Samsung managing intangible assets across borders

Samsung managing intangible assets across borders Unlike other electronic companies Samsung origins were not involving electronics but other products. In 1938 the Samsungs founder Byung-Chull Lee set up a trade export company in Korea, selling fish, vegetables, and fruit to China. Within a decade Samsung had flour mills and confectionary machines and became a co-operation in 1951. From 1958 onwards Samsung began to expand into other industries such as financial, media, chemicals and ship building throughout the 1970s. In 1969, Samsung Electronics was established producing what Samsung is most famous for, Televisions, Mobile Phones (throughout 90s), Radios, Computer components and other electronics devices. In 1978, Samsung Semiconductor became a separate entity producing for the domestic market. With the development of a 64K DRAM (Dynamic Random Access Memory) VLSI chip (Very Large Scale Integration electronics chips) it expanded globally. In 1987, the founder and chairman, Byung-Chull Lee passed away and Kun-Hee Lee took over as chairman. In the 1990s Samsung began to expand globally building factories in the US, Britain, Germany, Thailand, Mexico, Spain and China until 1997. In 1997 nearly all Korean businesses shrunk in size and Samsung was no exception. They sold businesses to relieve debt and cut employees down lowering personnel by 50,000. But thanks to the electronic industry they managed to curb this and continue to grow. In the financial crisis in that year, Samsung was facing US $20 billion in debt and had to slim down the company by more than 100 non-essential businesses in a restructuring process. It kept only 47 affiliated companies and strategically re-focused on four technical components: displays, storage media, random access memory (RAM) and processors. The history of Samsung and mobile phones stretches back to over 10 years. In 1993 Samsung developed the lightest mobile phone of its era. Then they developed smart phones and a phone combined mp3 player towards the end of the 20th century. To this date Samsung are dedicated to the 3G industry, making video, camera phones at a speed to keep up with consumer demand. Samsung has made steady growth in the mobile industry and are currently second but competitor Nokia is ahead with more than 100% increase in shares. It is ranked as number 21 of the 100 most valuable brands worldwide carried out by Interbrand in 2008. This is an increase of more than 200% since 2000 with brand value rising from US $5.2 billon up to US $17.5 billion.  [1]   Samsung has recently overtaken Sony as the worlds biggest producer of televisions. Its philosophy of bringing people the latest technology at a fair price has quickly made it a firm consumer favorite, while its phones are now second only to Nokia. Looking ahead, the brand realizes the importance of having stronger representation at the point of sale, so it will open more Samsung retail outlets to deliver the full brand experience. The restructuring process led Samsung also to focus on core businesses. It restructured its business into four strategic business areas Home Network, Mobile Network, Office Network and Core components that support network products. Samsung follows a simple business philosophy: to devote its talent and technology to creating superior products and services that contribute to a better global society. Every day, its people bring this philosophy to life. Its 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 its 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 thats what making a better global society is all about. At Samsung, a rigorous code of conduct and some core values are at the heart of every decision they make. Quite simply, a company is its people. At Samsung, they are dedicated to giving their people a wealth of opportunities to reach their full potential. Everything they do at Samsung is driven by an unyielding passion for excellence -and an unfaltering commitment to develop the best products and services on the market. In todays fast-paced global economy, change is constant and innovation is critical to a companys survival. As they have done for 70 years, they set their sights on the future, anticipating market needs and demands so they can steer their company toward long-term success. Operating in an ethical way is the foundation of their business. Everything they do is guided by a moral compass that ensures fairness, respect for all stakeholders and complete transparency. A business cannot be successful unless it creates prosperity and opportunity for others. Samsung is dedicated to being a socially and environmentally responsible corporate citizen in every community where they operate around the globe. COMMUNICATION POLICY Since 1998 Samsung has been an official sponsor of the Olympic Games: Nagano (1998), Sydney (2000), Salt Lake City (2002) and continued its sponsorship until 2008. During the Games Samsung provides athletes, organizational staff and journalists with especially developed mobile phones promoting Samsungs products and delivering its promise of being an innovative and flexible company. With the Olympic Games Samsung gained quick, cost-effective global exposure. Its brand awareness increased after each Olympics about 2% and had a huge impact on the quick rise of the brand. Brand value increased since 2000 until 2004 about 100%. Samsung lends support to people and their communities in many different ways. Their current area of focus is on investing in teenagers futures, through support of science education and creative thinking that encourages leadership; assisting children in low-income families by supporting educational infrastructure and discovering and supporting outstanding students; and supporting programs that encourage family well-being. They also carry out programs in these areas at each of their eight volunteer centers. Samsung provides support for diverse artistic and cultural activities around the world. Over the years, Samsung has contributed extensively to numerous museums, galleries and exhibits in Korea and in many countries, including the United States and France. The Samsung Museum of Modern Art collects preserves and exhibits modern and contemporary art from Korea and abroad, while the Samsung Childrens Museum, the first of its kind in Korea, invites children have fun exploring the world they live in. Samsung also hosts and supports various cultural events for children and programs that encourage their early artistic development. In 1995, Samsung launched the Social Contribution Corps to encourage employees to get involved in community service. The initiative has since expanded to eight volunteer centers across Korea, manned by social welfare experts who support the development of employee volunteer programs. Their employees use their expertise and skills to give back to local communities and each employee donates an average of 10 hours to community-based projects. Strengthening the minds and fostering the creativity of young people is a primary focus of many of Samsungs programs. Samsung is a major supporter of the Korea Youth Science Olympiad, the countrys most prestigious science competition for junior, middle and high schools and the National Students Creativity Olympiad, aimed at encouraging inventiveness among students from junior to high school levels. Since 2001, Samsung has teamed up with the Green Family Movement Association to run a green school, which promotes environmental awareness in children and enables them to take practical steps to protect the ecosystems. For its target customers, Samsung established both in B2C and B2B the concept of hero products. It means that each Samsung subsidiary has to define at least one hero product, e.g. mobile phone, TV or digital camera, which has based on local or regional market research potential to become a blockbuster. Samsung very closely involves its target customers in the development/research process via generating feedback on its B2B online platforms. To achieve business impact, a common planning/monitoring across disciplines is needed with a brand management via value creation and innovation rather than simple cost controlling. Samsung, when switching its strategy towards a premium brand, started to move its planning towards communication activities which have impact on each step of the customer relationship path, i.e. from awareness to purchase to loyalty. Two major directions of impact towards high-end distribution channels and an emotional approach for its campaign were Samsungs strategy. In its latest campaign, Samsung cemented the companys new up market image by promoting its products in high-end distribution channels. Despite several challenging moments for the semiconductor industry, such as the recession in early 1990s and early 2000, Samsung aggressively increased its investments in the business unlike the rest of the industry which laid-off workers to cut cost. This preemptive investment strategy helped Samsung to gain market share and to meet the rapidly growing demand for 4 megabyte chips after 1994 in the global market. Samsung became the number one memory chipmaker in 1993. By pursuing twin goals of leading-edge technology and producing one generation-old products in the niche market of memory chips, Samsung successfully avoided risks of failing in the market. They laid out Flash memory where text, photos, sound and screen can be saved in the small-sized chips. Samsungs market share of memory chips has been growing continuously from 10.8% in 1993 to 28% in 2004, but it still follows Intel in the non-memory sector. In 2000, Samsung asserted that digital consumers, a growing importance of business networks and technical devices would create new demands for semiconductors in the future. Samsung recently announced its plans to beat Intel in computer chip sales and to make a better partnership with it at the same time. Synergy effects will be drawn when all three core elements of investment, leading-edge technology and the unique digital products work together within a dynamic business interaction. Samsungs vice president Yun Jong-Yong stated that the company will try to become one of the top 3 electronics firms by 2010 in terms of quality and quantity and will therefore try to raise its brand value and revenues in its semiconductor business over Intel. Despite tough competition Samsung and Intel both plan on building better platforms to improve combined business opportunities. Samsung is already leading the electronic market in some product segments, such as in the set-top box as leading product in home networking. FUTURE CHALLENGES As the market leader in semi-conductor chips, the third largest cellular handset maker in the world behind Nokia and Motorola, and the largest manufacturer of flat display screens in the world, Samsung has indeed come a long way from its humble beginnings of 1938. But Samsung faces some tough challenges in the future. Maintaining consistency Samsung has invested billions of dollars in global advertising and brand building activities. Given its presence in multiple industries on the one hand and its consistent investment in RD on the other, it will be difficult for Samsung to sustain its investment in branding activities. But Samsung must not be complacent and reduce the brand budget. It has not yet reached a position where the brand can live independent of its products as Sony does. Therefore, it will be extremely important that Samsung continues to build and nurture its brand in a consistent manner. Spreading the corporate brand too thinly Even today, the Samsung name is found on literally everything from ships, memory chips, to mobile phones and camcorders. Although the company is leveraging its brand to build new business and gain considerable advantage in existing businesses, this can prove dangerous to the corporate brand. As Samsung has been trying hard to position itself as a premium lifestyle brand worldwide, many of the businesses in the Samsung portfolio do not match this positioning. Therefore, although it might appear as an advantage at the outset, spreading the corporate brand too thinly across a wide array of businesses might prove costly to Samsung in the long run. Local and international competition Today Samsung is faced with never-seen-before competition in the consumer electronics industry. Not only should it fight the leaders like Sony and Canon, but also the new crop of companies which are following the Samsung path to compete with Samsung, the most significant one being the LG Group of South Korea and potential competitors from China and Taiwan. Although Samsung has a comfortable lead time due to its top-notch technology and constant innovation, this should not lead to any sort of complacency. Samsung should continue investing in technology and design capabilities on the one hand and marketing and brand management activities on the other to maintain the lead over its rivals that it has so tirelessly built over the past decade. There is a high intensity and constant competition in the electronics industry and usually the main competitors come up with new products very often. If a company does not keep up with trends and new products, they will lose their customers and profits. According to Barney and Hesterly, high levels of rivalry are indicated by such actions as frequent introduction of new products by firms in an industry (Barney, Hesterly, 2008, p. 46). Rivalry tends to be high where there are numerous firms in an industry and these firms tend to be roughly the same size. Furthermore, rivalry tends to be high when firms are unable to differentiate their products from competitors in an industry. This can be seen in the personal computer and DVD industry. In the PC laptop industry, companies are focusing more on services that accompany the laptops and the designs of the computers. In the DVD industry the products are very similar and perform the same functions, thus it is hard to compete with existing co mpanies. If a company decided to compete in this industry, they have to compete with intense price rivalry. Dell focuses their strategy on selling their computers online and providing excellent customer service. They save money on not having a physical store and focus on online distribution instead. This saves them money and they can compete on other levels. With the popular trend of the internet, companies are now competing with providing more services online and expanding their online advertisement. The threat of Substitutes Substitutes in the consumer electronics industry are many and the different companies competing in this industry must apply many strategies in order to compete and make profits. The substitutes in the electronics market can be divided in to 4 categories. As will be mentioned the important factors in every industry of the general electronics market. Telecom The substitutes in the telecom industry are landline phones and email. At the moment, landline phones are losing popularity because of lower prices and popularity of cell phones and internet calling programs. In the cell phone industry, Apples I phone has the latest technology with its Touch screen, but companies are following and introducing new phones. Samsung has just introduced new line of innovative cell phones for 2008. Cell phones and PDAs have standard features and the only product differentiation lies with adding services such as Bluetooth, gaps and other communication applications and tools that are important for customers in the cell phone industry. Samsung provides an affordable PDA with the modern features to satisfy the average telecom user. Apple and Nokia are selling mobile phones with new technology for a high price for customers who are willing to pay more. There are not many substitutes for PDAs. The main one is using a cell phone or computer, laptop to call someone using e.g. Skype. Laptops / PC In the PC industry, the threat of substitutes is not very high because there are not many products that can do what a computer or laptop can provide. The only substitutes are portable and handheld devices. They are competing on price and trying to increase value based on service and customization. The major substitutes for computers are PDAs and cell phones for contacting other people. In terms of writing documents, portable devices are substitutes. Digital Cameras In the digital camera industry, there are two major substitutes. The first one is the film camera, and the other one is the cell phone camera. Unfortunately, there is not much interest in film cameras because of outdates technology and cell phone cameras dont provide the same quality and storage as digital cameras. HD TV Television have recently become very popular with the new HD technology. The substitutes for TVs are computers and laptops. For people who travel a lot, prefer to watch movies and favorite shows on their laptops because they can download or stream popular TV shows and movies from online sites. Furthermore, another substitute for TVs are going to the movies or watching videos on your IPod. Because of the limited availability and space on IPods and the smaller size of a laptop screen, TVs will still stay popular and be high in demand. Managing the Samsung brand architecture The Samsung name is used to represent every business unit of the Samsung group, as mentioned earlier. Even though the trend of late is to nurture a strong corporate brand, as Unilever and PG have been doing, Samsung lacks the necessary similarity between its various business units. Therefore, Samsung should develop a strong brand architecture system which will define and monitor the interaction of various brands within the Samsung portfolio with the corporate brand. This will be easier said than done, given the extremely diversified business units of the chaebol (Korean business conglomerate). The brand architecture would also guide Samsung in acquiring new brands to enter the value segments of different markets, as LG has done with the Zenith brand in the US to target solely the value segment. With the millions of dollars that Samsung has spent over the past decade to build the Samsung brand, it will be a major challenge to put in place a strong architecture system which will help the branding practices of Samsung going ahead. Creating the Samsung personality Most great brands are those that have strong personalities, with Apple iPod being the latest proof. But Samsung seems to have ignored this crucial aspect in building its brand. Although Samsung has been doing all the right things in its communications, it has not focused on creating a strong personality for its brand. It does not own anything specific in the consumers minds, like a Harley-Davidson standing for the rugged independence of western America or a BMW standing for the ultimate driving experience. As has been well recorded in the branding literature, a successful brand not only provides the customers with functional benefits, but also emotional and self-expressive benefits. So far, Samsung has emphasized the functional benefits of leading-edge technology, contemporary designs and exciting features. It needs to go beyond this and create a cult following for its brand, like the Apple iPod has done. Samsung needs to ensure that its brand can live on independently of its products. This could prove to be a major challenge. Although it is still a newcomer, Samsung has made significant inroads into the home and office printing markets over the past few years. The company has secured the second-place position in the laser printer category, following behind Hewlett-Packard but surpassing Brother and Lexmark. Samsungs ultimate intention is to achieve the top-tier position by 2010, but this is an aggressive goal that will require the right products and solutions, as well as a sound go-to-market strategy. Samsung has certainly been keeping on top of market trends, and it has launched a product range that is designed to meet the demands of todays consumers. The company has scrapped its A3 products and now offers multifunctional versions of all its devices, as well as recognizing the importance of the scanning function. Probably the most important announcement in 2008 comes from the solutions area, as Samsung finally has a competitive offering for this field. Samsungs next challenge will be to engage the channel to market these solutions. Samsung has enjoyed a year of growth and success. It is regarded as one of the worlds leading companies, producing products that are highly respected in the marketplace. The Samsung name is everywhere: in Asia, Europe and the Americas; the Northern and Southern hemispheres; in long-established nations and newly emerging ones. Samsung name means quality and innovation, and represents the combined teamwork of tens of thousands of employees worldwide. Samsung is moving to the forefront of the industry today because of its decade of dedication to the simple principles of change, innovation and creativity. Now that it is at last experiencing the success it has so long pursued and worked so hard to achieve, its mission has broadened. For with success come serious challenges and responsibilities. I believe that it is well prepared to meet these challenges and responsibilities. Success at Samsung has been the result of its relentless and fearless pursuit of change. It has taken the accepted and charged its employees to change it for the better. And it has dared to imagine the unimaginable. Nothing for it is ever finished-it can always be improved. It has used change as a motivator for its employees, as a metaphor for its culture and as a measure of its forward movement. Change has created momentum throughout the company. At Samsung, change has resulted in success-and success necessitates further change. It is now incumbent upon Samsung more than ever to continue to change at an accelerated rate. It will always stretch to greater heights. It will not rest on its laurels. People from the company will work harder, reach farther and continue to encourage and value change in order to maintain their leadership position. The responsibilities implied and demanded by its accomplishments are to its customers, its employees and to the communities around the world where it has made an impact, as well as to those where it will be influential in the future. Its customers have come to expect great products and service from it and Samsung will continue to deliver these. Its employees have come to expect a fertile environment in which they can create and a management structure that encourages, nurtures, values and rewards the creative process. Exploration of the possible-and sometimes the impossible-will always be encouraged. Among its immediate neighbors and around the world, there has been much transition. The world economy and social order have both been affected. There is much uncertainty ahead. It is its responsibility, broadly, to make the world a better place. Samsung do this every day through its products, which create better lives for the customers, and through demanding the highest standards throughout the organization. Now that the company finds itself in a leadership position, it is favorably situated to build on its legacy of change, innovation and creativity. Its five core values-people, excellence, change, integrity and co-prosperity-have served it well in the past and will continue to provide the sturdy foundation for a rewarding future. As employees worked to achieve these goals, they relied on these core values to overcome formidable obstacles: fierce competition, unhealthy economic environments and a rapidly changing world with many risks. Now stuff must look to these core values to maintain and improve their position as a market leader. It is now up to Samsung to redefine the future. It is not just their desire, but now also their duty to continue to strive to reach new heights. By taking on responsibility for the future, they can lead by example and demonstrate to the world that with hard work, it too can change for the better. Their growth and their future will come from the loyalty of their customers. They have earned this loyalty from their hard work in the past, and it will inspire them in the future. It is this loyalty that fuels the Samsung spirit and compels them to always keep moving ahead. It will not be easy maintaining their leadership position, but they are prepared for the challenge. They will redefine the future through their creative talent and by continuing to cultivate a culture that does not fear failure. The best measure of the success will be their ability to look back a year from now and be proud of their accomplishments, which were once only dreams. At Samsung, stability and security come from change. Through it, people working in the company will continue to aspire to lead and be prosperous. CONCLUSION Samsung Group is more than just the nations largest conglomerate. It is a mega brand with considerable cultural significance à ¢Ã¢â€š ¬Ã¢â‚¬ ¢ a business card with the blue and white logo is much coveted, while any Korean national would take pride in a Samsung billboard in a foreign country. Samsung has made itself noticeable as one of the most innovative and quality brands in the electronics industry. Samsung strives to be sustainable and achieve competitive advantage by remaining at the forefront of the digital market. Samsung policy is We will devote out human resources and technologies to create superior products and services thereby contributing to a better global society. Samsung provides the electronics market with a full range of great consumer products, ranging from mobile devices to home appliances. They have proved themselves an innovative and efficient company that strives to provide their customers with the newest products for a great price. With their wide range of products they have generated a powerful supply of products. In order to secure future success in a very competitive market, they need to focus on being innovative and expand their products in to new markets and countries. Samsung should also invest heavily into establishing its brand name in foreign countries to attract talent. Applying all of these recommendations and suggestions will generate a better future for Samsung and will make them be able to compete with other companies in the industry. Samsung is a market leader or major market share holder in its many segments. Samsung leads but does not lead a pace that cannot be followed or easily copied. For example, Apple leads the digital music player market at a pace that its competitors cannot follow. Apple passed its competition through its competitive advantage: innovation. Company culture at Apple creates the pace of innovation and new product designs and introductions. Samsung needs to lead the market through an innovative competitive advantage to push a pace not easily copied. Samsung has encountered foreign competition because foreign competition has acquired its own domestic talent. Samsung should invest heavily into establishing its brand name in foreign countries to attract talent. Samsung is moving to the forefront of the industry today because of its decade of dedication to the simple principles of change, innovation and creativity. Now that it is at last experiencing the success it has so long pursued and worked so hard to achieve, its mission has broadened. For with success come serious challenges and responsibilities.