Hello! Manitou! We are facing our last stage. I think we have been doing well. Let’s keep working hard. In the last class, we were talking about Samsung Electronics, which has been the highest position in the industry for more than 10 years. Because I think that the company has innovated on their business steadily, I would like to write in Samsung.
We already know some general information about Samsung, which are their status in that industry, their competitors, the market environment, and so on. Therefore, I will focus on their strategies which led the company to the top of the industry. I read an article about Samsung which is one of first movers in the industry on the web site, and I think the article appropriately figure out Samsung’s strategies.
First, it is Aggressive and timely investments in R&D and facilities. Because of the character of this industry, huge amount of money is required for R&D, and Samsung did not hesitate to put a lot of money for the R&D. That is a reason that Samsung have its own technology of semiconductor.
Second, it is speedy ramping-up and development. They keep developing their product very fast. Even there is a term, “law of Hwang”, which means that a better semiconductor is emerged in every 12 months. Also, it means that the company can take first-mover advantage from it. Then, this advantage helps the company keep the position.
Third, it is process innovations for reducing production costs. The company also consider about process innovation because the innovation leads more products in one process, and this higher productivity is related with cost saving. In a few time of downturns of the industry, the reason Samsung could keep their position and make some profit from it is this low cost advantage.
Fourth, it is technological choice, deepening, and diversification. As we saw in the case, the president’s choice which was to select between “stack method” and “trench method” was brilliant. The choice helped the company to join the forerunner’s group in the industry.
Fifth, it is governance and organization. It is definitely true that the president of Samsung, Lee gun hee, has affected a lot of things to his company in various ways. His leadership was innovative, fresh, and powerful. Also, he modified the organization, and the modification made his employee to do their job more efficiently.
There were some concerns about their future because of their competitors, especially Chinese competitors. However, even though the Chinese companies can imitate Samsung’s technology, the technology is not the only one to keep their position. The company’s culture and their custom also reinforce the company’s cutting-edge, so the concerns were not serious that much. However, it would need to aware of that the Chinese competitors have huge potential to grow in the industry, and Samsung might need a new strategy against for its competitors.
reference: http://ideas.repec.org/p/sca/scaewp/0513.html
Posted by 20300121(Kim, Jae-Yoon)
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