Well established modern business organizations have increasingly been seeking to expand their operations beyond the boundaries of their mother countries. Consequently, at the international level we have a new kind of business known as international business.
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Business organizations particularly from world’s major economies and the emerging Asian economies offering goods and services in different commercial sectors or industries are striving to establish a high profile presence in the international markets in an attempt to improve their profitability and remain competitive in an era of accelerated globalization.
Some of them are part and parcel of the business organizations known as multinational corporations (MNCs) or multinational enterprises (MNEs) which have operational branches in many stable nations world over.
There are various reasons that motivate a company’s desire to expand to the international or foreign markets. Kurtz have identified four main reasons that usually motivates companies or business organizations seek to expand to international markets namely the desire to use current resources and access to new resources, seeking to expand or develop new markets, competitive rivalry and controlling core competences and learning (215).
These authors point out that companies search for economies of scale in the use of their existing resources by expanding in to new foreign markets. At times they enter international markets in order to reach certain valuable resources like raw materials, specialized knowledge or cheap labour.
As companies become well established in the domestic markets they begin searching for international markets in order to increase their revenue and gain more profits, enhance their competition with major rivals and influence further development of their core competencies Kurtz (215).The aim of this task is to analyze Samsung company in UAE.
Doing Business in UAE
United Arabs Emirates (UAE) is situated southeast of Arabian Peninsula in southwest Asia on the Persian Gulf. It borders Oman and Saudi Arabia and shares sea borders with Iran, Qatar, Bahrain, Iraq and Kuwait Communicaid (1).
It’s a federation of Emirates ruled by Emirs and hence termed as the United Arabs Emirates Communicaid (1). According to Mina cited in Greenaway, UAE is a major player in world trade and that it has been the most significant Middle East trade partner for the European Union,US,Canada and Japan (61).
UAE’s religious and historical influences combined with a progressive attitude and broad economic opportunities make UAE a most fascinating and unique place to do business Communicaid (1).Communicaid observes that a proper understanding of UAE’s unique culture is vital for those wishing to profitably do business in the Emirates (1).
Samsung’s International business strategies
Samsung Company originates from South Korea. The Samsung Group of companies is made up of many international associated businesses like Samsung Electronics, Samsung Heavy Industries, Samsung Engineering, Samsung C &T, and Samsung Life Insurance among others which are united under the popular Samsung brand.
Samsung began to rise as an international corporation in the 1990s.It is during this same period that Samsung changed its strategy from an emulating cost leader to a differentiator. Rowley and Paik notes that Samsung sold off ten subsidiaries downscale and amalgamated operations so as to concentrate on three sectors in order to form the group’s core namely Samsung Electronics, Samsung Heavy Industries, and Samsung Engineering and construction (11).
Samsung Electronics is the world’s largest technology company in terms of sales volume. In fact, Samsung brand is particularly popular because of its consumer electronics brand. For example, Giudice, Peruta and Carayannis points out that “Samsung has been the world’s most popular consumer electronics brand since 2005 and is the best known South Korean brand in the world.” (P.66). Samsung’s electronic products from mobile phones to smart TVs are popular in the UAE markets.
Even though there are numerous advantages that accrue from a company’s expansion into international markets, proper international business strategies must be put in place by the management in order to reap the benefits of economies of scale.
As Samsung approached foreign markets against a background of the popular Asian money crisis in the 1990s, the firm underwent important strategic changes in order to stand a chance of succeeding in international business as well as domestic business Mathur (269).
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The firm shifted from being a company driven by technology that was largely imported into a firm that was driven by the market. In its international business, Samsung has successfully embraced a market driven strategy that is receptive to change Mathur (269).
According to Mathur (269), Samsung’s international business strategies have been guided by the firms endeavors to value creation and profitability, the need to become differentiable and one offering distinct value for money to its customers (269).
Its international business strategies have also included innovativeness for creating products and finding new foreign marketplaces, a better understanding of its market places and extensive use of R&D to develop new products for its customers whose taste and preference is constantly changing.
These strategies according to Mathur enabled Samsung to become a recognized international brand by the 2001 (269).Samsung’s major competence has been its leadership in digital technology, digital displays and digital wireless since 1980s Mathur (269).
Samsung adapts its products for its different foreign markets. Kurtz argues that the main key to success in international markets lies in a company’s ability to adapt its products to local inclinations and culture (216).For example, in order to satisfy its China’s large and different population Samsung provides different models and price ranges on its electrical devices and electronics Kurtz (216).
Samsung marketers according to Kurtz understands that people who live in the hot and humid climate of Guangdong province require bigger refrigerators than those who reside in the northern parts of China (216).Samsung thus adapts its products to suit the preferences and ways of life for specific markets.
Even though Samsung has been the most popular consumer electronics in the world since 2005, it is bound to encounter stiff competition from other key players like Nokia in UAE electronics markets. According to Giudice, Peruta and Carayannis Nokia has been a first mover for long.
For example, by 2003 Nokia was importing more than five million devices while Samsung was shipping only a few hundreds. In addition, Nokia has been among the forerunners to venture in creation of smart phones and go the directions of foreign markets requiring low cost phones like China and India Giudice, Peruta and Carayannis (66).Samsung has to put on these competitive elements in order to trade profitably in UAE.
Difference between vision and mission in formulation of business strategies
Many people assume that business vision and mission are one and the same thing and even uses the two terms interchangeably. There is however a clear distinction between these two things in a business context. However, the two are integral parts of a business strategy.
According to Stark, a business mission is the unique undertaking or reason for which a company is intended or destined (130). A business mission clearly describes the purpose of the company. He argues that there is a big difference between a strategy and a mission. On one hand a mission describes a company’s purpose while on the other hand a strategy describes the way to achieve goals of a company (130).
In a nut shell, a business mission identifies a desired destiny while a strategy describes how the company will reach that destiny. For example, Samsung’s mission can be to provide the most superior affordable products for all people in different stations in life while its strategy for realizing that can be through innovation, economical and proper use of resources and skills.
Stark observes that a vision in a business context is a mental image of something in future. So that a business vision describes the desired future state of a company thus it is also different from a strategy that describes the way a company like Samsung will achieve its objectives Stark (130).
To sum up, business strategies are to a large extent universal in nature and even application especially in market economies. What make them different are essentially the diverse business environments of various world economies. So that what makes a firm’s international business strategy different from its national or domestic strategy is of course diversity in business environments.
Therefore, the most important question that is supposed to bother a firm like Samsung is not whether the market is foreign or domestic but whether there are differences in business environments of its target markets.
If there are no differences then its domestic business strategy need not to be changed in order to succeed in a foreign market but if the business environments are different, new international business strategies must be designed or its domestic business strategies must be adapted to suit its target foreign market so as to reap benefits of expanding into international markets.
Communicaid. Doing Business in the UAE | UAE Social and Business Culture. Communicaid.com.Web.2009. 5th May 2011.
Giudice, Manlio, Peruta, David and Carayannis, Elias. Knowledge and the Family Business: The Governance and Management of Family Firms in the New Knowledge Economy. New York, NY: Springer, 2010. Print.
Greenaway, Daniel. The World Economy: Global Trade Policy 2008. London: John Wiley and Sons, 2009.Print.
Kurtz, David. Contemporary Marketing. New York: Cengage Learning, 2009. Print.
Mathur, Charles. Global Business Strategies. New, Delhi: I. K. International Pvt Ltd, 2011.Print.
Rowley, Chris and Paik, Y. The changing face of Korean management. London: Taylor & Francis, 2009. Print.