samsung Electronics - Essay Example

? Factors influencing decision making in organizational change: a case study of Samsung Electronics al affiliation Factorsinfluencing decision making in organizational change: a case study of Samsung Electronics Change is an inevitable process in any organization that seeks to grow and become successful. As Griffith & Moorhead (2011; 551) state, an organization may be forced by circumstances to change, or the change may be deliberate in response to the internal and external environments. Mostly, the middle management within the organization is tasked with making decisions with regard implementing the changes. The short-term competitiveness of a company, as well as its long-term survival depends on organizational change. Samsung Electronics is one of the companies that have achieved both short-term and long term survival goals, due to proper change management. This essay seeks to analyze the factors that influence decision making by the management, in the process of organizational change. In addition, the essay will examine the various cultural variations contained in management approaches, with regard to organizational change. Before 1993, Samsung Electronics was just a second-level manufacturer of low-quality television sets (Park & Gill, 2006). In 1993, however, the management at Samsung Electronics made a decision diversify their products and start making high-quality electronics. This meant that the company had to brace itself for a lot of changes, especially the target market which had to expand beyond South Korea. As Park & Gill (2006) state, Samsung Electronics was moving from a cost-oriented manufacturing company to a quality-oriented one. Although this seemed like an extremely ambitious move, Samsung Electronics was hopeful that the company would be able to undertake the new venture, especially due to the Samsung Advanced Institute of Technology (SAIT). According Park & Gill (2006) SAIT is a Research & Development (R&D) center established in 1987 to help Samsung develop advanced technologies that would prepare the future of the business. When Samsung Electronics changed business strategy and started focusing on quality rather than cost, SAIT started working on long-term projects and recruiting highly talented personnel to work on the projects (Park & Gill, 2006). Over the years, SAIT was able to transform from just a planning R&D center, to a commercialization one that has seen Samsung Electronics manufacture products that create value for the customers. Essentially, Samsung’s success can be attributed to the fact that SAIT has been able to transfer its projects to the business lines. This, according to Park & Gill (2006) has led to the escalation of the volume of sales and an increase the number of applications for patents. Essentially, throughout the 1990s, Samsung Electronics was undergoing a major organizational change poised to either elevate the company to a global electronic producer, or crush the second-tier manufacturer of low-quality television sets. Today, as provided by the Samsung Electronics website, Samsung Electronics is the leading electronic manufacturers in the world by revenue, with annual sales amounting to over 179 billion U.S dollars in 2012. The success of Samsung Electronics in implementing organizational change warrants an analysis into the factors that influenced and continue to influence the managerial team during this change process. Samsung’s success is driven by four key strategies, which according to the Samsung website include; intellectual capital, organizational creativity, technological innovation and employee empowerment. These strategies were introduced in 1993 by chairman Kun-Hee Lee, under the “New Management” philosophy (Park & Gill, 2006). The adoption of this strategy was influenced by various environmental factors that dictated the change process at Samsung. Most of the decisions made during the change process at Samsung Electronics were influenced by the external environment, especially the prevalent economic, technological, and political conditions. According to Agarwal (2008; 98), environmental factors can either create or destroy an organization, and it is important that these aspects be thoroughly evaluated before taking a decision. The political environment in South Korea was one of the factors that influenced the decisions made by the top management at Samsung Electronics during the change process. Prior to “New Management”, Samsung was run using the authoritarian style of leadership prevalent in South Korea at the time. Lee was, however, determined to change the situation and allow subordinates to participate in the decision-making process. In accordance with this initiative, Lee gave employees the right to give their opinions about issues and point out any errors they saw within the company (Lee 2006; 36).This meant that even the middle management did not always have to seek the approval of the top management concerning common issues. According to Lee (2006; 108), the heads of Samsung’s regional headquarters have the autonomy to make decisions affecting their regions, in accordance with the general policies at Samsung. The decision by the chairman of Samsung Electronics to empower employees and allow them to make autonomous decisions, so long as they are in line with Samsung’s general policies, has made it easier for the company to implement change. This decentralization continues to allow regional heads to run their operations independently, and in line with the norms of the regions they are working in. It, therefore, becomes easier for Samsung Electronics to establish new markets, since as Agarwal (2008; 98) states, it is important that managers know who is responsible for making what decisions. The global economic situation in the 1990s was promising, especially after the end of the cold war and Samsung Electronics sought to take advantage. Accordingly, Samsung Electronics started out on an aggressive marketing campaign for its products, in order to boost global sales (Lee 2006; 37).In addition to marketing, Samsung Electronics also adjusted the pricing system and started classifying its products according to the rates at which they were sold. In line with this, best selling products were prioritized and lucrative markets were sought. When Samsung Electronics was upgrading into a quality oriented manufacturer, most of the decisions were based on the technological evolution witnessed during the last years of the 20th century. Technology was changing in the late 1990s, and people were slowly beginning to shift from analogue to digital technology. Samsung Electronics was not to be left behind, as the company started manufacturing high-quality microelectronics that were poised to pave the future for the digital era for Samsung’s products. As Matthews & Thakkar (2012; 333) state, the objective of the management at Samsung Electronics is to develop valuable technologies designed to augment universal competition, hence, first-rate electric equipment. As Agarwal (2008; 103) indicates, organizational aspects can control the decision making procedure. At the time Samsung was established in 1938, the company’s duty was to come up with a constructive contribution to the South Korean financial system. Nonetheless, when Samsung made the decision to branch out, in 1993, the mission statement was customized to replicate a worldwide approach. Samsung Electronics would now center on the creation of advanced products and services that made an upbeat impact on the globe (Lee, 2006; 17). The strategy for Samsung Electronics was to produce superior quality products for the global market, in line with the company’s new mission. Agarwal (2008; 98) states that clear set policies are instrumental in ensuring that a company undergoes change successfully and is able to meet the organizational objectives. Every successful organization, or one that hopes to succeed, should have its own organizational culture that defines the company. According to Griffith and Moorhead (2011; 100) organizational culture is the glue that binds the members of a given organization together. Samsung Electronics is a company driven by a strong cultural bond among all personnel, which is deeply rooted in loyalty to the company. The integrity and ethics of the company prohibit such vices as personal exploitation and taking of bribes. The fact that Samsung Electronics does not condone fraud within the organization is evident in the way the company conducts keen audits and punishes any offenders (Chang, 2008). Integrity is, therefore, one of Samsung’s definitions of organizational culture. According to the planned change model of organizational change, an organization that plans to change should be able to recognize change propellers. This task is given to the top management who identify the change agents, designs the change, and implements the designed change (Griffith and Moorhead, 2011; 551). The management should, however, be ready to face any resistance to change, that may come from some individuals, mainly if such resistance is related to culture. According to Matthews & Thakkar (2012; 332) Samsung Electronics has a very family-centric culture that allows for everyone to participate in the decision making process within the company. The communication structure is very liberal and subordinates are allowed to point out mistakes when they see them. Accordingly, due to this culture of free speech, Samsung Electronics found itself at a loss when one of their cultures was challenged by employees. Matthews & Thakkar (2012; 332-333) writes that it was the culture at Samsung Electronics for employees to stay at work till their assignment was completed, and the work day was between five-to-nine. However, young, newly recruited employees were not comfortable with this culture as they were of the opinion that it was undervaluing them. Consequently, Samsung Electronics had to adjust and set the working hours to seven-to-four. This meant that employees had to plan their work well so that all tasks would be completed by four and the employees would have adequate personal time away from work. According to Harigopal (2006; 57) the actions to be taken during the planned change process depend on the cultural aspects of individual organizations. This helps evaluate how the proposed change can affect organizational culture, since the change process may call for the modification or elimination of some cultures Harigopal (2006; 110).For example, the culture at Samsung Electronics of staying at work until all tasks were completed, was eliminated and replaced with proper planning and supervision that ensures all tasks are completed by four and employees can then leave work. One of the prevalent organizational cultures at Samsung Electronics is that heads of regional offices are free to make whatever decisions they see fit for the business in their respective regions. The only rule is that these decisions should be made in accordance with the general policies of the Samsung Group. On the contrary, Sony has country mangers in every country in which it has operations, yet these managers do not have the autonomy to make decisions. All decisions come from an organization known as SEMC which controls all of Sony’s operations (Chang, 2008). This makes regional managers for Sony to act as puppets, thus limiting their creativity and initiative. At Samsung Electronics, the corporate culture emphasizes on human resources, thus calling for the integration of talented employees into the company in order to optimize efficiency (Chang, 2008). These employees are taught how to be strong-willed and the importance of being the best. Individual self-drive, as well as team effort are crucial aspects of Samsung’s human resource management. According to Chang (2008) Samsung Electronics also uses financial incentives to motivate the workforce. Bonuses for employees are based on the performance of their business units. If the unit has had a great year, then the bonuses could surpass the fixed wages. This encourages healthy competition among business units, which translates to more sales for Samsung Electronics. Sony, a rival company on the other hand, uses curves to calculate employee bonuses, meaning that even if the business year was very productive, the employee may end up getting very low bonuses. Looking at the way Samsung Electronics has been able to transform itself from a second-class manufacturer of electronics, to among the global leaders in the industry; it is evident that if handled well, change could revolutionize a company. The top management at Samsung Group, led by Mr. Lee was able to make decisions that transformed the cost-oriented company into a quality-oriented one. Most of these decisions were influenced by technological, economic, human resource and political scenarios during the change process. Through the development of SAIT, aggressive marketing, recruitment of highly talented personnel, and the elimination of bureaucracy within the organization, Samsung Electronics has been able to achieve positive change. It is also worth noting that Samsung Electronics has very admirable organizational cultures that have guided the company through the process of change. For example, the culture of free speech, autonomy in decision making for regional heads, monetary incentives, and the desire to be the best, have all shaped the success of Samsung. References Agarwal, R.D., 2008. Organization and Management. New Delhi: Tata McGraw-Hill Education. Chang, S., 2008. Sony Vs. Samsung: The Inside Story of the Electronics Giants’ Battle For Global Supremacy. Singapore: John Wiley & Sons. Griffith, R., &Moorhead, G., 2011. Organizational Behavior. Boston, MA: Cengage Learning. Harigopal, K., 2006. Management of Organizational Change: Leveraging Transformation. New Delhi: SAGE. Lee, D., 2006. Samsung Electronics: The Global Inc. Singapore: Lee Dongyoup. Matthews, L. & Thakkar, B., 2012. "The Impact of Globalization on Cross-Cultural Communication" In H. Cuadra-Montiel, ed. Globalization - Education and Management Agendas. ISBN 978-953-51-0702-6. InTech, DOI: 10.5772/45816. Park, S, & Gil, Y., 2006. How Samsung Transformed Its Corporate R&D Center: A Strategic Transformation Allowed Samsung To Leapfrog From Technology Follower To Leader. Research Technology Management. Available at: www.law-journals-books.vlex.com [Accessed on 14 May 2013]. Samsung website, n.d., Available at: www.samsung.com. [Accessed on 14 May 2013]. Read More