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SAMSUNG

Subject
Accounting Theory

Lecturer
Dr.Yvonne Augustine, Ak, MM

Author
Jucia Wanta Sianipar - 023143011

INTERNATIONAL CLASS OF FACULTY OF ECONOMICS AND BUSINESS


TRISAKTI UNIVERSITY
2016/2017

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Contents
1. History of Samsung from 1938 – present ............................................................................................. 3
1980 to Present ...................................................................................................................................... 3
2. The Vision, Mission, Philosophy and shared Value on Samsung .......................................................... 5
2.1 Vision................................................................................................................................................... 5
2.2 Mission ................................................................................................................................................ 5
2.3 The Samsung Philosophy .................................................................................................................... 6
2.4 SHARED VALUE.................................................................................................................................... 6
3. Analyze of SWOT, BCG, and Five force from SAMSUNG .................................................................... 7
3.1 SWOT................................................................................................................................................... 7
3.2 BCG (Boston Consulting Group) .......................................................................................................... 9
3.3 Five Force of Samsung ...................................................................................................................... 10
4. Nature of Control device at SAMSUNG .................................................................................................. 12
5. Organizational Structure of SAMSUNG ............................................................................................... 13
6. Corporate strategy and business unit- level strategy ............................................................................. 14
6. Business Unit Level Strategy ................................................................................................................... 15
7. The specialty or uniqueness of samsung that my very interested ..................................................... 17
8. The Critical Success at Samsung ......................................................................................................... 18
9. Four Levers in SAMSUNG................................................................................................................. 19
10. Formal and informal........................................................................................................................ 23
11. Benchmark for Indonesian Company to learn: ............................................................................... 23
12. Beyond Budgeting ........................................................................................................................... 24
13. Responsibility Center on SAMSUNG .................................................................................................. 24
13.1 Human Resource Management ...................................................................................................... 24

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1. History of Samsung from 1938 – present

With only 30,000 won (about $27 USD), Lee Byung-chull started Samsung on March 1 in 1938,
as a trading company based in Taegu, Korea. The small company of only 40 employees started
as a grocery store, trading and exporting goods produced in and around the city, like dried
Korean fish and vegetables, as well as its own noodles.The company grew and soon expanded to
Seoul in 1947 but left once the Korean War broke out. After the war, Lee started a sugar refinery
in Busan that was called Cheil Jedang, before expanding into textiles and building the (then)
largest woolen mill in Korea.The successful diversification became a growth strategy for
Samsung, which rapidly expanded into the insurance, securities, and retail business. Samsung
was focused on the redevelopment of Korea after the war with a central focus on
industrialization.

Samsung entered the electronics industry in the 1960's with the formation of several electronics
focused divisions. The initial electronics divisions included Samsung Electronics Devices,
Samsung Electro-Mechanics, Samsung Corning, and Samsung Semiconductor &
Telecommunications. Samsung built their initial facilities in Suwon, South Korea, in 1970,
where they started producing black and white television sets. Between 1972 and 1979, Samsung
began selling washing machines, changed to Samsung Petrochemical and then Samsung Heavy
Industries, and by 1976, had sold its 1 millionth B&W television. In 1977, they started exporting
color TVs and established Samsung Construction, Samsung Fine Chemicals, and Samsung
Precision Co. (now called Samsung Techwin). By 1978, Samsung had sold 4 million black and
white television sets and started mass producing microwave ovens before 1980.

1980 to Present

In 1980, Samsung entered the telecommunications hardware industry with the purchase of
Hanguk Jenja Tongsin. Initially building telephone switchboards, Samsung expanded in to
telephone and fax systems which eventually shifted to mobile phone manufacturing. The mobile
phone business was grouped together with Samsung Electronics which began to invest heavily in
research and development throughout the 1980's. During this time Samsung Electronics
expanded to Portugal, New York, Tokyo, England, and Austin, Texas.

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In 1987 with the death of Lee Byung-chull, the Samsung group was separated into four business
groups leaving the Samsung Group with electronics, engineering, construction, and most high-
tech products. Retail, food, chemicals, logistics, entertainment, paper, and telecom were spun out
among the Shinsegae Group, CJ Group, and Hansol Group.Samsung grew as an international
corporation throughout the 1990's. The construction division of Samsung secured several high
profile construction projects, including one of the Petronas Towers in Malaysia, Taipei 101 in
Taiwan and the half mile tall Burj Khalifa Tower in the UAE. Samsung 's engineering division
also includes Samsung Techwin, an aerospace manufacturer that manufacturers aircraft engines
and gas turbines as well as supplying parts used in jet engines on Boeing and Airbus aircraft.

In 1993, Samsung began to focus on three industries - electronics, engineering, and chemicals.
The reorganization included selling off ten subsidiaries and downsizing. With renewed focus in
electronics, Samsung invested in LCD technology, becoming the largest manufacturer of LCD
panels in the world by 2005. Sony partnered with Samsung in 2006 to develop a stable supply of
LCD panels for both companies, which had been an increasing problem for Sony, which had not
invested in large LCD panels. While the partnership was nearly a 50-50 split, Samsung owned
one share more than Sony, giving them control over the manufacturing. At the end of 2011,
Samsung bought Sony's stake in the partnership and took full control.

Samsung's focus in the future is centered on five core businesses including mobile, electronics
and biopharmaceuticals. As part of it's bio-pharma investment, Samsung formed a joint venture
with Biogen, investing $255 million to provide technical development and biopharmaceutical
manufacturing capacity in South Korea. Samsung has budgeted nearly $2 billion in additional
investment to pursue their bio-pharma growth strategy and leverage the advantages of their joint
venture.

Samsung has also continued to expand in the mobile phone market, becoming the largest
manufacturer of mobile phones in 2012. Samsung announced the Gear VR in September, 2014,
which is a virtual reality device developed for use with the Galaxy Note 4. Also in 2014,
Samsung announced that they will begin selling Fiber Optics to glass manufacturer Corning Inc.

By 2015, Samsung had more US patents approved than any other company, being granted over
7,500 utility patents before the end of the year. Samsung released a fitness smartwatch in 2016

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called Gear Fit 2, as well as wireless earbuds called Gear Icon X. By the end of the year, the
Gear G3 smartwatch was announced.

2. The Vision, Mission, Philosophy and shared Value on Samsung


2.1 Vision
The underlying principle that defines our vision for the future of Samsung Electronics is
"Inspire the World, Create the Future".

This vision is at the very core of our commitment to lead innovations in technology,
products and solutions that inspire communities around the world to join our aspiration for
creating a better world full of richer digital experiences. As we recognize our responsibility as a
creative leader in the global society, we also dedicate our efforts and resources to offering new
values to the industry and customers while fulfilling shared values of our employees and
partners. At Samsung Electronics, we want to create a future that is exciting and promising for
all together.

As a guide to common understanding and measurable goal, a set of specific objectives is


incorporated into our vision. By 2020, we seek to achieve annual sales of USD 400 billion while
placing Samsung Electronics’ overall brand value among the global top 5. Three key strategic
pillars that are now part of our culture, business operation and management describe the
governing initiatives to this end: ‘Creativity ’, ‘Partnership’ and ‘Great People’.

We pride ourselves on delivering the world’s best products through operational


excellence and innovation prowess. As we look forward to exploring new business areas
including healthcare and biotechnology, we are excited for new challenges and opportunities
ahead. Samsung Electronics will continue to build on top of its current achievements new
capacity and expertise to further its competitiveness and its history of innovation.

2.2 Mission
Samsung’s mission seems focused in building its brand and becoming a creative leader in
new markets. It looks like Samsung is set to change its reputation of being fast followers, a
company that succeeds through watching others pioneer new technologies and markets and then
rush in behind. This was seen when Samsung lost a high profile case to iPhone after

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being accused of the company’s phones were iPhone’s rip -offs that violated a number of patents.
In spite of its success, Samsung still lags behind Apple in terms of which is the most innovative
company. In its mission to capture the title of being creative leader in the Smartphone market,
Samsung leaders believe they must fundamentally transform the company’s culture and
strategies. By doing R&D, Samsung will be able to control its destiny.

2.3 The Samsung Philosophy


At Samsung, we follow a simple business philosophy: to devote our talent and
technology to creating superior products and services that contribute to a better global society.
Every day, our people bring this philosophy to life. Our leaders search for the brightest talent
from around the world, and give them the resources they need to be the best at what they do. The
result is that all of our products—from memory chips that help businesses store vital knowledge
to mobile phones that connect people across continents— have the power to enrich lives.
And that’s what making a better global society is all about.

2.4 SHARED VALUE

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3. Analyze of SWOT, BCG, and Five force from SAMSUNG

3.1 SWOT
1. Strenght
 Samsung enjoys the widest range of product portfolio which includes Mobile phone,
Tablet, TV/Audio/Video, Camera, camcorder, Home appliance, pc, peripherals,
printer, memory cards and other accessories
 Samsung holds significant market share in most of the product categories
 Samsung is NO.2 in terms of market share in mobiles, it captured Nokia’s market
share by superior innovation in smart phones
 Samsungs is the best in terms of design features and technology. It was the first to
introduced dual screen mobiles , 65k TFT/LCD colour phone, first phone with
polyphonic ringtones, phones with rotating lens, thinnest and lightest note pad etc
 Samsung enjoys the first mover advantage in terms of introducing advance features
in LCD, refrigerator, Air conditioner etc. It introduced the world’s smallest MP3
player and India’s first 17” TFT-LCD-TV monitor.
 Samsung took advantage of the growing economy of Asian market by setting up
manufacturing plant in India there by reducing logistics and supply chain costs.
 Samsung brand value increased by 80% in past three years

2. Weakness
 Samsung Mobile launched a series of Smart phones recently which led to
cannibalization
 The demand for LCD panels is expected to decline in the future
 Still Nokia is considered to be the most preferred product in India in terms of ease
of use, reliability and resale value
 Chinese products focus on economies of scale and dump into Indian market for
lesser cost. This results in reduction of sales
 Samsung is a hardware leader but has too much of dependence for software from
other parties.
 Online stores which sell a wide range of products are giving better deals as they
don’t incur cost in distribution channel

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3. Opportunities
 Samsung is planning to make the air-condition product category more strong with
unique technology called ‘Triple protection proposition’
 Samsung is the India’s official ‘Olympic partner’ for the 2012 London Olympic
and recently launched ‘Olympic Ratna Program’. This will result enhance brand
awareness and increase the sales.
 Samsung Mobile and Home appliance has future plans of launching Customized
products for Indian market. This will improve the market share in rural market
 The Indian youth population is growing and mobile phone sales is expected to
increase due to lesser call rates
 Its financial position is strong and there is a scope of entering into unrelated
diversification
4. Threat
 Samsung has wide variety of product lines, failure of one product line will have
impact on the other and will result in brand dilution
 The competitors like Nokia are focused only in one segment
 Since India is a potential market, entry of foreign players is likely high. Foreign
players like Haier have already started gaining market share in India in home
appliances.
 Threats from Chinese products
 Retail Chains like Bigbazar sell consumer electronics and home appliance in low
cost strategy which are procured in bulks from foreign market

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3.2 BCG (Boston Consulting Group)

QUESTION STARS
MARKS • Smartphones
• Smart TV's • Tablets
• New
Smartphones
• Wearables

DOGS CASHCOWS
• PC's • TV's
• Camcorders • Home
• Cameras Appliances
• Semi- conductors

 QUESTION MARKS
Samsung recently took the wraps off two new smartphones, the Galaxy Note 5 and the
Galaxy S6 Edge Plus. The company also teased its long-awaited smartwatch, the
Samsung Gear S2 running Tizen, during the launch of these new smartphones.
The UN55JS8500 is a 2015 model and features the latest and greatest from Samsung.
This is technically one of their SUHD televisions, which will give you 64X greater color
expression then a regular HD TV, as well as a more dynamic picture.
 STARS
Samsung's flagship mobile handset line is the Samsung Galaxy S, which many consider a
direct competitor of the Apple iPhone. Samsung became the world's largest cellphone
maker in 2012, with the sales of 95 million smart phones in the first quarter.
 CASH COWS
Samsung Electronics has been the world's largest memory chip maker since 1993. In
2009, it started mass-producing 30 nm-class NAND flash memories. It succeeded in 2010
in mass-producing 30 nm-class DRAMs and 20 nm-class NAND flashes, both of which
were the first time in the world. Samsung sold more than one million 3D televisions

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within six months of its launch. This is the figure close to what many market researchers
forecast for the year's worldwide 3D television sales (1.23 million units).
Analysts estimate Samsung Electronics earned around 13 trillion won ($12 billion) last
year from home appliances, part of the firm’s consumer electronics arm.
 DOGS
Samsung left the laptop market in Europe last year. While predicting the future of digital
technology is a mug's game, it's safe to say that for the immediate future, consumers are
clearly leaning towards HDD and flash memory as their preferred formats. Responding to
this demand, camcorder manufacturers are steadily reducing the number of tape and
DVD-based models.

3.3 Five Force of Samsung


a. The threat of potential new entrants (Low)

High capital is required to enter into the mobile industry. It is difficult to start up in an
industry where the existing firms already operate on cost and differentiation strategies.
New entrants would have issues with overcoming patent issues if they didn’t plan on
investing in their own R&D to create a unique product. These things together would
require a new entrant to establish a competitive brand name while achieving economies
of scale via investments in a supply chain process and developing a distribution
infrastructure to remain competitive. The costs of accomplishing these things make a
very strong barrier to entry.

b. The threat of substitutes (High)


The threat of substitute products within the industry, however, is low.
Although there is an increased popularity of Tablets, they are generally too bulky to be
considered as straight substitutes. They don’t offer traditional mobile phone capabilities,
which makes them inadequate. Laptops have the same problem. PDAs are no longer a
viable substitute in 2011. For some time they had productivity features that the average
mobile phone didn’t have, but now mobile phones have all those capabilities and more.
With that said, the buyers’ propensity to substitute is low. As for things like relative price
performance, perceived level of product differentiation and the number of substitute
products available in the market, most of these issues become irrelevant as neither

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laptops, tablets or PDAs offer enough of the same services to be able to replace Samsung
smartphones.
The only other viable substitute would be “dumb phones” which, due to the lack
of features and capabilities, come as a very cheap or even free substitute to the average
smart phone. They are a substandard product. Buyer switching costs are noticeably lower,
but product differentiation only comes in the lack of features. Today, even lower-end
smart phones can be purchased at very cheap prices, and sometimes come free with
certain contracts.
c. The bargaining power of buyers (High)
Buyers have good leverage when it comes to bargaining because of their access to
information and how competitive the mobile phone industry is. With so many similar
products from other carriers, buyers have several points on which they can bargain.
Whether it is by OS, price, tech specs such as camera quality or screen resolution, carrier
availability, or something more. Buyers easily switch cost with the increased of choices
of mobile companies and furthermore their products are quite similar to one another; they
will switch to those who have better features or price points.
d. The bargaining power of suppliers (Low)
In Samsung’s case, the bargaining power of suppliers is low because Samsung is
its own supplier of most components. Samsung also happens to be its own supplier for
raw materials. In the industry, however, the bargaining power of suppliers is high because
suppliers’ goods are critical to the buyers’ marketplace success. This means they are
more important to the consumers than the mobile carriers themselves. A mobile phone
manufacturer could always integrate forward into the industry without the middlemen.
e. The intensity of competitive rivalry (High)
The smart phone industry has many competitors that are equally balanced, and
thus rivalry is high. The market for smart phones has slowed in growth since its boom, so
pressure to take customers from competitors is also high. Differentiation in the smart
phone industry is also at a point where it is very short-lived. Sustainable competitive
advantage through innovation is an unknown. While Samsung has been doing great
keeping up with the industry and even leading in some areas, everything is short-lived
due to the extreme level of competition.

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4. Nature of Control device at SAMSUNG
Samsung Smart SON includes standard SON self-configuration/optimization/healing
functions such as Automatic Neighbor Relation, capacity coverage optimization and cell outage
compensation but also unique features such as Drive test optimization, Transmit Power Control
and Antenna tilt optimization. Our Smart Scheduler controls all cells as virtually one cell, or in
other words centralizes radio resources management, in order to improve the allocation pattern,
mitigate interference and maximize throughput. The third product, Cognitive Analytics, is a real-
time data processing tool that collects and analyzes data from various sources, including both
network elements and user device data, to provide analytics on network, service and users.

Samsung’s main purpose of controlling is to make sure that every product the company
created will have excellent unfailing quality and most importantly to guarantee customers’
satisfaction towards the product, which is done by monitoring of critical parameters, evaluating
the measurement system, and many more. In Samsung Electronics, they manufactured a lot of
electronic goods in which the process and the making of the goods must be controlled. In real
time monitoring, one of the methods that they apply is the interlock system.

The automatic interlock system is used during the manufacturing process where it
monitors and controls the products and processes. There are three stages to this system. The first
one is the Process Recipe Interlock’. Here it controls the incoming materials and recipe check.
The next stage is the Equipment Parameter Interlock and last one is the Process Output Interlock
where it prevents incorrect procedure or any potential damage to the process or the equipment
itself.

The other method would be Statistical Process Control or SPC and Advanced Process
Control or APC. SPC system is best used for semiconductor manufacturing processes while APC
system is a real time control used for controlling deterministic process behavior. Another
subsidiary of Samsung is the Samsung SDI, in which S stands for Samsung, D stands for Digital
and Display, and I for Interface and Internet Component. Samsung SDI started their business
from picture cathode ray tubes and has been expanding to today’s leading LCD (Liquid Crystal
Display), PDP (Plasma Display Panel), and AMOLED TV’s. Samsung SDI has started to
develop lithium ion battery (LIB) technology since 2000. To produce high quality products, the

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company will need to apply strong internal control system. The internal control system is set up
to boost the reliability of information related to the company’s business activity.

In the system there is the Internal Accounting Management Scheme, with the purpose to
improve the credibility of financial information, and the company’s other assets. By using this
system, the company will be able to make sure that all the activities regarding to the process of
making will takes place according with legalities, policies and procedures. The control
system will help in preventing possible risks and minimizing damage throughout the process.

5. Organizational Structure of SAMSUNG


The three divisions—IM, CE, and DS—are independently operated to strengthen their
competitiveness according to the characteristics of thei products. The IM division includes
telecommunication products such as smartphones, computers, and network systems; the CE
division includes TVs, monitors, refrigerators, washing machines, printers, and medical devices;
and the DS division manufactures and sells memory products such as DRAM, NAND, and
mobile AP.

Innovation is crucial to Samsung's business. As new technologies are being constantly


introduced to the market, speed is essential for remaining competitive in today's digital era, and
new markets have to be pioneered continuously. Through the interplay of creative, imaginative
people; a global R&D network; an organization that encourages collaboration and cooperation

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among business partners all along the supply chain; and a strong commitment to ongoing
investment, Samsung has put R&D at the heart of everything we do.

In the Top level consist from CEO. And the job desk of CEO is The responsibilities of an
organization's CEO or MD are set by the organization's board of director or other authority,
depending on the organization's legal structure. They can be far-reaching or quite limited and are
typically enshrined in a formal delegation of authority. Typically, the CEO/MD has
responsibilities as a director, decision maker, leader, manager and executor. The communicator
role can involve the press and the rest of the outside world, as well as the organization's
management and employees; the decision-making role involves high-level decisions about policy
and strategy. As a leader of the company, the CEO/MD advises the board of directors, motivates
employees, and drives change within the organization. As a manager, the CEO/MD presides over
the organization's day-to-day operations.

6. Corporate strategy and business unit- level strategy


1. The ultimate fast followers, Samsung is better than anybody else at learning from its
competitors. Samsung's aggression has gotten it into trouble in the past, losing a high profile
case to Apple for imitating its design. But the reputation hit and the fine were a small price to
pay. The company pivots and produces quickly, coming out with a variety of devices. It sees
what the market responds to, pushes successes, and kills failures. And now, rather than just
providing a cheaper and lesser iPhone, it's differentiated itself with larger screens, different
features, successful marketing, and delivering what consumers want.

2. When you've got cash, use it aggressively, or risk falling behind, Apple has a huge cash pile,
but Samsung seems to be more willing and able to put their money to use. Samsung's research
spend is 5.7 percent of its revenue, compared to 2.4 percent for Apple. Samsung is a diverse
business with chips, displays, and other technology. This pays dividends, allowing it to compete
on price and increasingly, offer features Apple hasn't gotten to. Although, many would argue that
Apple chooses not to include certain features Samsung offers.

3. Supply chain and distribution, Samsung is so much more than a smartphone-maker. It is a


conglomerate, a manufacturer, and the world's largest chip-maker. It makes many of the

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components that go into its smartphones giving it a cost advantage and allowing it to be much
more flexible in terms of what it produces and when.

4. You have to commit, when Samsung decides to get into a business, it goes hard. Within the
past decade, it went from just beginning to invest in making batteries for digital devices and flash
memory to being a global leader.

5. The future, the key test of whether Samsung can move from a close-and-gaining second to
becoming truly dominant is whether it can deliver products that are truly game-changing. To
really start pulling customers away from iPhones in droves, it needs to differentiate itself beyond
marketing and a bigger screen.

6. Business Unit Level Strategy

Differentiation vs. cost leadership

 The company has an experience of pursuing both, cost leadership as well as product
differentiation strategies during its lifetime.
 In 2010, the strategy was mainly cost efficiency prior to Asian Financial Crisis of 1997.
 With Eric Kim becoming chief marketing officer of the company, dramatic changes were
bought to the strategy of the company pursuing product differentiation strategy.
 Target market-broad vs. niche play
 Samsung, because of the unique ecosystem created around it, has successfully spread its
product line across both of these dimensions

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Samsung’s Combined Low-cost/Differentiated Strategy

 Difficult to implement
 Firms aiming to do this are often stuck in the middle
 Firm’s products are too costly to compete with low costs provider’s product, and too
undifferentiated to command the price premium gained by the differentiated firm
Differentiation

Faced with the challenge that the DRAM industry might fall into a commodity trap and therefore be
subject to cutthroat price competition and price fluctuations, Samsung developed the below classification
of broad product differentiation.

 Frontier: Cutting edge products with the highest margins


 Legacy: Current products, potentially manufactured using technology used to develop the frontier
products resulting in cost savings
 Specialty: Products to target niche markets
Cost advantage
Samsung was able to command better operating margins as compared to its competitors because
of
 Cheap labor: 35% cheaper as compared to non-Chinese manufacturers
 Use of new design rules: This allowed Samsung to produce more chips per wafer (the key
raw material in chip manufacturing).
 Better sourcing: Raw materials cost 37% less than its competitors probably due to
volume discounts and better bargaining power
Better manufacturing processes
- Yield rates were are at 80%, as compared to 50-67% for the competitors
- Samsung was able to get 2.4 times the amount of die’s by using 12-inch wafers as compared
to 8-inch wafers, at 90% of the costs per chip leading to better gross margins
 Lower depreciation costs: By collocating and scaling its fab investments, Samsung saved
an average of 12% of the fab construction costs.

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7. The specialty or uniqueness of samsung that my very interested
I choose Samsung galaxy S7

1. Lighting Up the night


The Galaxy S7’s camera knows just when to let the light shine in, whether you're in the
club or the Batcave.
2. No-Touch-ification
No fingerprints. No smudges. No fumbling. More battery. You no longer have to wake up
your peacefully sleeping phone screen to check the time or get your notifications—that's
what we call a no-touch notification experience.
3. Forget the wallet
Whether you carry a purse or stuff everything in your pockets, lighten your load by
leaving your wallet at home. You can shop just about anywhere with your Galaxy S7 and
Samsung Pay, no cash or bulky credit cards needed. (But don’t forget your driver’s
license—it fits nicely in this cool little Galaxy S7 cover.)
4. Expanding your Horizons
Everyone loves saving media and moments to their phone, but nobody loves storage
constraints. Don't sweat limits—when your Galaxy S7 starts to fill up, just expand your
storage space with a memory card.
5. No wire, More Time
Wireless fast charging gets you more minutes of talk time with less minutes of charging,
and no wires in sight.
6. Switching Smarter
Samsung Smart Switch transforms transferring from an all-day affair into a few
touchscreen taps.
7. Supporting your skinny jeans
It's a small thing, but so is your Samsung Galaxy S7. Its screen might be bigger than its
predecessors, but its profile's actually slimmer, so it fits in the tightest of pockets like a
piggy in a blanket. Bonus points: airport security won't think you're smuggling gold
bricks in your back pocket.

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8. The Critical Success at Samsung
1. Technology
Samsung invested R&D in digital technology. It employs scientists and researchers in
labs worldwide. As a result, it makes the world’s biggest LCD display and plasma HDTV. In
addition, Samsung has cell phone innovations, model that uses voice recognition technology
to convert speech into text messages. Furthermore, it invented the model that automatically
scans business cards and inserts the details in the user’s address book.
Samsung is also a leader in producing memory chips. It created the world’s first one-
megabit chip and the first chip that held 256 megabits. Thus, Samsung is now the world’s
largest producer of DRAM and SRAM chips. The chips and LCD divisions sell to other
Samsung businesses and outsiders for the same price, with no favoritism. This assures
Apple, HP, and other clients that they are treated fairly and knowledge of their buying
patterns offer valuable intelligence to Samsung. Samsung showed its advance in business
market as Apple announced that the iPod Nano would use flash chips rather than a hard-disk
drive and Samsung intends to invest more on new chip making facilities. Consequently,
Samsung is the world’s largest producer of thin film LCD screens and computer monitors
according to its huge investment in technology.
Samsung has great success on product development using same manufacturing
techniques and parts to introduce more products which enables huge cost savings. It also
encourages competition between its product divisions, leading to some novel innovations
such as a contest between the digital-camera team and the camcorder unit to produce the
Duocam, a product that combine both. Moreover, it modified cell phone product to build its
brand, Samsung new image. Also, Samsung is successful in its launch the first clamshell
handsets that worked with both the CDMA and GSM systems used in different parts of the
world.
2. Design
According to the article, Samsung CEO believes that the good design is the most
important way to differentiate itself from its competitors. Samsung has changed into good
internal management and staff and resource management. In order to be successful in that,
Samsung changed its hierarchical structure, encouraging younger designers to challenge
their superiors when they came up with ideas for new products. Samsung invested in

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designer staff by sending them to work at furniture, fashion and industrial design houses to
keep abreast of the latest trends and by opening design centers in main cities over the world.
3. Branding
To achieve brand repositioning, Samsung embraced change in all aspects including product
design and distribution. It made brand development a corporate performance target Additionally,
Samsung invested in advertising campaigns, introduces its futuristic gadgets appeared in Matrix
Reloaded and was principal sponsor of the 2004 Olympic games in Athens.

9. Four Levers in SAMSUNG


1. Core Values :
Controlled by belief-system ,such as mission ,Vision statement , credos and statement of
purpose.
 Mission :
The underlying principle that defines our vision for the future of
Samsung Electronics is "Inspire the World, Create the Future".
This vision is at the very core of our commitment to lead innovations in
technology, products and solutions that inspire communities around the world to
join our aspiration for creating a better world full of richer digital experiences. As
we recognize our responsibility as a creative leader in the global society, we also
dedicate our efforts and resources to offering new values to the industry and
customers while fulfilling shared values of our employees and partners. At
Samsung Electronics, we want to create a future that is exciting and promising for
all together.
 Vision :
Samsung’s mission seems focused in building its brand and becoming a
creative leader in new markets. It looks like Samsung is set to change its
reputation of being fast followers, a company that succeeds through watching
others pioneer new technologies and markets and then rush in behind. This was
seen when Samsung lost a high profile case to iPhone after being accused of the
company’s phones were iPhone’s rip -offs that violated a number of patents. In
spite of its success, Samsung still lags behind Apple in terms of which is the most
innovative company. In its mission to capture the title of being creative leader
in the Smartphone market, Samsung leaders believe they must fundamentally

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transform the company’s culture and strategies. By doing R&D, Samsung will be
able to control its destiny.
 Philosophy :
To devote our talent and technology to creating superior products and services
that contribute to a better global society. Every day, our people bring this
philosophy to life. Our leaders search for the brightest talent from around the
world, and give them the resources they need to be the best at what they do. The
result is that all of our products—from memory chips that help businesses store
vital knowledge to mobile phones that connect people across continents— have
the power to enrich lives. And that’s what making a better global society is all
about.
 Purposed
Market leader number one in sales, volume, and market share. That is the market
leader in electronic business with a sales volume number one. Best distribution
network, which has an extensive distribution network. Continue to make Samsung
a digital leader trusted.
2. Risk to be avoided :
Boundary system , such as code of conduct, predefined strategic planning method, Asset
aquicition regulation, operational guidelines)
 Code of Conduct :
Samsung Electronics endeavors to become a world leading company by following
its management philosophy of “Devoting its talent and technology to creating
superior products and services that contribute to a better global society.” Samsung
Electronics’ value chain of “Management Philosophy, Core Values and
Management Principles” is rooted in this management philosophy and constitutes
the spiritual guidelines for all its employees in their effort to realize the corporate
vision of being a world leader.

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In an expression of its commitment to corporate social responsibility as a world
leading company, Samsung Electronics announced the “Five Samsung Business
Principles” in 2005. The principles serve as the foundation for its global code of
conduct in compliance with legal and ethical standards and the fulfillment of its
corporate social responsibilities. The global code of conduct sets forth detailed
behavioral guidelines and judgmental standards for Samsung Electronics’
employees as members of a world leading company. The code of conduct
includes elimination of nationality or gender discrimination, transparent
disclosure of business information, customer information protection and partner
collaboration. All of Samsung Electronics employees will abide by this code of
conduct in their relationship with their peers and customers.

 Strategic planning method


1) Product Innovation
Samsung's product range in the world included CTVs, audio and video
products, information technology products, mobile phones and home appliances. Its
product range covered all the categories in the consumer electronics and
home appliances. Analysts felt that the wide product range of Samsung was one of
main reasons for its success in the Indian market. Samsung positioned itself on the
technology platform.
2) Pricing : Pricing also seemed to have played a significant role in Samsung's success.

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3) Distribution
Along with the launch of new products, Samsung also consolidated its distribution
system. Samsung had 18 state-level distribution offices and a direct dealer interface.
The direct dealer interface helped the company get quick feedback from dealers, and
enabled it to launch products according to consumer needs.
4) Advertising and sales promotion
when Samsung entered to any country, it realized that the citizens
consumers were not familiar with the company. So, in order to establish
itself in the world consumers ‘mind, Samsung launched corporate advertisements
highlighting its technologically superior goods.
 Asset Acquisition
Assets acquisition regulations, the disqualified portion of any foreign income tax
determined with respect to the income or gain attributable to the relevant foreign
assets that are shall not be taken into account in determining the credit allowed
under IRC Section 901(a) and in the case of a foreign income tax paid by a IRC
Section 902 corporation, shall not be taken into account for purposes of IRC
Section 902 or 960.
 Operational Guidelines
Samsung provides an operational guidelines for every products they make to
support customers.
3. Strategic Uncertainties
Strategic Uncertainties, controlled by Interactive Control Systems, such as :
1. Incorporating process data into management interaction
2. Face-to-face meetings with employees
3. Challenging data
4. Assumptions and action plans of subordinates
4. Critical Performance Variable
These is diagnostic control system, such as output measurement, Valuation Standard,
Incentive system, and compensation system
a. Output Measurement, Samsung using AC & DC Output Measurement Levels as its
output measurement.

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b. Valuation Measurement, Samsung ranked 19th in The Top 20 World Brands from the
Interbrand/Business Week Rankings For 2009 from Business Week with brand value
$ 18 Billions.
c. Incentive System, Samsung Electronics operates two types of incentive systems for
its parts suppliers in accordance with its initiatives for co-growth with local partners.
The first system is productivity-based incentive system with main concept was
developed as a methodology to ensure the business maintains profit margins required
to thrive and provides employee motivation based on specific performance criteria.
The second incentive system, an eco-based incentive introduced in 2013, benefits
Samsung's local partners involved in environment infrastructure businesses.
d. Compensation System, in Samsung the system are annual salary {Month Salary
(base salary, floating salary, and meals) and holiday travel expenses} and other
{Individual Incentives (merit based incentives) and Group Incentives}

10. Formal and informal


Formal control is provided from the agency, which in this analysis is Samsung Corporation.
In Samsung website it is available of legal information, such as terms of use, general use
restrictions, submission policy, general disclaimer, limitation of liability, local laws, violation of
terms in this site, and trademarks. Samsung controls and operates its site from its headquarters in
the Seoul, Korea. If someone uses this site from outside the Korea, she/he is entirely responsible
for compliance with applicable local laws, including but not limited to the export and import
laws of other countries in relation to the materials and third-party content.
Informal control includes indirect methods that do not have any legal sanction. Such as gossip
and slander. The example of informal control of Samsung are cheaper and lesser than iPhone, the
gossip of Samsung reached its peak since the accident of Samsung Galaxy Note 7, and Samsung
continuously imitating iPhone products.

11. Benchmark for Indonesian Company to learn:


To achieve a level of ethics which adheres to a higher standard than that required by laws
and regulations, the Company follows the guidelines in the Ethics for Employees and the Code
for Procurement. To prevent any illegalities, all employees periodically take an anticorruption
class. The cyber audit team receives a corruption report around the clock from inside the
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company and outside. Any employee connected with corruption is punished by proper measures
regardless of his or her position.

12. Beyond Budgeting

13.Responsibility Center on SAMSUNG

13.1 Human Resource Management


Samsung follows a simple business philosophy. We devote our human talent and
technology to create superior products and services to help contribute to global society. It is
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indeed significant that Samsung’s business philosophy first mentions “human talent.” Based on
this belief, we have been focusing on developing and nurturing our employees since the earliest
days of our company's foundation, knowing that people lie at the heart of any company. We do
encourage our people to reach their full potential by providing the self-regulating and creative
environment. Samsung also respects employee diversity and places a priority on protecting the
rights of our employees and prohibiting and discrimination by race, age, gender, sexual
orientation, ethnicity, disabilities, pregnancy, religion, political inclinations, union membership,
nationality or marital status. We are committed to complying with relevant laws and regulations
in the countries we carry out our business, while respecting all worker rights. All employees are
required to follow 'Employee Code of Conducts and 'Business Conduct Guidelines' at their daily
work.

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