Philosophy of Samsung
Samsung is a popular name in almost every household across the world. Samsung group products range from phones to washing machine. Emerging in the 1928 as a food exporter in Korea, shipping seafoods to China (Nytimes.com, 2013). Prior to becoming Samsung Electronics, between 1950 and 1960, Samsung got into business like textiles and manufacturing (Kovach, 2013). Business of textiles and manufacturing proved to be successful to Samsung because their profits had soared by 20-folds (Fundinguniverse.com, 2002). During the late 60s, Samsung group became Samsung Electronics, mainly responsible for manufacturing television. It made its first black and white television in 1970. Parallel to producing electronic goods such as television, Samsung became a part of many service businesses including insurance, department store and security. Samsung’s founder Lee Byung-Chull was charged with corruption during the 1960s, which is when Samsung tasted its bitter time period. However the charges dropped as it was proved to be a result of fabrication (Fundinguniverse.com, 2002). Nevertheless, after the release of Lee, due to the start of electronics sale, Samsung continued to witness growth between 1970 and 1980. In the year of 1980, Samsung had bought a well-known telecommunication company known as Hanguk Jeonja Tongsin (Kovach, 2013). As a result, Samsung started the production of telephone, fax machines and switchboards. Despite Samsung’s founder’s death, Samsung maintained its core values and approaches. Its standards could allow for continual expansion (Mathew, 2012). It invested money in research to develop new technology which brought Samsung a good outcome. It is evident in 1992 when Samsung became the only brand name to produce memory chips. Huge profits were made during 1995 when Samsung build Liquid Crystal Display screen (Lim and Park, 2012). Samsung’s mass electronics production did not leave it behind in other industries it had invested in. Its construction division was able to conduct big projects like the Burj Khalifa and the Petronas Tower (Kovach, 2013).
Recently Samsung surfaced in media reports for all the wrong reasons. These included, the vice-chairman of Samsung, Lee Jae-Yong arrested and Samsung Galaxy Note 7 catching on fire. According to Appendix 1, it is evident that an influential chaebol like Samsung are deeply connected and have ties with government. Opposing the Chaebol system is opposing government which got Lee facing charges of bribery and corruption. Furthermore, it is important to understand that company like Samsung are grounded by the Korean values and the Chaebols do not necessarily accept westernised method of working. Lee’s western education gave him the vision to change the way this Chaebol functions but as his friend quoted “he still operates in a very much Koreanised economic, political and business environment”, indicating that the government is not willing to sacrifice the years of traditions and culture that the Chaebols were founded upon (Martin and Cheng, 2017).
In short, Samsung’s philosophy is described as “Inspired by humans, creating the future” (Design.samsung.com, 2014). This implies Samsung values the ideas spawned by people and believes that it is essential for us to construct the future in terms of building new technology and revolutionising the way technology plays its role in the society. It also mentions about “sustainable values” which Samsung promotes, not only to its employees but also to the wide community to build designs and use technology that is compatible with the environment (Design.samsung.com, 2014). Samsung’s aim also includes to “bring joy and meaning to our lives”, focusing on developing the technology that empowers us (Design.samsung.com, 2014). Samsung stands by its three goals which are: balance of reasoning and feeling, simplicity with resonance and meaningful innovation. Keeping into account with its history and understanding its goals for the future, it is valid to conclude that Samsung’s approach to future is to integrate technology in our lives to move forward into the future.
Chaebol is a style that emerged in the early sixties in South Korea. It is a style started by a conglomerate of businesses that were formed through various strategies introduced by the government, in order to build the Korean economy post war (Stephen, n.d.). The centralised ownership of business like the Chaebol, is leading the Korean economy ever since its creation. Parallel to western style, the organisation/s is owned by the founder’s family, where the professionals manage and owner earns the credits of both owning and managing the organisation.
Chaebol implemented policies that promoted manufacturing industries and exporting of goods which were in synchronisation with the world economic trend, therefore stabilising Korean economic growth and development (Murillo and Sung, 2013). Central leadership to work towards national development and cultural emphasis on acceptance of authority are key features of Korean society which Chaebol implemented into its work management. This as a result made Chaebol grow towards success. Samsung and LG are examples of prominent chaebols known today.
Organisation culture is “the way members of the particular organisation behave with each other as a result of shared values, beliefs and assumption” (Robbins and Coulter, 2012). This is particularly important to highlight when discussing Chaebol’s organisational culture. Korea’s Chaebol is known for its distinguishing management style. Some of its many key features include: self-made founders, management by clan and tight ties with the government (Yoo and Lee, 1987). The management style of Chaebol is that of top-down management. The owners or founders have large influence in the management of Chaebol. Chaebols are largely influenced by the Korean values which sustain Chaebol’s success (Economist.com, 2017). Its rise in the 1960s meant that the working style was similar to that of colonial Japanese Zaibatsu, however the Korean Chaebols management stick to Confucian’s tradition, which Korean society is significantly based on. The Confucian tradition promotes the necessity and strength in familial relations. Hence the owners are regarded as the father-figure while the employees maintain their sense of belonging through brotherhood (Rhyu, 2017). Confucian culture is not only embedded within the firms but also forms the basis for the management of powerful ties between Chaebol and the government (Rhyu, 2017). The time period of 1960 was also a factor that gave Chaebols a unique characteristic. Conflict during that time had a huge impact on shaping management practices upheld by the rising Chaebols. In order to establish strong relation between the employee and the company, Chaebols used military disciplines which meant new employee had to undergo training. Training included the learning the firm’s principles in order to uphold the organisations’ culture (Economist.com, 2017).
Question 3Â Â
Due to recent incidents of Samsung phone overheating and catching on flames, Samsung witnessed a huge market share decline. The Korean company had to recall all the Galaxy Note 7 that was sold. It had to recall close to 3 million phones costing Samsung more than $5billion. However the replacement phones also caused overheating. This not only affected the company’s market share and position but hit the company’s reputation (Hollister, 2016). Shares plummeted so much that it was cut by $17 billion from its market. This left Samsung frantically searching for the reason behind the phone’s defect. The drop in market value was 8% which was recorded the highest since 2008 (Lee, Kim and Kim, 2016). These phones caught on fire due to battery defects. The battery defects was a result of design flaw. The phone design was not compatible with the battery that was supposed to be fit into the phone. Research reveals that the thin sheets of plastic separating the positive and negative sides had slightly touched at the edges due to stress hence created a puncture point. This point became least resistant to electric flow and caused the phone to eventually overheat to the point of bursting into flames. Phone industries continue to use lithium batteries despite the risk but lithium battery was not the reason for Samsung Galaxy Note 7 to catch on fire (Tibken and Cheng, 2017).
According to Gartner, the worldwide sale of smartphones had increased by 7%. Samsung was No. 1 in Global Smartphone ranking, however after the Galaxy Note 7 incident, during the fourth quarter of 2016, Apple took the No. 1 spot, pushing Samsung to the 2nd position on the Chart (Miller, 2017).
Samsung suffered a blow due to the Galaxy Note 7, so it is imperative to be successful with the next new device it introduces to regain its momentum in the market (Titcomb, 2016).
Every organisation represents and stand by the values that it was founded upon. Similarly, Samsung also represents the values it set when it was founded. It has also set goals which allows the organisation to work towards. Samsung, to be a leading smartphone producer, has taken years of shaping the way the organisation works and made improvements where required such as adopting western ethics and code of conduct. Recently, the Samsung Galaxy Note 7 has caused severe damage and loss to Samsung (Titcomb, 2016). Although its ranking on the global smartphone has fallen from the first to second, the monetary loss and the blow to its reputation was great (Titcomb, 2016). Samsung’s incident with Galaxy Note 7 is not reflection of its standards because as mentioned above, there has been events in history of Samsung that caused Samsung loss, both in money and reputation but it is because of its standards it has risen out the troubles. In the incident with the Galaxy Note 7, Samsung has displayed the fact that the company shows quick response to any defects with its products. Samsung acted swiftly when it was notified about its products catching fire (Tibken and Cheng, 2017). Hence in terms of the way the organisation responds is something that should continue not be changed. However, as CEO, it would be necessary to change the testing process prior to launching any product. For Samsung, it just not about just good ideas and new designs, it should be the implementation of that good idea. For example, smartphone producers like Samsung and Apple have been using lithium battery for all their technologies so far but it is vital for them to test it and understand whether the new technology that they have designed is compatible with the battery (Tibken and Cheng, 2017). As CEO, after the Galaxy Note incident, it is essential that Samsung moves forward with technology but keeping into account whether the new technology is compatible with the parts that are not new.
As CEO, the workforce should look the way it is but since there are many factors affect work environment, it is essential to take them into consideration. For example, it is understandable that parts of any products are manufactured all around the world, however it is difficult to trace back especially when the product has a defect like how it happened with the Galaxy Note 7 (Mack, 2012).
Due to this incident, I would implement a change in the workforce. I would want the testing department to rigorously test components designed and also test after the components that have returned from the foreign country that has built it. Such thorough testing is important in order to not only maintain the reputation of the organisation but also stand firm with the organisations goal to “deliver quality products and service”. Samsung organisation follows the Korean values which it is founded upon. These values have enabled it to work smoothly within Korea but expand worldwide (Rhyu, 2017). The types of employees that would be hired are the ones that uphold the organisation’s values. Employees who contributing to make Samsung meet its goals are the sort of employees that would be hired. Employees should be aware of the culture that the organisation is founded upon and must integrate with the organisation.
Design.samsung.com. (2014). SAMSUNG DESIGN PHILOSOPHY. [online] Available at: http://design.samsung.com/global/contents/samsung_philosophy/ [Accessed 14 Mar. 2017].
Economist.com. (2017). Corporate culture in South Korea – Loosening their ties. [online] Available at: http://www.economist.com/news/business/21679214-punishing-work-culture-gradually-being-relaxed-loosening-their-ties [Accessed 13 Mar. 2017].
Fundinguniverse.com. (2002). History of Samsung Electronics Co., Ltd. – FundingUniverse. [online] Available at: http://www.fundinguniverse.com/company-histories/samsung-electronics-co-ltd-history/ [Accessed 15 Mar. 2017].
Hollister, S. (2016). Here’s why Samsung Note 7 phones are catching fire. [online] CNET. Available at: https://www.cnet.com/au/news/why-is-samsung-galaxy-note-7-exploding-overheating/ [Accessed 14 Mar. 2017].
Kovach, S. (2013). How Samsung Went From A Dried Fish Exporter To One Of The Top Names In Tech. [online] Business Insider Australia. Available at: https://www.businessinsider.com.au/history-of-samsung-2013-2?r=US&IR=T#samsung-was-founded-by-byung-chull-lee-in-1938-in-taegu-korea-the-company-started-as-a-food-exporter-in-korea-and-shipped-items-like-dried-fish-and-flour-to-china-1 [Accessed 13 Mar. 2017].
Lee, Y., Kim, H. and Kim, S. (2016). Samsung Market Value Plummets $17 Billion on Note 7 Sales Halt. [online] Bloomberg.com. Available at: https://www.bloomberg.com/news/articles/2016-10-10/samsung-crisis-raises-prospect-note-7-could-head-to-scrapheap [Accessed 13 Mar. 2017].
Lim, B. and Park, K. (2012). The Success Story of Samsung Electronics: How It All Began | Samsung Official Blog: Samsung Village. [online] Samsung Official Blog: Samsung Village. Available at: http://www.samsungvillage.com/blog/2012/06/01/samsungblog-the-success-story-of-samsung-electronics-how-it-all-began/ [Accessed 15 Mar. 2017].
Mack, E. (2012). Are any smartphones not made in China?. [online] CNET. Available at: https://www.cnet.com/au/news/are-any-smartphones-not-made-in-china/ [Accessed 15 Mar. 2017].
Martin, T., Cheng, J., (2017) “Samsung heir Lee Jae-yong spiral to bottom” Wall Street Journal in The Australian URL: http://www.theaustralian.com.au/business/wall-street-journal/samsung-heir-leejaeyong-spiral-to-bottom/news-story/f39e503332b7cb1b8b5db302c2ac7c67 (accessed 22/2/17).
Mathew, A. (2012). Samsung Story – History, Founder, Founded, CEO | Conglomerate Companies | SuccessStory. [online] Successstory.com. Available at: https://successstory.com/companies/samsung-group [Accessed 15 Mar. 2017].
Miller, C. (2017). Latest Gartner data shows Apple edge out Samsung in market share during Q4 2016. [online] 9to5Mac. Available at: https://9to5mac.com/2017/02/15/samsung-loses-market-share-to-apple-in-q4-2016/ [Accessed 12 Mar. 2017].
Murillo, D. and Sung, Y. (2013). Understanding Korean Capitalism: Chaebols and their Corporate Governance. ESADEgeo-CENTRE FOR GLOBAL ECONOMY AND GEOPOLITICS. [online] Available at: http://Understanding Korean Capitalism: Chaebols and their Corporate Governance [Accessed 16 Mar. 2017].
Nytimes.com. (2013). From Fish Trader to Smartphone Maker. [online] Available at: http://www.nytimes.com/interactive/2013/12/15/technology/samsung-timeline.html?_r=1& [Accessed 15 Mar. 2017].
Rhyu, S. (2017). Confucianist Culture and Institutional Change: the Growth and Reform of the Korean Chaebols |. [online] Georgetown Journal of International Affairs. Available at: http://journal.georgetown.edu/confucianist-culture-and-institutional-change-the-growth-and-reform-of-the-korean-chaebols/ [Accessed 13 Mar. 2017].
Robbins, S. and Coulter, M. (2012). Management. 11th ed. New York: Pearson Education.
Stephen, K. (n.d.). Chaebol Structure. Hanyang University. [online] Available at: https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0ahUKEwjFlMbb7fPSAhVO42MKHUg_DbQQFggsMAM&url=http%3A%2F%2Fwww.kasba.or.kr%2Fezboard%2Fdownload.php%3Fmode%3Ddown%26UID%3D115%26idx%3D1%26BID%3Dboard09%26GID%3Droot%26sysop%3D%26fm%3D%26BType%3D%26ListMax%3D&usg=AFQjCNG7C_C-7QU9U9MdlNEgCoeKRM5Gzw&bvm=bv.150729734,d.cGc&cad=rja [Accessed 15 Mar. 2017].
Tibken, S. and Cheng, R. (2017). Samsung answers burning Note 7 questions, vows better batteries. [online] CNET. Available at: https://www.cnet.com/news/samsung-answers-burning-note-7-questions-vows-better-batteries/ [Accessed 12 Mar. 2017].
Titcomb, J. (2016). Samsung and Apple’s grip on smartphone market slips to less than one in three sales. [online] The Telegraph. Available at: http://www.telegraph.co.uk/technology/2016/11/17/samsung-and-apples-grip-on-smartphone-market-slips-to-less-than/ [Accessed 14 Mar. 2017].
Yoo, S. and Lee, S. (1987). Management Style and Practice of Korean Chaebols. CALIFORNIA MANAGEMENT REVIEW, [online] 29(4). Available at: https://www.google.com.au/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&uact=8&ved=0ahUKEwiTp6-57PPSAhVY2GMKHUvYCMkQFggrMAM&url=http%3A%2F%2Fjournals.sagepub.com%2Fdoi%2Fabs%2F10.2307%2F41162133&usg=AFQjCNEOxdFT3forMhyRghBP0BXffWTcfA&bvm=bv.150729734,d.dGc [Accessed 15 Mar. 2017].