Importance of Strategic Management for Samsung
Samsung’s one of the most significant parts of success is an effective managerial approaches. This company is large and has global and complex supply chains that need an effective support and effective management. In 1993, the c hairman of the Samsung Group announced the adoption of a significant business innovation approach known as “new management . ” The main point of this approach is a quality-orientated management both in manufacturing and business operations. In addition, this approach is made behind six sigma. There are four main key areas of six sigma, where the first is project discipline , the second is sustaining results, then effective HR strategy, and quantitative strength. According to the chairman , “ new management” is the pursuit of quality-oriented management in business operations as well as in manufacturing (“Supply chain management,” n.d. ).
The first point in six sigma is project discipline, which means the necessity of reasonable schedule and plan in each project. In addition, the company must save its results and only increase the advantages of the company (“Supply chain management,” n.d. ) . HR strategy in Samsung Company plays an extremely vital part and became a significant part of effective management. For example, in order to motivate its employees, Samsung created a special VIP room where various conference rooms, offices for project groups and premises are located. The main purpose of this room is to gather specialists while they are working on different projects. The specialists from different field s gather for a short time period to achieve several tasks and create new products or ideas. These rooms have everything for a well-being as people who work there know that they must represent the results in a short time, so they work there almost the whole day. The main advantage of this approach is a team, as while working in a team and in one place participants are more involved in and aware of the process.
Samsung has many divisions or organizational unit s , where each is occupied with significant work. Organizational unit is one of the most important business structures within the organization where the division of labor creates different departments . This is an extremely vital process for successful business performance as each department should fulfill the tasks according to its competence. The main goal of HR department in this regard is to search the employees according to the necessary competences of the department. Effective HR manager should set the range of goals concerning specifics of every department and according to the needs of the whole enterprise. It is certainly the case that environment, in which businesses operates, plays a significant role. Business environment concerns with two main factors: external and internal environments. External environment refers to the outside influences such as state, competitors, clients, while internal refers to the inside issues of the company. HR department of the company should consider and observe all the issues regarding business environment of the company and hire the employees respectively.
In addition, the company pays much attention to the business environment as it helps to view all the possible changes and trends in the industry. One of the most important aspects of the business environment is the economic environment. Today, due to the global crisis and other negative trends in the economy, labor market has many negative aspects. Negative tendencies in the economic situation lead to a reduction in the labor hiring process. For HR department, it is vital to consider these issues, and, in HR strategic plan, it is necessary to make plans concerning hiring, compensation, and training, which accommodate availability of talent .
In US, Samsung had started to deal since 1977, when the first regional department was opened. However, the company faced many challenges because of high competition in the inside market. In the past, the company was not as successful as today, and referred as the company that produces low-quality products, which imitate other products, but with cheap prices. Apple was a significant competitor, and still does not allow the company to achieve the highest level of success in the US market. In addition, there is also a cross-cultural aspect, and differences in cultures decrease the Samsung’s opportunities.
It is certainly the case that Samsung today is an extremely successful company that still does not losses its forces. The issue is that the company flew the best Western practices in business into Asian system, where the main points are low-cost manufacturing and high-quality products. One of the most significant approaches of effective management inside the company is that it combined the best sides of W estern and Asian culture and ways of running the business. The company focuses most ly on innovation, where each product should be created according to the freshest and most innovative ideas (Khanna, 2011).
One of the most significant key points of company’s success are high levels of production and a wide range of products. Th e s e aspects help in covering various markets as every product has its target audience. The main reasons of company’s success are brand name, innovativeness, global business network, and many of awards received. Moreover, the company pays much attention to marketing strategy. Samsung always has been one of the most significant industry players, however, in the past , this company had an image of an entity producing not expensive and low quality products. Today, the company changed this situation and proved that low prices and high quality can be not separate. According to its marketing strategy, Samsung pays more attention to such element of 4P as place. Place signifies that the company is willing to develop its distribution channels and sell its products in specialize electronics shops.
In the past, such issue as innovativeness did not play a significant role and its products were imitation s of previously produced in other companies. After the “new management” concept, the company set the goal to proof that Samsung products can be innovative and with a high quality. However, the company used technologies that others companies also used so it could not set a higher price for its products, and consequently, the company’s costs did not repay. The company’s chairman , who proposed a “ new management ,” set the new goal for the company, the main issue of which was a design. The chairman of the company put many efforts in design development as he though t that this issue will increase the competitiveness of products on the global market. He set a high competition in this field inside the company as well as created a special Laboratory of innovative design, where he invited the best specialists in this field. After these significant changes, the company won many awards in design , and in 2004 became the most successful in this aspect . Another major reason of the company’s success is a strict schedule and well-organized discipline, where during few months of each year, the company’s specialists must present their new ideas concerning new products and innovation s . This is the reason why today Samsung is well-known by its innovativeness and a wide range of products (Khanna, 2011).
Cross-Cultural Psychology studies the influence of culture on the human behavior. In addition, biological tendencies and experience have an enormous influence on behavior. Culture defines key factors that shape individual behavior that includes sets of beliefs, attitudes, and is shared by a large population of the region (Shiraev & Levy, 2010). The cultural psychology claims to research and find the main links that underline cultural influence and behavior. Korean culture mostly refers to collectivism and Confucianism. The culture of Korea and other Asian countries differ from the Western culture, and this issue demonstrates the importance of creating cross-cultural relationships inside the company and with foreign partners, as well. To deal successfully on the external markets, it is vital to consider the cultural, as well as social, politic, and economic differences. Samsung is willing to spread its forces and sell its products all over the world, and this issue resulted in the establishment of various managerial approaches that will help in cross-cultural management development.
According to Samsung Company, as it is Asian company that deals in the global market, such issue as cross-cultural management is extremely vital. The company’s local managers understand the necessity of globalization and integration inside the company’s culture. In the past years, all the top managers were Korean. In addition, all the specialists had to make reports for main department in Korean language; consequently, those managers who do not speak Korean language have less of influence and authority. The HR department was willing to hire Korean or Korean foreigners abroad as the language was a significant issue of the hiring process. As a result, the company has lost many opportunities such as talented specialists from aboard. This management was not successful as the company was dealing globally and need ed the knowledge of foreign markets. Consequently, one of the main goals of the company became globalization and integration. According to global management within the company, its representatives said “ They learn about the three P’s (products, process, and people); they learn about “global management” so that Samsung can expand into new markets; some employees go through the exercise of making kimchi together, to learn about teamwork and Korean culture ” (Grobart, 2013).
To enter global markets successfully , it is reasonable to hire foreign specialists as they can bring fresh ideas and advantages of the western way of running the business. Modern specialists of HR departments insist on the workplace diversity and its benefits. One of the most vital advantages of diversity is that, in spite of some inconveniences, people can share their experience, knowledge, and traditions. For example, every company prefers to hire both genders because there are some activities that can be difficult for men, and vice versa. In addition, different nationalities and races can also bring more benefits, such as knowledge and experience, from different cultures and countries. Because of the marginalization companies can lose the opportunity to find the real talents. Limitations and stereotypes can cause dangerous consequences and slow down the person’s development. Despite the fact that people are trying to implement measures to reduce the discrimination, in the modern companies, workers can still be threatened unfairly because of their age, gender, race or nationality. Many managers of HR departments came to the conclusion that hiring the diverse workforce can bring a lot of benefits and opportunities to their companies. There are many researches in progress to analyze these problems (Brunot, n.d.).
While entering the new market, it is vital to learn its culture and possible consumer behavior . T hat is the reason why local managers should make a research according to other countries, and one of the best ways of it is to send its local managers abroad for international experience. In 1991, the company created the Samsung Regional Specialist program where the main goal is to send local specialist to another country in order to observe the new country, learn about its culture and , consequently , become a regional specialist. The main purpose of this program is to send its local managers abroad where company’s departments are located. After this experience , they get enough of knowledge concerning cross-cultural communication . One of the participant s says “I went even further away from Korea – to Brazil. After working on a feasibility study involving the Brazilian market for 4 years, I went to the country in 1995 as a participant in the regional specialist program. It was a quite different experience from studying the market from afar. I visited different places and met different people, learning the country and the unique business structure there ” (“How do you,” 2011) .
Another successful program of the company is Samsung MBA, where managers get the opportunity to study in the best business schools all over the world with a purpose of enrichment of global management pool. One of its participants says “Samsung MBA Program, arguing that combining my expertise in emerging markets with knowledge of the best global practices from a top business school would allow me to bring marketing insights for the company. And I got the opportunity to pursue the company-sponsored MBA course in Thunderbird, Arizona.” The main goal of this program is to bring to the company necessary knowledge and international experience (“How do you,” 2011) .
In order to be competitive in the market, the companies recognize the importance of HR department. With constant changes in the business environment, HR department should provide its staff with the necessary training and education as it is necessary to keep the staff on a competitive level. It is clear that training plays almost the most significant role in each company. In the recent times, large companies began to understand the importance of trainings and education of the staff.
Each company has a need in young specialists that can bring new and innovative fresh ideas to the company. Moreover, the company should support different programs for young specialists. HR department should also recognize the need of collaboration with different education establishments, and also provide internships and training-related jobs as well as part-time jobs for students. These issues are crucial as they will help in searching the most talented specialists and bring the opportunity to teach them according to the needs of the company.
T he main reasons of company’s success are innovations, high levels of production, and effective management. As it was mentioned above, the company produces a wide range of products, so , consequently , it covers many target audiences. The tablets that were produced by Samsung have a wide range of choice, where every customer can choose the one according to required price, quality, and design. However, the most significant product of Samsung is Smartphone that help in the establishment of the Samsung brand . The issue is that the main reason of the company’s success is “n ew management. ” After the establishment of this new approach, the company’s managers changed everything and made everything possible for future globalization. The company started to hire foreign managers who possessed more information with regards to their region. In addition, it created different programs for local managers that helped in cross-cultural integration.
The expansion of the company’s products to the W est started in 1980s and established its departments in New York, Portugal, Tokyo, Texas, and England. However, it grew up as an international corporation throughout 1990s. In the past, Samsung was divided into several divisions, but , in 1993, it reorganized into three industries : electronics, chemicals, and engineering. The company mostly focused on electronics , and by 2005 became the largest manufacture of LCD panels in the world. Then, there was a successful partnership with Sony. One of the most significant parts of Samsung success abroad is the mobile market, where the company became one of the most significant participants in the market by 2013.
After the establishment of the “ new management, ” globalization became the main objective of a company. The company set the complexes of electronic production in different geographical areas. The company was willing to achieve the most effective results thanks to the exchange of experience on a regional level, low labor costs, and high managerial level. Later, some of the plants were replaced to Tijuana and Mexico . This expansion to foreign countries was extremely successful as it helped to reduce the costs. In addition to plants, the company also established several headquarters in such countries as Japan, China, USA, Europe, Southern Asia, as well as minor organizations in Russia, Central and Southern America, and other Central East countries. Consequently, the company spread its opportunities all over the world as every department was responsible for its region. Every region brings new ideas and research according to its location , however, the final decision is made by the main office in Korea. This program helps in development of international and cross-cultural communications. However, the company faced many challenges through the time. First, the program was not always successful, and after a while, the company had to make some significant changes. The issue is that not all the regions were profitable. It depended on various factors such as differences in culture, resources, and consumer demand. In addition, this program was not profitable and successful as the company did not hire local managers who could bring new ideas. In the modern world, recruiting has become a significant part of a business process. HR manager of each company understands the importance of developing hiring process and work conditions for the employees. For successful employees’ performance within the company, it is necessary to create an effective HR strategy. This strategy should be based on the long-term company’s goals and concerned with the issues of how HR department should work and what goals it should set. In addition, HR strategies should create the structure of plans for the future and motivate managers and employees to implement the plans accordingly. However, the company did not have this effective strategy, and the main problem was the cross-cultural communication among the regions. The issue was that the company had more expenses on foreign departments, where employees from other regions g o t higher salar ies . In addition, another significant problem was in the hierarchy as every division was responsible for a significant duty and was controlled by the main office. Consequently, the company decided to replace some departments and set them nearby to each other as it helped in closer collaboration and fast share of information, as well as negotiations.
The main challenge that the company has faced is high competition. It is clear that Apple became an extremely popular in the recent years. First, Apple is well-known by its innovations, and at the first time, Samsung played a role of imitator of Apples’ products. Only after a well-known “ new management ” approach this situation has changed, and today, Samsung also has its significant and innovative design s . Moreover, Apple is well-known by its successful and extremely innovative marketing strategies and promotion, where Samsung always lose the competition. However, the most significant challenge in this battle is that Apple displaces Samsung products from the US market, especially in mobile and handheld devices.
Another serious challenge is the cross-cultural communication. Language is also one of the most crucial issues. As it was mentioned above, managers of the company still do not want to speak in international English language while they are having negotiations or reports. This issue can cause many inconveniences in their partnership with foreign departments. For people who do not speak Korean, it is crucial to hire interpreter, who will carefully translate all the statements of both sides as mistakes or misunderstanding can bring many inconveniences. In order to avoid various embarrassing situations during negotiations, it is more convenient to hire an interpreter from the team whom it is possible to trust and who is aware of every aspect of work of the company. In addition, the company can face such issue as cultural differences, especially in comparison with the western world. To compare with Korean attitude towards their leader, West is more democratic; however, the rule of the law is extremely vital. Cultural values of these two nations differ from each other, however, also have some similarities. As it was mentioned above, Korean culture mostly refer to collectivism while Western culture is related to individualism.
According to future possible changes, it is possible to see that one of the major challenges is still competition. Apple is the main competitor, however , because of recent changes in its management and death of its chairman, Steve Jobs, the company faced several problems. Today, Apple produces less than in the past, and its innovativeness lost some issues. However, in the computer industry , Apple has more significant success in comparison with Samsung. In addition, Samsung also has other competitors such as Sony, Asus, and HP, which are much stronger in technical and design sides. Handheld devices are the main force of the company, and today, Samsung succeeded most ly in this industry. First, because of acceptable prices; second, because of a wide range of choice, where every consumer can find his or her product, and also because in the recent years, the company pa id many attention to a design and high quality that is crucial for the modern consumer . The main advantage s of Samsung are high production rate and a wide range of products, but such significant issue as keeping the loyal customers also exist s . Reuters claim “Samsung Electronics has built global leadership in mobile phones, but in a fickle industry looks more vulnerable than its nemesis Apple Inc without an ‘ecosystem’ – software, services, content and customer support – to keep its users loyal” (Wagstaff, 2012 ).
Trompenaars and Hampden-Turner Models help in understanding the cultural diversity. To understand the sense of cultural and cross-cultural communication, it is better first to clarify the definition of culture because this can give more deep knowledge of this discipline. Culture also can be defined as a set of behaviors, symbols, and attitudes of a big group of people. Usually culture communicates from generation to generation. Attitudes of culture include stereotypes, beliefs (moral, religious, political, and ideological), knowledge and values (theoretical and empirical), opinions and suggestions ( Shiraev & Levy 2010). According to main dimensions of the culture, it is possible to view the differences among western countries and Korea. The main difference among Korean and Western business culture is that the first are more likely to notice their attention on personal relationships . For Korean partners, personal relationships and trust are vital while Western partners are focusing more on tasks. In Korea, before starting collaboration, it is crucial to know the person with whom they are going to work, and trust him or her. Cooperation and respect to each other are essential for Koreans. In the business world, Koreans are willing to set support and trust before making any task as they believe that it will reduce the opportunity of possible conflicts and frustrations. For Westerners, completing the tasks are more crucial than creating positive personal relationships.
In conclusion, Samsung is one of the largest and most successful companies in the hi-tech industry. Previously, si nce 2008, the Samsung cooperation had maintained the top vendor position in the US market. Samsung’s cheapest phones, the premium Smartphone, which is powered by Google’s Android software, saturated the markets in developed countries. This company is large and has global and complex supply chains that need an effective support and effective management. In 1993, the c hairman of the Group announced the adoption of a significant business innovation approach known as “new management .” The main point of this approach is a quality-orientated management both in manufacturing and business operations.
T he reasons of company’s success are innovations, high levels of production, and effective management. As it was mentioned above, the company produces a wide range of products, so consequently it covers many target audiences. The tablets that were produced by Samsung have a wide range of choice, where every customer can choose the one according to required price, quality, and design. Samsung cherishes cultural diversity. There are seven dimensions of diversity as defined by Trompenaars and Hampden-Turner. These dimensions are : universalism vers us particularism, collectivism versus individualism, achievement versus ascription, specific versus diffuse dimension, neutral versus affective dimension, internal versus external, and time orientation .
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