Samsung was founded in 1938 by Byung-Chull Lee in South Korea. The company’s revenue represents roughly 17% of South Korea’s GDP. Samsung in Korean translates to Tri-Star. The number 3 is a big deal in Korean. It represents strength and abundance. The original logo had three stars bunched together.
How the Company Started
The company started out as a trucking company as Samsung Trading Co.
Byung-Chull Lee came from a wealthy family. He went to college but ended his education early to take over the business operations of his family due to the illness of his father. He developed the business into the conglomerate it is today.
Due to the Korean War, Lee was forced to relocate his company from Seoul to Pusan. This actually turned out to be a boon for the company as American Troops entered that area. They needed transportation of supplies and Samsung was conveniently located for this occasion.
In recent news, Samsung lost a patent lawsuit from Apple in the amount of $120 million. It later appealed and won the appeal. The company has had problems where the battery of one of its products (Galaxy 7) caught fire on several occasions. It’s unclear whether there will be legal backlashes from this.
They have completely suspended production of this line due to this problem. An entire recall on the product has been implemented.
Another disadvantage in the electronics arena is Samsung uses the Android operating system as the base of its smartphone technology. Any competitor can use this same technology to compete effectively. This is happening in a big way in China. Apple has a proprietary operating system and doesn’t run into this problem, aside from pirate copies of its operating system.
It’s hard to argue with Apple’s dominance. Apple is no longer a product company but is looked at as an ecosystem. The products all exist within the ecosystem to help make the lives of people easier. Apple has a loyal crowd that is difficult to bust up. This is something Samsung will have to contend with for quite some time.
Why it Works
The success of the company allowed it to expand to a conglomerate. It currently has several businesses including electronics, transportation, construction, textiles, plus several others.
Samsung Electronics is the subsidiary that makes a good chunk of its income. It has carved out its space as the leader in the smartphone industry.
The company made the decision to expand its Silicon Valley operations in 2013. This is due to the highest concentration of needed talent to give the company its competitive advantage.
The company has recently decided to break from its smartphone strategy of using the base Android operating system and is developing its own. If it pays off, this can allow it to keep competitors from developing technologies or at least control licensing.
Success largely depends on app developers readily accepting this new operating system, which requires they get the necessary training.
Samsung is trying to break away from the model of copying Apple. They will continue to compete but through its funding increases of research and developments, the company expects to produce several of its own innovations that will be unmatched by any competitor, including Apple.
The company seems to be dominating in the Virtual Reality space over its competitors, which it started to do in 2014. That could prove to be lucrative as VR is becoming a hot-ticket item.
Samsung has recently released a fitness product to compete with FitBit. The product is called Gear Fit2 and comes with GPS sensors. The strategy appears to undercut FitBit’s higher end products which support GPS. One big disadvantage of Fit2 is that it is not compatible with Apple products, only Android.
Companies like Samsung do not usually sell directly to the consumer. Although that is changing to some degree, most of Samsung’s products (especially in the electronics subsidiary) are sold via large retailers and other avenues. Therefore, the company has a difficult means to capture relationships with customers who buy.
Oddly enough, it does this using product registration. This is a core means of keeping tabs on its consumers and keeping them up-to-date on company and product announcements. Although the means to register is more likely to be web-based, the concept remains the same.
Samsung has also joined in the craze of companies giving access to accounts via social media. In other words, you can use Facebook or Twitter as a means to sign up or sign into your accounts. This takes away objections by customers in filling in information. These social sign ups fill most if not all of the needed information and registers them at the same time.
The company has incorporated digital advertising into its mix. It has partnered with firms dedicated to this activity and is funneling sizeable cash outlays to the cause. If you haven’t seen the company online, that is likely to change in the future. The company plans to ramp up online advertising well into the future.
The company has developed a huge worldwide supply-chain distribution network. It’s difficult for most companies to match that. When new products are released, they can rely on their partners to promote them.
As far as reviews, it largely depends on the model. Since there are many models, it will depend on what people are looking for and the reviews should be scrutinized.
There are many models that rate highly on Amazon and other sellers. However, they also have several models that don’t rate well. The recent snag with the model whose battery catches fire has become a PR challenge for the company. It will take some time for them to shed this image.
Samsung has a diverse line of products, which on the surface would seem like a positive aspect of the company. However, suppliers have more difficulty choosing which products to include when there are too many choices.
Lessons Learned By The Business
- In technology, it’s important to see ahead what others won’ Samsung has a knack for doing this and will look to the future far beyond what even its customers will do. However, they are aware of the risks of investing big on technologies that may not pan out.
- You cannot make it in business without relying on others. This includes competitors. Apple and Samsung work together in spite of the legal issues both have hit each other with. Partnerships are a key component of the company’s supply chain.
- Lee believed that a company’s human resources should be valued above all other aspects of the business. He was a true believer of attending to the needs of employees throughout their entire stages of employment with the company.
- Lee believed in his company being a good corporate citizen and should take on the same responsibilities as any other citizen, including taxes, etc.
How Other Businesses Can Learn From This
Successful penetration of technology products relies heavily on research and development. Companies must never skimp on this one area as it will leave them chasing other companies.
Because technology changes quickly, being a follower will force you to sell obsolete products or ones due to become obsolete soon. Only through innovation will you successfully lead in this field.