University of Washington Samsung a Strategic Plan for Success Case Analysis Case: Samsung a Strategic Plan for Success (p. 521) The Paper should be in APA

University of Washington Samsung a Strategic Plan for Success Case Analysis Case: Samsung a Strategic Plan for Success (p. 521)

The Paper should be in APA or MLA format

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Writing Expectation: 3-4 pages typed not including Cover Page and References.

Your Case analysis should include the following:

A short and concise overview of the company. This should include its origin, its mission statement and the size & reach of the company. If this information is not provided in the case text, consider searching for external sources.
Perform a short concise SWOT analysis for the company. Use the information provided in the case as well as any external information you feel is appropriate.
Answer the questions at the end of the case.
What would you recommend the company do moving forward to maintain its competitive edge?

They will be assigned from the text. The Case Histories will be graded on two dimensions:

substance (your analysis of the problem) and writing (how well you present your analysis). I uploaded the text material on a word doc. Company Case 2
Samsung: A Strategic Plan for Success
You’re probably familiar with Samsung. Maybe you have one of the company’s hot new Galaxy
smartphones or tablets that track your eye movements to help you navigate the screen. You
might be doing your homework on one of its cutting-edge laptops. Or perhaps you’ve seen one
of its dazzling new ultra-high-definition curved-screen smart TVs with Nano-crystal technology.
Chances are good that you or someone you know owns a Samsung product. After all, Samsung is
the world’s largest consumer electronics manufacturer, producing “gotta have” products in just
about every electronics category, including TVs, DVD players, home theaters, digital cameras
and camcorders, mobile devices, smartwatches, home appliances, laptops, printers, and LED
lighting.
But only 20 years ago, Samsung was little known, and it was anything but cutting-edge. Back
then, Samsung was a Korean copycat brand that you bought off a shipping pallet at Costco if you
couldn’t afford a Sony, then the world’s most coveted consumer electronics brand. However, in
1993 Samsung made an inspired decision. It turned its back on cheap knock-offs and set out to
overtake rival Sony. At the time, no one outside of Samsung believed that was possible. But the
Korean manufacturer passed Sony in just 10 years, and Samsung has been widening the gap that
separates it from the former market leader ever since.
The New Management Strategy
How did Samsung move so far so fast? The dramatic shift came about as a result of a top-down
mandate to reform Samsung’s business model and culture. In 1993, CEO Lee Kun-hee unveiled
a new strategy. The goal: Dethrone Sony as the biggest and most desirable consumer electronics
brand in the world. Turn Samsung into a premier brand and a trailblazing product leader. To that
end, the company hired a crop of fresh, young designers and managers who unleashed a torrent
of new products—not humdrum, me-too products, but sleek, bold, and beautiful products
targeted to high-end users. Samsung called them “lifestyle works of art.” Every new product had
to pass the “Wow!” test: If it didn’t get a “Wow!” reaction during market testing, it went straight
back to the design studio.
Beyond just seeking cutting-edge technology and stylish designs, Samsung put the customer at
the core of this innovation movement. “Put simply, our differentiation is centered on producing
innovative technology that brings genuine change to people’s lives,” said Sue Shim, Samsung’s
chief marketing officer. “We do this by bringing a relentless focus on consumer experience and
product innovation in everything we do.”
With its fresh customer-centered focus, Samsung made quick work of surpassing Sony. Today,
Samsung’s annual revenues of $196 billion are more than two and a half times Sony’s $75
billion. And over the past five years, as Samsung’s sales and profits have seen double-digit
growth, Sony’s revenues have declined and losses have compounded. According to brand tracker
Interbrand, Samsung is now the world’s seventh most valuable brand—ahead of megabrands like
Disney, Pepsi, Nike, and Toyota—and one of the fastest-growing brands in the world. And
Sony? It has fallen from grace as the value of its brand has declined as dramatically as
Samsung’s has risen.
But more than growth, Samsung has achieved the new product Wow! factor it sought. As
evidence, Samsung is a dominant force at the annual International Design Excellence Awards
(IDEA) presentations—the Academy Awards of the design world—which judge new products
based on appearance, functionality, and inspirational thinking. Year after year, Samsung emerges
as the top corporate winner. Last year, Samsung claimed 10 awards, more than three times as
many as the runners-up.
When New Becomes Old
Good companies achieve their strategic goals. Great companies modify their strategic
plans as goals are met, always looking to the future and positioning themselves to
remain in front. After Lee was named top CEO of the Decade by Fortune Korea, he
announced that the “new management” plan was old news. After 17 years of remarkable
success, Lee admitted that Samsung’s main products would likely become obsolete
within the next 10 years. He then unveiled the underpinnings of a new strategic
direction based on the Chinese axiom mabuljungje—meaning “horse that does not stop.”
In a memo to Samsung employees, Lee said, “The ‘new management’ doctrine for the
past 17 years helped catapult the company into being one of the world’s best
electronics makers. Now is not a time to be complacent but a time to run.”
Although Samsung doesn’t claim to know what will replace today’s products as they
become obsolete, it is investing heavily to ensure that it is the company that develops
them. Even with its new product systems in place, CEO Lee stresses the need for
Samsung to completely overhaul its business model or risk losing market share.
Fortunately for Samsung, profits have been so good that it has the funds to support its
quest to remain at the top of the innovation heap. Year after year, Samsung boosts its
innovation investment budget to record highs, even as its competition makes cuts. Its
most recent research and development expense of $13.4 billion was second only to
Volkswagen’s $13.5 billion and more than double that of Amazon, IBM, or Cisco. Sony,
Toshiba, Sharp, and Hitachi—Samsung’s more traditional competitors in the past—
didn’t even come close.
The folks at Samsung know that future success will require much more than flashy
hardware gadgets. For that reason, Samsung isn’t really paying attention to Sony
anymore. Samsung knows that it cannot thrive in the long term by merely offering
sharper colors, better sound quality, or even “Wow!” designs. Over the past half-decade,
Samsung has focused on competing with the likes of Apple for dominance of the mobile
device market and for the content and advertising that go along with such devices.
That focus has paid off, and Samsung has surged to the top of the smartphone market.
Just a few years ago, Samsung’s goal was to double its share of the smartphone market
from 5 percent to 10 percent. But the success of the Galaxy line catapulted Samsung
into the position of market leader, besting Apple with a global market share of more
than 30 percent. And although Apple has the jump on controlling content with more
than 100 billion downloads through its App Store, Samsung’s Galaxy App Store is
holding its own.
The Internet of Things
Despite its indisputable success in smartphones, Samsung knows that that success can
be short-lived. Although it still maintains the lead in the market, Samsung’s fortunes
have waned in the past year as the latest rendition of the iPhone cut its market share in
China in half, reducing its global market share to 25 percent. In a saturated and cutthroat market, Samsung knows that future growth will not come from a bigger, better
smartphone.
Rather, Samsung is again shifting its strategic direction. Samsung wants to take the lead
in “the Internet of Things”—a global environment where all electronic devices,
appliances, vehicles, and even static items such as clothing will be digitally connected
with each other, with the people who use them, and with the companies that make
them.
In recent years, Samsung has quietly gone about creating a foundation for establishing
an interconnective web between all of its products and linking them with the rest of the
world. It already makes products in just about every imaginable category of home
devices. Not many years ago, it dove into semiconductors, a business that has been
growing rapidly for the company in terms of size, innovation, and profitability. And last
year, it purchased SmartThings, a smart-home start-up company.
But at the recent Internet of Things World event in San Francisco, Young Sohn,
Samsung’s chief strategy officer, blew things wide open. He unveiled a plan that makes
Samsung’s intentions clear. The company is committing a funding pool of $100 million
to start-ups that want to help build the ecosystem. Committing to a policy of openness
and collaboration, Sohn unveiled a new line of semiconductor chips—state-of-the-art
processors that combine hardware and software—that are now available for sale,
helping companies large and small quickly and easily build Internet-connected devices.
And to meet what it expects will be enormous demand for these and future chips,
Samsung is investing $14 billion in a massive semiconductor manufacturing complex.
To accomplish its goal of becoming a leader in the Internet of Things market, Samsung
is taking on its biggest challenge yet. For starters, this shift in strategy broadens
Samsung’s list of competitors from an already daunting set to one that includes just
about every company in every field of high technology and even some beyond that.
Adding to that challenge, there are no common standards for technologies required to
connect the many devices of the world—technologies that involve networking, software,
and hardware. As a result, there are thousands of companies—from Google and Apple
to myriad start-ups—trying to move their products toward interconnectivity but not
getting much closer to a state of universal compatibility.
To add to this challenge, the many participants in the Internet of Things game don’t see
eye to eye, a competitive dynamic that makes the process much more difficult. As the
many players work toward compatibility, they employ numerous and often incompatible
approaches. And whereas Samsung and many others have committed to collaboration
and an open ecosystem, others intend to go it alone and develop their own systems. For
example, Apple is developing its HomeKit platform—a proprietary system that allows
users to command the devices in their homes through Apple TV using Siri. Remember
“Intel Inside”? Picture a “Made for iPhone” logo on devices that would ensure shoppers
of interoperability under the Apple system.
But these challenges are not dousing Samsung’s fire. The company’s motivations go
beyond greater financial performance. According to Alex Hawkinson, CEO for
SmartThings, Samsung is trying to lead by example and trying to “do what is right by
the customers” by giving them more choice and flexibility. “We will focus on creating
amazing experiences in both software and hardware, and win through the power of our
innovation rather than trying to win by locking others out or limiting choice,” Hawkinson
says.
So far as the Internet of Things goes, the ultimate goal is to build artificial intelligence
technology that can gather data from smart homes, cars, and wearable devices and turn
them into useful insights. That might sounds just a little too Big Brother-ish, but the
wheels are already in motion. According to one conservative estimate, the number of
networked devices will surge from about a billion today to 26 billion by 2020,
representing a $3 trillion market. By that time, Samsung claims that 100 percent of the
products it makes will be Internet-connected.
Twenty years ago, few people would have predicted that Samsung could have
transformed itself so quickly and completely from a low-cost copycat manufacturer into
a world-leading innovator of stylish, high-performing, premium products. But through
savvy strategic planning, that’s exactly what Samsung has done. And not so long ago,
few if any would have predicted that Samsung would be one of the driving forces
behind creating a world that is entirely interconnected. Yet, while that much remains to
be seen, Samsung certainly seems to have all the right ingredients. And, based on it
record of success, Yoon may have waxed prophetic as he unveiled Samsung’s new
strategic direction: “We have to show consumers what’s in it for them and what the
Internet of Things can achieve—to transform our economy, society, and how we live our
lives.”
Questions for Discussion
1. How was Samsung able to go from a copycat brand to an innovation leader?
2. In recent years, how has Samsung achieved its goals in markets where it had little
presence, such as smartphones?
3. What challenges does Samsung face with such a diverse product portfolio? What
benefits?
4. Is Samsung’s current and future strategy customer focused? Why or why not?
5. Will Samsung be successful in achieving its goal of becoming a leader in the Internet
of Things market?

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