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Samsung and South Korea: a strategic analysis - emba 13 - Rotterdam School of Management

Understanding of the nature of the environment, how Samsung has developed and the linkages between country and company.

Celine Bouquillon

on 16 November 2013

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Transcript of Samsung and South Korea: a strategic analysis - emba 13 - Rotterdam School of Management

Yin & Yang represents divided peninsula as well as ancient character of the nation

Modern country with strong cultural and social roots and fully functioning modern democracy.

Located in East Asia in the southern half of the Korean Peninsula

Land-border with North Korea, oversea borders with China (west) and Japan (East); both in the world top manufacturing countries (Also very close to Russia)

Bordering the East Sea and the Yellow Sea (Coastline: 2,413 km)

Approximately the size of Britain
Capital: Seoul
Temperate climate with four seasons
Prominent mountain terrain & 15% arable land: major food importing country (5th largest export country for U.S farm products)
Rich in anthracite, tungsten, graphite and other metals used for shipbuilding, automotive and electronics
South Korea and North Korea took distinctly different paths of development after they were divided. The two societies shared a common tradition and culture, however, by 1990 North Korea had emerged as a staunch communist society, while South Korea was evolving into a liberal democracy after many years of military dictatorship.

From 1905 Occupied by Japan
A 1953 armistice split the peninsula along a demilitarized zone. The border between the two nations remains the most heavily fortified in the world.
From 1994: South Koran business (chabeols) encouraged to globalize their operations.
Today - Policy of global engagement:

G-20 summit in 2010
Nuclear Security Summit in 2012
Non-permanent seat (2013-14) on the UN
Security Council
Host of the 2018 Winter Olympic Games)
South Korea
Sailed through the 2008–09 financial crisis with remarkable aplomb. Despite its heavy reliance on exports.
Family oriented culture based on respect for each other and support. (Similarities with Chinese culture)
Concept of Kibun relates to pride, face, mood, feelings, or state of mind. (similarities with Japanese culture)
Influence of Confucianism. In line with this, spiritual culture and academic knowledge were broadly preferred to commerce and technology.

largest Asian Economy
largest World Economy
largest trading country
Advanced country with good general healthcare and community services in place. Balanced demographic factors in the society.

Westernised and industrialised, wealthy and backed by the world's number one superpowers

South Korea is often said to be “Stuck in the middle,” trapped between an advanced Japan and a rising China. Its great dilemma is that it falls short of Japan on quality and can’t hope to match China on price
These characteristics of traditional culture have been eroded, and furthermore separated from contemporary culture, owing to the following factors:
Japanese occupation
Since 1945: division between South (Democracy/ Capitalism) and north: (communism & socialism)
Rapid spread of Western culture after 1950

This trend led to a certain confusion and crisis within Korean cultural identity:
Cultural identity policy
Now starting to foster and globalize south korean culture

As well as bigger societal issues:
"The system that has helped South Korea prosper is beginning to break down" - the economist, 2011
1950-53: Korean war involved the U.S., China, the Soviet Union, and several other nations.
During the four decades following the Korean War, it evolved from one of the most abject states in the region to one of the most vibrant, a manufacturing powerhouse that has virtually eradicated poverty, malnutrition, and illiteracy.
Capita income rose to roughly 17
times the level of North Korea
"Forget everything"
Message placed by government to dissuade suicide at a bridge
Competition issues:

16% of Income on private education
--> Kids studying from 7am to midnight
Nr. 1 suicide rate of OECD 30 countries
Most common form of death for those <40 year old
Suicide death rate quadrupled from 1982 to 2011
--> Declining birth rate
The company started out as a small grocer, trading a mixed bag of goods including noodles.

Started to diversify after the Korean war and entered the electronics market that was to make it a global player.

Multinational conglomerate (‘chaebol’) active in Electronics, Construction, Fashion, Finance, Life Insurance, Fire & Marine, Resort & Golf etc.

$188bn in revenues
Samsung Electronics is about 60% of Samsung Group
Samsung Electronics shows strong growth in revenues, gross profit and margins.
Sales represent about 60% in phones and the remaining in other Electronics.
Overall Samsung follows a conservative financial policy. This is probably due to the nature of Samsung being a family based company.

Samsung Electronics shows strong growth in revenues, gross profit and margins. However, it is unclear how sustainable this is considering upcoming Chinese OEMs and strong competition from Apple
Environmental factors have a lot of influence on Samsung.
Suppliers and customers have strong power.
New entrants challenge Samsung’s position on low cost and pursue a ‘me too’ strategy
Samsung is facing with serious challenges rising from the succession of the current CEO by his son Jay Y. Lee, saturation in every market and growing tension between South Korea and the Samsung family
8th most valuable corporation in the world
200,000 employees
Investing $21bn up to 2020 in five areas
Working culture
Chairman since 1987

In 2008 Lee Kun-Hee office was raided for inquiry, he was charged with Tax Evasion and other criminal charges and received suspended 3 years prison.
In 2009, President Lee Myung-bak pardoned Lee Kun-Hee so he could lead a campaign for Winter Olympics in South Korea

The rise of China
& creative power
“Chaebols & Society”
Quality of Life
(Thank you :)
Samsung And South Korea: a strategic analysis
Samsung - Agenda

1. History
2. Diversification
3. Today
4. Future
5. Financials and Comparison with competitors
6. Working Culture
7. Leader: CEO
- Corruption
8. Strategy : Pestel , porters 5, swot , strategy clock
9. off to link between company and country by willem
Full transcript