Free «The Rise of Samsung » Essay Sample
Being established as a company that sold dried seafood and noodles in 1938, Samsung became one of the biggest conglomerates in the business world. Samsung Group was founded in Korea in 1938 by the entrepreneur Byung-Chull Lee. The company experienced a rebirth in 1951. After the war and larcenous actions of the belligerent parties business was completely destroyed, but it is impossible to destroy the entrepreneurial spirit. Byung-Chull Lee revived the company and reached even greater well-being. The entrepreneur was engaged in different areas: the production of wool, sugar, and other consumer goods, distributive trades, insurance sector, broadcasting, publishing business, trading securities. In 1960, Samsung experienced unprecedented success. A policy of development of large national companies was pursued to revive the economy of Korea. The creator of Samsung has managed to get close to government circles, which provided unlimited opportunities for growth and expansion of corporation.
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In South Korea, the word “chaebol” is used for such companies. It is a large financial-industrial group, which mainly belongs to the same family and is related to government circles. The head office is located in Seoul (South Korea). It consists of numerous subsidiaries and affiliated companies, most of which are united under the Samsung brand. These affiliated companies are Samsung Electronics (the world's largest manufacturing company of information technology), Samsung Heavy Industries (the second largest shipbuilder in the world), Samsung Engineering and Samsung C&T. Other powerful units include Samsung Life Insurance (14th largest insurance company in the world), Samsung Everland (the oldest theme park in South Korea) and Cheil Worldwide (the 19th largest advertising agency in the world) are the best-known subsidiaries of Samsung. The company makes a great contribution to the total exports of South Korea and its revenues are higher than the GDP of many countries. The enterprise has a powerful influence on the politics, economic development, media and culture of South Korea.
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The implementation of diversification gave Samsung a possibility to take advantage of the market power, transforming it into a chaebol. The company became a conglomerate through pursuing economies of both scope and scale. Samsung Group has been diversified into particular industries, such as chemicals, electronics, financial services, shipbuilding, and construction. Particularly, the company is divided into 83 autonomous subsidiaries. Thus, scope and scale are benefits of chaebol. The success of Samsung is promoted not only by the quantity of produced goods, but also by the fact that the company can afford to spend a huge amount of money on marketing campaigns, promotion and advertising of its devices. This draws attention to the products and convinces the customer to choose Samsung devices.
Today, Samsung Electronics has become a world leader in the manufacture of electronics and appliances. Lee Kun Hee, a son of the founder, is the head of the corporation. Samsung is debited for its achievements in the modern world for him. He took charge of the chairman of the conglomerate after his father's death in 1987. Lee Kun Hee abandoned the idea of mass production of goods of low, so-called, budget quality. The company has focused on manufacturing of high-quality products, innovative and leading market trends. Brand Samsung won a lot from such decision, because those, who considered company’s products of insufficient quality, are discovering the world of consumer electronics at an exceptional combination of price-quality in the recent years.
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Moreover, Mr.Lee completely changed the conglomerate’s structure to form new Samsung’s culture. This culture grounds on the value of seniority, which is based on merit pay and promotion. He employed Western designers and managers into leading positions and sent company’s workers to learn business practices around the world.
However, Samsung Electronics sought to become more than leading provider and manufacturer of original equipment.
The global strategic intention of the company was to become a leader in manufacturing of branded household electronics. A corporate philosophy reflects a desire of Samsung to inspire communities for new development by using its three strengths: new technologies, innovative products and creative solutions. The basis of leadership position of Samsung Electronics deals with the fact that the company determines its future by creating market trends and timely response to changes. Significant portfolio of innovative products is a consequence of regular large-scale investments in research and development. Technological leadership of Samsung is based on the permanent use of advanced technology and creating new unconventional solutions.
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Samsung Electronics has bet on the flash memory development. Thus, Samsung became the largest supplier of Apple in the world. The rule “follow first, innovate second” was applied to smartphones. It made a number of gadgets, which were adapted to customers’ needs through a range of price categories. However, despite the fact that Samsung gained competitive advantage, its will be difficult to maintain it because of many reasons. As company’s advantage was based on following its rule “follow first, innovate second”, it will be a challenge for Samsung, that seeks to be not a leader, but just a follower, to keep leadership position in technology industry. Moreover, other technology companies want to join the struggle on the smartphones sector. Another factor, which Samsung has faced, is a court battle between Samsung and Apple about which of the companies has violated the copyrights.
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In order to provide avenues to revenue growth in the future, Samsung presented new business spheres, in which the enterprise plans to make investments. They include solar panels, LED lighting, biotech drugs, e-vehicle batteries, and medical devices. To keep a position of the leader in the field of consumer electronics, it is necessary to create a product-blockbuster. Therefore, the company relies on research in nanotechnology, wireless and wired technology, new types of displays that are more qualitative, affordable and energy efficient.
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