Factors that influence Samsung’s structure and design

This report discusses the factors that influence the structure and design of Samsung, including its organisational structure, technology, and corporate culture.

Samsung Case Study
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Table of Contents
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
Factors that influence Samsung’s structure and design..........................................................3
Task 2...............................................................................................................................................6
Management of dynamic processes in Samsung....................................................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9
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Introduction
This report aims to outline organisational structure of the Samsung Group (herein after
referred to as only Samsung) and the factors that influence and impact its design. Structure of an
organisation is base to its effective performance (Riet, 2016). It is developed out of the values
that company envisions for itself and its path to growth. Samsung is a South Korean
multinational technology conglomerate. Founded in 1938, it is headquartered in Seoul. Initially
started as trading company, it now ventures in consumers electronics, electronic components,
textiles, insurance, securities, etc. also. Influence of company culture in shaping its growth and
evolution are also discussed below.
Task 1
Factors that influence Samsung’s structure and design
Organisational Structure
Samsung in its mission statement aims to contribute to creation of a better global society
by devoting its human resources and technology in creation of superior products and services
(Samsung’s Mission Statement & Vision Statement (An Analysis), 2019). With technology at
heart and innovation as pump to its strategies, organisational structure of Samsung is touted as
facilitating evolution of business from trading firm to multi-products conglomerate. Samsung
Group has a product-type divisional organisational structure (Samsung’s Organizational
Structure & Its Characteristics (An Analysis), 2019). Fully understanding the importance of
organisational structure in improving its growth objectives, it has developed market and
industry- specific strategies, all of which evolve from structure designed and defined by Group
headquarters. In other words, characteristics of the structure of the parent company has been
branched out to subsidiary companies so that same values in the operations can be maintained
throughout. Such defined and refined corporate structure has also been a source to competitive
advantage for the company in developing such innovative strategies that enables to take its
competitors like Apple, Google, Sony, Dell, etc. head-on.
Features of the organisational structure
Structure of the company has three main features which are divisions based on products,
centralisation in hierarchy and geographical groupings:
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 Divisions based on products – This acts as the basis for company to determine allocation
of its resources and operational processes. Company has three business areas – consumer
electronics, IT & Mobile communications and Device Solutions (Business areas, 2020).
However, each division represents a group of operational process for a product category
such as operational process of researching, innovating and developing better device
solutions. All the divisions operate in line with the vision, mission and value statements
of the company. Decision on expansion or abandonment of any division is taken with a
single objective of sustainable development of the conglomerate in line with the current
business environment (Glowik, 2016).
 Centralisation in hierarchy – Hierarchy of its divisions and subsidiaries towards
corporate headquarters is aimed to ensure that all the divisional performances across
global operations are aimed at improving effectiveness of a single entity like the divisions
are branches of a single corporate tree. This is defined by their centralised strategic
planning and authority and communication channels.
 Geographical groupings - Samsung has a global spread and maintains sub-divisions
according to the geographies within their product-type divisions such as European
division within device solutions would look into the matters related to device solutions
only within European region.
Technology and Samsung’s structure
Company has kept technology as driver to success and regularly indulges in developing
and implementing improvised technologies. Company operates in a highly competitive market
and the industry which has all the rival companies continually striving hard to achieve innovative
technologies to produce superior products and with creation of superior products and
technological resources as its strategic objectives, company has a strong research and
development wing (Allameh, Rezaei and Seyedfazli, 2017). Company understands the need of
skilled brains to achieve such objectives and therefore, offers them highly competitive packages
and productive work environment. It has made it a point in their mission statement to make this a
part of their corporate structure. Company is committed to establish a creative environment
where all the employees are provided full opportunities to grow while observing all laws and
guidelines applicable in the country of operation. Company has various programs to attract and
retain talented brains like regional specialist programs, performance-based salary system,
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flexible works timing, career consulting centre, Samsung Health Research Institute, Samsung
Culture Index, human rights policy, human rights impact assessment, transparency about
restricted substances in manufacturing processes, etc. (Samsung Sustainability Report, 2019).
Advantages and Disadvantages of corporate structure
Advantages - Samsung had been ranked as 6th most valuable brand in the world in
Interbrand’s ‘Best 100 Global Brands 2017’ report (History, 2020). This is a testimony to the
effectiveness of the corporate structure of the company. Geographical sub-grouping, product-
type divisional grouping and centralised corporate instructions has helped the conglomerate
enhance its abilities to improve its operations based on market situations. This support from
organisational structure to operations has proved to be competitive advantage for the company
against big rivals like Apple Inc. Biggest advantage of the corporate structure of the company is
that it is aligned to the mission statement of the company which is based on technological
advancements that are innovative and add value to the lives of the people. Company has a
defined structure and refined processes which have clear command chain, this eliminates the
chances of confusion that might arise out of instructions from divisional heads and sub-divisional
heads. Company policies are centralised but strategies at divisional levels are allowed to be
flexible and market oriented. This flexible structure allows for innovative and technologically
advanced products in comparison to the competitors’ products and services (Jung and Chung,
2016).
Disadvantages - Even after having so many proven advantages, corporate structure of the
company has some limitations as well and the biggest limitation which can be observed at first
is, limited autonomy to divisions and sub-divisions. Centralised directions from company
headquarters are good to form corporate strategic objectives but operational strategies must be
designed by the divisions in accordance with the challenges and opportunities that their business
environment is presenting them. Samsung headquarters’ efforts of keeping the efforts unified are
good structure to adopt but autonomy to divisions and sub-divisions will help company expand
further in different geographical regions where company’s operational presence is still limited.
Despite limited autonomy and operational freedom to the divisions, global success of the
company is a testimony that it has been successful in using advantages of its organisational
structure for its better than being limited by its disadvantages.
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Task 2
Management of dynamic processes in Samsung
Corporate culture
Corporate culture of a company stems out from its organisational structure and involves
values, traditions and customs that are expected from employees of the company to follow
(Storey and Nyathi, 2015). Organisational culture of Samsung stems out from its vision, mission
and value statement and aims at creating such products which provide value to the customers and
global society. Culture of subsidiaries also reflects its vision to innovate and inspire,
improvement of lives of people across globe. Such values impact strategies and decision-making
of company to create such innovative products which inspire people of all strata of society to use
similar products and services despite variations in their societal conditions. Samsung has an
innovation-centred organisational culture (Samsung’s Organizational Culture & Its
Characteristics (An Analysis), 2019) which promotes designing of a working environment that
enables development of employees and their knowledge, skills and abilities. Just as mentioned
earlier, company’s corporate culture is inspired to promote innovative human resource practises
that inspires its employees further to create such creative and useful technologies like
smartphones that are able to brings such products which add value to the life in the society and
create a competitive advantage for the company. Centralised structure of the company ensures
that corporate culture within all the divisions of the conglomerate remain same (Edwards, 2018).
This unified and uniform culture across global divisions has been a standing proof to the
uniformity and homogeneity in the sustained success obtained by all the divisions in all the
endeavours that company undertakes. This has also helped it earn the titles like – being global
leader in TV market for 10 consecutive years (History, 2020).
Key features of organisational culture
Corporate culture of Samsung defines its belief that living by strong values is the key to
good business. Core values of the company includes commitment to excellence, leading to
change, integrity in operations, providing wealth of opportunities to its human resource and co-
prosperity for all fellow citizens of the world (The values that define Samsung’s spirit, 2020).
Principles that define managerial and operational processes of Samsung includes compliance
with local and global laws and ethical standards, maintaining a thorough professional and healthy
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organisational culture, completing all their responsibilities towards their stakeholders like
employees, shareholders, customers and society, etc. (Five Samsung Business Principles, 2020).
 Development of opportunity for all employees - Based on its business principles and core
values, Samsung strives to provide developmental opportunities to all its people. It aims
to increase the synergy effect of human resource and technologies to improve efficiency
of whole management system. Company recommends providing equal opportunities to
all employees according to their abilities and performance. They believe that employees
should focus on continuous self-development and support all the changes that company
brings out in its policies that improvise their working conditions (Griffiths, Fenton and
Fletcher, 2019).
 Ethical foundation for integrity - Company has a developed ethical code of conduct
within its workspace and has clear policies of no discrimination on any basis such as
nationality, gender, race, religion, etc. All the policies, rules and guidelines for operations
are in compliance with all the local laws, local culture and traditions so that its employees
who come from different regions and ethnicities of the world feel equal, welcome and
empowered in the company. Company is committed to develop a healthy atmosphere and
has clear non-tolerance policy for behaviours such as sexual harassment, violence, etc.
that can harm healthy peer relationships. It places value over development of informal
relations within company to improve team bonding but advises against forming such
factions that could cause incompatibility within the group. Company has a policy of
keeping personal and professional relations separate and in case of conflict, to place
company’s interest over and above anything.
 Passion for excellence - Company is truly committed to contribute for common interest
and value addition in life of Stakeholders just as it aims (Miller, 2020). Development of
employees is a part of its mission statement and so are of other stakeholders like
customers, shareholders, business partners, society, etc. Therefore, it has made customer
satisfaction as their top priority in customer relationship management. Its CRM activities
includes providing par excellence services to customers in all phases of their products
and accepts complaints and suggestions as feedbacks, which are later used to improve
company performance.
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 Emphasis on prosperity for all - Company considers itself as a socially responsible
citizen which is committed to improve life of fellow citizens. It pays its tax liabilities
regularly and refrains from being part of any type of political activity in any country. It
feels committed to honour basic human rights and therefore, has developed a strict policy
for no forced labour and child slavery in its human resource processes. It also participates
in social service activities like donations and charities, disaster relief, etc. as a part of its
CSR policies. Company strives to keep relations with their business partners symbiotic
i.e., one in which both parties co-exist and co-prosper in a legal manner. Company also
does not believe in unfair trade practises and believes in competing in market in a healthy
spirit (Hodkinson, 2016). For example, Samsung promotes respecting IPR and restricts
from infringements like unauthorised use, distribution or reproduction of intellectual
property of others. Samsung is also committed towards its responsibility towards
environment and constantly researches to adopt more and more eco-friendly practises.
For example, electronics produce lots of non-biodegradable waste every year therefore,
company promotes resources recycling so that waste is minimised and so is pollution
associated with it. It adheres to international standards, related acts, statute and
regulations related to environmental protection.
Conclusion
Above report is based on organisational structure, culture and the other factors that impact
operational processes of Samsung. It can be concluded from above that Samsung group follows
centralised product-type division structure and innovation centred organisational culture.
Company has a defined and refined code of conducts within its processes and is committed to
provide excellence in services towards all its stakeholders. Company stresses upon research and
innovation in technology to bring out superior products for its customers and this pursuit of
excellence has not only created a competitive advantage for the company but has also
empowered it to develop as a global market leader (Oh and Jun, 2016).
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References
Books and Journal
Allameh, S.M., Rezaei, A. and Seyedfazli, H., 2017. Relationship between knowledge
management enablers, organisational learning, and organisational innovation: an
empirical investigation. International Journal of Business Innovation and
Research. 12(3). pp.294-314.
Edwards, L., 2018. Understanding public relations: Theory, culture and society. Sage.
Glowik, M., 2016. Market Entry Strategies: Internationalization Theories, Concepts and Cases
of Asian High-Technology Firms: Haier, Hon Hai Precision, Lenovo, LG Electronics,
Panasonic, Samsung, Sharp, Sony, TCL, Xiaomi. Walter de Gruyter GmbH & Co KG.
Griffiths, M., Fenton, A. and Fletcher, G., 2019. Cautionary tales. Strategic Digital
Transformation: A Results-Driven Approach.
Hodkinson, P., 2016. Media, culture and society: An introduction. Sage.
Jung, U. and Chung, B.D., 2016. Lessons from the history of Samsung’s SCM innovations:
focus on the TQM perspective. Total Quality Management & Business Excellence. 27(7-
8). pp.751-760.
Miller, V., 2020. Understanding digital culture. SAGE Publications Limited.
Oh, I. and Jun, H., 2016. Economic miracle. Routledge Handbook of Modern Korean
History. 1(1998). p.295.
Riet, H.V., 2016. Sustainability through intra-organizational collaboration'The case of WEEE
and Samsung' (Master's thesis).
Storey, J. and Nyathi, N., 2015. Strategies and structures of MNCs from emerging economies.
In Handbook of Human Resource Management in Emerging Markets. Edward Elgar
Publishing.
Online
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History. 2020. [Online]. Available through:<
https://www.samsung.com/in/aboutsamsung/company/history/> (Accessed: 3 December
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Evans L. (2019) Samsung’s Organizational Culture & Its Characteristics (An Analysis).
[Online]. Available through:<http://panmore.com/samsung-organizational-culture-
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The values that define Samsung’s spirit. 2020. [Online]. Available through:<
https://www.samsung.com/in/aboutsamsung/vision/philosophy/samsung-spirit/>
(Accessed: 3 December 2020)
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Five Samsung Business Principles. 2020. [Online]. Available through:<
https://www.samsung.com/in/aboutsamsung/vision/philosophy/business-principles/>
(Accessed: 3 December 2020)
Samsung Sustainability Report. 2019. [Online]. Available through:<
https://images.samsung.com/is/content/samsung/p5/global/ir/docs/sustainability_report_
2019_en.pdf> (Accessed: 3 December 2020)
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