Samsung Electronics Co. Case: a firm’s capability building and its contribution to Korea’s economic growthProcessed By G-3Kyungu Ilunga Maloba;Mahdi Abdullah Mohammed;Ulan Jylkybaev Osmonkulovich
Content1. Background2. Main factors of success3. Samsung electronics capability building4. Interaction of the Korean government5. Leadership in global6. Samsung contribution to Korea’s economic growth7. Conclusion8. References
1. Background Samsung founded in 1938 by Byung-Chull Lee. Lee started a small trading company with a $2,000 nest egg and forty employees. exporter of dried fish, vegetables, and fruits flour mill and confectionery machines He called it Samsung, which means "three stars" in Korean. 1950’s Economic Stabilization Korean War - Samsung lost all assets aimed to help rebuild Korean economy; entered the manufacturing industry (sugar, fabrics) became a leader in modern business practices (recruiting from outside) 1960’s Expansion of Key Industries entered electronics and chemical industries 1969 established Samsung Electronics Co. as a division of the Samsung Group.
1. Background In 1970s, Samsungs entry into the semiconductors business was pivotal for the company, to that end, creation of Samsungs semiconductors and telecommunication Co. in 1978. laid the groundwork for electronics in Korea helped the domestic economy grow paved the way for exports 1980’s: Samsung was manufacturing, shipping, and selling a wide range of appliances and electronic products throughout the world. A more comprehensive electronics company established Semiconductor and Communication corporation began memory chip business Early 90’s: Integration and Globalization Sales at Samsung Group grew more than 2.5 times between 1987 and 1992. Mid-Late 90’s: Implementing new management strategies
2.Main factors of success 2.1 - Human resources One of Samsungs strongest assets is their team of talented researchers and engineers. More than a quarter of all Samsung employees - 42,000 people - work everyday in research and development, and this number is in increase every year. Source: http://www.mke.go.kr
2.Main factors of success 2.2 R&D network of SamsungSamsungs R&D organization has three layers : 1. The Samsung Advanced Institute of Technology (SAIT) Creation; 1 step: 1987-1993 Laying the Groundwork for Samsungs Central R&D Organization. 2 step: 1994-1998 Building Up Technological Competencies. 3 step: 1999-2003 Innovating research methods. 4 step: 2004-Taking Research Competencies to the Top
2.Main factors of success The R&D centers This research and development network spans six Samsung centers in Korea and 18 more in nine other countries. . Each year Samsung invest at least 9% of its sales revenue in R&D activitiesDivision product development The division productdevelopment teams areresponsible for commercializing Source: www.samsung.comproducts scheduled to hit themarket within one or two years.
2.Main factors of success 2.3 Management The hallmarks of leadership at Samsung are Creativity, collaboration and excellence. By attracting the worlds most talented managers and continuously evolving their companys culture to support them, they foster innovative ideas that advance technology, create new products and markets, and improve the everyday lives of their customers.
3. Samsung electronics capability building Samsung Electronics Co. Ltd. is a case of Korea’s National Innovation System and the three stages of Samsung development can be summarize as following Imitation: 1st stage (1970s) Reverse engineering As a learning process Selling imitation product
3. Samsung electronics capability building The 2nd stage: Technology acquisition, assimilation, development & transfer (1980s) Absorptive capability was important Process innovations Fast catching-up The 3rd stage: Making innovations, competition in the leading group (1990~) Expansion of Samsung in-house R&D Samsung competing in the leading group. Creative capability is important Product innovations Licensed technologies
4. Interaction of the Korean government The government worked with the companies, providing protection from competition and financial assistance as part of a series of five- year national economic growth plans. The Korean government introduced the Electronics Industry Promotion Law, marking the beginning of official support for the industry. It is also introduced in 1983 the semiconductors promotion policy.
5. Leadership in globalSamsung Electronics is Asia’s topelectronics company with morethan 134 offices in 62 countriesand over 150,000 employees.Samsung Electronics Co., Ltd. isa global leader in semiconductor,telecommunication, digital media,components for the computer,mobile and entertainment marketsand digital convergencetechnologies with 2008consolidated sales of US$96billion. Source: www.samsung.com
6. Samsung contribution to Korea’s economic growthKoreas economy, including its electronicsindustry, is dominated by the relatively smallnumber of industrial conglomerates that oftenenjoy vertical monopoliesThe story of the remarkable growth of Koreaseconomy is the story of the growth of electronicindustrial.According to the Korean Semiconductor IndustryAssociation (KSIA), domestic chip makers in1994 relied on foreign manufacturers for 84% ofequipment and 52% of materials
7. Conclusion The Korean government played a major role by initiating Korea’s National Innovation System (NIS) for development in early 1970s. Koreas willingness to invest heavily and long- term in R&D, plants, and manpower is impressive Koreas electronics capabilities in the past 25 years have undergone remarkably consistent and rapid expansion in terms of (1) size and capacity of facilities, (2) technological expertise and sophistication, and (3) income earned and impact on the world market.
8.Some of Samsung productsHome Mobile MultimediaMultimediaPersonal Multimedia Core Components
References www.samsung.com www.samsungcorp.com http://wikipedia.org http://www.secc.co.kr http://www.wtec.org http://www.investkorea.org/ http://www.mke.go.kr http://www.bookrags.com 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 perspective, 1996 Youngsoo Kim, Technological Capabilities and Samsung Electronics International Production Network in Asia, BRIE, 1997 International Directory of Company Histories , Vol. 14. St. James Press, 1996. http://www.wtec.org/loyola/kei/welcome.htm WTEC report on the Korean electronics industry; Richard R. Nelson, National innovation systems: a comparative analysis, Oxford University Press US, 1993: Linsu Kim, National system of industrial Innovation: Dynamics of Capabilities Building in Korea; Y.Gil, S.Bong, J.Lee, Integration model of technology internalization modes and learning strategy: globally late starter Samsungs successful practices in South Korea, Seoul 130-012, South Korea, 2001;
Thank you for your attention!!!Group 3: Kyungu Ilunga Maloba; Mahdi Abdullah Mohammed; Ulan Jylkybaev Osmonkulovich