Samsung electronics is a South Korean company and its headquarters are in Suwon. Since 2009, it has been the largest earning company in information technology in the world. It has a sales network and branches in 61 countries and has an estimate of around 221,000 employees.
Ways in which Samsung multi-business model has changed over time
Samsung has changed in its structure in business divisions to stand the global recessions. The main issues are ways to practise diversification in product productions and at the same time reduce the cost structure and still use high technology.
Samsung changed its multi-business model through diversification. They ought to increase profits by:
i.) Transfer of proficient skills in the business units into different industries.
ii.) Bring different competences together to build business units in the new industries.
iii.) Share resources in the different business units to get economies of scope.
iv.) Use product bundling
v.) Make use of organizational competencies that would increase performance in every business unit.
Why its top managers made these changes
The reasons why managers would change their business models are to ensure that they maximise on their profits, attract as many consumers, and at the same time meet their demand. They wanted to increase profits by value addition, being competent in manufacturing and developing products. They also wanted to produce new products in new industries. They also wanted to use strategies that would survive the stiff competition with European and Japanese electronics companies and emerge as the global leaders in technology.
They copied technology from Japanese and they wanted to produce low cost products with less cost skills to sell at much lower price than the Japanese products.
They also wanted to build competencies in cost effective manufacturing, R&D, and put up new industries for new production. As they were competing with the Japanese, the first thing was to engage in cell phone production, and they produced cheap phones. They then ventured into semiconductor industries that made cheap memory chips where they emerged as worldwide cost leader.
Samsung Electronics current performance
Samsung is performing well worldwide. They are in 61 countries in different continents. By 2007, they were the most innovative globally in making electronics. They also have a great share in the mobile phone market due to their new competences. In 2009, they held the second position after Nokia in the cell phone manufacturing and since 2011; they have been the greatest vendors of smart phones.
They are the leading dealers of advanced LCD screens and flash memory chips. Due to diversifications, Samsung Electronics has become the most innovative electronics makers within its research divisions: telecommunications, LCD displays, semiconductors, and digital media. Samsung is also the top in the market of tablet computer following the invention of Android-powered Galaxy Tab.
Changes that Samsung is making in its multi-business model
Samsung management changed from a one-person manages to two-person management, one being a CEO and Vice-chairman and the other the President and Chief Operating Officer. There were also changes in marketing bases in order to be able to reach the consumers efficiently. The company organization was reorganised to reinforce business synergies. Changes in bureaucracy have led to diversification being carried out since there exists two leaders who solve difficulties in the different units and industries. Teamwork is encouraged across the different industries since they have to keep on consulting which is a requirement in diversification.
Work Cited
Hill, Charles W., and Houghton Mifflin. Strategic Management Theory: An Integrated Approach. 10th Ed. U.S.A: Cengage Learning, 2012. Print.
Lindgren, Peter. Journal of Multi Business Model Innovation and Technology. Britain: River Publishers, 2012. Print.
