SECTION A – CASE ANALYSIS (Please note, your answers may and could be based on the Text of the below Passage as well as your own).
THE COMING UP OF SAMSUNG PRODUCTS, PARTICULARLY ITS MOBLES PHONES TO THE WORLD MARKET
Founded in 1938, Samsung comprises numerous subsidiaries and affiliated businesses united under the Samsung brand, and is the largest South Korean business conglomerate gained its revenue amounting to US$268.8 billion in 2012 and net income of US$30.1 billion in 2013, with total asset of US$590.4 billion in 2013, total equity of US$256.3 billion in 2013 and employed around 427,000 workers in 2013. Over the next three decades the group diversified into areas including food processing, textiles, insurance, securities and retail. Samsung entered the electronics industry in the late 1960s and the construction and shipbuilding industries in the mid-1970s; these areas would drive its subsequent growth. Since the 1990s Samsung has increasingly globalized its activities, and electronics, particularly mobile phones and semiconductors, have become its most important source of income. Samsung's revenue was equal to 17% of South Korea's $1,082 billion GDP.
Samsung Heavy Industries (the world's 2nd-largest ship builder and Samsung Engineering and Samsung C&T respectively) are the world's 13th and 36th-largest construction companies). Other notable subsidiaries include Samsung Life Insurance (the world's 14th-largest life insurance company), Samsung Everland (operator of Everland Resort, the oldest theme park in South Korea), Samsung Techwin (an aerospace, surveillance and defense company) and Cheil Worldwide (the world's 15th-largest advertising agency measured by 2012 revenues). In 2013, Samsung began construction on building the world's largest mobile phone factory in the Thai Nguyen province of Vietnam.
In the 1980s, Samsung Electronics began to invest heavily in research and development, investments that were pivotal in pushing the company to the forefront of the global electronics industry. In 1982, it built a television assembly plant in Portugal; in 1984, a plant in New York; in 1985, a plant in Tokyo; in 1987, a facility in England; and another facility in Austin, Texas, in 1996. As of 2012, Samsung has invested more than US$13 billion in the Austin facility, which operates under the name Samsung Austin Semiconductor. This makes the Austin location the largest foreign investment in Texas and one of the largest single foreign investments in the United States.
Samsung's construction branch was awarded a contract to build one of the two Petronas Towers in Malaysia, Taipei 101 in Taiwan and the Burj Khalifa in the United Arab Emirates. In 1993, Lee Kun-hee sold off ten of Samsung Group's subsidiaries, downsized the company, and merged other operations to concentrate on three industries: electronics, engineering, and chemicals. In 1996, the Samsung Group reacquired the Sung kyun kwan University foundation.
Samsung became the largest producer of memory chips in the world in 1992, and is the world's second-largest chipmaker after Intel. In 1995, it created its first liquid-crystal display screen. Ten years later, Samsung grew to be the world's largest manufacturer of liquid-crystal display panels. Sony, which had not invested in large-size TFT-LCDs, contacted Samsung to cooperate, and, in 2006, S-LCD was established as a joint venture between Samsung and Sony in order to provide a stable supply of LCD panels for both manufacturers. S-LCD was owned by Samsung (50% plus one share) and Sony (50% minus one share) and operates its factories and facilities in Tangjung, South Korea. As on 26 December 2011 it was announced that Samsung had acquired the stake of Sony in this joint venture.
In 2000, Samsung opened a computer programming laboratory in Warsaw, Poland. Its work began with set-top-box technology before moving into digital TV and smartphones. As of 2011, the Warsaw base is Samsung's most important R&D center in Europe, forecast to be recruiting 400 new-hires per year by the end of 2013.
In 2001 Samsung Techwin became the sole supplier of a combustor module for the Rolls-Royce Trent 900 used by the Airbus A380, the world's largest passenger airliner. Samsung Techwin is also a revenue-sharing participant in the Boeing's 787 Dreamliner GEnx engine program.
In 2010, Samsung announced a ten-year growth strategy centered around five businesses. One of these businesses was to be focused on biopharmaceuticals, to which the company has committed â‚©2.1 trillion.
In the first quarter of 2012, Samsung Electronics became the world's largest mobile phone maker by unit sales, overtaking Nokia, which had been the market leader since 1998. In the August 21 edition of the Austin American-Statesman, Samsung confirmed plans to spend 3 to 4 billion dollars converting half of its Austin chip manufacturing plant to a more profitable chip. On 24 August 2012, nine American jurors ruled that Samsung had to pay Apple $1.05 billion in damages for violating six of its patents on smartphone technology. The award was still less than the $2.5 billion requested by Apple. The decision also ruled that Apple did not violate five Samsung patents cited in the case. Samsung decried the decision saying that the move could harm innovation in the sector. It also followed a South Korean ruling stating that both companies were guilty of infringing on each other's intellectual property. In the first trading after the ruling, Samsung shares on the Kospi index fell 7.7%, the largest fall since October 24, 2008, to 1,177,000 Korean won. Apple then sought to ban the sales of eight Samsung phones (Galaxy S 4G, Galaxy S2 AT&T, Galaxy S2 Skyrocket, Galaxy S2 T-Mobile, Galaxy S2 Epic 4G, Galaxy S Showcase, Droid Charge and Galaxy Prevail) in the United States which has been denied by the court.
On 4 September 2012, Samsung announced that it plans to examine all of its Chinese suppliers for possible violations of labor policies. The company said it will carry out audits of 250 Chinese companies that are its exclusive suppliers to see if children under the age of 16 are being used in their factories.
In 2013 a New Zealand news outlet reported a number of Samsung washing machines spontaneously catching on fire. The corporation is expected to spend $14 billion on advertising and marketing in 2013, with publicity appearing in TV and cinema ads, on billboards, and at sports and arts events. In November 2013, the corporation was valued at $227 billion.
Samsung has made the following acquisitions and attempted acquisitions to several companies namely; Rollei-Swiss in 1995; Samsung invested in FUBU in 1995; Samsung Securities Co., Ltd. and City of London-based N M Rothschild & Sons (more commonly known simply as Rothschild) have agreed to form a strategic alliance in investment banking business. Two parties will jointly work on cross border mergers and acquisition deals; In December 2010, Samsung Electronics bought MEDISON Co., a South Korean medical-equipment company, discussed plan to diversify from consumer electronics; In July 2011, Samsung announced that it had acquired spin-transfer torque random access memory (MRAM) vendor Grandis Inc. Grandis will become a part of Samsung's R&D operations and will focus on development of next generation random-access memory; December 26, 2011 the board of Samsung Electronics approved a plan to buy Sony's entire stake in their 2004 joint liquid crystal display (LCD) venture for 1.08 trillion won ($938.97 million); On May 9, 2012, mSpot announced that it had been acquired by Samsung Electronics with the intention of a cloud based music service. The succeeding service was Samsung Music Hub; December 2012, Samsung announced that it had acquired the privately held storage software vendor NVELO, Inc., based in Santa Clara, California. NVELO will become part of Samsung's R&D operations, and will focus on software for intelligently managing and optimizing next-generation Samsung SSD storage subsystems for consumer and enterprise computing platforms; and January 2013, Samsung announced that it has acquired medical imaging company Neuro Logica, part of the multinational conglomerate’s plans to build a leading medical technology business. Terms of the deal were not disclosed.
In FY 2009, Samsung reported consolidated revenues of 220 trillion KRW ($172.5 billion). In FY 2010, Samsung reported consolidated revenues of 280 trillion KRW ($258 billion), and profits of 30 trillion KRW ($27.6 billion) (based upon a KRW-USD exchange rate of 1,084.5 KRW per USD, the spot rate as of 19 August 2011). However, it should be noted that these amounts do not include the revenues from all of Samsung's subsidiaries based outside South Korea.
Samsung SDS is a multinational IT Service company headquartered in Seoul. It was founded in March 1985. Its principal activity is the providing IT system (ERP, IT Infrastructure, IT Consulting, IT Outsourcing, Data Center). Samsung SDS is the Korea's largest IT service company. It achieved total revenues of 6,105.9 billion won (US$5.71 billion) in 2012.
Samsung Sumitomo LED Materials is a Korea-based joint venture between Samsung LED Co., Ltd., an LED maker based in Suwon, Korea-based and the Japan-based Sumitomo Chemical. The JV will carry out research and development, manufacturing, and sales of sapphire substrates for LEDs.
Global Steel Exchange was a joint venture formed in 2000 between Samsung, the U.S.-based Cargill, the Switzerland-based Duferco Group, and the Luxembourg-based Tradearbed (now part of the ArcelorMittal), to handle their online buying and selling of steel.
S-LCD Corporation was a joint venture between Samsung Electronics (50% plus one share) and the Japan-based Sony Corporation (50% minus one share) which was established in April 2004. On December 26, 2011, Samsung Electronics announced that it would acquire all of Sony's shares in the venture.
The world's largest oil and gas project, Sakhalin II- Lunskoye platform is under construction. The topside facilities of the LUN-A (Lunskoye) and PA-B (Piltun Astokhskoye) platforms are being built at the Samsung Heavy Industry shipyard in South Korea.
Major customers of Samsung include: Samsung Heavy Industries will be the sole provider of liquefied natural gas (LNG) storage facilities worth up to US$50 billion to Royal Dutch Shell for the next 15 years.
Shell unveiled plans to build the world's first floating liquefied natural gas (FLNG) platform at Samsung Heavy Industries' shipyard on Geoje Island in South Korea, work is about to start on a "ship" that, when finished and fully loaded, will weigh 600,000 tonnes, the world's biggest "ship". That is six times larger than the largest U.S. aircraft carrier.
A consortium of South Korean firms, including Samsung, Korea Electric Power Corporation, and Hyundai, won a deal worth $40 billion to build nuclear power plants in the United Arab Emirates. The government of the Canadian province of Ontario signed off one of the world's largest renewable energy projects, signing a deal worth $6.6 billion for an additional 2,500 MW of new wind and solar energy. Under the agreement, a consortium led by Samsung and the Korea Electric Power Corporation will manage the development of 2,000 MW-worth of new wind farms and 500 MW of solar capacity, while also building a manufacturing supply chain in the province.
Samsung Medical Center and pharmaceutical multinational Pfizer have agreed to collaborate on research to identify the genomic mechanisms responsible for clinical outcomes in hepatocellular carcinoma. Samsung sponsors Bundesliga club Bayern Munich. Samsung are the current sponsors of the English Premier League football club Chelsea Football Club. They also sponsor English Football League One clubs Swindon Town and Leyton Orient. Samsung, which started as a domestic sponsor of the Olympics in Seoul 1988, has been a worldwide Olympic partner since the 1998 Winter Olympics. Samsung operating many sports clubs, football club Suwon Samsung Bluewings, baseball club Samsung Lions, basketball club Seoul Samsung Thunders, volleyball club Daejeon Samsung Fire Bluefangs and etc.
Samsung Electronics spent an estimated $14 billion (U.S.) – more than Iceland’s GDP – on advertising and marketing in 2013. At 5.4% of annual revenue, this is a larger proportion than any of the world’s top-20 companies by sales (Apple spent 0.6% and General Motors spent 3.5%). Samsung became the world's biggest advertiser in 2012, spending $4.3 billion, compared to Apple's $1 billion. Samsung's global brand value of $39.6 billion is less than half that of Apple.
Samsung Galaxy S5 fingerprint sensor 'confirmed'. The Samsung Galaxy S5 is 'confirmed' to be sporting a fingerprint sensor ahead of its launch at Mobile World Congress. iPhone 5s fingerprint sensor 'hacked' within days of launched. The iPhone 5S also features a fingerprint scanner, which was 'hacked' within days of its launch Photo.
The Samsung Galaxy S5 will include an in-build fingerprint sensor. The finger pad must be pressed flat against the key and swiped at a moderate speed, Sammobile has reported, and a real-time image of your fingerprint will appear on the display. Fingerprint scanning will reportedly be incorporated throughout the operating system, and up to eight fingerprints can be registered to designated tasks or app shortcuts. A newly-developed private app feature allows users to swipe their finger to access apps, widgets and other content they want to keep private.
Samsung tightens grip on UK high street and by opening 15 new branded stores in collaboration with Phones 4u in an expansion of the pair's current retail partnership. Samsung will open 60 stand-alone stores in the next three months and more so in other European countries.
Samsung remains the biggest smartphone maker in Europe, according to research firm Kantar World Panel Comtech, and the stores selling Samsung's range of mobile phones, laptops, tablets and wearable tech demonstrate the South Korean hardware giant's dedication to establishing a high street presence.
Samsung takes on Apple with branded European stores; 29 Jan 2014 Samsung 'to unveil Galaxy S5 on 24 February'; 04 Feb 2014 Samsung 'Launching People' hunts new talent; 03 Feb 2014; Samsung Galaxy S5 release date and news; 02 Feb 2014Is 2014 is the year of the smart-watch?; 01 Feb 2014 UK invests £500k to train teachers to code; 04 Feb 2014 - Online trolls: the downside of social engagement Brother; Apple currently have 37 retail stores in the UK, with a total of 432 worldwide. Samsung has around 1,400 'Experience Stores' across the United States alone; effectively kiosks inside Best Buy stores; Scott Hooton, Chief Marketing Officer, Phones 4u, said, “Together, Phones 4u and Samsung offer amazing customer experiences that bring the latest mobile technology to life; "The first fifteen stores will showcase a full range of Samsung phones, computing accessories and wearable technology. We are already a leading retailer of Samsung phones and are thrilled to be further developing our strong relationship.”
Samsung stakes claim on the future of technology whereby the Korean giant has more chance of intelligently linking all our devices than any other company. In the Costa Del Sol’s most upmarket resort, Samsung laid out its vision for the future of technology – that means a world where the washing machine has a touchscreen, the TVs are all curved and the tablets all look like they have finally sorted out the vagaries of Windows vs Android.
Samsung, which has steadily built up its reputation as a brand that doesn't compromise on quality, remains the only one of the major electronics manufacturers to have a serious claim on being able to deliver a comprehensive digital home. It makes the washing machines, the ovens, the televisions and the laptops already; linking them up is the only way people will stick with the brand, because increasingly it’s hard to tell one computer from another. And Samsung also knows that the best way to persuade people of the merits of its brand is to produce the top-of-the-range, flagship products that trend-setting purchasers will want to buy and show off.
So in Marbella the aim was to show that a world in which technology is everywhere is a simpler one, rather than somewhere that requires every home to have a resident expert. The cameras automatically upload and tag the best pictures from those that users take, while laptops are as light as any those Samsung has ever made. And that washing machine, the WW9000, automatically doses laundry with just the right amount of detergent. It’s an image of a life that is easier than it has been previously.
Answer all questions below [Each question carries 8 marks and Total Marks is 40]
1. Describe Samsung global strategy in maintaining its strengths to enable it to retain its market share regionally and globally?[ 8 marks ]
2. Discuss the factors and objectives of Samsung’s cooperative strategy with three examples. [ 8 marks ]
3. Identify the opportunities and threats faced by Samsung in dealing its business for the last few decades? [ 8 marks ]
4. Discuss options for managing Samsung’s activities in buying and selling its shares, assets, and affiliated sub-companies, if any, in its efforts of protecting the company from risks, and sustaining success?. [ 8 marks ]
5. Discuss the use of organizational structure and controls to effectively support Samsung strategy? [ 8 marks ]
The six key aspects of corporate strategy as it affects diversification decisions are as follows:
1. Corporate strategy and diversification as concepts have changed over time.
2. There are potential sources of economic gain that make diversification attractive.
3. There are alternative forms of diversification.
4. There exists a rationale, or logic, for guiding corporate decisions about adding businesses.
5. There is a relationship between corporate strategy and competitive advantage.
6. There are roles of corporate strategy in dynamic contexts.
(a) Discuss the linkages and influences between diversification and performance. [7 marks]
(b) Explain the similarities between related and unrelated diversification. Give an example of each. [7 marks]
(c) Name and explain some of the shortcomings of diversification benefit? [6 marks]
Transferring best practices and core competencies can create value. This form of synergy is important in the resource-based view of competitive advantage. According to this view, one reason for acquiring another firm would be to absorb and assimilate the target’s resources, knowledge, and capabilities, which may be primary sources of competitive advantage. When firms combine resources and capabilities through Mergers and Acquisitions (M&As), they may be able to create a bundle of resources that is unavailable to competitors. If the combined resources and capabilities are complementary, the competitive advantage may be long term. If the combination is valuable and rare, the acquiring firm may be able to generate profits greater than the sum of the two firms’ individual profits. Bear in mind, however, that transferring resources, knowledge, or capabilities can create long-term competitive advantage only if the cost of the acquisition doesn’t exceed the cost to other firms of accumulating comparable resource stocks.
(a) Name the three reasons that the management of a profit oriented company need to decide before making an acquisition decision? [6 marks]
(b) Discuss some of the benefits of acquisition over internal development? [8 marks]
(c) List and argue the drawbacks of acquisition over internal development? [6 marks]
How a firm becomes involved in international markets differs from how it configures the interactions between headquarters and country operations. International-strategy configuration is as much about strategy formulation as it is about implementation, because management is making choices about which value-chain components to centralize, where to centralize those operations geographically, and the degree to which those decentralized and centralized value-chain activities will be managed and coordinated. Strategy helps a firm manage important tradeoffs that differentiate it and its products from competitors.
(a) What are the differences or discrepancies of global strategy formulation and cite some example each? [8 marks]
(b) With the business problems and challenges which are so complex, in your opinion reason why some companies are still eager to expand internationally? [7 marks]
(c) What are the costs associated with internationalization. [5 marks]
A strategic alliance is a partnership in which two or more firms combine resources and capabilities with the goal of creating mutual competitive advantage. An alliance may involve sharing resources related to only one key activity in the partners’ value chain, such as R&D, or it may involve coordination across many value chain activities. For example, partners may work together to develop new products via shared R&D and also cooperate on the production and marketing of the new products.
(a) What are the possible ways in which alliances can help firms achieve a competitive advantage? Explain. [12 marks]
(b) Explain potential risks associated with alliances. [8 marks]
Corporate governance is the system by which organizations are directed and controlled by their owners. It is the means and mechanisms used to ensure that managers act in accordance with investorsÊ¹ best interests. Corporate governance addresses the distribution of rights and responsibilities among different participants in the organization, such as the board, managers, shareholders, and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. By doing this, governance also provides the structure through which the company’s objectives are set and the means of attaining those objectives and monitoring performance.
a) Define the agency relationship and managerial opportunism and discuss their strategic implications. [7 marks]
b) What is the role of the board of directors in corporate governance? [5 marks]
c) In what ways is corporate governance related to strategy formulation and implementation? [8 marks]
|Due By (Pacific Time)||07/12/2014 08:00 am|
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