Samsung Electronics: Success by Design

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BSTR/228
IBS Center for Management Research
Samsung Electronics: Success by Design
This case was written by Sachin Govind, under the direction of S.S.George, IBS Center for Management Research. It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. 2006, IBS Center for Management Research. All rights reserved. To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org www.icmrindia.org

BSTR/228
Samsung Electronics: Success by Design
“An enterprise‟s most vital assets lie in its design and other creative capacities. I believe that the ultimate winners of the 21st century will be determined by these skills.”1 - Kun-Hee Lee, chairman, Samsung Corp., in 2006.

“We want to be the Mercedes of home electronics.”2
- Yun Jong Yong, chief executive, Samsung, in 2004.
“Good design is not simply about aesthetics or making a product easier to use. It‟s a central part of the business process, adding value to products and services and creating new markets.” 3 - Tony Blair, prime minister, UK.

INTRODUCTION
In the 2006 IDEA (Industrial Design Excellence Awards)4 competition, Korea-based Samsung Electronics Co. Ltd. (Samsung) won a gold (for a touch messenger 5) and two silver (for a portable digital projector and a digital presenter) awards. With these wins, Samsung held on to its number one position as the company that had won the most IDEAs in the last five years. Samsung had made the decision to adopt design as a source of competitive advantage in the 1990s. Earlier, the company‟s products had been uninspiring and undifferentiated. In the early 1990s, the Group chairman, Kun-Hee Lee (Lee), initiated Samsung‟s transformation from a low-end OEM6 into a world-class electronics company. Sharpening the company‟s design skills was a significant part of the initiative. However, this required major changes in culture, processes, and systems within the company.

The decade-long initiative proved to be successful and Samsung came to be perceived as a company with an exciting product portfolio. The IDEAs and numerous other awards that Samsung won in the 2000s reaffirmed the company‟s newly-acquired design prowess. With stylish products in its portfolio, the company was able to record higher sales and higher profits. Interbrand 7, a leading branding consultancy firm, named Samsung as one of the fastest growing brands in its 2005 brand survey. The top management attributed the company‟s success to a great extent to its new design capabilities.

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Luke W., “Design vision: In Korea,” www.lukew.com, February 19, 2006. David Rocks and Moon Ihlwan, “Samsung design,” www.businessweek.com, November 29, 2004 Roberto Verganti, “Managing design-driven innovation for competitive advantage,” www.innozone.dk, 2006. IDEAs, sponsored by BusinessWeek, are given away each year to the best industrial designs from across the world. The entries are judged by Industrial Designers Society of America (IDSA) and the results are published in BusinessWeek.

A touch messenger helps the visually impaired to send and receive text messages. OEM or Original Equipment Manufacturer refers to an entity that manufactures products which are then sold by other companies under their brands.

Interbrand Corp. was established in 1974 in London. Its services include brand research, brand valuation, brand strategy, naming and verbal identity, brand design, internal brand alignment, integrated marketing, digital brand management, and brand protection.

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Samsung Electronics: Success by Design
However, as of 2006, several small and big companies were following in Samsung‟s footsteps, and hiring design houses and consultancies to improve their product designs. It seemed that...
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