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Samsung Electronics

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on 26 June 2014

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Transcript of Samsung Electronics

Current Purpose
Samsung Electronics
By: Diego Flores
Anthony Goulbourne
Jack Meara

2004
2007
2013
2010
2001
1998
2005 Competitors
Elpida Memory Inc.
Hynix Semiconductors Inc.
Infeneon Technologies
Micron Technology
Nanya Technology Corporation
Semiconductor Manufacuring International Corp. (SMIC)
financial Loss due to Dram Decline
Cost of new facility 4.5 Billion
100 Million Investment
Japanese Customers
Elpida Memory Inc.
Task Environment #1
External Environment Analysis
2004
2007
2013
2010
2001
1998
Micron Technology
Founded in 1978
Purchased memory chip business of Texas Instruments.
Severe financial distress
Reduced its work force by 10%
500 million investment in DRAM Technology
Nanya Technology Corporation
5th largest DRAM manufacturer
1998 current generation of DRAM from IBM corp.
2002 Nanya & Infeneon joint developments
Invested 2.2 billion towards production
Samsung Manufacturing International Corp. (SMIC)
established in 2000 in Shanghai, China
Manufacture logic & memory including DRAM
Took other designs from other firms & produced blueprints
Increase production capacity, invested 1 billion towards production
Jiang Zemin in 2000 began production of logic chips
Internal Environment ANALYSIS
Hynix Semiconductors Inc.
Cost Advantages Against Samsung
Lost technology Lead
Increase Capital Expenditure
Decrease Capital Investments
Enormous Debt 2001-2002
Infineon Technologies AG
Semiconductor Process : Memory & Logic
Creation of Rectangular Chips
New Technology & Growth
Innovative & Diversity
Billions of Dollars in Assets
Opportunities
Customers
Threats
Suppliers
Partners
Regulators
Task Environment #2
"Superiority in product design and product efficiency.”
Samsung prided itself on the reliability of its products
Kun Hee Lee was so concerned with quality, he even launched mass burnings of shoddy Samsung products

Continue to transform and adapt to the changing industry
Continue to excel in the Memory Business and to excel past new challenges from Chinese firms
Continue to have top quality products
CEO's Vison
Organizational Culture:

Innovative
Employee-Friendly
Internally Competitive
2004
2007
2013
2010
2001
1998
KEY FACTS PART 3
7.) As of 2003, Samsung offered over 1,200 different variations of DRAM products, which was unprecedented in the memory business

8.) In 2005, Samsung faced new challenges from Chinese entrants who were attacking the DRAM market the same way Samsung did 20 years earlier

9.) Samsung had a different hiring and promotion model than most companies in South Korea. Perspective employees were given an aptitude test covering language skills, mathematical knowledge, reasoning, and space perception. They were also a firm that didn’t give promotions based off seniority, but based off of work production and merit

KEY FACTS PART 4
KEY FACTS PART 1
1.) In 2005, Samsung Group was the largest conglomerate in South Korea

2.) At the end of 2004, Samsung had $78.5 billion in net sales, $66 billion in assets, and 113,000 employees

3.) In the 1980s, Kun Hee Lee (future chairman of Samsung), bought Korea Semiconductor Company, the first company to produce wafers, with his own personal savings


KEY FACTS PART 2
4.) Lee convinced his father, Samsung chairman Byung Chull Lee, that semiconductors were the future of Samsung. So the group made Samsung Electronics its star affiliate and gave it most of the Group’s resources

5.) Since 1992, semiconductors had been South Korea’s largest export, and as of 2004, Korea’s semiconductor exports totaled $25.1 billion, fully 10.4% of the country’s export volume.

6.) Samsung alone was responsible for 22% of all Korea’s exports in 2004, and the company represented 23% of total market value on the Korea Stock Exchange
10 Key Facts from the Case

10.) Samsung actively sought and recruited foreign talent, also unlike other Korean companies
Formed allies with other industries competitors
Manage to stay near the pack of industry
Agreement with Taiwan-based DRAM Manufacture
0.11 um DRAM technology to Windbond exchange for output technology
2005 had more than 25 R&D around the globe
2004
2007
2013
2010
2001
1998
Financial Status
Managerial & Employee Status
Market Position
Samsung offered 1,200 different variations of DRAM products
"frontier products" to "Legacy products"
within each product existed "specialty products"
The Flash memory market growth doubled-digit rate

Product Quality
Strengths
Core business sectors are electronics, finance, and trade & service
Brand value increased 5.2 Billion
Ranked 43rd in the world in 2000
Ranked 21st in the world in 2004
Semiconductor of "watch chip"

Weakness
Building the first manufacturing facility in mid-1980's
Time consuming building a semiconductor
construction crews worked 168 hours
completion of a four-kilometer long road in 1 day


Strengths & Weaknesses
Rivalry between PC producers
OEMS negotiated hard on price
Chinese competitors willing to sacrifice for market share
Fierce rivalry & large scale entry by Chinese.
Powerful suppliers
technology more complex & concentrated
Applied Materials, Tokyo Electron & ASML
Discounts of 5% for high volume buyers
PC producers had to face price-conscious consumers
OEM pay up to 1% for reliable supplier

2004
2007
2013
2010
2001
1998
Political Legal
International
Technological
Economic
Socio Cultural
Telecommunication & consumer electronics market grew because of DRAM in 2003
General Environment
Risen to be leading memory producer
Earning in memory division to invest in technological products
Cyclical Downturn in 2005
Grew 16% per year.
Global memory chip industry
33.7 Billion in sales in 2003
OEM controlling more than 20% of the global PC market
Largest conglomerate in South Korea
Global Strategy Group to attract talent to the organization
2003 with the help with mobile phones, liquid crystals displays & memory products
Communication products grew 3.5% to 7.1% in 2008
Spam & flash memory 10% & 32% of industry sales

Employees followed Kun Hee Lee advice
Samsung Group had 337 overseas operations in 58 countries
Employed 212,000 worldwide
Relied on labor-intensive assembly lines
Break the mold of traditional seniority based promotion

Saved 12% on fab construction costs
Average salary in 2003 was 44,000
3 General types of incentives:
Project: Few thousands
Productivity: 300% annual salary
Profit: 50% annual salary by EVA
1980's Lee discovered compoany produced shoddy products
Samsung Group lost track of quality
Employees MUST think Quality First!
Burned shoddy products
1990's company won key industry for reliability
Corporate Image & Culture

Government subsidizing all infrastructure in Shangai & Beijing




2005 Samsung managers collaborated with Chinese partners
2010 China expected to be world 2nd largest purchaser of semiconductors
DRAM producers looked to Chinese to expand joint investments
BILLION DOLLAR INVESTMENT
HWANG'S LAW
WORKING AT SAMSUNG
SAMSUNG D-RAMS
Economy/Political
BILLION DOLLAR INVESTMENT
EMPLOYMENT
customer presumption

TECHNOLOGICAL DIMENSION
FLASH MEMORY
HWANG'S LAW /"STACKING" PROCESS
DRAM USED IN LAPTOP AND GAME PLAYERS
SAMSUNG WAS NOT PHASED WITH ANY REGULATIONS
Full transcript