Samsung Electronics: Innovation and Design Strategy
The case study commences with the integration of innovative design and brand management by Samsung Electronics which started a new trend in the electronics industry. As discussed in the case, initially Samsung was not much popular and lacked design identity but later it relocated itself by: * Improvement in the product development processes
* Increasing their investments in R&D and product design i.e. R&D globalization. * By adopting right innovation strategies.
* By mastering the less tangible, more intuitive qualities of superior design. * By diversification of products and step by step or continual improvement. * Implementing Global localization strategy.
* Achieving Vision of leading in digital convergence by using e-processes (electronic integration of processes by going online). All these methods were implemented by Samsung in order to improve its productivity and to gain competitive advantage over its competitors like LG Electronics, Sony, Apple Computer Inc., etc. Despite this, Samsung is facing the challenge to stay ahead in competition in the near future. Consumer electronics industry is facing a tough competition and the need of the hour is to optimize the R & D costs, having relevant information regarding the IPR (Intellectual Property Rights) while design outsourcing and using appropriate product design followed by appropriate market strategy.
As mentioned in the case, the background of Samsung can be discussed in a tabular form: * Started by Byung-Chull Lee in 1939 as an exporter of agricultural products.
| * Samsung Electronics established in 1969 followed by product diversification.
| * Strategic Joint Ventures with NEC, Sanyo and Corning Glass work in 1970
| * Brought 50% stake in Korea Semiconductor Inc.
* Acquisition of Korea Semiconductor Inc. in 1978 followed by the successful implementation of reverse engineered product design
| * Vertical integration by developing their own IC’s DRAMS(Dynamic Random Access Memories in 1985
| * Focus on qualitative growth than quantitative growth in 1990
| * Loosening of import restrictions by South Korean government
| And Samsung achieved price competitiveness in 1991.
| * In 1992, Samsung established R&D center in European markets.
| * In 1994, Samsung established R&D center in US markets.
| * In 1997, Samsung cuts its Korean and overseas workforces due to Asian Financial crises.
| * In 1999, Samsung was regarded as world’s premiere consumer goods and services industry By Forbes.
| * In 2000, Samsung embarked vision to convert itself into a Digital- e company.
| * Increased design staff and R&D in 2004
* In 2005, Samsung increased its design budget by 20%-30%
| * In 2006, Samsung registered 17,377 patents worldwide
| * In 2007, Samsung held dominant worldwide market share
| Samsung Electronics’ integration of brand management, product design and investment in R&D provided them advantages over its competitors. Hence, they improved step by step with the product diversification, Mergers and Acquisitions, vertical integration and implementation of new technology. They were aggressively involved in marketing and improving their brand image in the minds of their customers. The Samsung’s learning and leveraging matrix can be explained as: Dedicated business units e.g. Informal technology transfer
| New venture department or division, e.g. ”skunkworks( Investments in R&D’s)
| Independent business unit, e.g. Predivestment or potential spinout
| Direct integration or business team ( Vertical Integration by developing their own IC’s)
| Low Leveraging existing competencies High
Innovation and product Design at Samsung Electronics
Samsung Electronics leading position was...
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