IN424 Report: Samsung Group's Foreign Market Growth Strategies

This report examines the market growth of the Samsung Group in foreign countries, detailing its evolution from a small business to a global conglomerate. It analyzes Samsung's strategic approach to internationalization, including its investments in marketing, research and development, and adaptation to local market needs. The report explores Samsung's diversification into various sectors, such as electronics, telecommunications, and construction, and highlights its export strategies, including economies of scale and product customization. Furthermore, it discusses the factors contributing to Samsung's success, such as innovation, operational prowess, and marketing efforts, while also acknowledging the challenges associated with managing a global business, economic risks, and quality control issues. The report concludes by summarizing the key drivers of Samsung's international leadership and suggesting areas for further refinement to ensure continued dominance in the global market.

CHOI1
Dongwook Choi
Shireen Musa
IN424 OL1
May 1, 2019
Market Growth in Foreign Countries: A Case of Samsung Group
Introduction
The Samsung Group is a large South Korea-based company that includes many affiliated
companies. It is the biggest corporation in South Korea, creating almost 20% of South Korea’s
total exports in fashion, electronics, heavy industries, construction, food and other fields.
Lee Byung-Chul, founder of Samsung, started his business selling dried food and
noodles, with $27 USD and 40 employees based in Taegu, Korea.
The company expanded to Seoul which is the capital city in Korea trading and exporting
products made in the city. The success of this business helped Samsung to make many
subsidiaries in insurance, securities, and retail. After the Korean war, South Korea had sufficient
food but lacked infrastructure for food production. Lee Byung-Chul recognized the consumers’
needs, responded to it and became successful in his business.
In 1960, Samsung started its electronics divisions. The first divisions included Samsung
Electro-Machines, Corning, Electronic Devices, and Semiconductor and Telecommunications.
Samsung built their first factory in Suwon, Korea in 1970. They produced black and white
television.
In 1977, Samsung started to sell color TV and established Samsung Chemical and
Construction.

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In 1980, Samsung entered the telecommunications industry when it expanded into
making telephones and eventually into producing mobile phones.
In 1993, Samsung decided to focus only on three industries: engineering, chemicals and
electronics. They sold ten of their subsidiaries and down sized. With this new strategy,
Samsung invested in the LCD industry, becoming the biggest manufacturer of LCDs over the
world.
Furthermore, Samsung continued to invest in the smartphone market by becoming the
largest manufacturer of mobile phones.
I chose Samsung for my term project because it is one of the largest companies in the
world and ranked as the 6th most valuable global brand with an estimated brand value of $60
billion.
After the war between North Korea and South Korea, South Korea was one of the poorest
countries with $64 per capita. However, now the economy of South Korea is the 11th in the
world. The Samsung group accounts almost one-fifth of South Korea’s GDP. Samsung has
contributed to South Korea’s growth as one of the largest economies in Asia.
I want to learn Samsung’s export strategy and how Samsung was able to penetrate
foreign markets. I want to know how a business that started selling food items became one of the
most recognized brands in the world. I think understanding Samsung’s strategies can help other
businesses who might want to follow in its footsteps.
Company Research
Samsung Group has been leading the international market position in varied scale of
businesses. The Group can be considered as a conglomerate and it comprises of over 30
associated organizations that is associated with various activities. The various organizations are

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associated with manufacturing, engineering, supplying, along with various other services.
Samsung Electronics is considered as one of the leading electronics organizations in the world,
which has primarily resulted due to its innovations in different areas of technologies, ranging
from smartphones, tablets, smart devices, smart refrigerators, smart ACs and similar such
innovative technologies. It has been successful in expanding its businesses across the world
through strategic business processes that has allowed it to progress its operations within Korea
and eventually expand the same in the international markets.
The Samsung Group upholds the belief of shared responsibility towards their people,
planet and the society and therefore, across the corporate, occupies the highest standards so that
the organization is able to contribute towards a better world. The main motto of Samsung is to
“Inspire the world and Create the Future”(Samsung “Samsung Electronics Sustainability Report
2018”). The core values of Samsung comprise of its people, excellence, change, integrity and
coprosperity.
At the end of 2017, Samsung had nearly 217 worldwide operational hubs and that
encompassed of the corporate Head Quarters in Suwon, South Korea, its research centers, design
centers, sales subsidiaries, and manufacturing subsidiaries and have been operating in 15
Regional Offices in Korea, Southeast Asia, Europe, Africa, North America and several other
regions across the world (Samsung “Samsung Electronics Sustainability Report 2018”).
Internationalization of Samsung as a Market Leader
The success of Samsung to become a market leader can largely be contributed towards
the amalgamation of innovation, marketplace hunger, operational prowess, and marketing
swagger. It has been determined that to promote its products in the global market, Samsung
makes very high investments in the marketing of the products, thereby gaining high recognition

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amongst the consumers of target markets. For instance, Samsung has been estimated to have
spent $349 million on marketing in the United States within the first three quarters of 2012, as
opposed to $191 million that was spent the earlier year (Lev-Ram “Samsung's road to global
domination”). Additionally, it has been estimated that Samsung had spent $8.7 billion on its
R&D in the year 2011 (Lev-Ram “Samsung's road to global domination”). The key strengths of
the organization remain in the its motivation to grow and develop as a strong organization and
build itself as global leader. The fundamental ingredients of its growth are largely dependent on
the new technologies that are produced by it, the creative solutions that it provides and the
innovative products that are offered by the organization.
The generic strategy and intensive growth strategy of Samsung has continued to surpass
the technological innovations as a critical aspect of the competitive advantage that the
organization has gained. The conglomerate of Samsung has been successful in competing against
global leaders such as Google, Apple, Sony, LG, Intel, Lenovo and so on, and be able to acquire
strong competitive forces. Although the industry environment has imposed aggressive
competitive behavior which typically encompasses the rapid technological innovations for
product differentiations, therefore, the production of various kinds of smart devices by Samsung,
such as smartphones, tablets, smart refrigerators, smart ACs, in the global markets. To be able to
efficiently compete in the global market, the growth strategy and generic strategy of Samsung
comprises of investments on the technological innovations, thereby gaining competitive
advantages that allows the organization to maintain its competitive position in the market.
The Samsung Group is the largest South Korea based organization which encompasses of
various associated enterprises. It is considered as the largest enterprise in South Korea and has
been developing nearly 20% of the total exports of South Korea in the sectors of constructions,

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electronics, fashion, food, heavy industries and other relevant areas. The founder of Samsung,
Lee Byung, had initiated the business by selling noodles and dried food with the workforce of 40
individuals and USD 27, which was based in Taegu, Korea (Lev-Ram “Samsung's road to global
domination”). Eventually, the organization expanded to Seoul, that is, the capital of Korea and
the exporting and trading products entered the city.
Diversification of the Business
The electronics division of Samsung was initiated in the year 1960, and the initial
products included Corning, Semiconductors, Samsung Electro-Machines, Telecommunications
and Electronic Devices (Lev-Ram “Samsung's road to global domination”). The first factor of
Samsung was built in 1970, in Suwon, Korea and they were associated with the production of
black and white televisions. In the year 1977, Samsung had initiated the sales of the color
televisions and had also established Samsung Chemical and Construction. By 1980, Samsung
has been successful in entering the telecommunications industry and had expanded its businesses
to the production of telephones, which eventually enabled the company to initiate the production
of mobile phones.
In the year 1993, Samsung had decided on focusing the business in three major
industries, namely, electronics, chemical and engineering. The organization, therefore, had
downsized themselves by selling 10 of their subsidiaries and this new strategy allowed Samsung
to invest in the industry of LCD, which eventually enabled the corporate to become the largest
manufacturer of LCDs in the entire world. In addition, Samsung had continued to make
investments on the market of smartphones and have become the biggest manufacturer of mobile
phones across the world.

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Export Strategy
Samsung Group has been working in the international markets for a long time and has
ensured to follow all the trade policies that are associated with exports and imports. Based on the
domestic GDP of any location or market, Samsung attempts to provide the products at the price
that is affordable by the target consumer segment and therefore, develops the products according
to the usability of those markets. This has enabled Samsung to ensure that it is able to
successfully establish itself in that market and gain strong competitive advantage in that market,
thereby gaining leading positions in the global market, in a gradual manner (Samsung “Samsung
Electronics Sustainability Report 2018”).
Samsung Group has ensured to keep under consideration the aspects of economies of
scale, especially with respect to the production of semiconductors. It also refines the adaptability
of its devices as per the market requirements so as to ensure that the local consumers of the
market are able to utilize the products with the intent of fulfilling their requirements and
demands. The R&D of Samsung Group works towards the development and production of
innovative products and services that would offer the consumers with the latest trends and would
also allow in fulfilling their requirements (Samsung “Samsung Electronics Sustainability Report
2018”). Furthermore, through mass production of the products based on the latest trends amongst
the consumers, Samsung is able to achieve cost advantage.
The expansion of the business of Samsung in the global market has offered the
organization the opportunity to access various international markets for the production processes,
due to the availability of resources and skilled and expert labors in those markets. For instance,
Samsung had inaugurated the largest mobile factory of the world in India in 2018 that provides
opportunity to Samsung to tap into the skilled workforce of India, while providing employment

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opportunities to the local community, thereby benefitting each other, which allows Samsung to
gain further advantage in the market (Samsung Newsroom “Samsung Inaugurates World’s
Largest Mobile Factory in India; Honorable Prime Minister Shri Narendra Modi Flags-off ‘Make
for the World’”).Similar units also exist in the US whereby Samsung conducts various R&D
tasks for the production of innovative technologies (Lev-Ram “Samsung's road to global
domination”). In these manners, Samsung has been successful in expanding its businesses in the
global market, which has enabled the business to gain strong competitive position in the
international market against some of the major global competitors.
Conclusion
The growth strategies and generic strategies that are employed by Samsung Group for the
expansion of its business in the global market has beneficial for the organization on various
aspects. Although strategies that have been employed by Samsung Group has been advantageous
so far, there still exists certain cons with respect to the same that are to be refined so that the
organization is able to successfully dominate the global market, by gaining the leading position
in all the industries and sectors in which Samsung operates (Samsung “Samsung”).
The various aspects that have been influencing the growth of Samsung Group as an
international leader encompasses the following:
 Complexity of management: The various aspects associated with the management
of the global businesses provide both advantages as well as disadvantage to the
company as the company is required to spend considerable capital on the
maintenance of the management forces and the lack of the same results in
disarrayed coordination.

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 Risks associated with the economy: The entry into an international market
requires consideration of various factors and aspects that exist in that market and
these may impose threat on the operations and functioning of the business of
Samsung. Consequently, the organization is required to develop suitable strategies
that are based on the market research that is conducted for that market, for the
determination of the advantageous spots within the market that would offer the
organization the opportunity and benefit of successfully integrating itself in the
market (Samsung “Samsung”).
 Quality Issues: While operating in the global market, Samsung might encounter
the issues associated with the quality of the product and the same is largely
responsible to the transit processes of the products. Therefore, Samsung is
required to follow extra care on the products that are exported to the external
markets. Furthermore, this issue can also be overcome by installing more
manufacturing units in the international markets that can easily be accessed by the
organization (Samsung “Samsung”).
The various strategies that are employed by Samsung Group has several pros and cons
associated with it. These can be detailed as follows. The pros of the internationalization
strategies of Samsung include:
Market Growth: The internationalization strategies that have been employed by the
organization has enabled it to gain the opportunity of market growth, with respect to the global
markets. Samsung has been successful in integrating its businesses in various parts of South
West Asia, North American, Latin America, Africa, Middle East, and Europe. The presence in

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the global market has allows the organization to gain growth in the markets, with respect to
market shares and competitive positions (Samsung Global Strategy Group “Global Samsung”).
Competitive Advantage: The internationalization decisions and strategies that Samsung
Group enables have aided the company in providing ideas and similar such aspect with respect to
product development, which are focused towards innovations and technological advancement.
The introduction of these innovative products in the international markets have eventually
resulted in the establishment of Samsung being one of the most innovative companies that stands
first in introduction of innovative and advanced technologies in any market.
Technological Advancements: The internationalization strategies and efforts have
provided Samsung the opportunity to tap into the technological developments that already exists
in several markets such as China, USA, Japan and so on. Through the access to the technological
innovations of the local market, Samsung is able to integrate the same with their own
technological innovations, thereby making the organization highly successful (Samsung Global
Strategy Group “Global Samsung”).
Despite the different pros that are associated with the internationalization strategies, there
exists certain cons that are also significant to be considered so as to ensure that the organization
can work towards overcoming or mitigating the same. These include following:
Cultural and Language Barriers: During the internationalization processes, establishment
of businesses in any international market requires consideration of the local languages and
cultural beliefs and it is significant for Samsung to ensure that suitable measures are followed to
ascertain that the products that are developed are in accordance with the local cultures and
beliefs, which ascertains successful acceptance and widespread of the same.

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Works Cited
Lev-Ram, Michael. “Samsung's road to global domination.” Fortune, 22 Jan. 2013,
http://fortune.com/2013/01/22/samsungs-road-to-global-domination/.Accessed 2 May
2019.
Samsung Global Strategy Group. “Global Samsung.”Samsung GSG, 2016,
https://sgsg.samsung.com/main/index.php.Accessed 2 May 2019.
Samsung Newsroom. “Samsung Inaugurates World’s Largest Mobile Factory in India;
Honorable Prime Minister Shri Narendra Modi Flags-off ‘Make for the World.’”
Samsung, 2018, https://news.samsung.com/in/samsung-inaugurates-worlds-largest-
mobile-factory-in-india. Accessed 2 May 2019.
Samsung. “Samsung Electronics Sustainability Report 2018.” 2018,
https://images.samsung.com/is/content/samsung/p5/global/ir/docs/SustainabilityReport20
18_en.pdf. Accessed 2 May 2019.
Samsung. “Samsung.” Samsung, 2019, https://www.samsung.com/global/business/networks/.
Accessed 2 May 2019.