Organizational Structure and Leadership in Samsung Company
Table of contents
- Organizational Challenges for Today
- Groups and Teams
Lee Byung-Chull is one of South Korea’s most successful businessman. He started a grocery trading business in Taegu, Korea; their main goal was to trade noodles and other goods by exporting them to China. Shortly after the success of the trading business, on March 1st, 1938, he founded Samsung (Founder of Samsung, 2019). His new company, Samsung, became one of the most significant publicly traded companies in Korea and around the world. Samsung prides itself on its mission and vision statements. Their mission statement states, 'we will devote our human resources and technology to create superior products and services, thereby contributing to a better global society' (Samsung, 2017). Their vision statement aims to 'inspire the world with our innovative technologies, products, and design that enrich people's lives and contribute to social prosperity by creating a new future' (Samsung, 2017). Samsung's vision statements are a mixture of 3 things which include global inspiration, innovation, and improvement of lives and future social prosperity. Samsung makes appliances such as digital media devices, semiconductors, memory chips, integrated systems (Samsung, 2017).
Samsung first entered the electronics world in 1969, and by the 1970s the company began exporting home electronics overseas. Samsung makes various electronics such as TVs, smartwatches, smartphones, desktops, laptops, printers, and exports them internationally (Korean Expose, 2017). Samsung is a multinational electronics and information technology company running worldwide. In March 2019, Samsung appointed three new CEOs, Koh Dong-Jin, Kim Hyun Suk, and Kim Ki Nam for the company to thrive in Korea and internationally. Samsung's headquarters is in Seoul, South Korea. Presently Samsung is operating six mobile manufacturing companies in Korea, Vietnam, China, India, Brazil, and Indonesia.
The main reason our team chose to research Samsung is that it is one of the top ten publicly traded technology companies. As a team want to broaden our understanding of Samsung products as most of us are Apple users and have minimal knowledge of Samsung products.
Organizational Challenges for Today
With the rapid development of technology, technological industries are getting more competitive, especially in the smartphone industry. Samsung, as one of the top ten technological companies, received a decrease of 60.2 percent operating profit in 2019 compared to the same time last year (Farooqui, 2019). Samsung is not only facing competition from Apple but also some rivals like China’s Huawei, Xiaomi and Vivo (Kharpal, 2018). Those smaller smartphone rivals are offering powerfully functional devices at a lower price. One of the strategies that Samsung applied to respond to this challenge, was announcing a new trade-in program. This program offers the Samsung users a great discount deal when they upgrade their old phone to the new S9 and S9+ (Kharpal, 2018).
The second issue facing Samsung is false public representation in France. An article by South China Morning Post accused Samsung of having children in factories located in France. Exposing the gap between company standards and factory working conditions (Chapman, 2019). The findings are crashing Samsung potential in Europe and France (Samsung, 2019). Samsung responded by public-facing these allegations and exposing its conduct in the past and present. This not only removes the fuel from the fire, but it also generalizes the situation as a common issue among every company.
Additionally, the restrictions and tariffs that have been imposed by the Trump administration as part of the US and China trade war have affected Samsung greatly. As reported by The New York Times “restrictions on sales to Huawei … has reduced demand for the company’s [Samsung] chips and forced it to cut prices.” the ongoing trade war has greatly impacted Samsung who has relied on buyers previously (Merced, 2019). To keep up with the current economic downturn as well as the imposed tariffs on washing machines Samsung has been forced to lower its prices. Samsung operates through a conglomerate structure that combines the functional and divisional approaches to the company authorities. Under the organizational chart provided on Samsung’s official website, the domestic sales department is separately grouped from the international sales department after the top hierarchy level – president (Samsung, 2019). The sales support team and research center are also part of secondary hierarchy groups based on different functions (Samsung, 2019). The Fixed income derivatives team, Global FX and derivatives team, Financial futures team and Foreign currencies strategy team are grouped into the domestic sales department based on different functions (Samsung, 2019). The centralized corporate hierarchy, geographical groupings and department function differentiation feature Samsung company’s conglomerate of functional and divisional organizational structure.
One major contextual variable that could be present in Samsung's organization is its response to size and culture. Currently, Samsung holds 309.63 thousand employees across the board (Shanlong, 2019). Samsung's leadership is based in South Korea and that brings Korean leadership, culture and social norms across to other countries. While Korea would function great under that cultural leadership, other cultures and communities would respond differently to that style of leadership. Samsung responds great to the cultural aspect that comes with the magnitude of its company by adding a major branch of divine Regional management to every location. Managing culture communications across the board. Due to the size of Samsung and the values, the company wants to create in its organization the communication between leadership and staff needs to be better than average. Samsung's regional division creates a direct line where consistency and communication from each culture can grasp the company goals and culture.
Groups and Teams
The trade war conflicting the US and China has left a lasting impact on Samsung “it expected its second-quarter operating profit to fall more than 50 percent” the trade war wreaks havoc on the global economy (Merced, 2019). Samsung would benefit from creating an executive board of leading members composed of engineering, marketing, and finance teams to bring several different minded people together with different opinions and concerns to solve issues like the search for new etching gas “Samsung Electronics is testing hydrogen fluoride etching gas from companies outside Japan” because of the impacts on Japan from the trade dispute(Yamada, 2019). Problems that Samsung might face in having executive board members from different departments such as engineering, marketing, and finance could be the permanence and skill differentiation within the different teams, as each member may bring a different quality to the table. The teams must be cooperative with one another. If the teams are not able to be cooperative with each other, they will run across problems causing conflicts and opinion clashes between each other. It is critical to come to a common solution for any progress to be made. To do so it must be coordinated very well for everything to run smoothly. If there is trouble reaching that common ground, or challenges within the team coordination, it may create a scenario where contributing members pick what works best for them, therefore neglecting what the other teams may require to get the job done. For example, if an engineering department believes something needs to be worked on, and be built they will need a good amount of financial support, but if the finance department does not believe they can finance the project, the two departments will need to find coordination and a common ground to work upon, so challenges are not faced.
Lee Kun-hee joined Samsung in 1968 and became chairman of the Samsung group in 1987 after the death of his father Samsung founder Lee Byung-chul (Kraar, 2010). Lee Kun-hee followed the inspirational leadership theory as a charismatic leader of Samsung making drastic changes to the organizational structure. “Mr. Lee, Kun Hee emphasized quality over quantity in his first statement” Kun-hee wanted to reform the Samsung group from the traditional way of operating business in Korea (Hur, 2019, p. 28). “most Korean firms exploited the cheap labor from the agricultural sector” the rest of Korea was using cheap labor to manufacture large quantities, Kun-hee's unconventional strategy was to focus on quality as well as change the management structure of Samsung (Hur, 2019, p. 28). With the new management concept “Samsung insisted that subordinates point out errors to their bosses … [and also] promoted women to the ranks of senior executives” Kun-hee saw that Samsung was second rate on a global standard and revolutionized Samsung to what it is now.
The U.S Samsung executive team is made up of experienced effective followers. Most of the executives have over 10 years' experience and some as much as 30 years' experience working in their fields of expertise. (Samsung Newsroom, 2019) From reading the Samsung executive bios, the senior vice president Bryan Choi is taking responsibility for sales and marketing for the telecommunications business in Europe & CIS and the executive vice president Joseph Stinziano is responsible for overseeing sales and marketing. (Samsung Newsroom, 2019) Michael Lawder as the senior vice president in the Customer Care department is committed that their team will simplify the customers’ problems and provide more productive service to the customers with delight. (Samsung Newsroom, 2019) The Samsung executive team embraces the responsible professionals who are also seeking for improvements and they are the effective followers.
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