Samsung Case Study
In 1993 SEC chairman Lee started the “new management initiative” to remake Samsung as a global business leader that would shift its current focus from being product-driven to value-driven. Lee wanted the company to focus on long-term commitment to invest in premium products and brand value.
Samsung focused on vertical integration because the company did not want to lose its edge in manufacturing as it is one of Samsung’s core competencies. Samsung also focused on customized production for premium price, along with higher prices, Samsung still kept costs low by operating plants and facilities in China and India, where there was relatively abundance low-cost labor force.
Samsung also wanted to remain focused on the hardware industry to continue focusing on its core competencies. Despite the short life-cycles of hardware, due to Samsung’s high value and variation in the industry, the company could bounce between which products to focus on depending on the market, while developing the ones currently not creating value until their time is ready.
Samsung attracted and retained top scientific talent to focus on Product Innovation, and created world’s first pillar products because of its team of capable designers and engineers and potent investment in Research and Development. Due to fewer levels of bureaucracy, Samsung was able to move from design concepts to production and commercialization about two times faster than their Japanese rivals.
Samsung was also a leader in the emerging field of Digital Convergence because they envisioned the future when a single device could control all the electronic devices in a household.
Because the old strategy of Samsung was product oriented, marketing was only designed to meet short-term sales targets rather than long-term brand building. And Samsung converted the company’s product line from low-end commodities to high-end premium goods, which required brand building, so Chairman Lee