CORPORATE LEVEL STRATEGY OF SAMSUNG
Introduction
Corporate-level strategy plays a vital role in the success of organizations. Clearly well-defined corporate strategy of any organization brings the path of success by developing grounds for measurable activities in favor of business goals. Today’s business environment is highly unpredictable due to rapid outdating of innovation and technology. It is vital for the organization to build corporate strategy in a manner that affect organization’s value and sustainability in a fruitful way.
Theoretical review
Corporate-level strategy refers the strategic decision of the organization about the business or businesses firm owns and wants to enter in favor of the whole organization. It is mainly the concern of top level management which then leads to develop business and market strategy of the company. Corporate strategy mainly falls in three categories are
- Value-creation
The strategy is made to serve the market with more choices to achieve bigger market share and economic reward. It is either by employing related diversification within the same businesses having diversified portfolio or by unrelated diversification by entering into new markets and new businesses.
- Value-neutral
On the other hand, value-neutral strategies belong to create strategic conduct for operational plans, maintaining internal processes and cash-flow of the company while securing steady position in the market.
- Value-reducing
It is employed when company is concerned with the perception of consumer and shareholder about the size of the company. Corporate intentionally take measures to reduce unnecessary or harmful growth of the market.
Samsung group- Background
Starting in 1938 with “Samsung general stores “ in Korea, company become the producer of local consumption products till 1950, and then company by adapting diversifying corporate strategy entered into the insurance industry in 1958.Afterward in 1960, company expanded its operations to foreign countries and also continued to not only existing businesses but also added new unrelated businesses to the portfolio of the company.
Company by applying incremental portfolio and functional strategies to the business was able to shape its functions and operations as a large- corporate. Today, Samsung has now become a large group of companies with highly streamlined, well-trained global teams, who are committed to provide markets with increased value by exploiting innovative opportunities.
Business Line of the Firm
Samsung group believing in diversification own a large portfolio of businesses under its name, mainly the core business of the company are considered finance, trade and services and more known to masses electronic. Company serves four major business sectors with a diversified portfolio of product and services while also serves in some other categories (Marangu, 2013).
The categories mentioned above own groups of companies with diversifying product portfolios. As evident by the above representation, it can be concluded that the company has strong diversification strategy which allows the company to practice both unrelated diversifications and also company is involved with related diversification as serving to sub-categories.Company’s portfolio is very large to discuss as whole, so the paper focus will be on electronics division (Marangu, 2013).
In electronics division, company has a group of companies. Focusing on sub-categories the portfolio of electronics division includes
- Samsung electronics
- Samsung SDI
- Samsung Electro-Mechanics
- Samsung SDS
- Samsung Display
- Samsung corning advanced glass
Looking at the business portfolio of electronic division, it is clarified that company is also involved in related diversification.
Value Creation with diversification
If critically looked at the diversification strategy of the organization, it is in all dimensions and serving overall different areas including consumer markets, corporate and enterprise customers and also socially responsible groups. Because of specialized structure for each division and ability to imitate market practices in a cost-efficient manner has created value for Samsung in many diversified businesses.
Considering Samsung electronics has gained clear value of delivery and quality in the mind of the consumer. People have positive perception of value delivery while go for Samsung electronics diversified product portfolio in the market including LCD to smartphones, while having strong position company is continuously practicing innovations to deliver more value to more customers and live alive in the markets with viable market share occupation.
Global Strategy of Samsung
Samsung is considered one of the most globally successful organizations because of the strategy of the founder to locate and reveal new markets and move into them to create value. The major successful global strategy of Samsung was introduced by Kun-Hee Lee named as “new management”. It critically reviewed the prevailing circumstances and challenges of global market Lee suggested the global strategy which was an amalgam of cautiously built sub-strategies and practices.As a part of global profitable existence strategy, new management includes
- organizational creativity
- intellectual capital
- technological innovation
- employee empowerment
- Collaboration to serve (Samsung, 2003)
Company isincrementally practicing the model of new management led to the top of the global market.
Objective
Strengths
Company possesses the strength to serve globally supported by these factors.
- Structured ventures
- Huge assets and technological R&D
- Friendly culture to support collaboration
- Empowerment and Win-win strategies
- Positive perception of value delivery among markets.
Weaknesses
Although having strong structures and organized systems company face weakness on following area:
- Focus disrupts due to many diversified filed and products.
- Low-profit margins.
- Competitors are buyers of Samsung.
Financial review (2013)
(Samsung, 2013a)
(Samsung, 2013a)
(Samsung, 2013a)
The figures and pictorial facts are fetched from official Samsung profile (Samsung, 2013a).It is evident by the general financial review that as a company has positive indicator but profit margins are relatively low. This should be taken into consideration to sustain the positive trend in long-run.
Organizational structure
(Samsung, 2009)
Firm’s organizational structure gives the idea of independence of the team to work in efficient manner. The team is not only managing own functions but also supporting the global operations by assisting compliance teams.
Organizational Culture
(Samsung, 2009)
Samsung is committed for a responsible culture within the organization for each stakeholder as shown in the above graphic. Samsung behaves in a socially responsible manner by focus environmental, society and people focus.
Conclusion
The strategy, structure, and culture of Samsungare alignedtogether, and that is playing a vital role in the success of Samsung. However, playing safe Samsung should practice decentralization of power and functions to increase efficiency of the system in cost effective manner.
References
Marangu, P. (2013). Product Diversification As A Strategic Approach By Youth Funding Organisations In Kenya. Retrieved November 20, 2014 from http://erepository.uonbi.ac.ke/bitstream/handle/11295/58888/Marangu_Product%20diversification%20as%20a%20strategic%20approach%20by%20youth%20funding%20organisations%20in%20Kenya.pdf?sequence=3
Samsung. (2009). Sustainable Management System. Retrieved November 20, 2014 from http://www.samsung.com/uk/images/aboutnew/VisionOrganization.pdf
Samsung. (2003). Annual Report 2003. Retrieved November 20, 2014 from http://www.samsung.com/common/aboutsamsung/download/performance/SAMAR04.pdf
Samsung. (2013b). Re:vision. Retrieved November 20, 2014 from http://www.samsung.com/common/aboutsamsung/download/performance/Samsung_Profile_2013.pdf
Samsung. (2013a). Samsung Profile 2013. Retrieved November 20, 2014 from http://www.samsung.com/us/aboutsamsung/samsung_group/our_performance/
