Samsung Key Drivers For Future Growth Management Essay

The involvement of Samsung in electronic and mobile market needs them to survive within the industries for the next 20 years. In the other it means that Samsung have to set their key drivers that can allow them archive as well as a benchmark for the future growth. This key driver also is based on Samsung achievements and capabilities that they have now and then to continue with adding some more new keys to guide them to realize their vision and mission. The keys driver for Samsung future growth is also known as their sustainability in present towards the future. Focusing on Samsung Electronics, Samsung sustainability showed that their performance in surviving the industries and can be also as a benchmark to survive in the future. According to Nidomulu and Prahalad (2009) company that make sustainability a goal will achieve competitive advantage in the future , that mean rethinking business models as well as technologies, products and processes. In 2010, Samsung sustainability performance and plan focusing on talent management, integrity management, green management, social contribution, partners collaboration and products/services. For 2011 they set 9 material issues as a guidance to sustainability in future growth; (1) Creative Organizational Culture (2) Employee Health and Safety (3) Integrity Management (4) Increasing Social Contribution (5) Patent (6) Climate Change and Energy (7) Water Management (8) Mutual Growth (9) Supplier CSR(Corporate Social Responsibilities) based on Samsung Electronics Sustainability Report 2012.

4.1 Samsung Electronic 2011 Sustainability Plan

For Talent Management plan in 2011, Samsung plan to, introduce telecommuting/ work at home scheme for married employees, increase percentage of female executive, set up idea proposal system at oversea research centers and hire new recruits with disabilities. Samsung plan on Integrity Management was to improve compliance program also related activities, declare compliance management and signing of the compliance agreement by employees. Instead of talent and integrity management Samsung also focus on Green Management plan which the plan to set 96% ratio of Eco-product development, set long/mid-term targets for water management, build a global environmental management system and support for outside country partners’ environment management system. In developing Social Contribution Samsung plan to introduce new regional social contribution based on global guidelines (Samsung Hope for Children) and to create tools in assessing impact of social contribution programs. Samsung needs a supportive partner in order to help them achieving their vision and sustain. Partner Collaboration plan for 2011 is to sign agreement for mutual growth as well as conducting monitor on progress in mutual growth and assess partner companies CSR (Corporate Social Responsibilities). The last plan for products and services are to expand outside country service centers and have more subsidiaries company and receive Korea as well as international awards for their products and services. The plan of sustainability was create in 2010 and will be apply in 2011. Samsung key drivers are based on their stakeholder, environment and their threat. It now translate to 9 material issue to be more focusing on that particular factor that can drive them to sustainability in future growth.

4.2 Samsung Electronics Sustainability Reports 2012

Samsung Electronics Sustainability Reports 2012 is based on performance in 2011 and the plan that to be apply in 2012. Samsung rank in 73rd in the most sustainable corporation in the world. Samsung Electronics’ core business including of the manufacture and sales of digital media devices (mobile phone, digital TVs, refrigerators, air conditioners, monitors, printers and communication systems) and components (memory chips). Instead of Samsung headquarters in Korea they now have nine subsidiaries in certain region in the world which responsible in managing production and sales. Beside their successful in hardware manufacturing, Samsung is will become the new leader of the IT industry when they started strengthening theirs soft power capacity. As their vision to realize which includes achieving targeted sales of USD 400 billion, becoming one of the 10 most admired companies and one of the top 5 global brands and in the world. Samsung Electronics manages theirs businesses base to Samsung different types in technology, consumers and market in Device Solutions (DS) or Digital Media and Communications (DMC) division, consolidating their independent operating structure. Digital Media Communications is gathered into Consumer Electronics (CE) and IT and Mobile Communications (IM) divisions. The Consumer Electronics division is in charge of home appliances department and visual display business department. The IT and Mobile division is took charge of managing IT Solutions, wireless businesses, Network business, the Media Solution Center and digital imaging displays . This strategy gives changes which were made to the employment in hiring of soft power experts that become more value than before in the ‘Smart’ era. They had announced their intention to do a technical shift by turn to a soft driven company and made a ‘Software center’ to increase their software capacity until it’s on a right track with their world most wanted manufacturing. Shifts in the Device Solutions (DS) division can also bringing extension of the organizations in charge of controller, software and solution development to make sure different teams. The extension of the software connected organizations was made to realize Samsung Electronics’ vision of creating experience and new value by merging Samsung’s strength in hardware design together with an emotionally attracting user interface and optimized software. Samsung Electronics also enhanced the organization took charge of medical and bio device business then they expanded the Bio Lab at Samsung Technology Research Center into the Bio Research Center. They also appointed bio material experts to consolidate their research in the area and upgraded support for bio medical and bio similar research.

Samsung Electronics Division Market Share (%) source Samsung Electronics Sustainability Report 2012

They plan to become IT industry restructuring due to the appearance of cross-sector industries and resumed global economic decline. Samsung Electronics plans to make the largest investment ever to tighten the competitiveness advantages of present businesses and set up the foundation of new businesses potential to drive Samsung especially in Electronics Industries growth in the future. In 2011, they invested KRW (Korean Won) 13 trillion in facility expansion for semiconductors manufacturer and KRW (Korean Won) 6.4 trillion in display panel manufacture (10% greater investment than originally planned). They also building R5 (new research center) which is now under construction in the Samsung Digital City (estimate completion 2013) the landmark of IT and R&D will estimate have more than 23 thousand researchers. They also plan to combine more than 15 core component research centers including their memory, semiconductor and LSI research centers. The new center will give the foundation for their research and development in existing product and for the next-generation display technologies and the new non-memory semiconductors.

For the future Samsung Electronics is on establishing a bio-business and medical. For medical industry they invest KRW (Korean Won) 1.2 trillion in expecting sales of KRW (Korean Won) 10 trillion by 2020.. They were also nurturing a bio-similar (bio medicine) and already developed a digital x-ray that using visual information processing and digital technologies in photo-taking. Quintiles (Samsung Electronic Subsidiaries) had established Samsung Bioepis in 2012 and Samsung Biologics in April 2011. In 2016, Samsung Bioepis will start global sales of Bio-similar products and manage international clinical testing. The bio-similar business capacity will consisting of product licensing, manufacture development, clinical testing, and sales capacity. For software development strategy they increase the number of software engineer in order to meet their software development capacity. In order to realize their vision and future growth Samsung has; (1) started the software development to produce more appropriated and smarter software for Samsung gadgets and devices. (2) Initiated the Media Solution Center in the Silicon Valley, America that specializes in software to build service development and capacity on content. (3) Operating training programs and recruiting talented software engineers to maximize their capacity.(4) created a new engaged employees group ‘S’ to conduct core software experts in operating systems, smart TV software and mobile apps ( August 2011). (5) Created a special talent-based employing process for software (‘S’ workforce group) alternative of a more standardized process that exactly like to R&D staff employing. Samsung created a new ‘Software Academy’ (for short-term training) that has the ability to train for more than five thousand employees in order to achieve 50% of software training needs.

4.3 The Live Smart Product and Samsung Stakeholders

People nowadays tend to the term Smart Work, new office working style using the mobile device and Internet. It is assist people to enlarge the scope of collaboration also to improved work productivity. They produce notebook of 50% thinner with transition between application and faster start-up (application of file storage between smart devices and PC). Eco-driver Printer function which saves toner usage with the same quality. The function of Eco-simulator can also save electricity and paper. The smart printing application is enables direct printing from mobile devices (smartphones and tablet PCs).In Smart Life even you are not at home Samsung give your chance to control your air conditioner, washing your cloth and even clean your house . All of Samsung appliance can save electricity and assist your in house job. Samsung Smart Robot Cleaner (based on vacuum technology) has cleaning efficiency of 93% with extended battery life by 30% it is equipped with on-board camera (for smart view function) also with the function of video conference. Samsung Smart Refrigerator assist people to manage food using the touch screen interface that connect to online store (Food Manager Application)

Samsung Electronic Domestic and Overseas Workforce 2009-2011 (Source Samsung Sustainability Report 2012)

Samsung actively reported their quarterly business results, Corporate Social Responsibilities CSR policies and achievements with their shareholders and investors. The Social Responsible Investment (SRI) companies always make a visit the Samsung Electronics Headquarter in Seoul Korea to discuss CSR issues that equivalent to the electronics industry. They discuss about environmental management targets, waste management and occupational safety issues. In 2011 customer’s inquiries increased dramatically on Samsung Electronics CSR.

Samsung created online open communication platform (LiVE) for employees of all ranks. The LiVE platform allow all employees to post memos, give opinion and communicate among themselves in real time for fast responses/ NGO (Non-Government Organizational) always collecting information, conducting interviews with executive and make site visits to Samsung Electronics. Samsung Electronics has been actively responses to past various issues raised by NGO and always remain communicate with them. Sharing growth among large companies and SMEs (Small Medium Enterprise) was the Government South Korean policy focus in 2011. Samsung Electronics joined in a public-private dialogue by the Shared Growth Committee, be a member of Korea Business Council for Sustainable Development, and actively communicated their opinions on energy-related and climate policies. Samsung Electronics has made variety communication channels to collect opinions from their suppliers. Their supplier grievance and complaint handling system allow them to state their problems and find solutions. They were also responding supplier opinions and collected through seminar and training sessions.

4.4 Samsung 9 Material Issues as Key Driver for Future Growth

The previous three years, Samsung focus their sustainability six key performance area including talent management, integrity management, green management, social contribution, partner’s collaboration and products/services s. However, they have decided to comprise global issues that have the potential to affect their business activities as well as its overall competitiveness in order to gain relationship with their stakeholders. Nine key issues have been selected through the process; Creative Organizational Culture; Employee Health and Safety ; Integrity Management ;Increasing Social Contribution; Patent ;Climate Change and Energy ;Water Management ;Mutual Growth; Supplier CSR

4.4.1 Creative Organizational Structure

The first key driver for future growth is the creative organizational structure it include the work & life balance through work smart; establishing a work culture that encourages learning and development; talent-based recruiting of software and design experts; and diversity management (female employee disable employee, global diversity) in establishing a work culture that encourages learning and development Samsung electronics improving productivity by applying a flexible work schedule, effective time management as employee can arrive at work between 6.00 am and 1.00 pm.

Through Creative Development Research Institute System, Samsung provide their employees with opportunities to attain creative new ideas which take professional incenses and all advantage of their talents towards that encourages taking risks. This system encourages Samsung employees to develop creative idea. During the system they are free from their core job and no penalty occurs if the employee not achieves the goals. The first product came from the institute is the eyecan for disable user substitute for pc mouse. Samsung aggressively hiring most talented software engineer in order to archive their goal and vision. In diversity management Samsung hiring more female worker due to flexible working for those whose have small child to take care. The flexible work allowed them to work at home. Beside that Samsung also establish in house child care facilities for their workers. Samsung show their concern on hiring the disable employee and for now they have 1,100 disable worker in the other hand Samsung help them to develop their carrier and give them opportunity to live in better business world and society

Source Samsung sustainability report 2012

4.4.2 Employee Health and Safety

To help employees monitor their health, Samsung Electronics provides annual health checks. Their employees have opportunities to get advice with health experts like doctors and nurses. The leading problem for employee is work stress that risk to personal health also business management. Samsung operating consultation centers, conducting meditation programs and yoga lessons, and volunteer activities to help their workers remain productive in a supportive working environment. Their effort is also in establishing Musculoskeletal Disorder Prevention Center, hiring full-time sports science experts teams, publishing a safety guide on non-work related activities and establishing Employee Health Research Center. The Employee Health Research Center is focusing on 4 areas of research including, analysis of new production processes as well as materials and epidemiology, toxicology of hazardous materials, the work environment ,with a vision of becoming an industry leading occupational health and environment research center.

The role of Health Research Centre (Source Samsung Sustainability 2012)

4.4.3 Integrity Management

Samsung Electronic integrity management focus on established compliance team towards for realizing their vision in expansion global market. In 2011, they have expanded their Global Legal Affairs & Compliance Team from two hundred to two hundred seventy employee for more effective operation.

The compliance program divides to 3 compliance awareness that is prevention, monitoring and follow-up. In prevention awareness it is include of employee education, compliance manual, compliance self-test system, operation of a help desk, sensing on laws and regulation and report. The monitoring process focusing on regular and non-regular monitoring by members of compliance organization units. The last component is the post management/ follow up that consist analysis of case of incompliance to identify improvement measures and employee training for prevention of recurrence. In order to establish on internal awareness compliance Samsung has to strengthen and developed the training program for existing and new employee.

4.4.4 Increasing Social Contribution

The economic crisis nowadays result to the bigger gap between rich and poor, as well as the increasing unemployment rate, bringing high demand for more responsible capitalism. In the other point of view, the society is demanding the business sector to take action and responsibility for problems occur instead of depending on the government. Rely on that, Samsung Electronics believes that they must take responsible in remaining and improving the sustainability of local communities in within their area. Samsung Electronics has their own mechanize to increasing their fundamental contribution programs in volunteer activities and donations. One of their programs is Samsung Hope For Children that has been conducted in 30 countries with different 9 regions. The program focused on supporting education and good health of youth and children. As same also on Samsung subsidiaries in different countries managed various support programs including low-income youth health benefits, youth education support and job trainings, designed for needs of the children and youth of local communities.

The other social contribution that has been conducted by Samsung Electronics in South Africa are employees volunteer program (employee sent to Sudan, Zambia), engineering academy, solar energy lantern and solar internet school.

4.4.5 Patent

The patenting issues on technology now is major problem from preventing imitate of Samsung Electronics product. They have failed in defending their designed against Apple and have been sued in total USD 1 billion. In addition, as the competition in IT technology is ever emphasizing, while the intention of various IT technologies is in trend, the patent resists are bound to become aggressive. Besides that, the rapid technology innovation cycles that has increased patent competition. Samsung Electronics increased the strength of their workforce importantly and reorganized the patent related organization for purpose to protect their know-how in technology .To sustain in technology competition in 2010 the rapid decision making resulting in establishes the Intellectual Property Center (IP Center), that affiliated with the Samsung Advanced Institute of Technology ( including hiring outside expert

Samsung strategy on securing pattern issues is by partnerships. Samsung Electronics proved the huge strength of their patent protection portfolio by signing cross patent contracts which allow a broader cross use of patents with other global IT companies. They collaborate with Qualcomm (mobile phones), Rambus (entire semiconductor products), Sharp (LCD panel module) and in Kodak (camera technology), and in 2010, also followed by deals with Microsoft (MS) and IBM for the cross license of technologies of the mobile phone operation system. The same strategy also applied by Samsung in using pattern license of Google Android operating systems. From the partnership they also gain new innovative in production future technology.

4.4.6 Climate Change and Energy

Concerning of Climate change has become one of the most important global issues. Climate change is already causing many people in daily lives with unexpected weather conditions, flooding and draughts, the function of greenhouse gas (GHG) management has become a key challenge for the global community due to reduce the impact on climate change. Samsung Electronic has establishing Climate Change Mitigation System EM 201 in 2009 They also established a greenhouse gas emission management system that can monitors direct and indirect emissions connected with all business activities including global partners, logistics, manufacturing, product use and worker’s work related travels. Samsung are carefully monitoring each source of Greenhouse Gas emissions and getting reductions to fulfill their corporate responsibility (CSR) in reducing climate change.

Product energy efficiency improvement makes reduction average energy consumption of products by 40% and achieving 0.5 W of standby power by 2013. Supplier support is for the establishment of global supplier’s GHG inventory system by offering training and expertise sharing to global suppliers. Implementation if energy management system and establishment of internal energy efficiency certification system subjected to all business sites in Korea. Incorporation of GHG reduction facilities is the reduction F-gas emission from the semiconductor and LCD manufacturing. Samsung Electronics low carbon product certification winner is on LED TV, Note PC and semiconductor

Low Carbon Product Certification Winners (Source Samsung Electronics Sustainability Report 2102)

4.4.7 Water Management

The other major factor and issue in this key driver in future growth is how Samsung can manage the water sources (Water Management). Samsung semiconductor manufacture is responsible on daily consumption 0f 7500- 15000 tons of pure water. As a leading semiconductor manufacturer, Samsung is now on high responsible in water management in order to maintain water resources.

Samsung Electronics Water Management Resource policy recognizes the importance of water resources in the sustainability of business and society management, and provides to its protection as a responsible corporate citizen of worldwide community. According to Samsung Electronic Sustainability Report 2012, there are several of code conducts; (1) Strive to minimize water risk impact by our business activities. Analyze the impacts of our products, production activities and services make on water resources and minimize risks by identifying and implementing new technologies; (2) instill an awareness of the importance of water resources as a part of our corporate culture. Integrate the importance of water resource protection and sustainability management into the corporate culture and ensure responsible water resource management by employees with the highest consideration for the impact on local communities and the environment. (3) Proactively cooperate with public water policies. Proactively contribute to the establishment and implementation of water resource management policies by international institutes; the government and local authorities in line with relevant guidelines; (4) disclose our policies and activities on water resource management. Disclose company policies and activities related to water resource use to stakeholders including local communities in a transparent manner.

4.4.8 Mutual Growth

Samsung Electronics expanding their support programs for outstanding 1st tier suppliers to become worldwide companies, and we start providing different support policies for 2nd – and 3rd -tier companies to achieve shared growth. They developed key programs to support supplier shared growth including technological supports, training, also provision of support funds. They then strengthened communication and more carefully listened to their suppliers through an effort including a visit by top management to their suppliers. Samsung announced shared growth implementation policies; financial support programs for 1st and 2nd tier suppliers, support for 2nd tier supplier competitiveness building, increased trade opportunities, technology innovation contest, cultivation of global SMEs (Small Medium Enterprise) and incentives for 1st tier suppliers with good shared growth practice. According to Samsung Sustainability Report 2012 they also plan take different kind of shared growth promotion measures including co-development of core parts for boosting the competitiveness of suppliers, inclusion of shared growth performance indicators in performance assessments of our employees responsible for supplier collaboration and responsive adjustment of raw material price changes in supply contracts, free use of patented technologies, support for patent registration of new technology developed by suppliers.

Shared growth management implementation plan focus on ; establish a supplier support fund ; elevated qualified 2nd and 3rd tier suppliers into 1st tier supplier ; cultivate global SMEs ; implement fast-track ‘ Temporary Supplier Registration Policy’ for SMEs with Innovative ideas or new technology. As for the share growth on expected benefits to suppliers is focusing on; funding for investment in facilities and R&D; access to greater supplier benefits, improved credibility in market; strengthened reputation as official partners of Samsung electronics; increased business opportunities for companies without prior business relationship; increased sales of supplier products with funding and technical support; more transparent and responsive communication between suppliers and Samsung

4.4.9 Supplier CSR (Corporate Social Responsibilities)

Samsung Electronics is enduring by the EICC (Electronic Industry Citizenship Coalition’s) basic code of conduct as a guideline for fulfilling their CSR (corporate social responsibility). They have provided the development of a CSR management structure by supplier companies and incorporated CSR activities as a part of their supplier evaluation criteria to further incentivize their participation in CSR activities. Samsung also applied a 3rd party validation program of supplier CSR activities. Developing Corporate Social Responsibilities activities is a part of supplier evaluation of Samsung Electronics. They have been managing annual supplier evaluations using criteria consisting technological competitiveness and other internal criteria to identify leading suppliers. In additional, the company has provided financial support and collaborative technology development opportunities. In 2011, Corporate Social Responsibilities achievements and activities have been a part of the evaluation criteria previously; they increased their importance in the overall evaluation. The CSR activity evaluation criteria including 20 different areas covering the EICC (Electronic Industry Citizenship Coalition’s) basic code of conduct, consisting a ban on environmental management , child labor and occupational health and safety.