Analysis Of Organisational Culture And Management Of Samsung

Overview

Samsung is a ‘Multinational Conglomerate Company’ (chaebol). In 1938 the Company originated in Taegu (Daegu), South Korea by Lee Byung-Chull. Lee originally traded groceries in Taegu and exported them to China. Early 1950’s Lee broadened his product portfolio to textiles and he built the 'largest wooden mill in Korea’. His main focus after the war was to focus on the redevelopment of Korea especially ‘industrialisation’. Lee started to diversify the company and focus on new industries such as ‘retail, insurance, and securities’. Samsung Electronics developed its first black and white television in the 1970s and the late 1980s, it started developing telephones and faxes. This was a crucial year for Samsung as they switched focused and invested the businesses' interests into research and development. This change was instrumental in the dynamic growth of the business as it expanded globally to Europe and North America. Today there stands ’37 Research and Development centres’. This shows the importance of R&D within the company. Samsung launched its world’s first flat-panel plasma TV in 1998 and in 2010 Samsung launched its first Galaxy S Series smartphone selling 280 million phones by the end of 2010. Within Samsung’s Group, there are several subsidiaries. Samsung Electronics, Samsung Heavy Industries, Samsung Engineering, Samsung C&T, Samsung Life Insurance, and many others. Samsungs main headquarters are in Seoul, South Korea. The Samsung Group is a Public Limited Company and its stocks are listed on the Korean Exchange, GDR London stock exchange and several others. Currently Samsung electronics co. ltd market capitalisation is ‘1,084. 00 USD’. Samsung operates in 80 countries worldwide and has a total of 308,630 employees. Samsung has a large target market as it has a huge range of electrical products from household products such as Mobile phones, TV’s, laptops, Fridges, home theatres to storage devices like memory devices and semiconductors. Samsung ‘aims to be a world-leading company, devoting human resources and technology to creating superior products and services. ’ Samsung prides themselves on having a ‘constant focus on innovation and discovery’ constantly improving and developing their product range, this is especially important in their competitive business environment.

Management Models and challenges

Samsung’s management is arguably monocultural as 100% of independent and executive directors are Korean which would therefore suggest that their company operates according to Korean culture. Hofstede insights (2019) explain that in South Korea “people accept a hierarchical order in which everybody has a place and which needs no further justification. Hierarchy in an organization is seen as reflecting inherent inequalities, centralization is popular, subordinates expect to be told what to do and the ideal boss is a benevolent autocrat”. Evans (2019) demonstrates how this reflects Samsung as their head offices “notable manifestation of this hierarchy, which is part of an organizational design for ensuring that the conglomerate’s operations are unified and effectively directed towards growth and operational effectiveness”. This statement links in with Fayol’s Internal Process Model which is comprised of centralisation, unity of direction and command meaning all control is given to the head of the company with little delegation to people further down. Samsung follows the Rational goal model where output maximisation is the prime goal and worker’s needs are compromised. According to Pattisson (2018), “Unlike its competitors, most of Samsung’s products are assembled in-house, but it uses a long chain of suppliers to provide it with parts, services and labour, including foreign migrant workers”. This means that Samsung are not outsourcing from suppliers rather they manufacture internally. Towne (2003) justifies Fredrick Taylor’s scientific management theory, where the most efficient method of production was sought after; “to ensure the best results, the organization of productive labour must be directed and controlled by persons”. By having effectively full control of their production process, Samsung can utilise efficiency methods and cheaper labour to keep manufacturing costs low. It can be argued that Samsung don’t parallel with Taylor’s vision however as he believed in financial rewards for increased production rate, Pattisson (2013) reports that the workers he came across at a Samsung factory “were earning far below the minimum wage”.

Operating internationally has been somewhat unstable for Samsung, particularly in China. Jung-a, Yang & Bradshaw (2019) report that Samsung have stopped production, manufacturing and selling, in China. “Samsung did not pay enough attention to the particularity of the Chinese market,” said Yanhui Wang, secretary-general of the Mobile China Alliance”. There were many threats for Samsung including their smartphones using Google play which is one of many systems blocked by the Chinese Government. This caused competition such as Huawei and Xiomi, with alternative systems, to become market leaders leaving Samsung with less than 5% market share nationally. Whitley’s (1999) devised business model which “deals with the co-ordination of economic activities across national boundaries” where the systems including education and legal are considered by a firm in order to operate efficiently in a country. Lyon (2009) explains that “Failing to identify the problem that needs to be dealt with may result in a poor consideration of the variety of technology policy alternatives that exist”. In this case, Samsung should have analysed the political environment of China before deciding to enter the market.

Organisational Culture

Organisational Culture is ‘the set of values, beliefs, norms and assumptions that are shared by a group. They are ‘how decisions should be made and how work activities should be carried out’. Each business’ Organisational culture is formed through their individual beliefs and values. Every business establishes and maintains its unique culture. From Samsung's website, it discloses its five main shared values that run throughout the organisation. The first value ‘people’, they believe ‘A company is its people’, as they are the ones who get the tasks done and determine the success or failure of the company. If the employees get demotivated and disinterested with the tasks, it’s most likely going to cause a negative impact on the organisation, resulting in constant needs for high levels of employee satisfaction. ‘Excellence’, they aim to become the ‘world’s best in every way’ showing Samsung’s commitment to having outstanding quality and performance. ‘Change’ they have strong beliefs in Innovation ‘with a risk awareness’ as they believe they ‘cannot survive if we do not constantly strive to innovate’ consistent innovation is particularly important for Samsung as they are in a highly competitive fast-moving environment with extreme pressures from their competitors such as Apple, Dell and Sony.

Change is also an important value as it enables Samsung’s employees to learn new skills and intern will increase their productivity. ‘Integrity’ Samsung actively believe in ‘ensuring fairness with honour and grace’ Integrity is a core element of success within an organisation as Samsung is committed to what they believe in. This belief adds value to Samsung’s brand image as is shows consumers their dedication and commitment to delivering their latest high-quality products. Lastly ‘Co-prosperity’ they pride themselves on being ‘good corporate citizens in pursuits of mutual prosperity with our community, nation and human society’ showing the company act in an ethical way enabling them to have a positive brand identity. These five main shared values are linked back to Samsung’s mission statement which ‘promotes an inspiration focused strategic objective that makes the business an influencer amount people and societies around the world’. Samsung’s traditionally had a ‘senior-orientated’ centralised organisational culture. This senior culture is reflected in ‘Hofstede’s dimensions of national culture' of its home country South Korea. South Korea has high levels of collectivism and power distance. This high level of collectivism is due to industrialisation and high levels of power distance mean people in the country 'accept and appreciate inequality’. However their organisational culture has changed from a power culture where decision making within the organisation is set to a limited amount of people to a new task and role culture resulting in Samsung concentrating more on communication between managers and employees and more on getting the task completed by sharing skills. The change of organisational culture is also to ‘improve its global competitiveness’. Samsung has planned to make more innovations to its human resources management. This is to devise a creative and horizontal organisational culture. Widening the span of control within Samsung’s organisational structure and allow employees more interdependence of working together towards their common goal. Increasing communication within the organisation between employees and managers allowing employees more opportunities of working in groups and teams. Making employees feel more motivated. This cultural change was as a result of the ‘internal awareness that Samsungs software compared to the rate of their growth was falling behind’ the company successfully overcame this problem however to their competitors the companies innovation was viewed as weak due to its ‘fixed centralised culture’.

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