978-1259278211 Case 28 Solution Manual Part 2

subject Type Homework Help
subject Pages 8
subject Words 3378
subject Authors Alan Eisner, Gerry McNamara, Gregory Dess

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Referencing Chapter 7: International Strategy
Samsung was a global company. When a firm chooses to do business internationally, it must
assess issues of consumer demand, the degree to which resources such as skilled labor and other
Because of Samsung’s global strategy and competitive structure, there were several ways
Samsung could use international markets to achieve growth. Samsung’s consumer products were
designed to a global consumer standard of aesthetics and function, with no need for adaptation to
NOTE: ADDITIONAL READING:
Global business requires assessment of many factors. This article from September of 2012
highlights some of the challenges facing Korean businesses, including fluctuating global demand
for South Korean products as other countries handle economic issues, and geopolitical risks from
North Korea’s escalating threats:
http://www.bloomberg.com/news/articles/2012-04-25/south-korea-s-economy-expands-at-
fastest-pace-in-a-year
Samsung Electronics (http://www.samsung.com/us/aboutsamsung/index.html ) is a subsidiary of
the Samsung Group, which is diversified into several key industries – Machinery, Chemical,
Financial, Research and Education, as well as Electronics. See
http://www.samsung.com/us/aboutsamsung/samsung_group/affiliated_companies/ for the full list
of the Samsung Group’s businesses, which include one of its most profitable divisions, Life
Insurance.
In 2015 Samsung Electronics, with a market cap of $199.4 billion, was18th on Forbes’ list of the
world’s biggest public companies (China’s government controlled bank ICBC was the largest,
In 2008, Samsung was in 38th place overall in Fortune Magazine’s list of the top global 500
companies, number 1 of the South Korean companies. In 2011 it had risen to 22nd place overall,
still number 1 in South Korea. In 2015 it had risen to number 13. See
http://money.cnn.com/magazines/fortune/global500/2011/asia/
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Samsung Electronics is the flagship of Samsung Group, and Korea’s top electronics company.
Does this position place special pressure on the Electronics division to continue to deliver
profitable growth, to bring honor to its country? What pressure does this place on leadership?
Referencing Chapter 11: Strategic Leadership
Strategy consists of analysis (setting goals, assessing the internal and external environment of the
firm), formulation (deciding which industries to compete in and how to compete in those
Part of implementation requires leadership to make sure the firm is staying true to its original
vision, mission, and strategic objectives. See the concept of leadership, the process of
transforming organizations from what they are to what the leader would have them become.
Leadership is proactive, goal oriented, and focused on the creation and implementation of the
creative vision. This definition implies dissatisfaction with the status quo, a vision of what
should be, and a need to develop a process for bringing about change. Leaders are change agents
whose success is measured by how effectively they formulate and implement a strategic vision
and mission. See Chapter 11, Exhibit 11.1. This involves:
Setting a direction
The interdependent nature of these three activities is self-evident. Consider an organization with
a great mission and a superb organizational structure, but a culture that implicitly encourages
Leaders need to set the direction for the organization by continually scanning the environment to
develop knowledge of all stakeholders, and knowledge of salient environmental trends and
Leaders are responsible for designing the organization: a strategic leadership activity of building
structures, teams, systems, and organizational processes that facilitate the implementation of the
Leaders play a key role in changing, developing, and sustaining an organization’s culture. An
excellent and ethical organizational culture is an organizational culture focused on core
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In nurturing a culture dedicated to excellence and ethical behavior, managers and top executives
must accept personal responsibility for developing and strengthening appropriate behavior;
consistently demonstrate that such behavior is central to the vision and mission; develop and
Cultural difficulties in implementing the leaders vision and strategies include a lack of
understanding of responsibility and accountability among managers, reward systems that do not
Jong Yong Yun engaged in the following leadership activities:
Direction: When Yun took over Samsung he focused the company in a new direction. Yun
steered the company away from its previous strategy of being the cost leader on the production
Organization: Yun redesigned his organization to focus on research and development. By
building up the engineering and design departments, Samsung focused on creating innovative
Culture: Yun was determined to build a culture dedicated to creating innovative, well- designed
products that consumers would be eager to purchase. By heavily investing in R&D technologies
Referencing Chapter 10: Creating Effective Organizational Designs
A firm’s leadership has responsibility for choosing an effective organizational design. Chapter 10
stresses that organizational strategy has implications for a firm’s structure. Organizational
structure refers to formalized patterns of interactions that link a firm’s tasks, technologies, and
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An effective organizational design can encourage the flow of information and enhance working
relationships between functional departments and activities. However, achieving the coordination
and integration necessary to maximize the potential of an organization’s human capital involves
Samsung Electronics was a subsidiary of the Samsung Group, and its flagship. This meant Yun
had the discretion to structure his organization in a way that best suited his chosen strategy. His
choice of differentiation strategy, entrepreneurial strategy, and global strategy meant the firm was
1. Cont: What challenges does Samsung face in the future?
Referencing Chapter 11: Strategic Leadership REDUX
CASE UPDATE:
See Case Exhibit 7: Samsung Milestones. Regarding leadership changes, there were many since
Yun retired:
2008 Yoon-Woo Lee became CEO; restructured firm, consolidating divisions from
2009 Gee-Sung Choi elevated to head the new digital media and communications
2010 Gee-Sung Choi elevated to CEO, Lee became Vice Chairman
2011 More restructuring to address “the conflict of interest among its many
tentacles in the backdrop of the company's ongoing patent war with Apple.”
2012 Oh-Hyun Kwon promoted from head of components to CEO, Choi became
head of Samsung Group Corporate Strategy Office. Kwon emphasized the
2013 Two additional CEOs named: J.K. Shin, as head of the IT/mobile division,
would join Boo-Keun Yoon, as head of appliances/electronics/TVs, and
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Samsung appeared to be embarking on even more change in its leadership structure. To provide
more detail, Jong-Yong Yun retired as CEO of Samsung Electronics in 2008, becoming a
In 2010 Lee appointed Samsung’s digital media and communications division chief executive
Choi Gee-Sung to the CEO position, and in 2012 Choi Gee-Sung promoted Kwon Oh-Hyun
In 2013, news came from Samsung Electronics that there would be three CEOs: J. K. Shin, as
head of the IT/mobile division, would join Boo-Keun Yoon, as head of consumer
To provide historical background on these management changes, in an attempt to streamline
operations and reduce costs in reaction to worsening economic conditions, in 2008, new CEO
Lee Yoon Woo had restructured the firm, consolidating divisions from five down into just two.
The sets division, called digital media and communications, would focus on consumer products
CEO Lee also signaled a change in corporate strategy – attempting to grow via acquisition of
SanDisk, a hardware firm, rather than by internal organic development. A change in product
Rising star Choi Gee Sung, named successor to Lee as CEO in 2010, came from the digital
media division. One of his challenges was to craft strategy to move Samsung away from its
It appeared that Choi’s overall perspective may have been better for long-term strategy, because
within two years his moves positioned Samsung in its top market spot. Likewise, Kwon Oh-Hyn,
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The 2013 restructuring appeared to be an attempt to encourage these heads of key departments to
work more closely together, and prevent potential fractures in the leadership structure, as these
In late 2012 Kwon “called on all executives and employees to find new growth engines to help
Samsung succeed during the coming years. As part of its plans to find new markets and
products, Kwon highlighted the need for Samsung to hire more qualified human resources and to
Would Samsung benefit from this renewed focus?
NOTE – ADDITIONAL READING:
In 2011 Harvard Business Review listed Yun Jong-Yong, based on his legacy as CEO at
Samsung from 1996 to 2008, as the second best performing CEO in the world – Steve Jobs was
listed as number 1. See the most current list: https://hbr.org/2013/01/the-best-performing-ceos-
in-the-world
For a historical perspective on how Samsung has developed its leadership talent, here’s an
interview from 2012 with Choi Gee Sung in his previous role as chief executive of the digital
media division. It’s noteworthy that he said Samsung was now a major brand, but still not happy
with that designation, seeing a lot of potential for growth, and pointing out that Samsung’s
strength was in the development of key technologies and key components:
http://www.iso.org/iso/home/news_index/news_archive/news.htm?refid=Ref1720
He seemed committed to innovative thinking. However, the reshuffle in early 2009 that saw Choi
elevated to head the new digital media and communications division also led to two other long-
term innovators leaving upper management at Samsung. Some wondered whether “under Lee
Yoon Woo's leadership, Samsung would focus more on profitability and efficiency than on
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In 2011, Samsung announced a reorganization to address “the conflict of interest among its many
tentacles in the backdrop of the company's ongoing patent war with Apple. Samsung Electronics
is now divided into Digital Media Communications (DMC), which will oversee finished,
And here’s the news story about Choi’s move to become head of Samsung Group Corporate
Strategy, and the 2012 promotion of Kwon Oh-Hyun, former head of the components division, to
CEO Samsung Electronics: http://news.cnet.com/8301-1001_3-57448742-92/samsung-appoints-
kwon-oh-hyun-new-ceo/
Kwon oversaw Samsung’s components division, which makes displays, chips, memory, and
processors, and, under his leadership, made Samsung the second largest chip maker in the world:
http://www.businessinsider.com/samsung-ceos-2013-3?op=1
In 2013 Kwon was named “best global brand builder,” ahead of Apple’s Tim Cook:
http://www.thedrum.com/news/2013/02/28/samsung-s-kwon-oh-hyun-named-best-brand-builder-
ahead-apples-tim-cook
In 2013, Samsung Electronics announced there would be three CEOs: Boo-Keun Yoon
(consumer electronics, TVs and appliances), J.K. Shin (head of IT and mobile communications),
and overall leader and chairman of the board Oh-Hyun Kwon. According to the news story, “In
its statement, Samsung said that, ‘“The new leadership structure will serve to clarify and enhance
independent management of the two set divisions, as well as the independent management of the
set and component businesses.’” According to the report, while having three chief operating
Regarding how leadership and an effective organizational design that activates key resources has
helped, Samsung says it spends 9 percent of sales on R&D yearly, and has internal networks and
external partnerships worldwide. According to Samsung, its “team of researchers and engineers
include over 50,000 employees across 42 global research facilities – each one collaborating on
strategic technologies to forge new market trends and set new standards of excellence.” From the
Samsung USA web-site, here is a description of the R&D organization, listing the locations of its
global network:
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http://originus.samsung.com/us/aboutsamsung/samsung_electronics/business_area/rd_page/
Samsung Electronics also won 46 awards from CES International Innovations Design and
Do you think Samsung will be able to continue to grow through innovation, or will the many
changes in leadership put this strategy in jeopardy?

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