PGBM16 Global Corporate Strategy Report: Samsung's Approach

This report analyzes Samsung's global corporate strategy, exploring its approach to open innovation, internationalization, and localization. It distinguishes between closed and open innovation models, examining Samsung's use of external innovation and its competitive landscape. The report discusses the merits and demerits of balancing internationalization and localization demands, arguing for a focus on internationalization to build a universal brand and achieve cost leadership. It also examines the impact of factors like factor endowment, supporting industries, demand conditions, and government policies on innovation and internationalization. The report concludes with a reflection on the author's learning experience during the preparation process, highlighting the importance of adapting to global market demands.

Global Corporate Strategy

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Contents
Introduction...........................................................................................................................................1
Open innovation and internationalisation..............................................................................................1
Internationalisation, Localisation and Competitiveness.........................................................................4
Chosen demand.................................................................................................................................5
Organisational purpose, profitability and Social Responsibility............................................................6
Personal reflection.................................................................................................................................8
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9

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Introduction
Innovation in today’s time has become the major strategy to achieve success. It is the ability
of the firm to understand the requirements of the market and make innovations accordingly so
as to stay ahead of their competitors. In this regards critical role is played by played by the
leadership and strategies made by the organisations. Close and open innovations are the two
methods of innovation (Lasserre, 2017). Since innovation has the capacity to provide
competitive advantage to the rivals hence companies also select their method of innovation
wisely. Internationalisation and localisation strategies and decisions are to be made checking
the environment around the firm and their capacity to address these resources. It is also
critical that firm looks at the CSR initiatives while making the innovation and decisions
related to internationalisation and localisation. Samsung is one of the biggest multinational
organisations operational in different industries as conglomerate. Their major business comes
in the electronic devices industry. It started as a trading company then it came in the
electronics company along with shipping and construction. In this report major focus will be
towards Samsung electronics.
This report distinguishes between closed and open innovation and discuss about Samsung’s
approach to external innovation and competition. It also discusses about merits and demerits
associated with meeting demand for localisation and demand for internationalisation. In the
latter part of the report, it illustrates about the senior management team and CEO’s ability to
simultaneously achieve CSR and profitability. In the last segment of the report things that I
have learned while preparing this report is illustrated.
Open innovation and internationalisation
Innovation has not only remained as a strategy or concept that gives an organisation
competitive advantage over the rivals but it is also a process that needs to managed in an
appropriate manner. Since huge amount of resources of any company is at stake in any
innovation initiatives hence it is critical that proper innovation strategy needs to be adopted
by the company. In Samsung Both Open and Closed innovations are going on simultaneously
(Jung, 2014). The basic difference between the two is the way in which they are conducted.
In closed innovation the stakeholders are people from inside the firm while in the open
innovation this is done through interaction of internal and external technologies, processes,
ideas etc.

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Points of difference
Open Innovation Closed Innovation
Philosophy Conscious export and import of
knowledge for enhancing firm’s
own innovation.
It emerges from firm’s internal
resources.
Innovation ideas Open exchange of ideas beyond the
boundaries of the firm
Ideas are internal
Consumer’s role Active co-innovators Passive recipients
Employee’s
mobility
High Low
Venture Capital Crucial part Minor part
Intellectual
property
Company acquires third part
intellectual property.
Everything is taken as confidential
matter. All the intellectual
property rights are used.
Factor endowment is understood as the amount of resources that a country poses and can
exploit for manufacturing. This has a serious impact on the business of any firm. If the
countries in which Samsung is operational have large factor endowment then the chances that
they can be successful in the market also increases. This is because there will be easy
availability of resources. At the same time it will also ensure that companies like Samsung
will avail the resources on time. This also has a critical role in the innovation as the resources
that are required for the innovation are also availed through factor endowment (Chang, 2012).
This is because due to endowment they will easily get resources that are necessary for open
innovation. For instance the skilled and knowledgeable people that are capable of doing
innovations, if they are available in any country then there is more likely a chance that open
innovation will be successful.
The impact on the company is also from the fact that which kind of supporting and related
industries are associated with the firm. Samsung electronics being an electronics company
requires many supporting industries to do their operations effectively. If any nation has strong
related and supporting industries within the country then the chances of achieving success
becomes easier. This is because all the raw materials gets available to them on time and
hence can give strong support to their business activities (Hong, 2012). Quality of the overall

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product depends on the type of products supplied by the supporting industry. Any changes in
the related and supporting industries gets reflected back in the actual industry. For instance
the products that is supplied by the related and supporting industry, if their quality is good
then open innovation becomes easier. Companies from these supporting industries become
the part of this open innovation which helps the company to work as a greater force for open
innovation. This provides competitive advantage to the firm.
Another major factor that has impact on the internationalisation is the demand condition. This
is because it is the demand condition that decides in which country a company should do their
business. If the demand condition is more in any area it is most likely that firm is going to
shift their focus in that region only and might thing of expanding in that country by setting up
manufacturing unit for meeting the demands of the people (Song and Lee, 2014). This also
has impact on the open innovation in terms of the fact that according to the demand in the
market, companies invites people to help them in their innovation strategies. Since customers
have a major role in the factor condition hence they also become active co-innovators.
Strategy, structure and rivalry also plays a critical role in innovation and impacts upon the
process as strategy made by the company acts as a torch bearer for the company according to
which they will promote other peoples to give their ideas for particular innovation. The
structure of the market impacts on innovation in terms of the fact that it promotes companies
to stay ahead of their competitors and gain competitive advantage from it (Tanaka, 2013).
This is also same in the case of rivalry where companies try to stay ahead of their competitors
irrespective of the fact that whether that innovation is going to benefit others also or not. By
choosing open innovation companies like Samsung can ensure that they do not put extra
pressure on the internal employees only to give them advantage in the market.
Government being important stakeholders in the business has a greater impact on the open
innovation. This can be understood in terms of the fact that if the government policies
supports innovative model by providing resources and freedom then it is more likely that
company can achieve success in their open innovation campaign. Since in open innovation
there is need of factor endowments which generally are under the control of government
hence has larger impact on the whole process (Cho, Kim and Kim, 2015). The approach to
external innovation is decided by the way in which government supports the overall
initiatives especially in terms of financial helps.

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At last ‘chance’ also has impact on the approach to external innovation as the according to
the chance available for open innovation, companies change their approach to do research.
They provide that kind of resources only in which they feel that they will have chance to
capture the market or have chance to create market for themselves.
Internationalisation, Localisation and Competitiveness
Internationalisation is understood as the enhancing involvement of the firm in the
international markets. Demand for internationalisation means the demand that is created for
the company so as to enhance its growth. It is crucial that a company understands its demand
for internationalisation and they should build their strategies accordingly so as to meet these
demands. In the changing business scenario and increasing competition, this demand for
internationalisation has further enhanced. On the other hand localisation is a service that is
used for adapting a page, app or product to a specific market (Ali, Muhammad and Park,
2011). Since companies like Samsung also have to fulfil the needs that are generated in the
local market so as to gain competitive advantage in that market. This is usually done by the
company with the help of strategies or specific kinds of innovative products that addresses
the concerns of the people in that market. Since the demand for localisation has a significant
impact on the sales of the company hence needs to be managed appropriately.
Both demand for internationalisation and localisation comes in front of the company
simultaneously. Both need to be addressed so as to remain successful both in the international
market as well as in the local markets. But this simultaneous addressing of demands can have
long term impact on the business operations and hence has various kinds of merits and
demerits attached with it.
Merits
 Overall sales of the company will remain on the better side as higher customer
satisfaction can be achieved through it.
 It helps the company in gaining competitive advantage at both local and global levels.
 It helps in enhancing the knowledge base of the company as due to
internationalisation they gain the knowledge of the changing purchasing behaviour at
the international level and at the same it also explains the behaviour pattern of specific
cultures at the local levels (Song, Lee and Khanna, 2016).

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Demerits
 When a company tries to meet the demands of localisation and internationalisation
simultaneously, it is not easier for them to strategies in an appropriate manner about
both local and international campaign (Chang, 2011).
 Such organisations fail to address the cultural aspects such as cultural demands of the
society.
 It also has the demerit that it is not able to decide the universal pricing for the product
which is again a failure for the firm (Giachetti and Marchi, 2017).
Chosen demand
Among the two types of demands, MNCs need to focus on the demand for
internationalisation. This is because it will help the company to make universal image and it
will ensure that company is able to move as per the changing needs of the consumers at the
global level. Since MNCs have its operations in different parts of the world hence they need
to move along with the changing demands of the world (Rusko, 2014). The major benefit of
this can be seen in the case of innovation as the research is done according to global demands
and not on the aspects like any particular cultural demand. Since companies will compare
their strategies for meeting demands of the international market hence they will make it better
than most of the company. For example pricing will be decided according to the international
competitors that has a significant impact on the corporate profitability.
Low-cost leadership which is an effective strategy to deal with in today’s time can be done
with the help of approach to internationalisation (Jung, Graeff and Shim, 2011). By making
internationalisation strategy, and adopting cost leadership strategy, they might be able to
attract people at the global level hence it would be easier for them to enhance their
profitability.
Two reasons
 Low cost leadership will help them in enhancing their sales at the global platforms
which they can easily do with the help of online technologies (Morschett, Schramm-
Klein and Zentes, 2015).
 Low cost leadership will allow the company to make faster penetration in the new
markets which is crucial for generating new sources of revenue and also for
improving the profitability of the firm (Balcet and Ietto-Gillies, 2019).

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On the other hand since the product differentiation strategy can help in meeting the demands
of the international customers. Since more numbers of products will be available in the
company’s portfolio hence they will be able to meet the global demands. Choosing
internationalisation with the help of product differentiation can be an effective option as it
differentiates the company from others (McFarlin and Sweeney, 2014).
Two reasons
 It enables the company to improve their business portfolio as it enables the company
to enhance its customer satisfaction as their product will be able to meet different
kinds of global needs.
 It also enhances the speed at which they can follow internationalisation. For instance
product diversification allows company to improve the ways in which they are dealing
with different cultural demands at the same time. For example Samsung knows the
fact that in whichever country they will do their business, people will demand for
latest of technology (Johanson and Mattsson, 2015). The awareness of the people
about technology has increased hence they want latest of products that has unique
feature. This makes it necessary for the company to choose demand for
internationalisation rather than localisation.
Organisational purpose, profitability and Social Responsibility
Organisational purpose is understood as the outcome that any organisation wants to achieve
from its business operations. The organisational purpose is illustrated through its mission and
vision statement. It is this organisational purpose that acts as a path bearer for development of
their strategies and the products. Corporate profitability is another major aspect that
companies aims to achieve while doing their operations (Čirjevskis, 2019). Since it is the
ultimate objective of the organisation hence it is critical that firm look at the problems that
might arise in gaining corporate profitability. Along with the corporate profitability, it is
essential that firms look at the corporate social responsibility as there are large numbers of
stakeholders attached with the firm and hence companies need to check the interest of all
these people.
Ki Nam Kim is an effective CEO and leader. His strategies made in their business have
allowed them to achieve all the corporate social responsibilities and at the same time they
have earned a huge amount of corporate profitability. MNC’s survival and growth is ensured

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with the help of the strategies related to these areas (Joyce and Slocum, 2012). In this regards,
Samsung’s organisational purpose is to devote their human resource and technology for
creating superior services and products and hence making contribution towards making a
better society. The senior leadership of the company have been working towards this by
building highly skilled labourers that enables them to add value t their products and services.
Their main aim is to enhance the technologies that is used within the organisation so that they
product that are made have lesser numbers of faults in them. Their leader has the idea to
become global inspiration by diversifying the numbers of products that are available in the
market (Garkavenko, 2013).
Their leadership is also focused towards the social contribution programs where they utilise
their resources and strengths to benefit the local communities. Their corporate policy is to
encourage their employees to volunteer many of their programs (Chang, Zhang and Xiong,
2019). Their CEO has focused towards the initiatives that are directly connected with each
individual. Some of these activities are book donation, building libraries, and opening
technical schools that improves their skills that can help in getting jobs.
In Samsung senior management gives special attention given to the innovation, where
leadership focuses on understanding the demands of the people so that they can fulfil the
social needs of the people. Another principle of strategic leadership on which their senior
management is very strict about is transparency. They want to remain transparent in their
business so that they do not face any kinds of challenges related to ethics (Gatti and Seele,
2015). This is critical for the management of corporate social responsibilities while ensuring
higher profitability. It is critical for supporting the organisational values and hence has an
impact on the organisational directions. Another important principle of strategic management
and leadership is decision making. Samsung’s senior management ensures that most numbers
of stakeholders are involved in the decision making process. This not only improves the
corporate profitability but it also ensures that benefits of all the stakeholders is ensured hence
fulfilling the corporate social responsibilities. This type of decision making has impact on the
organisational values and provides a specific direction to the firm.
Personal reflection
While making this report I learned various aspects of business of MNCs as big as Samsung. I
learnt that it is essential that MNCs focus on demand of internationalisation as it has a bigger

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market to address. The localisation strategy will help the company in enhancing their sales. I
have learned that it is beneficial for company addresses both demand of globalisation and
location so as to gain competitive advantage over their competitors but it also has a demerit
that it does allows the company to concentrate on any one of the demand and distributes the
resources. This is not good for the MNCs as they have international reputations at stake.
Multinational organisations need to keep their corporate purpose as their priority as it acts a
guiding force for building the strategies which maintaining the values and ethics related to
business. I also learnt that open innovation is critical for the success of the organisation as it
widens the idea pool that a firm has which could not have been possible when confined to
internal resources of the firm. I learnt that it is critical that firms understand the demand
condition and accordingly to carry on with their innovation practices. By adding more
numbers of stakeholders in the decision making process and bringing innovations according
to the requirements of the firm, they will be able to improve the corporate social
responsibility. I have also learnt that leadership has a critical role in the designing of
organisational purpose which acts as a driving force for innovations, decision making,
corporate profitability, CSR and has impact on the future direction of the company.
Conclusion
From the above based report, it can be concluded that Samsung is a big multinational firm
that supports open innovation. Closed innovation is based on the innovation that is done
within the company itself. It is conducted inside the company. From idea generation to
marketing and development everything is done within the firm. On the other hand in open
innovation, innovations can take place even beyond the boundary walls. Factor endowment,
strategy, structure, supporting and related industries as well as demand condition are some of
the factors that have impact on the open innovation. Meeting both local and global demands
at a time allows a company to improve its sales but also has demerit that it distributes
resources hence it is difficult to make strategies. Demand for internationalisation will be more
beneficial for the company. The leadership of Samsung is capable of meeting the leadership
principles such as innovation, decision making and transparency by the help of effective
strategies and this has allowed company to achieve corporate profitability along with CSR.

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