978-1259278211 Case 28 Solution Manual Part 2

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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/

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

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 leader’s 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

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

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,

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

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:

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?