Samsung Electronics Essay

 

Samsung Electronics is a “national” company in South Korea. The company contributes a great deal to the country’s growth and is a major provider of semiconductor, television, mobile phone, and other electronic products in world markets. It has put special emphasis on export, local production, and research and development (R&D).

Founded in 1969, Samsung Electronics is the central company in Samsung, the largest Korean family-owned business conglomerate (chaebol) from 2001, which has 59 member companies with assets of 144.4 trillion Korean wons (some US$144.4 billion) as of April 2008. Kun-Hee Lee, the second-generation owner and group chairman, has controlled Samsung since 1987 and also led Samsung Electronics as a representative board member and the chief executive officer. In April 2008, however, Lee resigned from all the managerial positions after the prosecutions for succession and corruption scandals, although he remains the owner of Samsung.

In 2007 Samsung Electronics had sales of some $63.2 billion, 81 percent of which occurred in foreign markets. The sales were the largest among those by the 555 large public companies quoted on the Korean Stock Exchange and more than double the second largest sales by Hyundai Motor. Also, the company made the largest net profit of some $7.4 billion, which was double the second-largest one by POSCO, the steel company. Samsung Electronics’s 2007 sales accounted for 7 percent of the country’s gross domestic product (GDP) and its foreign sales made up 14 percent of the country’s exports. The company was given the $45billion export award for the first time in the country. Meanwhile, sales generated in 2007 by Samsung Electronics and its 108 domestic and foreign affiliate companies amounted to more than US$100 billion (US$103.4 billion) for the third time in the industry, following Siemens and Hewlett-Packard, and 80 percent of the sales took place in overseas markets.

Samsung Electronics earned three-fourths of the 2007 sales from three products: mobile phones (29 percent), liquid crystal displays (LCD; 23 percent), and semiconductor or memory chips (21 percent), most of these sales (83 percent, 88 percent, and 95 percent, respectively) being foreign sales. The company also produces “digital media” items (such as televisions and computers) and home appliances (refrigerators and washing machines), and exports nearly half of them. To fully serve world markets, Samsung Electronics had organized a worldwide network of 76 subsidiaries and offices in 49 countries by 2007. There are 23 manufacturing subsidiaries in 12 countries (China, India, Malaysia, Mexico, Indonesia, the Philippines, Thailand, Vietnam, Hungary, Slovakia, Brazil, and the United States), 40 selling subsidiaries in 29 countries (seven in China; four in the United States; two each in Germany and the United Kingdom; 11 in Europe, six in Americas, seven in Asia, and one in Africa), and 13 selling offices in 13 countries. These are supervised by the main headquarters in Korea and eight local headquarters in China, India, Singapore, Dubai, Russia, the United Kingdom, Brazil, and the United States. In the world mobile phone market, Samsung Electronics (14 percent share in 2007) and Motorola (14 percent) are neck and neck, following Nokia (39 percent). In LCD, the company (23 percent share) narrowly competes with LG Philips LCD (21 percent) and AUO (19 percent). In memory chip, Samsung has remained the top brand and, in 2006, had 34 percent share for flash memory and 32 percent for dynamic random access memory (DRAM). And in television, the company had the largest shares in 2006–07 and, in the first quarter of 2008, secured more than 20 percent (21 percent) share for the first time in the industries, surpassing Sony (13 percent) and LG Electronics (11 percent).

Samsung Electronics has increasingly spent more money on R&D to improve quality through new technology: 7.3–7.5 percent of sales in 2001–02, 8.1–8.3 percent in 2003–04, and 9.4–9.5 percent in 2005–07 (some US$5.9 billion in 2007). The company registered 17,377 patents in the United States until 2006 and, in 2006, 2,665 patents, the second-largest number among those by the patentees. R&D is carried out by 35 domestic institutes and 10 organizations in seven countries (three in China; two in the United States; five in Japan, India, Israel, Russia, the United Kingdom). Also, the company has made strategic alliances with competitors (including Nokia and Sony) and other market leaders concerning technology, design, marketing, and raw materials.

Bibliography:

  1. Se-jin Chang, Sony vs. Samsung: The Inside Story of the Electronics Giants’ Battle for Global Supremacy (Wiley, 2008);
  2. J. Lee and George Wehrfritz, “Dark Days for the Empire,” www.newsweek.com (cited March 2009);
  3. Tony Michell, Samsung Electronics and the Struggle for Leadership of the Electronics Industry (Wiley, 2008);
  4. Samsung Electronics, www.samsung.com/us (cited March 2009);
  5. Samsung Electronics, The 2007 Annual Report, dart.fss.or.kr (cited March 2009).

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