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This assignment on the leadership theory of Samsung. The roles leaders and managers play in the operations function of Samsung Vietnam.
Samsung is a long-standing and well-known company in the field of manufacturing electronic technology equipment. This report will analyze the leadership theory of Samsung, operational management methods at Samsung Electronics Vietnam (SEV), and the specific roles of leaders and managers in the governance process. From there, point out successes that the company has achieved with the operational management method will be outlined. In addition, the report also provides the factors in the business environment that affect the governance of SEV, and the decisions and how the company balances the different expectations of the stakeholders are also listed.
I. Key approaches to managing operations and the role of leaders and manager
According to Linderman (2003), Six Sigma is a systematic and systemic approach to strategic process control and the development of innovative products and services that relies on statistical methods and the scientific method to achieve substantial reductions in consumer-identified defect rates. Six Sigma is a corporate process management methodology that focuses on reducing waste, improving customer relationships, and increasing a company's productivity.
In operation management, Samsung Electronics Vietnam (SEV) has implemented Six Sigma with the " Line Stop" system, which allows everyone to halt the manufacturing process if non-standard goods are detected. SEV also employs the method of determining the degree of divergence from the perfection of an operation. It aids in the measurement of the number of "defects" in a process, allowing the organization to find a way to repair it and come as close to "defect-free" as possible. This method helps SEV create perfect products and achieve higher quality in its production. Six Sigma applications in organizations have been described as involving effective leadership. (Alessandro & Jiju, 2015). To apply the Six Sigma approach with success, leaders need to communicate, inspire, and consistently define goals for employees. In addition, they need to be flexible in the process of applying the Six Sigma model to the company, know how to recognize the employee's contribution and connect, develop leadership with the size of the company and industry, and focus on people and services. Managers in Six Sigma are responsible for setting and updating targets in order to make cost-cutting and waste-reduction decisions. The manager will oversee the DMAIC method's development as well as supporting and evaluating personnel for the company (Mintzberg, 1973). Therefore, SEV leaders and managers take advantage of Six Sigma operations management by building intrinsic characteristics, especially human resources, and often prioritizing creativity in creating and design products, track and set goals to help maintain the company's production activities stably and efficiently.
In the management arena, Continuous Improvement (CI) is described as "continuous change affecting all, administrators and employees alike" (Suárez-Barraza et al., 2011). CI emphasizes performance improvement in small continuous development activities.
Through stabilizing manufacturing processes based on requirements, SEV is dedicated to supplying consumers with reliable and consistent quality goods. With a dedication to " No Specification, No Work" SEV's leaders use the CI approach to enforce the strategy in the enterprise, with all workers participating in continuous quality improvement initiatives. Samsung aims to consistently increase efficiency by managing improvement in various processes in a predictable manner in order to deliver excellent and reliable product consistency at a fair price and at the right time to ensure consumer loyalty. It is important for Kaizen leaders to understand the complexity of various company activities and this ensures that employees are mindful of what needs to be accomplished (Armstrong, 2009). Meanwhile, managers need to define specific tasks to assign to specific individuals, support and accompany employees in challengesMintzberg, 1973). The leader and manager at SEV use a closed-loop approach with measurement and monitoring systems to strictly control overall quality. Thereby, contributing to the improvement of process capacity, giving a response plan to help minimize the change around the target.
TQM is an applied management methodology and a system of activities that emphasize the role that all teams and individuals play in an organization's products and services to maximize service quality, at a very reasonable expense, in order to satisfy customer expectations and increase market share (Kanji, 1990).
It can be seen that from the management activities of SEV, the leader has applied the TQM method. The TQM leader's role is to keep all aspects of the organization engaged in order to ensure that company objectives are met (Armstrong, 2009). Besides that, management must ensure that the organization focuses from both within and outside the enterprise while applying TQM; quality assurance of goods and services must be strengthened and produced in accordance with TQM's eight standards (Mintzberg, 1973). In operations management, SEV applies TQM, puts customer satisfaction first, implements every production process to achieve excellent product quality at reasonable prices and right when the customer needs it. The company always monitor and survey customer needs before deciding or changing in small improvements to the product. The leaders at SEV understand very well the goals of the organization, well implement the leadership element in TQM, thereby ensuring and clearly orienting their employees' goals. In addition, to further improve the management process, managers at SEV develop personnel by advanced training methods, helping to increase labor productivity. In addition, the company also applies continual improvement in focusing on small steps in product improvement, placing product innovation as a priority criterion.SEV takes a factual approach to decision-making as the company always studies the needs of customers and the fluctuations in the environment and business before innovating the company's products.
Shared on the official website, Samsung’s philosophy is “ Samsung Electronics is dedicated to using its human capital and technologies to develop superior products and services in order to make a bright future for society.” With a vision for the future of " Inspire the World, Create the Future" the company always strives to utilize organizational concepts to expand human capital and technological advantages, thereby increasing the synergistic impact on the management system and achieving long-term goals:
Pursuing its goals, Samsung Vietnam focuses on developing its internal assets; especially human capital, putting innovation first in product development and design and in the production of products, the company focuses on marketing, growth, and workforce care. Thus, it can be said that the main operations management at SEV is applying Lean Six Sigma. Lean Six Sigma is a hybrid of Lean and Six Sigma tools and concepts, recognized as a business strategy to increase process efficiency, help improve customer satisfaction and improve final profit results (Snee, 2010). In operations management of SEV, the leader is responsible for maintaining and monitoring a method of measuring the degree of deviation of a process, thereby helping to create more perfection in products. The " Line Stop" system is applied to allow SEV to minimize errors or "defects" in products, helping to improve business speed, contributing to improving profit results for businesses. The stages of product improvement are carried out continuously at high speed, contributing to helping Samsung meet the aspirations of shareholders and serve the needs of customers.
It is by optimizing the Lean Six Sigma method that Samsung has achieved certain successes thanks to good operational management from leaders. ISO 9000, which was first published in 1987 by the International Organization for Standardization (ISO), will help a company please its clients, meet regulatory requirements, and achieve consistent growth when used as the basis of a consistency scheme. In particular, ISO 9001 is the most advanced certification, ensuring the company meets customer needs when having consistent, good-quality products and services (Russell & Morgan, 1998). Thanks to its good operational management approach, Samsung first received ISO 9001 certification in 1993, for its factories in Korea. For SEV, the company received ISO 9001:2008 certification and standard certification in reducing the company's impact on the environment: ISO 14001:2004 (Samsung Electro-Mechanics, 2021). In addition, in the first quarter of 2021, Samsung Electronics maintained its leading position in the smartphone market with nearly 23% of the global smartphone market share, up 32% over the same period in 2020 (Ngoc Trang, 2021). With nearly $26 billion in turnover and nearly $2 billion in earnings, SEVT in Thai Nguyen is the biggest company and contributes the most to Samsung Vietnam's market performance in 2020. Furthermore, SEV and SDV in Bac Ninh have a combined turnover of about 18 billion USD (Song Ngoc, 2020).
However, during the difficult growth period of the covid-19 outbreak, the cargo management system is constantly improving and the application of SEV's Six Sigma management approach is not ideal. The disadvantages of applying Six Sigma are that it is expensive, complicated, and the participation of members of the organization is required (Amile, 2018). The outbreak of the disease has led to a decrease in the revenue of many businesses, including SEV. Therefore, Samsung Vietnam must expect to reduce its export target in 2020 to about 45.5 billion USD, down about 5.8 billion USD compared to 2019 (Vietnam Ministry of Industry and Trade, 2020). Therefore, SEV leaders should consider internal and external factors to use a better operational management approach. During the pandemic, perhaps Lean production can be considered as a more reasonable operation management method for SEV.
Stakeholders are undeniably important in every corporation and its business. The actions and decisions made by the organization when operating an enterprise influence stakeholders (Gibson, 2000). As a result, to ensure business profitability, satisfying stakeholder expectations equals achieving stakeholder satisfaction. According to Samsung Sustainability Report 2020, each stakeholder's priorities are as follows:
|
Stakeholders |
Expectations |
Actions of Samsung Vietnam |
|
Employees |
- Working environments that are safe - Diversity and integration - Lots of training courses and career advancement opportunities - Job security and compensation - Employment stability and lots of benefits with transparent policy |
- Management of the working climate - Create a creative culture in the workplace - Apply for many personalized job growth programs - Organize business briefings |
|
Stakeholders |
Expectations |
Actions of Samsung Vietnam |
|
Governments |
- A fair trade - The health and safety of the workforce - The company's legal enforcement |
- Create recommendations on operating SMEs support services for government departments by policy meetings - Establish and run a venture investment scheme in collaboration with the government |
|
Local communities |
- Revitalizing the local economy - Protection of the environment - Contributions of money and volunteer campaign |
- SMEs in the area are helping to fund projects like the building of smart factories - Streams surrounding construction sites are being preserved - Has employee volunteer groups |
|
NGOs, CSR Councils, Specialized Institutions |
- Dedicated to the well-being of local people and the community - Contribution to the UN SDGs - Publish company information in a timely, quickly, and transparently |
- Obtain feedback from international NGOs - The company holds conferences and talks with NGOs, and its operations (RBA, GeSI, RMI..) |
|
Media |
Information should be made public as soon as possible and in a straightforward manner |
Support delivering news via Samsung Newsroom Vietnam |
|
Stakeholders |
Expectations |
Actions of Samsung Vietnam |
|
Shareholders & Investors |
- Company's economic performance - Risk management of the company - Environmental, social, governance, and other sustainability concerns |
- Maintain a stable and growing revenue - Enhance the company's dividend policies for shareholders - External sponsorships are run in a transparent manner |
|
Suppliers |
- Commerce that is fair - Shared prosperity - Security in labor and civil rights
|
- Encourage manufacturers to pursue innovative ideas. - Traffic Technology Fair - Suppliers are financially supported and have fair dealings - Manage the working conditions of suppliers responsibly |
|
Customers |
- Desire the value of a good product or service, reasonable price - The product is guaranteed to be safe to use - Accurate and public product information |
- Improve product quality continuity and the management system - Product information be available on official websites - Gather and respond to customer feedback |
Stakeholder expectations will inevitably clash because Samsung stakeholders have different kinds of expectations. SEV has straightforward priorities in achieving activities that satisfy the various demands of the stakeholders, with the aim of moving the enterprise on a good path. Conflicts will also arise, however, because each stakeholder's thoughts and perceptions are different.
During the time of fighting the covid-19 epidemic, although the number of global orders decreased, leading to a decrease in the operating rate of factories, there was not a single employee among the total 130,000 employees of SEV who lost their jobs or had to take unpaid (Nguyen Duc, 2021). Not just that, but Samsung has coordinated the hiring of additional staff. SEV workers and the local population endorse this, but it irritates shareholders that it could result in a drop in earnings. Samsung's executives, on the other hand, have become extremely innovative when it comes to inspiring and orienting employees, pledging to work together to build gains to counter the need for more capital.
Every time a new phone product is launched, Samsung always has a higher price than previously launched products because the company wants to meet the needs of shareholders and optimize profits (Thuy, 2020). Many consumers, however, were opposed to the product's price rise. Thus, SEV announces unique characteristics and values of its products, as well as various market segments in product diversity, in order to balance the needs of consumers and shareholders. In addition, the firm provides consumers with complimentary benefits and a highly preferential warranty.
A company must enact legislation set by the government before doing business, so political and legal authorities have a significant impact on its business practices. Samsung Electronics Vietnam Co., Ltd. is an enterprise with foreign elements, so it needs to comply with very strict conditions. In Vietnam, the establishment of enterprises with foreign elements needs to consider the business lines according to WTO commitments and the charter capital for import-export companies such as SEV is 50,000 USD or more.
The ruling state is the State of the Socialist Republic of Vietnam, which has the authority to monitor or participate in decision-making, as well as to take over and nationalize a company's assets. The laws passed by the heads of state's congress, on the other hand, are aimed at restoring order and preserving justice for all people (Constitution and political system, 2020). SEV has the potential to grow its sector and perform reasonably and equally with competitors in the same industry since it is located in Vietnam's state political system. In addition, the Vietnamese government also has policies to protect the rights and health of workers such as extending working time less than 8 hours/day; for particularly dangerous and arduous jobs, the maximum working time per day is 6 hours (Article 104, Section 1, Amended labor code 2012).
Country:
According to The World Bank, Vietnam is one of the few countries in the world with positive economic growth with a GDP estimated at 2.9% in 2020. The economy is forecasted to grow by 6.6% in 2021 if Vietnam controls well the spread of coronavirus, while export-oriented manufacturing industries perform well, and domestic demand recovers strongly. However, the re-emergence of the covid epidemic has led to a decrease in people's income in 2021 compared to 2020, thereby leading to a decrease in purchasing power. This is considered as one of the obstacles for SEV.
According to the General Statistics Office (2020), the overall export turnover of products in 2020 of Vietnam is expected to be 281.5 billion USD, with phones and parts accounting for the highest share of this increase at 50.9 billion USD or 18.1 percent of total export turnover. In addition, import turnover in 2020 will reach 262.4 billion USD, focusing mainly on goods necessary for production and export, including machinery, equipment, raw materials for production and export. This has a positive impact on Vietnam's economy, especially since the commodity export industry like SEV has more opportunities for development. However, due to the negative effects of covid-19, the manufacture of SEV goods was temporarily halted. As a result, demand for goods and services falls, resulting in a backlog of SEV products in particular and the production sector of technical electronic products in general.
Industry – Market:
In Vietnam, Samsung's profits in the manufacturing industry of high-tech electronic products are quite high due to high market barriers in the industry, few major competitors, and the low power of customers and suppliers. Samsung is a long-established company, so it has high brand awareness and customer loyalty. In 2020, Samsung's market share accounted for 20% with 255.6 million shipments, leading the smartphone market (Canalys, 2020). Businesses frequently have a primary goal: profit or not-for-profit. SEV may be calculated to be a benefit corporation based on its corporate objectives. SEV, on the other hand, aims to adhere to societal and environmental conservation values in the manufacturing process. In addition, Samsung also has to compete with a large electronics manufacturer that has a smartphone market share position right behind it, Apple (16% market share in 2020). In the high-end phone segment in terms of price, Samsung is almost unable to compete with Apple. However, the company has competitive strategies to maximize its profits such as launching the S10 smartphone at 1000 USD, directly confronting the iPhone 11 Pro (Liam, n.d). In addition, Samsung also creates many low-priced products to serve consumer needs and compete with other phone manufacturers, maximizing profits for the company.
In 2020, the population of Vietnam has 48.99 million women and 48.6 million men with a working-age population of about 74.18 million people (Satista, 2021). This can be considered as an opportunity for SEV as the company aims to recruit the majority of female employees.
Confucius countries like Vietnam usually have a high Power Distance ratio of around 70%, while Long-term Orientation and Masculinity are 30% and 40% respectively (Hofstede Insight, 2020). It can be seen that the Vietnamese workforce is focused on " working to live," and administrators are constantly striving to make choices based on unity, dignity, and cohesion. Leaders at SEV often gather input from staff and consumers before making decisions in order to make informed decisions. People in a low UAI society can work flexibly, hard, and accept innovation if it is required. As a result, SEV's continuous improvement management strategy has been very fruitful in Vietnam, assisting the organization in achieving those goals.
Climate change and CO2 emissions are environmental issues of concern to the world and many countries. It directly affects human life and entails many extremely bad consequences if people do not take action to protect nature. Vietnam tends to increase CO2 in recent years and the temperature increase is forecast to range from 1.0 to 3.4 degrees Celsius (The World Bank, 2020). This can have a multi-faceted negative impact on SEV's the production and business activities, with production interruptions, reduced labor productivity, increased production costs, stagnation of the distribution network, etc. ...Recognizing the importance of protecting the environment, Samsung has developed highly energy-efficient products, installed equipment with minimal greenhouse gas (GHG) emissions, and focused on harnessing the energy of the environment. renewable energy to contribute to a lower-emissions future (Samsung, 2021). SEV expands emissions management at every level, using advanced technology like IoT to develop energy-saving algorithms in outdoor climates, and HVAC in production to control optimal mechanical equipment operation infrastructure...
In the information technology equipment manufacturing industry, especially the smartphone market, Samsung faces many competitors. Product differentiation still creates competition among manufacturers because the mainstream design for an ideal smartphone has not yet appeared, so each change in technology and the increase of new products makes the market more attractive (Grazia, et.al, 2014). Thus, the smartphone market has become extremely dynamic. Because of being in a dynamic and changing business environment, the decision-making process of leaders and managers at Samsung must be swift.
Employees
Governments
Local communities
Media
Shareholder & Investors
NGOs, CSR Councils, Specialized Institutions
Suppliers
Customers
In general, all stakeholders have an impact on or are impacted by the business. The stakeholder map above depicts Samsung Electronics Vietnam's internal, external, and connected stakeholder groups.
Employees are an abundant resource and contribute to the performance and income of a business. Decisions about salary or remuneration in the workplace are something that employees are extremely concerned about because it has a great impact on their lives. Considering employees as an important part of the business and helping them to ensure their standard of living, SEV applies an average salary of 6.7-8 million VND/ month for workers, 18-25 million VND/ month for engineers (Samsung Sustainability Report, 2020).
The government is a very influential stakeholder for every business, having an indirect impact on the economy. The leaders at SEV always assure the state that the fire processes produced at the factory are legal and clear. In addition to paying taxes transparently, clearly, and on time, the company also focuses on environmental protection when planning specific solutions to protect water and air around the production area (Samsung Sustainability Report, 2020).
Local communication can be considered a major influential stakeholder in the Samsung factory. To support and meet their expectations, Samsung opened Samsung Hope School in Bac Ninh in 2013, providing physical education and after-school English courses and free dinner to needy students in the locality (Samsung Sustainability Report, 2020).
The media has a high influence on companies related to the production line of electronic technology equipment such as Samsung. The interest in network media for big enterprises is very high. Therefore, Samsung developed the Samsung Newsroom Vietnam channel to provide easy access to information to the media. Furthermore, Samsung executives arrange and engage in daily news releases, ensuring that all business operations are transparent (Samsung Sustainability Report, 2020).
Shareholders and investors both have a strong interest in and control over a business. The way the company manages and optimizes earnings is really something they care about. Samsung maintains the interests of shareholders and investors by ensuring increased profits through new product development and attracting new customers (Samsung Engineering Sustainability Report, 2016).
Connecting practices with NGOs, CSR Councils, and Specialized Institutions all have advantages for a business. In addition to compliance with regulations, peaceful communication between organizations, Samsung also strives to fulfill the expectations that this stakeholder has for the company.
Supply and demand pressure due to the coronavirus epidemic has had a direct negative impact on thousands of Samsung suppliers from production to customer service. Since the organization views vendors as important stakeholders, it has provided stabilization funds and logistics costs to suppliers whose operations have been impacted (Samsung Sustainability Report, 2020).
Customers are the preferred stakeholders of any business because they are the ones who bring profits to the company. Recognizing the importance of customers, Samsung always has specific policies and actions to satisfy customers. The company always has channels to listen to and support customers when they are needed (Samsung, 2021). In addition, customer feedback on products is carefully considered by the company in the process of creating new products.
This study investigated and assessed Samsung Electronics Vietnam's operations management, evaluating the role and nature of operations management in guiding the organization to long-term growth. In addition, the leadership theory of Samsung and several external factors affecting organizational management and decision-making are identified and evaluated, and the metrics are then interpreted to balance the different expectations of stakeholders of the company. Also, It was important to understand the Management Case Study Samsung where we have discussed how stakeholders can influence operational management.