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Samsung Company: Globalisation Effects on Growth and Performance Essay


Company Background

Samsung Electronics is a South Korean multinational corporation that was established by Byung-Chull Lee in the late 1930s as a grocery store for trade export business. By 1948, the company expanded to milling and confectionery industries before it became a co-operation in 1951. In 1958, Lee founded the Samsung Foundation of Culture to promote and propagate Korean traditional art. Between the mid-1950s and late 1970s, Samsung extended its business to insurance, mass communication, oceanic equipment, and chemical industries.

In 1969, the famous Samsung Electronics came into establishment. Later, in the late 1980s, Kun-Hee Lee (the son of Byung-Chull Lee) inherited the business from his father. He became the head of Samsung Electronics. Since his takeover, the business underwent a significant revolution in the world of electronics. The company grew to establish various affiliate companies and universities to nurture students’ talents. During the 1990s, Samsung Electronics focused on the establishment of electronics companies in various international localities such as the United States, Germany, China, Spain, Britain, and Mexico, among other global nations.

The establishment of electronics factories led to significant globalisation of the business. With the global advancement in technology, the company featured in both local and international markets with high-tech consumer electronics. Indeed, in 1993, Samsung presented the lightest and classy mobile phone of its time (Samsung Electronics Annual Report 2013).

Today, the Samsung Group is the largest company in South Korea and the second-largest consumer electronics corporation internationally. Samsung Electronics’ commodities range from semiconductor chips and LCD panels to television and mobile phone technology. Many companies in the Southern Korean region depend on Samsung Group for electronics, components, and materials (Samsung Electronics Annual Report 2013). This dependency has enabled the company to gain enormous control over the electronics industry to the extent of leading to the closure of some smaller-sized electronics stores due to the agonising competition.

The Effect of Globalisation on Growth and Performance

Zhou, Wu, and Barnes (2012) reveal that globalisation significantly influences the growth and performance of an organisation. Correspondingly, globalisation is a crucial factor that has shaped the business landscape of Samsung Electronics. South Korea houses various giant companies that generate pioneering technology. Samsung Electronics is such a giant electronics technology conglomeration that has taken advantage of globalisation and the dynamic advancement of technology to expand its business internationally.

According to Chang (2012), globalisation is not an emerging spectacle in the twenty-first century. Nevertheless, technology and global trade have changed many aspects of conducting business in areas such as production, delivery, monitoring, market trends, and communication, among others. The integration of global economies, communities, and their philosophies through the ever-growing global trade, communication, and immigration has led to the witnessed change in business trends.

As a result, businesses have had to re-evaluate the effects of embracing globalisation on their growth. In the context of globalisation, Samsung Electronics has remained on the forefront to differentiate its products in an attempt to meet the demands of global markets. Samsung Electronics is driven by its three messages of inventing new technology, delivering state-of-the-art products, and offering innovative solutions to its consumers around the world (Uchitelle 2005).

Shifting of Samsung Electronics to Facilities outside Korea

The pursuit of technology and globalisation has influenced various business decisions in Samsung Electronics. Globalisation has tremendously increased competition for Samsung Electronics and other major players in the electronics industry (Freund, Trahan, & Vasudevan 2007). Globalisation has led to the shifting of Samsung Electronics facilities out of Korea to lower production costs. Asia has undergone dramatic shifts in terms of production. This situation has led to a reduction in the company’s operational costs.

As a result, many multinational conglomerates, including Samsung Electronics, have moved their facilities to Southeast Asia in an attempt to maximise profits (Thoumrungroje 2004). Employee compensation rates and production costs have moved up the value chain in Korea, Japan, and China, among other initial localities of its electronics plants (Kim 1998). To cut down costs, Samsung Electronics has opted to move its electronics plants to other Asian countries such as Indonesia, Vietnam, Cambodia, and the Philippines among other nations.

The availability of cheap labour in these countries, especially in the undeveloped districts, has also favoured Samsung Electronics’ business. In addition, the impending establishment of the Asian Economic Community (EAC) as a common regional market trade strategy and the anticipated elimination of trade barricades and tariffs in Asian countries have also compelled Samsung Electronics to establish production plants and its associated businesses in Asia (Anwar 2007).

Increase in Sales and Market Share in Europe

Samsung Electronics has maintained a significant competitive gap with reference to other players in the electronics industry such as Apple Inc., Sony Electronics, Nokia, and LG Electronics among other companies (Sherr & Ramstad 2013). The diversification of Samsung Electronics’ products has resulted in increased sales and market share in the European markets in the past three to five years.

The emergence of its Samsung Galaxy products that are driven by the power of the recently invented Android Operating System has been a great achievement for the business (Lawson 2014). Samsung Electronics has also remained in the lead in terms of proliferation of Liquid Crystal Display (LCD) technology in the local and global markets. Lee and Folkmanis (2013) reveal that Samsung Electronics has gained 50-per cent of the electronics market in Europe. Indeed, the company leads the European Smartphone market.

Sustaining Samsung Electronics’ High-End Strategy in the International Arena

According to the Samsung Electronics Sustainability Report (2014), globalisation has significantly altered the face of Samsung Electronics business. The company has strived to improve its brand by diversifying and differentiating its electronics products to stay at par with international competitiveness that is prevailing in the electronics industry. Globalisation has led to the entrance of many competitors in the electronics industry.

This situation is a challenge to Samsung Electronics since more companies have introduced quality products at comparatively lower prices. In this context, globalisation has increased competition, especially in the mobile phone market. Nevertheless, Samsung Electronics has achieved significant competitive advantage, owing to its state of technology leadership, brand superiority, and economies of scale (Verma & Singh 2010). The company has also maintained its high-end strategy by standardising and modularising its products in an effort to deliver first-class products to consumers.

Conclusion

In conclusion, globalisation has had a significant influence on the growth and performance of Samsung Electronics. However, other electronics giants such as Sony and LG are also keeping up with technological shifts and globalisation pace. This situation is reducing the competition gap, especially in the mobile phone market. The consumer electronics market has become saturated. It is diversifying in a reasonably swift pace, owing to the sudden emergence of new technologies in the electronics industry. Consequently, there is an emerging need for Samsung Electronics to fasten its product development to redefine its business in terms of innovation.

References

Anwar, R 2007, Globalisation Lesson from Samsung, Web.

Chang, S 2012, ‘Study on human resource management in Korea’s chaebol enterprise: a case study of Samsung Electronics’, International Journal of Human Resource Management, vol. 23 no. 7, pp. 1436-61.

Freund, S, Trahan, E & Vasudevan, G 2007,‘Effects of Global and Industrial Diversification on Firm Value and Operating Performance’, Financial Management (Wiley-Blackwell), vol. 36 no. 4, pp.143-61.

Kim, Y 1998, ‘Technological capabilities and Samsung Electronics’ international production network in East Asia’, Management Decision, vol. 36 no. 7/8, p. 517.

Lawson, S 2014, ‘The Samsung Galaxy’, Fast Company, vol. 1 no. 184, p. 48.

Lee, J & Folkmanis, J 2013, , Web.

Samsung Electronics Sustainability Report 2014, Samsung Electronics: Global Harmony with People, Society, and Environment, Sage, London.

Samsung Electronics Annual Report 2013, Samsung Electronics Co. Ltd, Sage, London.

Sherr, I & Ramstad, E 2013, Web.

Thoumrungroje, A 2014, , Web.

Uchitelle, L 2005, ‘Globalisation: It’s Not Just Wages’, New York Times, p. 4.

Verma, S & Singh, P 2010, Organising and Managing in the Era of Globalisation, Response Books, New Delhi, India.

Zhou, L, Wu, A & Barnes, B 2012, ‘The Effects of Early Internationalisation on Performance Outcomes in Young International Ventures: The Mediating Role of Marketing Capabilities’, Journal of International Marketing, vol. 20 no. 4, pp. 25-45.

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IvyPanda. (2020, July 6). Samsung Company: Globalisation Effects on Growth and Performance. Retrieved from https://ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/

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"Samsung Company: Globalisation Effects on Growth and Performance." IvyPanda, 6 July 2020, ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/.

1. IvyPanda. "Samsung Company: Globalisation Effects on Growth and Performance." July 6, 2020. https://ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/.


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IvyPanda. "Samsung Company: Globalisation Effects on Growth and Performance." July 6, 2020. https://ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/.

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IvyPanda. 2020. "Samsung Company: Globalisation Effects on Growth and Performance." July 6, 2020. https://ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/.

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IvyPanda. (2020) 'Samsung Company: Globalisation Effects on Growth and Performance'. 6 July.

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