Samsung Electronics Co. Samsung Electronics Co. Case: a firm’s capability building and its Case: a firm’s capability building and its contribution to Korea’s economic growthcontribution to Korea’s economic growth

Processed By G-3Processed By G-3 Kyungu Ilunga Maloba;Kyungu Ilunga Maloba;Mahdi Abdullah Mohammed;Mahdi Abdullah Mohammed;Ulan Jylkybaev OsmonkulovichUlan Jylkybaev Osmonkulovich

ContentContent

1.1. BackgroundBackground

2.2. Main factors of successMain factors of success

3.3. Samsung electronics capability building Samsung electronics capability building

4.4. Interaction of the Korean governmentInteraction of the Korean government

5.5. Leadership in globalLeadership in global

6.6. Samsung contribution to Korea’s economic growth Samsung contribution to Korea’s economic growth

7.7. Conclusion Conclusion

8.8. References References

1. Background1. Background Samsung Samsung founded in 1938 by Byung-Chull Lee.founded in 1938 by Byung-Chull Lee.

Lee started a small trading company with a $2,000 nest egg and forty Lee started a small trading company with a $2,000 nest egg and forty employees.employees.

exporter of dried fish, vegetables, and fruitsexporter of dried fish, vegetables, and fruits flour mill and confectionery machinesflour mill and confectionery machines He called it Samsung, which means "three stars" in Korean.He called it Samsung, which means "three stars" in Korean.

1950’s Economic Stabilization1950’s Economic Stabilization Korean War - Samsung lost all assetsKorean War - Samsung lost all assets aimed to help rebuild Korean economy; entered the aimed to help rebuild Korean economy; entered the

manufacturing industry (sugar, fabrics)manufacturing industry (sugar, fabrics) became a leader in modern business practices (recruiting from became a leader in modern business practices (recruiting from

outside)outside) 1960’s Expansion of Key Industries1960’s Expansion of Key Industries

entered electronics and chemical industriesentered electronics and chemical industries 1969 established Samsung Electronics Co. 1969 established Samsung Electronics Co. as a division of the as a division of the

Samsung Group.Samsung Group.

1. Background1. Background

In 1970s, Samsung's entry into the semiconductors business was In 1970s, Samsung's entry into the semiconductors business was pivotal for the company, to that end, creation of pivotal for the company, to that end, creation of Samsung's Samsung's semiconductors and telecommunication Co. in 1978.semiconductors and telecommunication Co. in 1978.

laid the groundwork for electronics in Korealaid the groundwork for electronics in Korea helped the domestic economy growhelped the domestic economy grow paved the way for exports paved the way for exports

1980’s: Samsung was manufacturing, shipping, and selling a wide 1980’s: Samsung was manufacturing, shipping, and selling a wide range of appliances and electronic products throughout the world. range of appliances and electronic products throughout the world.

A more comprehensive electronics companyA more comprehensive electronics company established Semiconductor and Communication corporationestablished Semiconductor and Communication corporation began memory chip businessbegan memory chip business

Early 90’s: Integration and GlobalizationEarly 90’s: Integration and Globalization Sales at Samsung Group grew more than 2.5 times between 1987 and Sales at Samsung Group grew more than 2.5 times between 1987 and

1992. 1992. Mid-Late 90’s: Implementing new management strategiesMid-Late 90’s: Implementing new management strategies

2.Main factors of success2.Main factors of success

2.1 - Human resources2.1 - Human resources One of Samsung's One of Samsung's

strongest assets is their team strongest assets is their team of talented researchers and of talented researchers and engineers. More than a quarter engineers. More than a quarter of all Samsung employees - of all Samsung employees - 42,000 people - work everyday 42,000 people - work everyday in research and development, in research and development, and this number is in increase and this number is in increase every year. every year.

Source: http://www.mke.go.kr

2.Main factors of success2.Main factors of success

2.2 R&D network of Samsung2.2 R&D network of Samsung

Samsung's R&D organization has three layersSamsung's R&D organization has three layers ::1.1. The Samsung Advanced Institute of Technology The Samsung Advanced Institute of Technology

(SAIT) Creation;(SAIT) Creation;1 step: 1987-1993 Laying the Groundwork for Samsung's Central 1 step: 1987-1993 Laying the Groundwork for Samsung's Central

R&D Organization.R&D Organization.

2 step: 1994-1998 Building Up Technological Competencies.2 step: 1994-1998 Building Up Technological Competencies.

3 step: 1999-2003 Innovating research methods.3 step: 1999-2003 Innovating research methods.

4 step: 2004-Taking Research Competencies to the Top4 step: 2004-Taking Research Competencies to the Top

2.Main factors of success2.Main factors of success

The R&D centersThe R&D centersThis research and development This research and development network spans six Samsung network spans six Samsung centers in Korea andcenters in Korea and 18 more in  18 more in ninenine other countries. other countries.. Each year Samsung invest at . Each year Samsung invest at least 9% of its sales revenue in least 9% of its sales revenue in R&D activitiesR&D activities

Division product developmentDivision product development

The division product The division product development teams are development teams are responsible for commercializing responsible for commercializing products scheduled to hit the products scheduled to hit the market within one or two years.market within one or two years.

Source: www.samsung.com

2.Main factors of success2.Main factors of success

2.3 Management2.3 Management

The hallmarks of leadership at Samsung are The hallmarks of leadership at Samsung are Creativity, collaboration and excellence. By Creativity, collaboration and excellence. By attracting the world's most talented managers attracting the world's most talented managers and continuously evolving their company's and continuously evolving their company's culture to support them, they foster innovative culture to support them, they foster innovative ideas that advance technology, create new ideas that advance technology, create new products and markets, and improve the products and markets, and improve the everyday lives of their customers.everyday lives of their customers.

3. Samsung electronics capability 3. Samsung electronics capability buildingbuilding

Samsung Electronics Co. Ltd. is a case of Samsung Electronics Co. Ltd. is a case of Korea’s National Innovation System and the Korea’s National Innovation System and the three stages of Samsung development can three stages of Samsung development can be summarize as followingbe summarize as following

Imitation: 1st stage (1970s)Imitation: 1st stage (1970s) Reverse engineeringReverse engineering As a learning process As a learning process Selling imitation productSelling imitation product

3. Samsung electronics capability 3. Samsung electronics capability buildingbuilding

The 2nd stage: TechnologyThe 2nd stage: Technology acquisitionacquisition,, assimilation, assimilation, development & transfer (1980s)development & transfer (1980s) Absorptive capability was importantAbsorptive capability was important Process innovationsProcess innovations Fast catching-up Fast catching-up

The 3rd stage: Making innovations, competition in The 3rd stage: Making innovations, competition in the leading groupthe leading group (1990~)(1990~) Expansion of Samsung in-house R&D Expansion of Samsung in-house R&D Samsung competing in the leading group.Samsung competing in the leading group. Creative capability is importantCreative capability is important Product innovationsProduct innovations Licensed technologiesLicensed technologies

4. 4. Interaction of the Korean governmentInteraction of the Korean government

The government worked with the companies, The government worked with the companies, providing protection from competition and providing protection from competition and financial assistance as part of a series of five-financial assistance as part of a series of five-year national economic growth plans. year national economic growth plans.

The Korean government introduced the The Korean government introduced the Electronics Industry Promotion Law, marking the Electronics Industry Promotion Law, marking the beginning of official support for the industry. It is beginning of official support for the industry. It is also introduced in 1983 the semiconductors also introduced in 1983 the semiconductors promotion policy.promotion policy.

5. Leadership in global5. Leadership in global

Samsung Electronics is Asia’s top Samsung Electronics is Asia’s top electronics company with more electronics company with more than 134 offices in 62 countries than 134 offices in 62 countries and over 150,000 employees. and over 150,000 employees.

Samsung Electronics Co., Ltd. is Samsung Electronics Co., Ltd. is a global leader in semiconductor, a global leader in semiconductor, telecommunication, digital media, telecommunication, digital media, components for the computer, components for the computer, mobile and entertainment marketsmobile and entertainment markets and digital convergence and digital convergence technologies with 2008 technologies with 2008 consolidated sales of US$96 consolidated sales of US$96 billion. billion.

Source: www.samsung.com

6. Samsung contribution to 6. Samsung contribution to Korea’s economic growthKorea’s economic growth

Korea's economy, including its electronics Korea's economy, including its electronics industry, is dominated by the relatively small industry, is dominated by the relatively small number of industrial conglomerates that often number of industrial conglomerates that often enjoy vertical monopolies enjoy vertical monopolies The story of the remarkable growth of Korea's The story of the remarkable growth of Korea's economy is the story of the growth of electronic economy is the story of the growth of electronic industrial.industrial. According to the Korean Semiconductor Industry According to the Korean Semiconductor Industry Association (KSIA), domestic chip makers in Association (KSIA), domestic chip makers in 1994 relied on foreign manufacturers for 84% of 1994 relied on foreign manufacturers for 84% of equipment and 52% of materialsequipment and 52% of materials

7. Conclusion 7. Conclusion The Korean government played a major role by The Korean government played a major role by

initiating Korea’s National Innovation System initiating Korea’s National Innovation System (NIS) for development in early 1970s.(NIS) for development in early 1970s.

Korea's willingness to invest heavily and long-Korea's willingness to invest heavily and long-term in R&D, plants, and manpower is term in R&D, plants, and manpower is impressiveimpressive

Korea's electronics capabilities in the past 25 Korea's electronics capabilities in the past 25 years have undergone remarkably consistent years have undergone remarkably consistent and rapid expansion in terms of (1) size and and rapid expansion in terms of (1) size and capacity of facilities, (2) technological expertise capacity of facilities, (2) technological expertise and sophistication, and (3) income earned and and sophistication, and (3) income earned and impact on the world market.impact on the world market.

8.Some of Samsung products 8.Some of Samsung products

Home Multimedia Mobile Multimedia

Personal Multimedia Core Components

ReferencesReferences www.samsung.comwww.samsung.com www.samsungcorp.comwww.samsungcorp.com http://wikipedia.org http://wikipedia.org http://www.secc.co.kr http://www.secc.co.kr http://www.wtec.orghttp://www.wtec.org http://www.investkorea.org/http://www.investkorea.org/ http://www.mke.go.krhttp://www.mke.go.kr http://www.bookrags.com http://www.bookrags.com Jordan I. Siegel, James Jinho Chang, Samsung electronics Harvard Business school 2006;Jordan I. Siegel, James Jinho Chang, Samsung electronics Harvard Business school 2006; S. Ran Kim, The Korean system of innovation and the semiconductor industry: a governance S. Ran Kim, The Korean system of innovation and the semiconductor industry: a governance

perspective, 1996perspective, 1996 Youngsoo Kim, Technological Capabilities and Samsung Electronics' International Production Youngsoo Kim, Technological Capabilities and Samsung Electronics' International Production

Network in Asia, BRIE, 1997Network in Asia, BRIE, 1997 International Directory of Company HistoriesInternational Directory of Company Histories , Vol. 14. St. James Press, 1996. , Vol. 14. St. James Press, 1996. http://www.wtec.org/loyola/kei/welcome.htmhttp://www.wtec.org/loyola/kei/welcome.htm WTEC report on the Korean electronics WTEC report on the Korean electronics

industry;industry; Richard R. Nelson, National innovation systems: a comparative analysis, Oxford University Richard R. Nelson, National innovation systems: a comparative analysis, Oxford University

Press US, 1993:Press US, 1993: Linsu Kim, National system of industrial Innovation: Dynamics of Capabilities Building in Linsu Kim, National system of industrial Innovation: Dynamics of Capabilities Building in

Korea;Korea; Y.Gil, S.Bong, J.Lee, Integration model of technology internalization modes and learning Y.Gil, S.Bong, J.Lee, Integration model of technology internalization modes and learning

strategy: globally late starter Samsung's successful practices in South Korea, Seoul 130-012, strategy: globally late starter Samsung's successful practices in South Korea, Seoul 130-012, South Korea, 2001;South Korea, 2001;

Thank you for your attention!!!Thank you for your attention!!!

Group 3:Group 3: Kyungu Ilunga Maloba;Kyungu Ilunga Maloba; Mahdi Abdullah Mohammed;Mahdi Abdullah Mohammed; Ulan Jylkybaev OsmonkulovichUlan Jylkybaev Osmonkulovich