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It is easy for most companies to identify a suitable operating model for their digital platforms. In most cases, several operating models can fit one company. However, it is essential that one operating model is used. The use of a single model increases the efficiency of management and enhances implementation of IT systems. When choosing an operating model, the company should consider ways of doing business.
Consider the level of standardization and integration required. When a company commits itself to a single operating model, it becomes easy for the management to organize business units and define IT responsibilities.
Specifically, digital platforms used by companies take one of the following operating models; diversification, unification, coordination and replication. This paper discusses Samsung Electronics’ organizational structure with respect to the operating model it has adopted in its digital platform.
Samsung Electronics’ Organizational Structure
Samsung Electronics is a large company with a global presence. The company has a well defined organizational structure that makes its management efficient, enabling it to maintain control over its value chains (Lee 4). Production sectors are organized according to the production type they undertake. Production is determined by the production plan set by Samsung Advanced Institute of Technology (SAIT).
SAIT mainly deals with preparation and development of new products (Lee 4). As such SAIT is the key determinant of how the other organs communicate with each other before the commencement of production. On the other hand, the sales and marketing section is organized according to regions.
The managers are assigned according to the geographical areas. It has been arranged this way because the company covers a large area, with each having its own specific needs (Lee 5). These managers are also responsible for outsourcing of logistics and vendors for their products.
Samsung’s management organization structure is divided according to regions. Each region operates separately with little sharing of information. This is because the needs of each region are specific to the region.
For this reason, very little information can be shared between the regional offices. Consequently, the digital platforms and IT infrastructure used in each region are designed to address area-specific issues (Arshad, Bosua and Milton 4)
On the other hand, Samsung’s macro organizational structure has three main divisions; Digital Media and Communications Components Business (DMC), Device Solutions, and SAIT. The first two areas are independent of each other. Neither do they share information nor do business in a similar manner (Lee 5).
However, the SAIT group is linked to the two directly because it is responsible for developing new technologies to be implemented by these sections. Due to the uniqueness of the ways of doing business, Samsung has adopted a low level of integration (Arshad et al. 4)
The products produced by both DMC and Device Solutions are the same for most areas. Moreover, the logistics and vending procedures are almost the same from the point of manufacture to the final buyer. For instance, regional managers deal with different customers, vendors and suppliers but the products they deal in are similar (Lee 6).
Consequently, Samsung’s digital platform is designed in a standardized manner with the aim of making it simple for customers to access their quality services and enable regional managers to operate efficiently.
Another reason for standardization is to create an efficient means of communication especially between the three main sections of the company (Ashrad and Mohamed 3). Specifically, it aims at enhancing communication between SAIT and the other two main areas.
Samsung Electronics falls in the fourth quadrant due to its low level of integration and a high level of standardization. The company’s success relies on the success of the regional business units that are limited to standard business processes designed for the replication operation model (Argenti and Courtney 123).
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The implication of this is that even though, they are independent, regional managers in charge of particular regions are bound to act within the discretions of the standard procedures set by the model. Samsung’s success depends on the efficiency of repeated business processes which the model provides for (Argenti and Courtney 124).
Choosing a unification operating model could have had similar or better results for Samsung compared to replication. Its current model’s low integration prevents the sharing of information between regional units.
Unification would increase efficiency by integrating data and driving variability out of business processes (Argenti and Courtney 129). Moreover, unification will lead to predictability, reliability and at the end reduce the cost of doing business due to integration and standardization of business processes.
Samsung’s commitment to replication as its preferred operating model for digital platform and IT infrastructure has scaled it to become an electronic giant. The company has been able to integrate its business strategy with IT infrastructure leading to continuous growth and improved customer delivery.
However, commitment to one operating model has prevented the company from considering other operating models such as unification that have better results. In line with the discussion in this paper, it is essential for a company to select the best operating model for use on the digital platform by assessing business requirements at every level.
Argenti, Paul A., and Courtney M. Barnes. Digital strategies for powerful corporate communications. New York: McGraw-Hill, 2009. Print.
Arshad, Noreen I., Rachelle Bosua, and Simon K. Milton. “Exploring the Use of Enterprise Co ntent Management Systems in different types of Organisations.” The University of Melbourne. Department of Computing and Information Systems, 2012. Web.
Lee, Boon-Young. “Case Study of Samsung’s Mobile Phone Business.” N.p., 2006. Web.