SAMSUNG

ELECTRONICS
INNOVATION AND DESIGN
STRATEGY
 SAMSUNG CASE ANALYSIS
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.

 Contd ......
 In 1994, Samsung established R&D centre 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

 M e t hod s t o I mpro ve Pro du c t i v i t y

• 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).
 I n n o vati on a nd pro duc t D e s i g n a t
Sams ung El ectr oni c s
• Creative people in the organization which
contributed in the development of technology.
• Co-operation between the business partners
throughout the supply chain
• Firms ability in exploring end penetrating into the
new markets
• Speed of innovation and product development.

Sa ms ung R & D bud get a n d
pe rc enta ge s al es

Source: EXHIBIT 3
I d e a beh ind th e gl oba liz a t i o n o f
R & D n etw ork
• Focus on innovation and generating new products
for global market.
• There is a huge scope of product improvement.
• This provides an access to the emerging markets.
• Leverages the market opportunity for the firm.
U s e r - Cen tric D esig n Ph i l o s o p h y
 Ma rke ting

The
 Convergence and integration between
manufacturing, promotion & distribution of
electronics included releasing, promoting and
marketing. This thing helped Samsung in improving:
• Brand Image
• Helped in product differentiation
• Better value propositions or bundle of benefits to
the customers.
N e t sal es a nd ope rat ing p r o f i t
o f Sa msun g E lec tron ics i n 2 0 0 7
S a m s ung Elec tr onic s ’ E - pr o c e s s e s
C o m p a r i s o n of perc ent age of Net
s a l e s on R & D In ves tm e nt
 C omp eti tive La nds ca p e
Samsung Apple LG Nokia Sony Corp. Motorola
Landscape Electronics Computer Electronics Corp. Inc.
Inc.

Consumer PC’s, Consumer Leading Electronic Mobility

electronics portable Electronics Mobile games, solutions,
Product (LCD TV’s, music ( mobile Comm. Motion mobile
Offered Microwave players, handsets, Company pictures, services,
Ovens, PC’s, Mobile Front loading ( started as Financial cellular
etc.) communicati washing wood pulp services, etc. comm.
on devices, machines, producers) Devices ,etc.
etc. AC’s, etc.)
 C omp eti tive La nds ca p e
Samsung Apple LG Nokia Corp. Sony Corp. Motorola
Landscape Electronics Computer Electronics Inc.
Inc.

Focuses on Occupies Concentrated on Adopted Creates Value Focus on two

‘Reason’ and ‘feeling’ zone 5 areas: telecom as its Added products criteria's for
Mobile comm., core business by doping 4 design the
feeling to and emphasis digital and designing principles of products for their
create a design on the appliances, was based on 3 Design: consumers:
Innovation and used simplicity of digital displays, principles: Originality, Personalization
& Design global products in digital media andSimplicity, Lifestyle, and Socialization
localization terms of home Relevance and Functionality
strategy to design and networking and Experience and Usability
design their
establish as a usability.
products by
first class using 4 values:
consumer Theme, Style,
electronic Interface, and
company(user Finish
centric)
 C omp eti tive La nds ca p e
Samsung Apple LG Nokia Sony Corp. Motorola
Landscape Electronics Computer Electronics Corp. Inc.
Inc.
Digital Improvement Originally Product Do not rely Paid attention
convergence in Design and produced categorizatio on customer on
using E- Product electronics for n is done by: surveys and development
Processes and Features mass Explore Live create value of new
Marketing efforts in consumption Classic, added user revenue
improving but later Classic, experience generating
design by transformed achieve and through services and
investing in to produce entry and feature technologies
R&D premium communicati design, and enabling
consumer ng brand concept customers to
products for value to the development experience
attracting customers and eco- media
premium friendly mobility
customers and sustainable
to gain brand design
image
 CO NCL USIO N
Ø Relations with suppliers: Improve the relations
with the suppliers. This can be done with Suppliers
relationship management
Ø Relations with buyers: Customer is the king
Ø New entrants: It is important for Samsung to
analyse the threats from new entrants
Ø Substitutes: With the emergence of Chinese products
in the market which can act as the substitutes for
Samsung products . Establish Generic technology
strategies which includes:
 Cost leadership
 Differentiation
 Cost focus
 Differentiation

Ø Rivalry among established firms: There is a

strong competition between the already existing
firms like Nokia, Sony, Apple, LG, etc. Therefore
Samsung will have to improve its competitiveness in
the market.