Nokia

The target market of Nokia is the college students who are mainly aged from 18 to 25 years old. They are selected as the target customers because they have great potentials for the mobile phone category. The target market of college students is based on the segmentation which indicated the i) substantiality, ii) profitability/identifiably/measurability, iii) accessibility and vi) differential responsiveness. The segment of college students is large enough because of the continuous investment in education by the government. The number of college students rises rapidly which provides a large pool of potential target customers for the mobile phone market.

Moreover, this segment is very identifiable and measurable, more importantly, college students market provide optimistic potential for Nokia because those students receive the tertiary education are those with high disposable income in the future once they involve in the labour market. According to the MingPao Daily on 16/03/2006, the starting salary of college students in the year 2005 reaches $9,000 to $12,000 in average. So we can see the potential of these future middle class, their high disposable income can be the profit of Nokia. Nokia can access college students easily and they show differential responsiveness as this new generation has cultivated a unique culture and trend on the multi-usage of mobile phone which spread among the college students.

Competitors Analysis LG LG is a Korea based company which provides ranges of mobile phone for customers to choose. Since its establishment, LG has evolved a lot according to the trend of mobile phone in Hong Kong. However, instead of putting all emphasis on 2-G GSM mobile phone, LG has put more focus on the 3-G mobile phone market and worked closely with the Hutchison Group, The 3 Hong Kong service provider, to provide high quality 3G mobile to customers. LG has used different means of marketing strategies including print advertisements, TV advertisements and celebrities to promote the products.

Motorola Motorola introduced the first mobile phone in Hong Kong in the 1980’s Motorola emphasizes on the transformation of device formerly known as the cell phone into a universal remote control for life by adding more functions and innovations in the mobile phone. Motorola won the Asian Innovations Award by the technology of the product A668 with a “finger writing board” on the mobile phone, also,with the integration of the technology of iTunes(r) by cooperation with Marc(r), Motorola launched the product ROKR E1. Motorola aims to be the leader in multi-mode, multi-band communications products and technologies. Samsung provide a wide range of products for customers to choose from, including the 3G mobile phone, the MegaPixel Camera Phone, the Camera Phone and the Color Display Phone. No matter from the prime mobile phone of the latest 3 G mobile phone, Samsung provides choices for customers to deliver the desirable benefits and solutions for different customers.

Sony Ericsson has the mission to be the most attractive and innovative brand of mobile phone in the world. To achieve this goal Sony Ericsson integrated design into every step of the process – intelligent features, user-friendly applications, innovative materials and attractive visual appearance. Design is the essential differentiator when comparing mobile communications products. The attractive good looking appearance and the sophisticated integration of technology has contributed to the success of Sony Ericsson, some products like W800i and W550i, with the functions of mobile phone and Walkman(r), has gained market share in this competitive market.

Product attributes used in questionnaires In order to find out the most important product features that will influence our target customers’ purchase decision, we have conducted 5 focus groups, each with 6 target customers. At last, we concluded 14 product attributes that are important in affecting their purchase decision. The product attributes consist of product-related and non-product related attributes. Produce-related attributes include design, appearance, ease of use, functional performance, durability, multi-function, advanced features and number of models to choose from. Non-product related attributes include after sales services, price, resale value, level of advertisement, accessibility and reputation.

As our target customers are university students, we use convenient sampling as the sampling method and distribute the questionnaires among CUHK students. The sample size consists of 60 CUHK students, which include 29 female and 31 male.  Research Findings Based on the Attitude toward the Object Model, the positioning statement which guides the marketing mix strategy was generated by- Factor Analysis: identifying factors affecting customers’ attitude toward the brand; – Compare Means: evaluating the current market performance of self and competitors based on the identified factors; – Multiple Regression: revealing the weight of each factor and confirming the significance of the identified factors in attributing the attitude – Simple Regression: confirming the significance of the attitude towards the brand in attributing the buying intention.

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From the factor loading table (Fig. 1) generated from factor analysis, the 14 attributes were categorized into 2 factors. The identified Factor 1 is “product quality” (multi-functions, stylish design, professional look, excellent functional performance, advanced features, user friendly and durable); Factor 2 is “marketing activities” (purchased everywhere, widely advertised, reputable phone, many models, reasonable pricing, good after-sales services and high resale value).

Compare Means Fig. 2 Mean of FS1 and FS2 for Each Brand Fig. 2 shows the mean of FS1 and FS2 for each brand. They were used as coordinates to plot a perceptual map (Fig. 3). The perceptual map shows the relative positions of the 5 mobile phone brands in respondents’ mind. From the map, Nokia is on the most top right hand corner. It is the winner in terms of both factors, which are marketing activities and product quality. However, the differing range of the five brands on product quality is not as large as that on marketing activities.

It implies that Nokia is doing much better on marketing activities than the other brands, but not differing much from the others on product quality although it is the winner. The differences of the five brands were supported by the ANOVA Table (Fig. 4). For both factors, that significant figures smaller than 0.05 means that the factor scores means of the mobile phone brands are significantly different. There is at least one brand winning when considering each of the two factors.

Introduction:

One of the most important concepts in the orbitational research which is the firm performance. Firm performance is the measure of performance of a company that may not depends on the efficiency of the company by itself, it depends on the markets also. It is known as the financial stability in the financial sector, there are many differences of financial measures that can be used in order of evaluating the performance of the company, such as: Stock prices, revenues, return on assets, profit margin, Sales growth, Capital adequacy, liquidity ratio, return on equity is considered as some of the common financial measures.

To illuminate, some of the ratios will be more meaningful than the others depending on the market or the industry that the company operates in. For example; the manufacturing industry field, the return on assets, inventory turnover, and total unit sales might be the key ratio to display. On the contrary, the operating income, stock prices, revenues and cashflows could be the key ratios for the financial institution. Its complex term which might include various shadows of meaning if it stays related to the organizational performance.

Generally, the firm performance implies the institution performance that includes manufacturing products and services, performance of its employees and their outcomes in the institution of their work. The firm performance can be also viewed in the broad context. The more effective and completed operations in the firm the more positive sign of the institution performance is, on the other hand, the performance of the firm becomes poor when the efficiency of the firm’s operation and the employees’ performance getting low. Furthermore, the hard part of the job is to keep the firm performance high which happened in the history of the economics, big collapsed and bankrupts faced huge corporations due to certain reasons.

Nokia in the history, the corporation and its business version converted from a rubber, paper and cable corporation to an organization that focused on cellular handsets and mobile telecommunication infrastructure. Nokia in the 1990s and early 2000s considered one of the largest mobile cellphone organizations in phrases of volume, sales, market share and earnings, however it failed to make the transition to the phone market within the early 2010s. despite the fact that, Nokia until 2007 had a market share of 80% in the cellphone market, the main reason for losing floor during the new generation of the smartphone age was due to the weak function of Nokia in the technological system. it is tempting to blame Apple, Google and Samsung for Nokia’s demise at the doors of. However, as an existing argument for the last decade, Nokia had started to fall apart from inside well earlier than any of those organizations entered the cellular communications market. In these instances of technological advancement, rapid market trade and developing complexity, analyzing the story of Nokia presents salutary lessons for any corporation looking to either forge or hold a leading position in their industry.

Nokia Analysis:

Nokia’s troubles and struggles are clearly exposed through its financial numbers. As lately as June 2012 Nokia reported revenues of $34.08 billion, but on June 30, 2015, Nokia reported revenues of $16.31 billion. those revenues definitely represent something of a turnaround for the corporation; in June 2013 Nokia stated revenues of just $8.57 billion, or a bit over a quarter of the amount from the 12 months before. latest revenue figures imply that Nokia is retaining its market position but no longer growing. Nokia-MobiraIn appointed Ollila in 1990 as a CEO. the following year, 1991, Finland was in economic crises and Nokia made massive losses. The very same year Nokia bought Technophobe Ltd and this modified Nokia’s corporation language to English. also, the meaning of a brand has become a focal point for the corporation and big efforts have been made to place Nokia as a strong brand. The name of the organization changed into Nokia mobile phones Ltd. the first GSM network was in place in July 1991 and the first call was made the same day with a Nokia cellphone. The increase in manufacturing quantity of mobile phones by Nokia and some of its most competitors showed that in the middle of 1990s the cellular market and Nokia’s market share gained momentum.

In 1994 Nokia made the shift from a Finnish organization to a global payer. even though Finland remained a pioneer marketplace, the actual market was international with Nokia having an alternatively difficult relation with the united states market. initially, global markets had been served through exports and slow global expand. subsequent manufacturing outside Finland turned into ventured, in the United Kingdom with the aid of obtaining Technophone and inside the US through taking over Tandy stocks after an initial 50-50 joint venture owned operations. In 1998 Nokia have become the number one mobile cell phone producer in the world. However, Nokia was the world leader in the mobile phones market, the new decade delivered along a brand-new set of demanding situations for the corporation. The wireless and internet technologies have been converging, and the 3rd era of wireless era – that promised better multimedia capability.

It was the year 2001 when Nokia’s income first crumbled after being the top cell phone maker in the world. This was normal because of a slowdown in the mobile phone market. That downfall turned out to be short-lived, but 3 years later, in 2004, the corporation once more reported that its market share is sliding, in spite of still leading with the solid 35%. Another hiccup came in 2007 when the corporation needed to recall a whopping 46 million defective mobile-phone batteries. What is even worse was that the batteries which were manufactured between 2005 and 2006 appeared in a huge range of Nokia phones, which intended that a huge part of the corporation’s device portfolio became affected. In 2008 – the same year when the Android first version released – Nokia income decreased by 30%, at the same time as sales decreased 3.1%. On the other hand, iPhone sales sky-rocketed by around 330% during the same period. The year 2009 noticed Nokia laying off 1,700 employees worldwide. Later within the year, the suffering Finnish corporation ultimately stated that it was gradual to react to the change in the market, which became now slowly being taken over by the likes of Apple and BlackBerry, and inspired by newcomers like Samsung, HTC, and LG.

The following year, Stephen Elop who was previously head of Microsoft’s business software department, was appointed as Nokia’s new CEO. He became additionally the first non-Finnish chief of the corporation. Even though, 2010 noticed a rise in the profits for the corporation, job cuts continued. Stephen Elop became well-known for a speech that he brought to Nokia employees in early 2011, in which he compared the corporation’s market position to a man standing on a “burning platform.” quite evidently, the corporation’s financial situation was going from bad to worse.

Policy implications:

PESTLE analysis, is a concept in advertising and marketing principles. furthermore, this concept is used as a tool by organizations to track the environment they are operating in. PESTLE is a mnemonic which in its expanded form denotes Political, economic, Social, Technological, legal and Environmental which helps evaluating and analyses Nokia corporation factors that lead it to the crisis.

Political Factors Affecting Nokia:

The impact of political factors on Nokia is difficult to ascertain. The corporation is based in the European nation of Finland; however, the Finnish government has refused to provide it a bailout or special favors. This forced Nokia into an uneasy alliance with Microsoft that has considering fallen apart. in contrast to some tech organizations, Nokia lacks strong government aid because it is based in a small country. this may both help and hurt the corporation because it is not associated with a major power, however it would lack the political clout of American or Chinese language-based competitors. Political unrest or other modifications in China could disrupt manufacturing and limit Nokia’s production abilities in that country. This will force it to transfer manufacturing to higher-cost places such as the united states.

Economic Factors Affecting Nokia:

Nokia suffered heavily from the European downturn of latest years. economic turmoil in Europe has hurt it badly through limiting buying demand in its domestic markets. Unlike Apple in the other side Apple, Nokia has had a difficult time tapping into the fast-growing Chinese market. Nokia also lacks the large economic resources available compared to its competitors, including Google, Apple and Samsung. particularly, Nokia appears to lack the research and development abilities that have enabled these corporations to develop new devices and tap new markets. One reason why it lacks those abilities is that Nokia clearly does no longer have the cash to finance large research and developments efforts like its competitors do.

Social and Cultural Factors Affecting Nokia:

The main cultural issue that has hurt Nokia has been the massive adoption of smartphones and the growing use of apps. Among the most famous apps, such as WhatsApp, are designed for more popular running systems consisting of Google’s Android and Apple’s proprietary iOS. Nokia’s choice to make use of the Microsoft windows smartphone rather than Android decreased its enchantment to many customers. The popular association of Apple with smartphones in a few countries—including America—has reduced deeply into Nokia’s market share by creating an era of customers that more effective purchase one brand. In more recent years, Nokia has needed to deal with the famous misconceptions that there are the most effective brands of the smartphone within the market, Apple and Samsung, and best-operating systems: iOS and Android. This has kept many clients from even thinking about Nokia products.

Technological Factors Affecting Nokia:

The technological challenges affecting Nokia are at the foundation of the social factors limiting its business. The development of open-sourced running systems which includes Android and the invention of apps significantly changed the mobile smartphone market. mobile telephones have been converted from a simple communications tool into advanced computers. This led to a situation in which clients desired to perform a wide variety of tasks with smartphones, which includes taking images, watching streaming video and performing business capabilities. The trouble was compounded through Nokia’s choices to make use of the much less popular windows smartphones operating system and to stick with its own operating system. This limited customers’ alternatives and made it hard to promote Nokia products to younger purchasers. Nokia has no longer be capable to significantly tap the probably lucrative market for different styles of smartphones devices such as tablets and wearable technology. this can greatly reduce its competitive part in the future.

Legal Factors Affecting Nokia:

Nokia’s legal environment is extremely difficult and challenging as it operates in the European Union. That body’s regulators had been investigating Google’s use of Android for a probable antitrust case. the European movement towards Google may cause radical changes in Nokia’s market share, such as Android being spun off right into a separate organization. It is not clear how exactly such action could have an influence Nokia; however, it may create an extra space of competing area and increase Nokia’s access to the European market. One possible game-changer may be those famous Google solutions such as Gmail could be taken off Android, which could impact its popularity.

Environmental Factors Affecting Nokia:

Like other electronics manufacturers, Nokia is faced with the trouble of properly and economically disposing of its used products in an environmentally-friendly way. One high cost requirement that it may face in the years ahead is legal guidelines making electronics producers chargeable for the disposal or recycling of used devices, a potentially expensive cost, particularly if the devices use lithium batteries. another environmental issue that might affect Nokia is expanded prices for materials and components, specially lithium for batteries. accelerated demand for lithium for other uses including electric vehicles may limit its supply and raise prices. an extended-range challenge may be climate change created by global warming, that can disrupt transoceanic materials shipping and Nokia’s supply chain. New environmental regulations in China designed to reduce greenhouse gases may increase manufacturing expenses in that country and influence effect Nokia’s expenses.

Research ; Development Policy and venturing policy:

Nokia was initially mainly focused on product improvement. only a fraction of Nokia’s attempt become in primary research. within the 1990s research become channeled in the direction of the primary development of cell phones and cellular data communications. In 1999 Nokia had besides Nokia studies Centre, 44 extra enterprise units primarily based worldwide research centers in 12 countries. Nokia research Centre becomes closely linked to and embedded in the Finnish education and research infrastructure. access to pretty skilled and professional IT experts never has been a difficulty.

Collaboration with universities has usually been a part of Nokia’s open innovation policy. Tampere University of technology is the main partner, but additionally, a collaboration with Aalto and Oulu university and top American (MIT, Stanford) and Chinese (BUPT, Tsinghua) universities have been established. Nokia spent a totally massive amount of cash in R;D, also as a proportion of the income, sometimes near 10% (Sölvell and Porter, 2011). at the end of 2006, 31% of the Nokia employees labored in R;D, even though in particular in product development (cord, 2014, p. 38).

Management strategy:

It has always been known that the corporation board plays a fundamental role in; the corporate governance, the corporation strategic dimensions of the company structure, the organizational goals and operational target (Agyemang et al., 2014). From a different perspective, Key amongst those decisions was the reallocation of essential management roles and the poorly applied 2004 reorganization right into a matrix structure. This caused the departure of critical members of the executive team, which caused the deterioration of strategic questioning. Tensions within matrix corporations are not unusual as different companies with different priorities and overall performance criteria are required to work collaboratively.

At Nokia, which had been accustomed to decentralized tasks, this new manner of operating proved an anathema. Mid-level executives had neither the experience nor training in the subtle integrative negotiations essential in a successful matrix. Nokia mobiles production have locked into an increasing number of conflicted product development matrix. Among product line executives with obligations and common “horizontal resource platforms” whose managers have been struggling to allocate scarce resources. They had to meet the various and growing demands of increasingly more numerous and disparate product development programs without sufficient software program structure development and software assignment management skills. This conflictual manner of operating slowed decision-making and seriously dented morale, at the same time as the damage and tear of extraordinary growth combined with an abrasive CEO personality additionally began to take their toll. Many managers left.

Recommendations:

In the current economic environment, corporations are racing for variety and more revenues, that is the mission of the management team to increase the wealth of the shareholders, and to keep their positions. Globalization made corporations as open book for everybody, even financial trading is easier, so corporations are competing to be the best to attract investors to invest their money in their corporation. Frim performance is the guide line for investors to invest their money in a company, so every board of directors and management team should work to improve the organization performance. Engaging the employees to the work decisions by allow them to give their opinions, that will help the board of directors and the management to build a strong knowledge and understanding of the business strategy through work force.

Furthermore, it will build trust between the management and the employees, make certain each employee is using his preferred skills and has an effective degree of autonomy, and focusing on each department to improve their procedures and targeting the department activities to do better achievements. Leverage is one of the biggest challenges for the firms’ decisions. Debt ratio should be studied well and taking in consecration all the concerns that maybe affect the firm performance and capitalism in a bad way in the future. Moreover, using training and development strategies always in the company. Technology and employees’ knowledge is the best investment to improve the firm performance, which are linked together. Technology needs some knowledge employees to operate it, and they must be in a deep knowledge of it, which is better for the business, production, and performance.

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Conclusion:

Firm performance is the measure of performance of a company that depends on the efficiency and the market of the company. The firm performance implies the institution performance that includes manufacturing products and services, performance of its employees and their outcomes in the institution of their work. The more effective and completed operations in the firm the more positive sign of the performance is, on the other hand the performance of the firm becomes poor when the efficiency of the firm’s operation and the employees’ performance getting low. The goal of the firm is to increase the wealth of the current investors.

There are many models to determine or measure the firm performance like, Profitability performance: which is the possibility to the firm to generate the profits. A profit is what remain from the earnings that the firm earned after paying all costs. Market value performance (Potential value): it shows the evaluation outside the firm and the future expectation of the performance. Growth performance: The organization ability to expand it is size by making the firm generate more money and gains. Nokia’s decline in mobile phones market cannot be defined through a single, simple answer: management decisions, dysfunctional organizational strategies and structure, growing bureaucracy and deep internal rivalries all performed an element in preventing Nokia from recognizing the shift from product-based competition to one based on platforms.

Motorola Phone Company is among the best performing companies in the telecommunication industry. This research paper analyses the Motorola by carrying out a PEST analysis and a Porter’s five force industry analysis. The paper aims at looking at the issues affecting Motorola within the context of its operation (political, social, economical and technological) and issues that are related to the telecommunication industry. PEST Analysis Political Factors In its supranational operations, Motorola has to abide by the law in wherever it has based its business.

The company has been done quite well in abiding by the law since; whenever there is a legal question, the organisation has a well established legal department that is charged with the mandate of ensuring that all operations are compliant with the rules and regulations in the context of operation. The company’s policy on political activity states that, no employee, unless approved by the Government Relations Office, is to engage in any political activity or use Motorola’s name, property equipment or even funds in such activities.

The Government Relations Office is responsible for any form of lobbying or government contacting the government on behalf of the company, except on sales activities. In general, the communication sector worldwide is experiencing deregulation, which gives companies more freedom in decision making (Motorola 2010). Economic Factors Motorola has been very successful in emerging markets. The company has sold over 16 million low-cost phones in developing economies. In 2006, analysts predicted that about 1.6 billion people in developing economies owned mobile phones; this number was predicted to double by 2010. Through such programs, the company has allowed poor people to access technology; this has impacted positively on developing countries use of information technology (WRI 2007, para. 3). Social Factors The company uses wireless broadband technology to connect remote places, and, to develop networks in developing countries. In addition Motorola uses solar cells and wind power to run remotely based stations.

Globally, the company’s technology has been useful in saving lives by ensuring that there is communication among the police, and emergency workers to ensure that get the assistance they need in real time. The company has been active when it comes to corporate social responsibility (CSR), this has been majorly advanced through the Motorola foundation. In 2006, the company joined the ‘RED’ foundation to ensure that women and children in Africa living with AIDS get access to anti-retroviral drugs; about $ 30. 8 million has been donated towards the RED project and other causes.

The company has also taken part initiatives that encourage young cohorts to embrace science and math. In its concerted efforts towards the elimination of social barriers, the company has initiated programs that are geared towards improving environmental and labor conditions with regard to the ICT industry (CSRwire, 2010, para. 6). Technological Factors In collaborating with Voxiva, the GSM Association (GSMA) Development Fund, and the World Health Organization, Motorola has helped in developing a mobile-phone application that assists in disease management in third world countries.

In addition, Motorola’s has enhanced its technology by making products that are eco-friendly. This includes the expansion of the take back programs in more than 80 percent of countries that account for most of its mobile phone sales (Development Fund 2008, p. 1). Porter’s 5 forces analysis Supplier power With regard to the telecommunications sector, Motorola is regarded as a giant; this gives the company an upper hand when it comes to dealing with its suppliers. The company has numerous suppliers since Motorola makes a number of electronic gadgets beside phones.

The supplier chain is simply enormous. The company invests handsomely in research and development, Motorola has over 25,000 engineers and scientists, and more than 21,300 patents. In view of this article’s analysis, supplier power is low (Motorola 2010). Buyer’s power Motorola operates globally hence; the company has a wide global customer base. The company holds a position, making it highly competitive. The strength of Motorola lies in quality, innovativeness and high standards in the telecoms sector. In the light of this argument, buyer power is low thus the company’s products are competitive.

This argument is premised on Motorola’s diversification approach in production, the company does not just concentrate on one product-though there is more emphasis on cell-phone (Motorola 2009, p. 17). The threat of substitution Unequivocally, the telecommunication industry is highly competitive; the threat of substitutes is relatively high. Every cell manufacturer is determined to make a model that is superior and those appeals more to customers than that of its competitors’. Nokia is in fact leading in this industry, while Motorola trails in second place.

Comparatively, Nokia phones are considered cheap and simple to use as compared to those of Motorola. On the other hand, Sony Erricson has the reputation when it comes to manufacture of cell phones with highly powered cameras and walkmans, this is more appealing to the young generation. In analysis, Motorola holds quality and innovativeness, Nokia has affordability and simplicity while Sony Ericson has quality cameras and walkmans. Motorola mainly competes by enhancing its quality and creation of new models, however, this strategy has not been fully successful in eating into Nokia’s market share (Motorola 2009, p. 13). The threat of new entrants Motorola has faced a myriad of challenges in its global operations, particularly in Europe and in emerging markets. In these markets, Nokia has remained dominant. In its strategy, Motorola has in the past few years gotten involved with the GSMA Emerging Market Handset (EMH) Programme; this has helped the company to improve with regard to market share. However, it is quite obvious that such programs continue to put pressure on the company’s profits.

In addition, since competitors are increasingly replicating Motorola’s ultra-slim designs, this makes the threat of entrants imminent-the industry is profitable but dependent on creativity and innovativeness. Motorola has to ensure that it stays ahead, the company must continue to be innovative, and the company should also consider improving its User Interface system. Nevertheless, it can be noted that the company is currently experiencing growth and the telecommunications value chain should be aware of this fact (Development Fund 2008, p.1).

Conclusion

This article has presented the PEST analysis (environmental factors) and the Porter’s five force industry analysis of Motorola Phone Company. The paper continues to analyses the current activities of Motorola and goes ahead to give suggestions on how the company should improve its market share in a highly competitive industry.

References

WRI, 2007, “New Report Shines Light on Electricity Challenges in Asia,” viewed May 28th 2010, from:< http://www. wri. org/stories/2007/05/new-report-shines-light-electricity-challenges-asia>

C SRwire, 2010, Motorola Ranked Fourth Among America’s “100 Best Corporate Citizens,” viewed May 28th 2010, from: http://www. csrwire. com/press/press_release/25038-Motorola-Ranked-Fourth-Among-America-s-100-Best-Corporate-Citizens-

Development Fund, 2008, “Phones for health,” viewed May 28th 2010, from: http://gsmworld. com/documents/gsma_case_study_mhealth. pdf? DEVNR=PHONES Motorola, 2008, viewed May 28th 2010, from: www. annualreports. com/partners/Report/19697 Motorola, 2010, viewed May 28th 2010, from: www. motorola. com/Consumers/US-EN/GLP

Nokia

Nokia’s Interim Report (2013) showed a decline in the first quarter for group net sales, device and services net sales and networks net sales. Therefore, it comes as no surprise that Nokia’s mission statement places a strong emphasis on shareholder value and social responsibility to increase the company’s stronghold within its industry.

Shareholder Value

In order to gauge the company’s performance in these two areas, there are a couple of specific indicators that Nokia is looking for. Shareholder value is increased through the success of the business. Nokia gives four areas that will become the primary focus of each of the business areas and gauge its success. These areas are: (1) leading and winning in mobile devices, (2) growing consumer internet services, (3) accelerating adoption of business solutions and (4) leveraging scale and transforming solutions in infrastructure (Grant, 2010, p. 24). This focus in these business areas allows for Nokia to increase shareholder value through a strong business strategy.

Nokia also wants to strengthen their strategic capabilities in the areas of: (1) consumer understanding, (2) brand recognition, (3) technology and architecture and (4) channels and supply chain (Grant, 2010). This will also help to increase shareholder value by allowing for a competitive advantage when dealing with the above business areas.

Social Responsibility

Nokia also wants to focus on their social responsibility as a mediator between the unconnected and connected. They envision a world where everyone is connected and allow everyone to feel close to what matters to them. I believe that they can gauge this through the same manner they gauge shareholder value. Essentially, Nokia’s business strategy will fulfill their social responsibility of connecting people. Leading the industry in mobile devices, Internet services, business solutions and solution infrastructure will all help connect people throughout the world.

Mission

With the new Nokia Lumia reaching number four on the list of largest smartphone brands in the USA, one can say that Nokia’s mission is working on increasing the connectivity amongst people through their smartphones (Shah, 2013). However, the company as a whole is not doing so well. With all their sales dropping, the only thing that is increasing is the sale of their Nokia Lumia. Even at the number four spot, Nokia only holds a measly 4.1% of the smartphone industry in the US, and their overall sales are declining (Shah, 2013). Therefore, I would say they are not doing a very good job at fulfilling their mission statement. If Apple had the same mission statement, leading the sales of smartphones in the US at a whopping 33.7%, the statement would be more accurate in saying that they plan to connect people around the world and lead the industry.

Recommendation

In order to improve the mission statement, I believe that Nokia should add more tangible short-term goals to boost morale. Short-term wins not only boost morale, but also provide more attainable objectives to satisfy shareholders. Therefore, instead of stating that Nokia plans to, “Lead and win in mobile devices,” they can state that Nokia will, “increase the smartphone market value partnering with Android AND Microsoft to expand Nokia’s global reach.” Providing short-term wins that are not as broad as Nokia’s current mission statement will help also strengthen the company’s brand and make them a stronger company as a whole. Overall, Nokia is doing well within the smartphone realm, and losing in everything else. It is either time that they specialize in a specific industry (smartphones), or take the market by storm with something that has not been offered before. Only the future will tell, and the mission statement is what will reflect these plans.

Introduction

Nokia is one of the largest telecommunication manufacturer companies in the world. They are recognized globally for their reliable and high quality products. Though they are a pioneer in manufacturing mobile phones and the GSM technology, Nokia’s profitability has been on the decline in recent years. A reduction of market share in North America of thirty-five percent in March of 2008 to eight and one tenths percent in April of 2010 highlight’s Nokia’s decline (Wong, 2011).

Synopsis of the situation

Nokia has been on a steady decline for the last few years due to outdated product design and technology. On February 11, 2011, Nokia’s new CEO Stephen Elop announced a new mobile strategy to adopt Microsoft’s new but unproven windows phone as its primary smartphone operating system (Wong, 2011). Nokia’s flagship phone, the Vertu, has been a staple in the urban luxury market for the last eight years. Will Nokia’s loyal customer accept or reject this new move for their beloved devise.

Key Issues

Nokia was once an industry leader, but as of recently found themselves behind in the times. Nokia has several key issues that need to be addressed. The first is their shrinking market share and brand preference. The next issue is the inability to deliver innovative products in a timely manner.

Define the Problem

The Microsoft operating system is not a winning over the customers that Elop thought that it would. Nokia has one phone that has been their flagship item for the last eight years. It is believed that making the change to the Microsoft operating system on that phone will cause Nokia to lose the customers for that one popular devise.

Alternative solutions

One alternate solution that could be well received would be to scrap the Microsoft idea all together. The system could be replaced with the current Android smartphone operating system. Android has a proven track record and is even more popular and used than iOS6 which is Apples current operating system.

Selected Solution of the problem

The solution is to move forward with the production of the phones with the Microsoft operating system. Nokia has always been on the cutting edge of technology. They did not get to the place that they are by following the trends. Nokia is a company that sets the trends. Microsoft’s operating system is a viable option for the Nokia platform and

Implementation

Implementing new technology in the workplace can be an advantage to current job performance levels. You may experience an increase in production and reduction of working man hours while adding considerably to the bottom line of the company’s income statement. This could be the shot in the arm that Nokia needs. Integrating this new technology in your current system without any disruption to the current workflow can prove to be challenging.

You may run into problems with compatibility due to existing systems, hard-to-train workers or errors in the technology installation, all of which adds cost and time to the integration process (Simmons, 2011). There are approaches you can take to make the integration of the new technology as seamless and frustration-free as possible. It is just a matter of careful planning and the support of the workers and vendors alike.

Recommendations

It is my recommendation that the Nokia stays the course. The new and improved Vertu will be a greater success that its predecessor. It is time for the company to regain its place on top of the leader board in the industry, and this new decision could take them there. Nokia will never be at the head of the pack by following its competitors.

Conclusion

In conclusion, I feel that that the current CEO of Nokia, Stephen Elop, should take the reins of this company and lead it into a new era. Elop has solid ideas and sound vision for the direction of the company. I feel that the customers that have been loyal to Nokia will continue to be loyal to the company. These customers expect something new and exciting. That excitement is what led them to Nokia in the first place. It is Nokia’s job to fulfill that promise. There was some initial negative reaction to the news of the direction of the company, but you can always expect some adversity with change. We do not change because it is the easy thing to do; we change because it is necessary. It is necessary to evolve to remain in existence.

GAC012: Business Studies Assessment Event 3 Recommending a Marketing Mix for a Service ‘Lumia’ 800 of NOKIA Mobile Company’ Student: Zhou Siyan ‘Effie’ ID number: ZMSC22222 Tutor: Maqui Due Date: November 19, 2012 Date submitted: November 19, 2012 Word Count: 1249 words Table of Contents Executive Summary 1. 0 Introduction 2. 0 Research Methodology 3. 0 Research Findings 4. 0 Discussion 5. 0 Conclusion and recommendations Reference List Executive Summary

When technology change the way people interact with each other in daily life, those writing days were gone with letters and postcards and personalized greeting cards and they are turned into emails, online social networking chat, sending text messages mostly with a mobile phone. The research paper is about choosing a product on which we will do and recommend a marketing mix. In order to come up with a good marketing mix, we gathered information online and from some interviews, discussion and findings which finally given our own conclusions and recommendations.

The outcome of the paper concentrated on the recommended marketing mix for a chosen product which is lumia from ‘NOKAI’ and for its competitor which is G21 ‘HTC’. Therefore, there are different own style between the two companies in doing their marketing mixes, also we believe that our recommendation for a marketing mix for Nokia is considerable. 1. 0 Introduction This research is focus on recommending a marketing mix for a chosen product which is Lumia 800 form the NOKIA mobile company. A new type of mobile phone, with new designed out looking and the powerful windows phone 7. operating system, not only can be used for daily phone calls, sending messages but also is a perfect integration of work and leisure for people with it can get contact with social network and surfing the internet and enjoy the music or movies, books anytime anywhere they want. There is no doubt that this product is popular among teenagers, but actually our target market is people from 15 to 40 years old. The key success factors in this market are as follows: Appearance design, Operating system, Product quality, Brand awareness.

Moreover, the reason why we chose Lumia 800 from NOKIA mobile company as our product is that representative products of NOKIA now whenever considering its quality or satisfaction As for the SWOT of NOKIA Company, firstly, the strengths is a position as industry leader in the telecommunications and electronics industry. Secondly, the weakness is that it is cannot sustain its current marketing rate. Thirdly, opportunity is that its marketing are all around the world. Lastly, threats are the competitive pressure from other companies, such as Apple, Google.

As for marketing mix of the product Lumia 800, the price we recommend is about 1800 RMB and we decide to promote it through TV, Magazine, Film or any other possible way. As for place, we plan to set up monopolized store and expanding to the overseas markets. The outcome of the research is that the NOKIA with an excellent marketing mix can finally overcome its weakness–the declining market position. It is the target object on (Lumia 800) and popularity of windows phone OS that determine our choice of the marketing mix. 2. 0 Methods . 1 In order to collect the data, an interview is done in relation to the NOKIA Company and the product by asking questions from the managers in phone selling company. Moreover, we visit some appropriate Internet sites such as the official website of NOKIA and Google, Wikipedia and so on. From the way we used different websites to widen the scope of our research and gather important facts during interview to give clarity to vague topics concerning our report, the data collection methods can perfectly address the research bjectives. 3. 0 Findings A key competitor is the HTC Mobile Company and its marketing mix is as follows The product is HTC G21(Sensation XL), with 4. 7 inches of high-definition display and GSM & WCDMA network system and 8000000 pixels camera and it is a very popular product of HTC. The price on sale now is 2079 to 3699 RMB. As for place, product are on sale in monopolized store around the world. Promotions can be done in several ways, like on sale with plan cap or with tax-free.

The analysis of the current SWOT of NOKIA is as follows: strengths is its position as industry leader in the telecommunications and electronics industry. Also, it shows to the world the incredible ability to adapt to the market. Weakness may be that it has grown so huge, as the fifth most valuable brand in the world, that it cannot sustain its growth at its current rate. It still have some opportunities like Nokia’s leadership in the area of mobile phones and its versatility open the company up to a wide variety of communications and mobile device possibilities — markets that are growing throughout the world.

Threats are that Nokia is facing a number of threats from companies such as Apple, Google, and Research in Motion, all of which are investing heavily in the mobile phone industry in an attempt to gain dominance. The marketing mix we recommend is as follows: NOKIA Lumia 800 with large display screen, the shape of phones, the face plates and the soft key touch pads charges about 1800RMB which can be accepted by most of the customer and maybe the innovation of Promotion Method Oriented by Target Consumer is necessary. We decide to promote it through TV, Magazine, Film or any other possible way.

As for place, we plan to set up monopolized store and expanding to the overseas markets. We came up with a promotion strategy: NOKIA can enhance its Promotion Management and built a large database, making a dose control of terminal promotion activities. Furthermore, it is a good choice to have a surprise price on holidays and it can be on sale on a duty-free shop to attract more customers. Here are the interview summary: The ratio of concern of the Symbian OS (NOKIA’s own system) Month1357911 The ratio of concern (%)67. 265. 460. 857. 754. 847. 2 Table 1 From table 1, we can know that the ratio of concern for the Symbian OS in 2010.

The Symbian OS is the primary OS of NOKIA; the data can reflect the rise and decline of NOKIA. Graph 1 The data from Graph 1 is ajusted from the table 1. According to this bar graph we can clearly see the trends reflecting the rise and decline of NOKIA. 4. 0 Discussion We came up with the marketing mix based on its recession during these years and also referred to the statistical data and the current situation analysis. the reason why we chose Lumia 800 from NOKIA mobile company as our product is that representative products of NOKIA now whenever considering its quality or satisfaction.

And the price is 1800 because it can easily be accepted by ordinary people to attract more customers. We build up NOKIA’s own franchise stores, according to the successful case-apple store. There are a lot of factors will affect the findings, like the information online and the interview of or the advice from teachers. 5. 0 Conclusions and recommendations After long time discussion and findings and information we gathered online and from interviews we determine our final marketing mix for NOKIA Lumia 800. To summarize, the price we recommend is about 1800 RMB and we decide to promote it through TV, Magazine, Film or any other possible way.

As for place, we plan to set up monopolized store and expanding to the overseas markets. The final marketing mix has its competitive edge when we consider its price. The price is reasonable but still quality-guarantee. What’s more? The brand awareness, just like most people will choose to buy the well-known brand instead of a normal brand even they have a similar product at same price. Reference List Wikipedia (2012), Nokia [online] Available at: http://en. wikipedia. org/wiki/Nokia (Accessed November 5, 2012) Wikipedia (2012), HTC [online] Available at: ttp://en. wikipedia. org/wiki/HTC (Accessed November 5, 2012) HTC. COM (2012), the HTC phones [online] Available at: http://www. htc. com/us/smartphones/ NOKIA. COM (2012), the Lumia 800[online] Available at: http://www. nokia. com/us-en/products/phone/lumia800/ (Accessed November 5, 2012) Wikipedia (2012), marketing mix [online] Available at: http://en. wikipedia. org/wiki/Marketing_Mix (Accessed November 5, 2012) Mysmartprice (2012), the Lumia 800[online] Available at: http://www. mysmartprice. com/mobile/nokia-lumia-800-msp1531 (Accessed November 5, 2012)

Culture, Goal-Oriented Communication (Leadership), and A Fast Growing Organization: the case of Samsung Electronics Hur, Chulboo, Professor Emeritus, Myongji University, Seoul, Korea and Adjunct Professor of Business Management, Yanbian University of Science and Technology, Yianji, Jilin, China Mobile phone 010-9872-7492, e-mail: chulhur@hotmail. com and cbhur@mju. ac. kr Summary In response to the globalization and rapid economic growth of China, the Korean economy has transformed itself.

A few Korean firms, spearheaded by Samsung Electronics, have successfully driven the economy, even if the Korean economy has difficulty in the ‘nut cracker’ situation. The success of Samsung Electronics has been attributed to the strategies of ‘selection and concentration,’ ‘successful restructuring following the IMF crisis,’ ‘long-term vision and unprecedented risk-taking strategy,’ ‘speed management,’ ‘world class brain management’ and ‘successful benchmarking of both Japanese and American management,’ among others. But in regard to Samsung’s strategies, cogent questions need to be examined.

Associated essay:

For example, would any Korean firm be able to apply the same strategies as used by Samsung Electronics, and produce the same success? No one could confidently say yes to this question. Samsung Electronics has dramatically achieved a successful transformation between 1987 and 1999. We argue that this is the result of Mr. Lee, Kun Hee (the ex-CEO of Samsung Group)’s strategic learning leadership and its resultant paradigm shift, and that this can be applied to the emergence phenomenon of complexity theory that provides the momentum of evolution of the corporate cultural and/or core competence.

The paper explores the dynamic process of this phenomenon. 1 1. Introduction: Korean Economy and Samsung Electronics After three decades of rapid industrial growth, in itself a dramatic transformation from the poverty-stricken agricultural economy of 1961, the Korean industries became exposed to the predicament of borderless competition as well as the threat of the formidable super-speed chaser, the Chinese economy.

In the time between Korea’s acceptance as a member of the WTO in 1992 and the IMF Control of the Korean Economy in December 1997, pessimism was high among the Korean leading circles regarding the future of the Korean firms and the economy. Nut Cracker Theory of the Korean Economy (Maekyung Booze Allen & Hamilton Report, July 1997) Japan 10. 22 2. 8845, 4,029, 3. 5696 Korea 1 1 1 1 China 2. 35, 5. 7994, 6. 09, 5. 8399 2000 World Bank estimated GDP ratio in black color 2007 IMF estimated GDP ratio in Red color 2007 US CIA estimated PPP adjusted GDP ratio in blue color 2000 World Bank estimated PPP adjusted GDP ratio in violet color The figures have been corrected in this diagram from the author’s 2004 article But miraculously, the Korean economy has partly escaped the “nut cracker situation,” thanks to a few large firms spearheaded by Samsung Electronics. For example, three Korean firms were selected in the Fortune 100 companies in 2006. They were Samsung Electronics, LG, and Hyundai Motors. But this year, Samsung Electronics was listed as the only Korean firm with US$92. 26 billion in sales in the Forbes 100. It 2 is ranked 6th among Asian firms, following Toyota, PetroChina, Mitsubishi, UF Financial, and Bank of China.

Samsung electronics ranked 3rd in the Info Tech 100, in the 2007 Businessweek scoreboard, following AT&T and Hewlett Packard. Four Chaebol groups were responsible for 48% of the country’s exports, 49% of the Seoul stock market, and 42% of GDP based on sales in 2004. And in 2008,10 major export products from Chaebol groups account for 61. 1% of the nation’s total export (ChoongAng Daily, Feb. , 6, 2008). The Korean Economy Pulled by 4 Chaebol Groups ChoongAng Daily, April 29, 2004 The major Korean firms exhibiting global competitiveness are centered on the following industries: semiconductors/ TFT-LCD, mobile phones, petrochemical roducts, shipbuilding and small- and medium-sized automobiles. Businessweek (July, 2007), in cooperation with the English Interbrand Co. , reported that 3 Korean firms were included in the 100 global top brands value. They are Samsung Electronics, (21 th place); Hyundai 72nd place); and LG Electronics (97th place). Samsung’s brand value increased 4% from the previous year’s 15 billion dollars to 16. 4 billion dollars, but lost one place in ranking. Businessweek reported that Samsung Electronics is 3rd in Asia, after Toyota and Honda.

Samsung is superb in LCD and high capacity memory chips, but suffered loss because it failed to enter into the low price cellular phone market in the year 2006. Hyundai Motors attained success by jumping to 72nd position from 2005’s 80th through explicit brand strategies and aggressive strategies in the overseas market, and thus 3 became the 8th global auto maker. LG also ascended 14% by improving brand value of 400 million dollars. USA captured 1st through 5th places, and registered 52 firms: Germany, 10; France 9, Japan, 8; England 6; Swiss 4; Korea, 3; and Finland, Italy.

Sweden, Spain, and Bermuda each listed 1 firm in the 100 brand powers. BusinessWeek July 2007, based on the Interbrand Co. , England Research data. 2007 Businessweek Top 100 Global Brands Scoreboard 2007 2006 Change Brand Name 2007 Coca-Cola Microsoft IBM GE Nokia Toyota Intel Honda Samsung E. Sony Hyundai Brand Value $m 2007 65,324 58,709 57,091 51,569 33,696 32,070 30,954 17,998 16,853 12,907 4,453 Brand Value $m 2006 67,000 56,926 56,201 48,907 30,131 27,941 32,319 17,049 16,169 11,695 4,078 Parent Company Coca-Cola Microsoft IBM GE Nokia Toyota Intel Honda Motor Samsung Sony Hyundai Motor Matsushita

Brand Brand in Rank Rank 1 2 3 4 5 6 7 19 21 25 72 1 2 3 4 6 7 5 19 20 26 75 Country Rank 0 0 0 0 1 1 -2 0 -1 1 3 U. S. U. S. U. S. U. S. FINLAND JAPAN U. S. JAPAN S. KOREA JAPAN S. KOREA 78 77 -1 Panasonic 4,135 3,977 electric Industrial JAPAN 92 97 98 92 94 90 0 -3 -8 Lexus LG Nissan 3,354 3,100 3,072 3,070 3,010 3,108 Toyota Motor LG Nissan Motor JAPAN S. KOREA JAPAN Three years earlier in 2004, Businessweek (August 9~16, 2004) listed only Samsung Electronics as the sole Korean firm in the list of 100 global brands, and also placed the firm in 4th place in the global top 5 brands (world ranking was 21st).

The Weekly also published a special edition on the Samsung brand (November 29, 2004) and reported that Samsung’s competitive edge came from cost reduction through innovation and world class industrial designers who enabled the firm to capture five world class 4 design prizes in 2004. The firm had also won over 100 design prizes between 2000 and 2004. Samsung Electronics ran her own innovative design institute, and its designers took lectures directly from IDEO, the top class US design company, and from faculty members of a US design school located in Pasadena, California.

The number of the firm’s designers increased from 170 in 2000 to 480 in 2004, accordingly. In the following table, the 2008 Forbes global 2000 big companies are reclassified according to country. Reflecting unfavorable world trade, there are signs of setback for the firms of traditional trading countries like Korea and Japan in profit ratio, but one can notice an increase in the number of firms in oil exporting countries and BRIC countries. For example, in terms of sales volume, Japan had 87 firms and South Korea had 24 firms in the 2007 Fortune 500, as oppose to France’s 38, Germany’s 37, and Great Britain’s 33 firms. 008 Forbes 100, 500 and 2000 Large Companies* Countries USA France Germany Great Britain Japan China Swiss Canada Spain Italy Netherland Brazil Australia Belgium South Korea Russia Norway Finland Luxemberg Panama 100, 500, 2,000 29, 165, 590 9, 32, 67 9, 26, 59 8, 34, 120 7, 47, 260 5+1, 12+7, 70+39** 5, 11, 37 4, 20, 59 3, 13, 28 3, 10, 37 3, 10, 24 3, 7, 34 2, 12, 50 2, 3, 12 1, 12, 52 1, 9, 29 1, 5, 14 1, 3, 12 1, 1, 8 1, 1, 2 Class I II III 5 Sweden India Taiwan Singapore Ireland Bermuda South Africa Mexico Turkey Austria Greece Saudi Arabia Portugal Denmark Thailand Israel Cayman Islands Czech Republic 0, 10, 29 0. , 48 0, 4, 41 0, 4, 18 0, 4, 10 0, 3, 25 0. 3, 17 0, 3, 16 0, 3, 14 0, 3, 13 0, 3, 12 0, 2, 11 0, 2, 10 0, 2, 9 0, 1, 14 0. 1, 10 0, 1, 4 0, 1, 1 IV 6 Malaysia United Arab Emirates Kuwait Chile Indonesia Iceland Poland Qatar Egypt New Zealand Hungary Parkistan Philippines Peru Columbia Morocco Barain Jordan Liberia Channel Islands 0, 0, 15 0, 0, 11 0, 0, 7 0, 0, 7 0, 0, 5 0, 0, 4 0, 0, 4 0, 0, 4 0, 0, 3 0. 0, 2 0. 0, 2 0, 0, 2 0, 0, 2 0, 0, 2 0, 0, 2 0, 0, 2 0, 0, 2 0, 0, 1 0, 0, 1 0, 0, 1 V *The global 2000 by Forbes. com, April 2, The Forbes 500 and 2000 figures include Forbes 100 and 500 figures respectively. *The Hong Kong figures were added to the Chinese figures. Samsung Electronics has maintained its position as a leader in semiconductors for 12 years after seizing first place in the global memory semiconductor chip sector with the introduction of the first 256-megabyte D RAM chip in 1994. The firm has been the world leader in the 8 hitec products such as D RAM, 28. 7%; S Ram, 33. 3%; Flash Memory, 30. 7%; TFT-LCD, 20. 5%; Display Driver Chips; 20. 5%; Monitor, 15. 2%; digital TV sets, 10. 6%; and Mobile Phones, 14. 3% (2 nd place after Nokia, beating Motolora in 2006). The Group, in total, has 25 world best products.

The firm has also been the number one exporter in Korea for 12 years since 1994. In 2004, Samsung Electronics has recorded W110 trillion in accumulated sales and W29 trillion in profits, clearing all the loss accumulated since 1973 when the firm first entered the semiconductor industry. In the entire semiconductor industry, including non-memory chip sectors, the firm is the world’s second largest chip producer following Intel, the 7 world leader. The Samsung Group contributes 21% of the nation’s exports; 20% of the entire stock market; and in sales volume, 18% of the country’s GDP.

As of 2005, Samsung has 23,000 researchers with over 2,400 doctoral degree holders spending an annual research fund of 4. 7 billion dollars. In 2000, Samsung ranked 6th in U. S. A. patent right applications. During 2005 and 2006, Samsung placed 5th. and aspires to be in the top 3 by the year 2007. (Lee, Chae Yoon, 2006) Samsung Electronics’ revenue was over 92. 26 billion dollars last year, but the firm recorded a 10. 3 billion dollar net profit in 2004, the 7th largest position among 9 world 10 billionaire firms. This surprised many Japanese opinion leaders, recalling the imilar phenomenon in 1999-2001, when a spectacular performance of net profit amounted to 120 billion won from semiconductors and mobile phones, at a time when almost all world leaders of semiconductor manufacturers recorded red ink (with the exception of GE, IBM, and Nokia. ) A bad period for chip producers worldwide, many leading semiconductor manufacturers closed down their production lines. The number of worldwide semiconductor manufacturers has declined from 22 in 1998 to 12 since 2004, including such famous IT leaders like Toshiba, Motorola, and Fujitsu.

Samsung Electronics faced some difficulty in mobile phones in 2006, but it improved in 2007, as there were some progress in the mobile communication services. Samsung Electronics agreed to begin 3rd generation WiBro commercial services across the United States on a nationwide basis with the service provider Sprint and Nextel, starting in 2008. WiBro is a wireless high-speed Internet technology that enables the transmission of data anytime, anywhere, even within vehicles moving faster than 100 kilometers (62 miles) per hour or on mountaintops.

The connection speed is even faster than a fixed-line Internet connection. In addition, Samsung Electronics has recently announced the development of the 4th generation WiBro technology which is expected to operate five times faster than the presently available 3rd generation WiBro system. Korea’s WiBro technology, also known as mobile WiMAX, is the result of three decades of continuous research. As it was solely developed in Korea, it is potentially far more lucrative than CDMA had been. The project was a product of collaboration between the Samsung Electronic research team and the governmental research lab 8 nder the governmental policy led by Minister Chin, Dae Jae, former President of Samsung Electronics, all under the influence of Samsung corporate culture, exemplified by: “look for our next lines of business, ten years ahead …” The story of Korea’s advance in telecommunications began in the 1970s, when the mechanical national telephone system reached a saturation point. To resolve the problem, the Korean government decided in 1976 to develop Korea’s own time division exchange, or TDX, a form of electronic operator. With 1,060 researchers working on the project, Korea became the 10th country in the world to develop her own TDX.

At the helm of this project, part of his national development plans, was Park, Jung-hee. President Park, Jung-hee, a self-educated economist, was the nation’s top class expert on the history of Japanese modernization since Meiji Restoration (1869). He laid the ground of the Korean industrial development in 1961, following the Japanese track. He also indirectly influenced the growth of the Korean Chaebuls and their technological development/learning processes. In 1989, the Korean government developed the TDX-10, together with the governmental research intitutes, the researchers in the Chaebol groups, and from the universities.

The outcome was a more sophisticated digital operator system, and as a result, Korea could afford to export the technology, although only a half of the parts used in the TDX were locally produced. However, all stages of the TDX-10, from design to software, were devised and produced in Korea. Samsung Electronics played a major part in the developmental procecess, but we must also note that Samsung alone started to build up global capabilities of semiconductor manufacturing all by herself as early as 1973. The foundation of Korea’s subsequent success in mobile phones was laid in 993, when Korea became the first country in the world to commercialize the code division multiple access technology, or CDMA, conceptually developed in the laboratory level by a small U. S. firm, Qualcomm. Unlike the time division multiple access, or TDMA, system used in Europe, which assigned a specific frequency for each user, CDMA allowed multiple subscribers to a single frequency. The CDMA was adopted by Korea because of low connection error compared to other technology in the Korean situation of high population density, of mountainous areas and multiple concentrations of high rise building blocks. Expectations were high with the hope that the Korean firms would turn huge profits from the Korean’s share of CDMA technology improvement, as countries such as China, India, and Brazil decided to adopt the system. But with Qualcomm demanding high royalty payments on CDMA source technology, its price competitiveness soon eroded. (The Korean firms have paid over 1 trillion won or $1 billion in royalty payments to Qualcomm, the CDMA source technology holder up to date. )

Moreover, Europe looked to nurture her own telecommunications companies with the development of the Global System for Mobile Communication, or GSM. The adoption of this updated version of TDMA meant Korean firms were further handicapped because the Korean firms were not able to sell CDMA technology to one of the world’s biggest cellular phone markets. In short, Korea found success by copying foreign telecommunications technology in the 1980s; and by the 1990s, Korea was commercializing foreign developed technology but still had a long way to go until technological independence. (ChoongAng Daily Aug. 10, 2006)

Future of Samsung Technological Capabilities: In close coordination with Government, Chaebol, and university research instututes, Korea developed a new generation of mobile phone wireless Internet technology. WiBro system, the new technology, is leading the rest of the world by years ahead. It is accepted as one of the standards by the World electronic organizations. Samsung Electronics has made trial-runs with Brazil, Venezuela, Croatia, and Saudi Arabia, and has begun entry into the US market, while telecommunication companies in Japan, Britain, France, and Italy, are showing keen interest in the technology.

WiBro shall be the fourth generation technology, if the CDMA technology used today is considered as the third generation. According to the agreement with Sprint, the US partner, Samsung Electronics will provide base stations, handsets, and chipsets. About 100 small- and medium-sized business firms will participate as well. Samsung estimates that the deal will produce 33 trillion won and create 270,000 new jobs. (ChoongAng Daily Aug. 9, 2006) Samsung Electronics has made successive technological breakthroughs, most recently in the world’s first 50-gigabit NAND flash memory chip, employing a new method called the charge trap flash, or CTF.

The firm is a world leader today in LCD TV, 10 mobile phone parts, and various memory chips. The CFT technology provides the foundation for entering the tera-bit [1,000-gigabit] age after 2010. Dr. Hwang, Chang-kyu, president in charge of Samsung Electronics R & D Division added that Samsung’s semiconductor division was different from its competitors in terms of its dual investment in facilities as well as in research and development. “This year, we spent 2. 8 trillion won ($2. 9 billion) on semiconductor research and development.

For CTF technology, we started to develop it five years ago and created an independent developing team three years ago. We have 30 to 40 of these development teams, so imagine what kind of developments we can achieve in 5 to 10 years,” he said. He had rosy predictions for the DRAM and graphic DDR DRAM markets, saying they were diversifying and could lead to a supply shortage. “Even now, Samsung is only able to meet 70 percent of the demand. Prices shall be good until 2009,” he said. “Samsung currently occupies 50 to 60 percent of the graphic DDR market and will provide 100 percent of the chips for the Nintendo game players,” he added.

Samsung Electronics developed the first 256-megabit NAND flash memory in 1999, and ever since, the company has doubled the capacity of its semiconductor on a yearly basis. The industry has even dubbed this phenomenon as “Hwang’s Law,” an allusion to Moore’s Law, which states that the processing power of chips will double every 18 months. NAND flash memory chips are mostly used to store data in small devices such as digital cameras and music players. The chip Samsung presented was made using 40nano technology; last year, chips were made using 50-nano technology. The difference allows more semiconductors to be produced from each wafer.

Forty nanometers is 3,000 times thinner than a human hair. It is expected that the new NANO chip would create new Flash memory chip demand worth $60. 6 billion by the year 2016 when the technology becomes fully commercial in 2008 2. Previous Research works on the Samsung Transformation Samsung Electronic’s evolution from a fledgling company within a developing nation to a powerhouse global leader and technological innovator has attracted much attention from academicians and journalists, and as a result, numerous articles have documented the transformation, mostly from Samsung in-house researchers, journalists, and some 1 Japanese observers and scholars, as well as a few Korean scholars. Senior researcher Chang, SangSoo from Samsung Economic Research Institute (SERI, August, 2005) observed that the Samsung Group has gone through four stages of growth in an accelerated pace, owing to the superb leadership of the CEO and the inspiring corporate culture in which the upper management work under a shared value system, exemplified by: “a single mind towards a single goal. ” His four growth stages are as follows: 1) Inauguration of the enterprise and foundation of the system between 1938 to late 1950’s: Included in this period were the turmoil and confusion of the Liberation (1945), the Independence (1948), and the Korean War (1950 -1953). Samsung has started the first Japanese-style public new employee recruit examination in Korean history as early as in 1957. (Recruitment of recent college graduates based on general examinations—in effect, an IQ test. ) (2) Growth from a small- and medium-sized firm to one of the large firms in Korea. It had elements of the early stages of a business group.

It was the period of General Park, Chung-hee’s Military Coup and the launching of successive five-year economic development plans between late ‘50’s to mid ‘60’s. (3) Ascendance to the Korean top enterprise between late ‘60’s to late ‘80’s. This period includes the 6th Five-Year Economic Development Plan and the 1988 Seoul Olympic Games. (4) Ascendance to the global top Enterprise between late ‘80’s to now. This period started with the transfer of the leadership from the first generation group chairmanship to the second generation group chairmanship, thereby marking “new management. There were crises, rising from the Korean WTO participation, and turmoil caused by the IMF crisis, as well as the 2002 Korea-Japan World Cup. Chang believes that the quantum leap resulted from the superb human resources management and the overall strategies of the Samsung group. Samsung Electronics, the forerunner of the Samsung group, has gone through a paradigm shift of personnel management in the following ways: 1. 2. Growth strategy based on mass production and economy of scale centering on seniority pay system until 1996. Survival strategies under IMF crisis–employing a merit system of individually 12 ifferentiated salaries between 1998 and 1999. 3. Core competence based personnel administration of up-grading overseas personnel and team based compensation system adopting profit sharing and stock option programs between 2000 and 2002. 4. Further strengthening of the core competence based personnel administration aiming at solidifying the pool of the global top grade human resources. And the evolution of the human resources management has been reinforced by: (1) The regional expert system for the employees to get on-the-spot training for one year. Over 2800 persons have gone through the program between 1990 and 2004. 2) Through Samsung MBA program since 1995, the firm conferred the master degree to some 460 persons. The program is divided into Socio-MBA and Techno-MBA programs. (3) Under the overseas genius program, over 100 full scholarship grants were awarded to top 5% level students enrolled in India, China, and Russian top universities since 1995. (4) An in-house semiconductor college was established for 30 graduates with BS degrees, 20 graduates with masters degrees, and 3 graduates with doctoral degrees. (5) An in-house manufacturing technology college was set up for the retraining of 100 overseas engineers. 6) Five to six week courses for the functional expertise educational programs were set up to provide training for some 700 specialists in the fields of finance, planning, procurement, marketing, and personnel administration. Autographic writer Hong, Ha Sang (2005) sketched 16 Samsung top managers, both in Korean and Japanese. He emphasized, similar to the opinions of many Japanese journalists, that the troika leading the Samsung transformation consisted of (1) Chaiman Lee, Kun Hee, (2) a group of professional managers, and (3) the Center for Structural Realignment.

Cho, Tu Sup, Professor of Yokohama National University and former Professor of Nagoya University in Japan with Yoon, Chong-sup, his Ph. D. student and a researcher of SERI, wrote a book in Japan titled, “ to technological capability – technological learning process towards global business,” based on Yoon’s dissertation 13 (2004). Their research is centered on a single business entity, an organic cluster comprised of four Samsung companies. They are: Samsung Electronics, Samsung SDI, Samsung Corning, and Samsung Electricity.

And their classification of the technological learning process includes the following four stages: (1) Absorption stage: It took place in the early 1970’s in a declining industry of black and white TVs, tuners, cathodes, tubes, DY and FBT. Samsung relied on a simple assembly line technology of joint venture partners, such as Sanyo, NEC, and Corning. But Samsung also intensified its technological absorption, having its engineers attempt to reverse-engineer beyond the level of formal technological cooperation by penetrating into the tacit knowledge behind the explicit knowledge.

The firm implemented strategies of producing the parts domestically rather than simply relying on the importation of parts from partner companies. Samsung Electronics also established the vertical integration of the electronic products, even starting to export black and white TV sets to Japan on OEM basis. Depended on the Japanese technology. (2) Emulation stage: It started in the late 70’s as it evolved into color TV set assembly. Samsung had developed some level of maturity in technological capability through reverse-engineering. And as a result, Samsung could take ver some of the decision power of the joint ventures. (3) Improvement stage: It took place in ‘80’s, a rapid growth stage for Samsung technology in the area of large size flat panel TV including large size CPT, CTD, and CRT. Samsung became self-sufficient in designing numerous models and developed mass production technology. The firm could export plants and compete with overseas manufactures of color TV sets with its own R&D division. Samsung diversified its products including the development of an overseas sales network. (4) Innovation stage. The ‘90’s and beyond marks the development of high efinition TV and digital TV. Samsung solely developed TVs of an original concept, such as thin TV sets. Samsung could enjoy the freedom of cross licensing, strategic alliance, and it could export products on her own brand, through her own network of overseas production bases. The book does not deal with semiconductor technology capability building, because Samsung had to build the capability all alone, as no advanced nations were willing to provide assistance in the sensitive area. However, the corporate culture of strategic 14 learning has been preserved and documented. When Korean technological and ducational capabilities were poorer in comparison to that of advanced nations, Samsung’s intense in-house higher educational system continued to benchmark themselves against the GE in-house educational system, and Lee, Kun Hee’s “genius management” provided many effective solutions. Professor Kim Shin proposed a strategic model of Samsung in comparison with Toyota Motors. (June, 2003. Japan Korea Association of International Management, Tokyo. ) Samsung Electronics World rank 3rd in IT, Fortune ranking 115th and Financial Times, 67 2002 records th Toyota Motors 3rd in Auto, Fortune ranking 10 h Sales, 40. 5 billion; Net profit 7. 25 bil. (Won) 14. 5% of total South Korean export Sales, 16 billion; Net profit, 1. 4 bil (Yen) Management strength Superior adaptation motivation human to resources, change, high speedy work Positive adaptation to change, Rational management based on strong community spirit JIT inventory management Unique management concept Digital convergence Production mode Production of multiple products in small quantity Production of multiple products in small quantity Japan is in trouble but Toyota is an exception Corporate image Digital best Strategy

Global HRM, increase the number of the world best products and social Globalization, Concentration on and sustained cost reduction R&D friendliness Chang, Se-Jin (2008) also compares Sony and Samsung, the winners of both analogue electronics and digital electronics centering on strategies and HRM. Journalist/writer Lee, Chae Yoon (2006) compared Samsung and Toyota in a similar manner: He observed that Toyota benchmarked Ford to overcome the adverse productivity rate of 8 to 1 as early as 1935, and again in 1949, and, in that process, Toyota developed what is known as the Toyota Production System, or Just In Time 5 (JIT) and Kanbang system (zero inventory), all contributing to the “Toyota Way. ” He also observed that since 1987, Samsung has benchmarked GE and Toyota in the development of world best products, speedy decision making, and R&D and Market strategies. A senior consultant and an expert on the Korean industry, Midarai Hizami (????? ) from the Nomura Research Institute of Japan observed that the strength of the Korean business system reform lies in the efficacy of the Samsung Electronics’ decision making mechanism, which was lacking in the Japanese firms. (2005) He observed that Mr.

Lee Kun Hee, in power, was making important decisions, and the system of external board members and board of directors was nominal in the corporate governance. He summarized that the uniqueness of Samsung Electronics was due to (1) the corporate chairman’s unique ability for judgment and leadership, (2) existence of a corporate strategic center called the Center of Structural Realignment, (3) delegation of power to professional managers and their compensation system, and (4) business projects based on strategic marketing viewpoint. Finally Midarai proposed that the Japanese company reform planners had to be mindful of the Samsung system.

A business consultant and Chairman of Japan Debate Association, Kitaoka, Doshiaki (? ??? ), published a book titled “I am afraid of Samsung” documenting a year long debate series on the threat of Samsung and how the Japanese firms could roll back. He concluded that Mr. Lee Kun Hee was a genius, who had an exceptional gift in both technology and management, and who would concentrate solely on long-range strategic research to command outstanding think tanks and watch dogs called the Strategic Realignment Center and the Samsung Economic Research Institute.

He also argued that, with Mr. Lee’s long-range strategic view, swift decision making, and enormous scale of resources allocation, Samsung could have overrun all the world top class giants of the Japanese electronic firms when the IT bubble collapsed in 2002. He felt that the Japanese CEOs were handicapped because they would stay in their positions for a relatively short term (2-3 years), while Mr. Lee, Kun Hee could stay in his office for life, thereby able to formulate long-range strategies for Samsung.

He argued that the Koreans were so dogged that they were posing a potential threat to the future of the Japanese firms’. 16 Hasekawa, Tanashi (???? ), management professor of Kyotokakuen University, contributed an article to Nikkei Business Monthly Magazine and commented that the Samsung quantum jump from Korea’s best to global leader was dependent solely on Mr. Lee Kun Hee’s leadership. (July 11, 2006) He observed that when the global IT bubble collapsed in 2000, Samsung surpassed the poorly performing Japanese electronic firms including Sony, and became a global IT power.

In the process, Mr. Lee’s “New Management” became the leading vehicle of the transformation process. According to Dr. Hasekawa, ex-CEO Lee Kun Hee. lead the Samsung innovation even before the Korean economy was crushed by the 1997 liquidity crisis, by taking the shareholders seriously, putting emphases on the transparency of management and accounting, personnel management based on ability, and the introduction of an annual salary system. In addition, he observed that the Center for Strategic Realignment, in cooperation with Mr.

Lee Kun Hee and the professional managers, played key roles in information gathering, sense-making, and planning in an organic manner to effectively operate the overall business. An example can be found in the merging of the semiconductor and telecommunication business units. The decision to select and concentrate on three major areas, namely electricity-electronics, finance-trading, and service, has provided the basis for the Samsung jump into a position of global power. 3. Discussion

The points of Chang, Sang Soo’s (SERI, August, 2005) four stages of growth, the jump from the Korean top to the global top based on the superb leadership of ex-CEO Lee Kun Hee and the superb corporate culture of upper managements’ shared value, exemplified by “a single mind towards a single goal,” is well understood in a post facto analysis. But his proposal of a superb human resources management, outstanding educational system, and retraining systems can be better understood as an end result of the strategic means rather than as the actual cause of the transformation.

After all, most of the leading global firms of Japan, USA, and Korea share similar characteristics with Samsung. Nonetheless, it is possible that Samsung has simply benchmarked itself against these rival companies, surpassing them even, in regards to these specific factors. Although Chang, Sang Soo’s proposal could be understood as a occurrence of novelty, with a serendiptious effect resulting from its organizational development techniques. However, Samsung’s transformation has not been a transient phenomenon. 7 In fact, Kim, Chang and Lee,s comparson of strategeis and HRM is not sufficient to explain the rapid change processes of Samsung. And many writers make a point to emphasize the rapid and timely decisions made by Lee, Kun Hee in regards to the speedy growth process, as well the leadership undeterred by outside inteference. Samsung, at its inception under the leadership of Mr. Lee, Byung Chul (founder and the first CEO of the Group), had been an ardent follower of Japanese Management. Mr.

Lee received his education from Waseda University in Japan before WWII, and was famous for his annual “Tokyo Conceptualization:” He would stay in Tokyo at the beginning of every year in order to learn firsthand the forecasts of the coming year as made by Japanese journalists and economists through TV and mass communication media. He also had a Japanese girl friend in Tokyo. Also, he carefully studied the Japanese government’s new year economic plans and new year strategies for major Japanese corporations.

He would personally follow through this information with Japanese experts and leading Japanese businessman friends. He, then, would collect necessary books and articles and return to Korea to encourage his top managers to read the material before formulating each year’s strategies and planning for the entire Samsung group. In addition, they also examined the forecasts made by the Korean experts. Mr. Lee, Byung Chul was not only the first generation CEO for Samsung but also one of the pioneers of the contemporary businessmen of Korea.

Partly we can state that Samsung Group is an outcome of the Korean government’s modernization effort to transform the economy from one of the world’s poorest agricultural economy to an advanced industrial economy under President Park, Jung Hee between 1961 to 1979. However Samsung had been a forerunner of a small group of successful large corporations who quickly grew to keep pace with the rapid growth of the national economy. It was well known that President Park, Jung Hee, the architect of the Korean economic miracle, had thoroughly studied and became one of the Korean op level experts on the Japanese industrialization history since the Meiji Restoration. But General Park was not particularly favorable towards Samsung from the beginning of May 16, 1961, the date of his military coup d’etat. Rather he was hostile, in the early days of coup, toward all the Chaebol or rich men because of his concept of socialistic and Confucian justice, at the time, reflecting the general sentiment of Korea and the ever critical Korean mass communication. General Park’s economic development policy was greatly influenced by socialistically oriented economist Park, 18

Hi Bum, the then dean of Commerce College, Seoul National University, and they agreed to mobilize capital from the rich families including the Chinese restaurant owners in Korea. Furthermore, the Military Government staged a currency reform with disastrous results. The event provided Mr. Lee, Byung Chul from Samsung Group momentum to stage a personal confrontation with General Park (who then was elected to the Presidency of Korea) in 1963, and persuaded President Park with a plan of industrialization of import substituting, export oriented growth policy, and the normalization with Japan.

Lee, Byung Chul contributed an article on the same idea of Korean economic development plan to Hankuk Daily Newspaper in Seoul, then, owned and operated by Deputy Prime Minister of Economy, Chang, Ki Yung. In the earlier phase of Korean industrialization, there was serious debate among the scholars and policy makers of Korea, with forceful arguments that Korea should build agriculture first before industrialization, because Korea had no basis of industrialization at all.

These models were available in Taiwan and Denmark. And Denmark educated agricultural economist Yoo, Dal Young and Max Weber economist Choe, Moon Whan, both from SNU, who were in turn personally tutoring President Park, who would later formulate Saemaul movement to change the Korean farmers’ culture, in the manner of McClelland’s achievement motivation education from Harvard, in order to develop an agricultural economy without much material investment. Since Mr.

Lee, Byung Chul and President Park, Jung Hee’s meeting, President Park decided to take Mr. Lee, Byung Chul’s Japanese style of the “industrialization first policy” with a Weberian push, in addition to his all-out effort on the export oriented industrialization projects and thereby attained the ‘Han River miracle’. But in the process, he delayed the ever mounting public desire for democratization and ended his life tragically in October 24, 1979, with his famous last words, “spat upon my tomb later. After a few years of trial and effort, President Park’s economic plan was more or less settled around the US educated econometrician Nam, Duk Woo, an engineer oriented bureaucrat Oh, Won Chul, along with the use of the history of Japanese industrialization as the main textbook after normalization with Japan in the mid ‘60’s. Also, his policy line did not deviate much from Samsung’s first CEO Lee, Byung Chul’s 9 original 1963 proposal. Along the same line of thought, Hong, Ha Sang’s (2005) sketching of Samsung’s top professional managers can also be taken as providing the necessary condition for the transformation because all leading OECD global corporations have plenty of top level professional managers similar to Samsung’s “genius management. But the genius does not automatically yield global management. Anyway, Mr. Lee, Kun Hee, in a way, has adopted American style management on top of his inherited Japanese style management with a Korean color, by recruiting global scale top managers with engineering backgrounds, which is rare in traditional Korean managers unless the founders also have engineering backgrounds.

Because of business closely linked to the governmental economic development plan at the same time to deal with every level of governmental Confucian feudalistic heritage, most of the top managers from large corporations have consisted of economists and lawyers to cope with the governmental or pseudo governmental interference and for lobbying purposes. Mr.

Lee, Kun Hee maintained groups of lawyers and economists, but he stepped aside from the Korean conventional practice and recruited professional top managers from a combined elite of engineering and business specialties and encouraged them to break away from their traditional conservative bureaucrat nutshells and exhibit their high level entrepreneurship of experimentation including a certain a latitude of failure tolerance

Nikkei Business weekly magazine, (July 14, 2006) maintained that “Samsung power originates from passion and solidarity,” and this was the very aspect that was missing in the Japanese firm. It was pointed out in the article that the strength of Samsung human resources management can be found in the strength of regional expert development program to strengthen Samsung marketing in strategic regions such as China and India, as well as in the potential growth markets, like France and Italy.

The missing link was not fully described in the article regarding the “passion and solidarity” behind the superb HRM. The question remains: What makes the top managers and employees deeply moved with this burning passion? A Korean diplomat, who was stationed in Japan for a long time, wrote a very persuasive book in Japanese, contrasting the two different cultures of Korea and Japan: Park, Seun Moo, ‘Sunbi’ (humanity scholar-poet-politician) and ‘Samurai’ (sword man-scholar-politician), 20 Tokai University, Japan (2004).

One aspect of contrast can be seen between emotive idealism and cool headed pragmatism. And there are some scholars and businessmen in Korea who can harness the Korean passion and emotive energy into the productive Korean style business management: Lee, Myun-woo, “Create W theory of Korea, 1969” (as oppose to McGregor’s X theory and Y theory and Okuchi’s Z theory or Americanized Japanese theory) and Lee, Chang-woo, “Han Management, 1992” (Harness Long suppressed emotion, Han, 1994) Chin, Dae-jae, “Manage Passion, 2006” The secret also lies in the American style competitive compensation system.

In the words of Mr. Lee: “The incentive system is the greatest invention of the century, turning the tide favorably for capitalism, vis-a-vis socialism” where the top managers’ annual income is roughly several times higher than that of the comparable top managers in Korea, and the system runs down throughout the Samsung system to the very bottom. Cho, Tu Sup and Yoon, Chong Sup’s joint work narrates the learning and maturity process of Samsung’s technological capability. The work is descriptive of the past track, but it is limited in causal analysis.

However, the strategy of technological capacity has been the core of the Samsung organizational learning in the age of globalization, “the first comer takes all. ” “There is no place for the second comers,”-all translated into the catch phrase—increase the number of the world best products. Also, Samsung observers do not fail to mention the golden triangle of Mr. Lee, Kun Hee, the Center for Structural Realignment, and the outstanding abilities of elite top management groups, as the source of the Samsung transformation from the Korea best to the global best.

But Japanese observers tend to put more emphasis on the outstanding leadership of ex CEO Lee, Kun Hee. There are at least three books published by a group of Korean journalists and a writer. They are “Samsung Rising: Why Samsung Electronics is Strong,” (2002, Hankuk Economic Daily) “Lee, Kun Hee,” by Hong, Ha Sung (2003, Hankuk Economic Daily), covering the period immediately after the Samsung Spectacular Performance between 1999 – 2002, and a slightly critical autobiography by Kang, Jung Man, titled “Lee, Kun Hee’s Era,” reflecting increasing criticism of Mr.

Lee because of a ”no union policy” and a suspected immoral deal in the process regarding his property inheritance for his son, etc. (2005, Personality and Thought) 21 What has Samsung achieved in the process of organizational transformation that made a paradigm shift to facilitate an essential part of the Korean-style management? In other words, what kind of model or models could be applied to explain the transformation processes of Samsung Electronics and Samsung Group? There are at least three models, which can explain the change process of Samsung.

These are: Strategy models such as R&D strategy and core competence models. Organizational theory models such as HRM, leadership, learning and culture Knowledge management model But each of these models can only provide a partial explanation of the dynamic processes of organizational transformation within the Samsung Group. Strategy models: R&D strategy and core competence model: There is the effect of equifinality, one of the concepts of General Systems Theory and/or contemporary complexity theory) in most of the successful firms’ strategies and outcomes.

All the global leaders have similar strategies in the large framework of aspiration towards global leadership. The question is, how does one attain them. Almost every Chebol group with better technological leadership adopted a similar strategy when South Korea signed the WTO membership in 1992, but only Samsung has reached the goal(s). The simple contrast cannot explain the dynamics behind the quantum leap of Samsung from a developing nation status to the advanced nation status of Sony, Erickson, and Motorola, the established leaders of the industrialized countries.

Samsung can be better compared to the NEC case of 1980’s vis-a-vis GTE. C. K Prabalad and Gary Hamel (Harvard Business Review, 1990) observed that top executives will be judged on their ability to identify, cultivate, and exploit core competencies that make growth possible. And Mr. Lee is the right person in that capacity for Samsung. GTE 1980 Sale 1988 Sale $9. 98 billion $16. 48 billion NEC $3. 8 billion $21. 89 billion 22 In 1988, GTE has become a telephone operating company with a position in defense and lighting.

GTE has divested Sylvania TV and Telenet and put switching, transmission, and digital PABX into joint ventures. In the same year NEC has emerged as a world leader in semiconductors, consolidated a position in mobile telephones, facsimiles, laptop and mainframe computers. As early as in 1970, NEC communicated her strategic intent of computer and communication convergence (C&C) both internally and externally. The NEC’s strategy has been adopted by most South Korean firms as the Government proclaimed in 1983, the 1st year of the Korean Information Age.

Samsung Group has concentrated her whole effort towards the strategic intent of “world best” and “increase number of world best products. ” It’s organizational culture is simplified in this precise catch phrase and readily communicated to every corner of the system. According to the authors Prahalad and Hamet, The most powerful way to prevail in the global competition in the ‘80’s were top executives’ ability to restructure, de-clutter, and de-layer their corporation, but in the ‘90’s on, they will be judged on their ability to identify, cultivate, and exploit the core competencies that make growth possible.

And this was exactly what Mr. Lee did since the beginning of his chairmanship. Samsung’s successful transformation in the last decade or more can be explained from successful organizational change and innovation model and/or leadership model and/or strategy of core competence building model and/or knowledge management model and more. But it can be enveloped into organizational learning, centering on transformation of organizational culture and cultivation of core competence. Some observers attested that Jack Welch started from restructuring to reform of organizational culture, but Mr.

Lee went the other way around because the very unfavorable Korean socio-cultural environment and the 1997 IMF crisis have facilitated the process. Now under Mr. Lee, Kun Hee the leadership of the new Korean management style is a blend of both Japanese and American styles of external labor market and differential compensation and no life long employment, with the element of Silicon Valley’s revolutionary spirit. And it is also actively benchmarked by many Korean firms, as observed by Professor Lee Byung Chul (2002).

There are indications that Japan, too, is groping reluctantly towards a new model. 23 After all, many aspects of the Japanese cultural model can be considered as a reflection of globally small firms in the stage of rapid growth, rather than the uniqueness of the culture. A new approach is recommended to tap “culture” holistically and longitudinally instead of by simple snapshot of two firms for better causal explanation as practiced by political scientists, communication scientists, and sociologists relying on secondary sources of data too. Samsung leadership under Mr.

Lee has gone through a systematic, dynamic, organic and nonlinear process of leadership of strategic or targeted organizational learning centering on core competence building. In the global arena, prevailing firms are mutually inspired by a competitive mutual benchmarking process among the world best firms. And it is observed that, of late, Samsung and Toyota are mutually benchmarking. (Lee, Chae Yun, 2006) Recently, Mr. Lee stated, in the presidential meeting of Samsung corporations, “we don’t need top executives who are copying someone else’s ideas and strategies”. As many of our products are in the leading positions in the global market, we lost the target to benchmark or imitate. Samsung must strive towards a unique and differentiated creative management. ” “With negotiation on FTA with U. S. A. for an accelerated domestic market opening and with China making a big stride in the global market, we are faced with both crises and opportunities. We must discover and cultivate a creative management system and creative personnel. ” (Hankyung Economic daily, June 28, 2006) As many observers have attested, Samsung Electronic has the elements of GE and Toyota.

It is natural that any firm among the global leaders would attempt to benchmark the best practices for the best performing companies. But one should not overlook the fact that there is an organic approach in the Samsung word “fusion. ” Technological capability advancement, strategies of marketing and finance, and the process to convert into market taste of design are simultaneously used to break through the barriers of bureaucracy, or the tyranny of the small business unit, as written by Prabalad and Hamel (1990). Bureaucracy is the greatest invention of the Industrial Revolution.

The founding fathers of economics and sociology, Adam Smith and Max Weber, respectively, described the merits in an elaborated manner: specialization and division of labor. How to retain the merits of the system and at the same time reduce the inherent problems of delay and red tape? In 1992, Mr. Lee was awarded the Korean Management Prize 24 of the Year at Korea University by the largest Korean business professor’s academy, The Korean Association of Business Administration. In his acceptance speech, Mr. Lee said in a slow and hesitant voice, “I was once approached by a Japanese engineer at Kimpo Airport.

He said that Samsung Electronic developed a high quality DRAM no sooner than the time when the Japanese rivaling company announced its own development. Our production was 6 months delayed by Samsung’s inner paperwork. So, for the next time, I assembled every concerned party so that we could announce the next generation chip simultaneously with the world big leaders, and eventually we beat them. ” This was exactly the way how the late President Park handled the problems by regularly holding the Blue House Expanded Presidential Export Expansion meetings.

Quite a few Japanese specialists on Samsung have observed that Samsung’s strength lies in the fact that Lee, Kun Hee’s term of office is indefinite, allowing him a free hand to delve into long range opportunities and strategic visions, while the Japanese CEO’s term of office lasts only 2-3 years, on average. This reminds us of the similar observations made by American scholars in the ‘70’s and ‘80’s. The Japanese CEOs were obligated to satisfy the major shareholders, the bank, whereas the American CEOs had to satisfy shareholders every year.

However one should take note of the Samsung golden triangle in terms of its dynamics. Kang, Woo-ran, SERI (2006) conducted a survey to find that the Korean firms with Owner CEO- Professional managers combination out-achieved, as compared with Professional CEO only model or Owner CEO only model between 1986 and 2004. Michael Porter (1996 2004) suggested that the often acclaimed strategy of Japanese management was nothing but operational effectiveness. The Japanese businessman quickly caught up with the American businessman in a relatively short time p, between the 1960’s and 1980’s.

In the process, Japanese firms exhibited core competence and accompanying Japanese best practices. They were recaptured by the American scholars in the form of new management theories: Total quality management, 6 sigma management, MIS network linked inventory-delivery systems, lean management and restructuring, knowledge management, benchmarking, organizational learning, to name a few. So the Japanese firm’s comparative advantages have been shared by many global firms in a slightly differentiated manner. 25 4.

Culture, Goal Oriented Communication (Leadership) and A Fast Growing Organization, Samsung Electronics Samsung Electronics’, the centerpiece of the Samsung group, market value was only 420,680 million won in 1987 when ex CEO Lee, Kun Hee assumed the chairmanship. Ten years later in 1997, it was 3,996,909. 66 million won or roughly 950% increase. That is not bad. But from that time on, there has been a steep ascending of the market value of 12,179% increase of 91,671,138. 128 million won in 2007. One would naturally be tempted to ask, “What happened to the leadership of the first 10 years with ex-chairrman Lee, Kun Hee? Sams u ng Electro nics Market V alu e (1,000w o n) 12 0,00 0,0 00,0 00 10 0,00 0,0 00,0 00 80 ,00 0,00 0,0 00 60 ,00 0,00 0,0 00 40 ,00 0,00 0,0 00 20 ,00 0,00 0,0 00 Name 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Name Samsung Electronics Market Value (Unit 1,000 won equals roughly 1 to 1. 30 US Dollars) 1983 63,350,000 1989 1,640,470,000 1984 76,950,000 1990 1,318,439,793 1985 137,500,000 1991 1,328,438,858 1980 41,440,000 1986 308,000,000 1992 1,587,069,540 1987 981 59,500,000 1988 1982 64,400,000 420,680,000 1993 1,020,330,990 1994 6,272,521,240 3,013,541,426 1995 9,052,186,755 2001 44,932,513,615 2006 1996 3,579,480,030 2002 51,542,526,788 2007 1997 3,996,909,660 2003 73,785,248,588 1998 10,918,438,172 2004 73,174,129,278 1999 44,086,251,261 2005 108,281,475,740 2000 25,544,557,299 26 2006 0 101,254,538,541 91,671,138,128 Key Figures Representing Changes in Samsung Group in 20 Years Unit Sales Trillion Won 1987 17 2006 152 Ratio 8. 9 Profit Tax Before 0. 27 14. 2 52. 8 Market Value 1 140 140

Export 9 663 73. 7 Brand Value 100 dollars million None 169 (2007) N/A Number of Employees 10,000 men 16 25 1. 6 Source: Samsung Greoup PA Office Materials, Feb. , 2008. Scanning through the observervations made of Samsung Electronics’ rapid growth, one factor clearly emerges–the ex-CEO Lee, Kun Hee’s leadership as the success factor including his bold and swift large scale investment decisions at key junctures: When there was a debate over DRAM and SRAM, it was Lee, Kun Hee’s decision concerning DRAM, difficult to develop, but with he promise of a greater potential market. And the decision turned out to be a very wise one. When Samsung started to build Kiheung semiconductor lines, it was completed in 6 months while similar lines would take one year and a half in the overseas cases. Chang, Sang Soo (2005) observed that Samsung Group has gone through 4 stages of growth in an accelerated pace based on superb leadership of ex-CEO Lee Kun Hee and superb corporate culture of upper managements’ shared value: “a single mind towards a single goal. It indicates that Samsung’s global technological capability development has been possible due to the transformation of corporate culture as one of the pillars of Samsung global competence. So the leadership in transforming the Samsung culture and core competence by Lee Kun Hee has created the paradigm shift. 27 To understand Lee Kun Hee’s leadership, the comparison of first and second generation corporate culture is in order. Over the years, Mr. Lee, Byung Chul an ardent Japan learner had shaped Samsung as a rational bureaucratic model under a fragile and protective Korean economy.

Korea did not have any capital, so the government obtained good quality loans and grants from the USA, West Germany, Japan, and World economic organizations, and in turn provided loans to selected Korean firms under the condition that the firms use the funds to set up industries within the guideline of the Government Plans. The interest rates were at international level, but the Korean market bank loan rate was several times higher under the high inflation rate, and thus the economic developmental loans were highly covetous in Korea.

And this is one of the sources of the blame on the Chaebol and rich families receiving the governmental special favor, or the politician-capitalists corruption suspicion to date. Having neither technological nor managerial capabilities, most Korean firms exploited the cheap labor from the agricultural sector, at the same time attempting to build scale economy as sources of international competition emphasizing quantity in light industry and new and primitive petro-chemical and heavy industry. And Mr. Lee, Kun Hee emphasized quality over quantity in his first statement soon after his chairmanship inauguration.

Against such backdrops, Chang, Sang Soo compared the first generation and second generation corporate culture as follows: Change of First Generation Corporate Culture (1938-1987) (1988 – 1993. 3) Second Generation Corporate Culture 1993. 3- to date Second Founding Father’s Doctrine(1993) Dedicate to the human society through the best Founding Father’s Doctrine (1973) Contribute to nation through business Put priority on human resources Seek rationality Samsung Spirit (1984) Creativity High ethical standard Be Number one in the nation Perfectionism Co-prosper anpower, technology and the best services Samsung Spirit (1993) Co-prosper with customers Challenge to the world Create future Core Value (2005) Priority on human resources Aspire to be the best Leader of change Righteous business management 28 Co-prosper Principles of Management (2006) Stick to principles of law and ethics Maintain clean corporate culture Principles of Business Management Respect customers, stockholders and employees Respect environment, safety and health Fulfill social responsibility as a corporate citizen

From the chart, we can examine the Samsung aspiration to be the leader of the industrial age in the first generation founding father’s culture of rational bureaucracy, and the transformation of the second founding father’s culture as the leader of the globalization and digital and/or knowledge economy. In a similar vein, reporters from DongA Daily Newspaper depicted the change of corporate culture as follows: Change of Samsung Corporate Culture Past Minimizes Risk Taking New Investment

Present Put Emphasis on Taking a New opportunity Failure Decides after a Through Internal Decision Making Down Power Strong Management Management Management Staff Step Aside from the Operational Staff Decision Control size Delegated Decision First recognizing Investigation Culture Staff of Making while Financial System is Retained Conservative Emphasizes Process Rationality in Every Detail DongA Daily Newspaper, June 4, 2004 Image Evaluation Emphasizes Speed Emphasizes the Outcome Mr. Lee, Kun Hee has received thorough CEO training from his father for 21 years before taking over the position.

He and his father-in-law, a lawyer and owner of ChoongAng Mass Communication, were ever present at his father’s staff meeting, usually during lunch hours. He could not retire from his office until he personally confirmed that his father was in bed. Mr. Lee, Byung Chul had chosen Mr. Lee Kun 29 Hee, the third son, against the conventional Korean tradition of passing the reins onto the eldest son, because the first son had a grave disagreement with his father. The second son was talented in business, but Mr.

Lee Kun Hee was more futuristically oriented, even forcefully starting his own hi-tech venture in the early days when Korean technology was at an infantile stage.. Leadership Styles Compared: Mr. Lee, Kun Hee went through CEO training from his father, but his leadership style is so different from his father, though sharing some similarities. Mr. Lee, Byung Chul emphasized the importance of personnel management and human resources, and he also mentioned that 80% of management dealt with the question of how to manage persons.

He personally participated in the recruitment process in examination problems and personnel interviews, and at times, personally selected topics for group discussion in the screening process. Mr. Lee, Kun Hee expanded the inner labor market of selection and promotion systems to open system for the external labor market in recruiting outstanding personnel and managers. His father, a strict time keeper, who enjoyed talking, was concerned with every detail of the Business operation. His father practiced regular walks around management and was strict in awarding prizes and punishment for the subordinates.

In contrast, Mr. Lee, Kun Hee is a good listener and often repeatedly asked, “why? why? why? ” He rarely came to his office in the company building and mostly delegated his authority to his professional top managers, and confined himself mostly in his electronic fortress called Seungjiwon, modeled after Microsoft CEO Bill Gates’ work place/residence, and developed long range visions of strategies for Samsung, specializing in a comprehensive and long range gatekeeper role. His organizational management has a flavor of human touch. He is a night worker and his sleeping hours are irregular.

Although he confined himself in Seungjiwon, he gets instantaneous high qu