Samsung Group is a South Korean multinational conglomerate founded on 1 March 1938 (Samsung US, 2020). The business philosophy of Samsung is to devote their talent and technology to creating superior products and services to contribute to a better society. This statement would indicate that the purpose of Samsung is to create products and services that are of high quality and would ensure customer satisfaction. The company also aims that this product and services will be able to contribute to society so that each person is living a rich life. The company also aims to retain the 1st position in the world.
Samsung has three business areas: consumer electronics, IT & Mobile Communications, and Device Solutions. Consumer electronics include home appliances as well as health & medical equipment. In 2006, Samsung won the top global market share in this division (Samsung US, 2020). IT & Mobile Communications involves mobile devices, wearable devices, tablets, and personal computers. Samsung is the number one smartphone company in the world (Statista, 2020). The company aims to retain its market leadership through innovation. Device solutions refer to the internal parts of a whole range of electronic devices. The company ensures that these parts are high quality to provide maximized performance, reliability, and longevity.
The organizational structure of Samsung is designed in order to promote technological innovation. The current corporate structure of the company also reflects the evolution of the company from a small trading firm to a diverse multinational corporation. Because of the structure of the company, it enabled Samsung to have effective market penetration as well as market development strategies.
Samsung has a product-type divisional organizational structure with a minor characteristic of geographical groupings. In this structure, the product categories are the basis in determining the resources and business operations that would belong to a specific division. In each division, there are different departments of production, distribution, and marketing, and sales. Currently, there are five divisions that represent the different product categories of the company:
- personal and industrial appliances;
- smartphones and gadgets;
- software and hardware solutions;
- the management of the company;
- research and development.
The corporate structure also emphasizes technological innovation. This organizational structure is also flexible because Samsung may add, merge, or remove divisions depending on the business needs as well as the development of the organization. Samsung still implements a centralized hierarchy over the different product-type and geographic divisions.
Samsung also uses geographical divisions. There are different geographical divisions such as Samsung Singapore, Samsung Taiwan, Samsung Philippines, and many others. The geographical divisions also follow the product-type division, which is the main characteristic of the corporate structure of the organization. For example, Samsung Electronics Singapore is a geographical division under Samsung Electronics, which is a product-type division.
A divisional organizational structure has advantages and disadvantages. The advantages of this structure include extensive support for product development, contextualized strategies, and streamlined operations. Samsung’s organizational structure provides the advantage of extensive support for product development because of the product-type divisions. Each product-type division can focus on its specialization in order to ensure technological innovation. Another advantage is contextualized strategies. This corporate structure provides flexibility to the organization that they can adjust their strategies as well as operations in order to meet the needs of the market. For instance, since they have geographical divisions, Samsung can modify the marketing strategies in each country in order to attract the local people. The effect of the streamlined operations is that Samsung has been able to keep its competitive advantage against their competitors such as Apple, Sony, Lenovo, and many others. Because the divisions are separate, even if they belong to the same company, if there is negative publicity about a specific division, the other divisions are not too affected. For instance, during the Note 7 explosion incidents, the other divisions were not too affected that their sales also declined as much as the smartphone division’s sales did.
Samsung’s organizational structure has the disadvantage of the product-based divisions having limited autonomy. There is a centralized hierarchy within the company that means each division still needs to follow the directives of the top management in the Seoul headquarters. Another disadvantage is the challenge of expanding into different markets given the priority for the product-type division as opposed to the geographical divisions. The duplicity of functions across the different divisions may also be a disadvantage. However, Samsung has managed to ensure that the drawbacks of their organizational structure will not affect the whole company as much as possible.
Samsung Case study
There has been a decline in the sales of smartphones. Samsung stated that one of the reasons for the decline in the sales of smartphones is because the smartphone market is already saturated as there are a lot of smartphone companies already. Some of the companies that compete with Samsung are Huawei, Lenovo, Apple, LG, Huawei, and many more. In addition, there is also stiff competition from Chinese smartphone companies that are offering similar innovative devices, but at a cheaper price.
Chief Koh of Samsung stated that there are a lot of young Millennials who cannot afford to buy premium phones but still want innovative products. As such, Samsung aims to counter the declining sales by boosting the technology of its mid-range phones. The new and advanced technology used to be reserved for the premium smartphones of the brand. In the new strategy, the company will put their advanced technology to the other range of smartphones in their company. For instance, the Galaxy A series will have improved features such as more cameras but will remain affordable to the public.
Samsung also aims to be able to continue providing premium innovative smartphones. During the time that the article was published, Samsung was working on the first foldable phone, which will be introduced as Galaxy Fold. Another strategy is to invest in the production of devices that are compatible with 5-G. The 5-G technology promises to link every device at faster speeds compared to how they are connected currently.
Among the different dimensions of organizational culture, the most appropriate one to be used in the long-term plan of Samsung in the context of declining sales would be innovation. Samsung needs to ensure that the organizational culture promotes innovation. When employees perceive positive innovative culture in the organization, they are more likely to show innovative behavior, which will further improve innovation in the workplace (Lukoto & Chan, 2016). The employees will also more likely demonstrate innovative behavior in the different stages of the innovative process such as opportunity exploration, idea generation, idea championing, and idea realization (Lukoto & Chan, 2016). Innovation will be the one that will determine the success of Samsung in the current context as well as in the future. Samsung needs to ensure that they provide innovative products and services so that they will remain relevant to the needs of their consumers as well as be able to contribute to the betterment of society.
The structured problem refers to problems where it can be solved by following instructions while the unstructured problem refers to problems where it cannot be solved by the structured decision-making process. Given the context in the case study, Samsung is facing an unstructured problem with the decline in its smartphone sales. While there is data that can show the trends of the sales of Samsung and research about the reasons for the decline in sales, the problem is still unstructured. There are no specific instructions on how Samsung can resolve the problem because it involves a lot of internal and external factors. Samsung must make unstructured decisions in which the company has to provide judgment, evaluation, and insights into the problem definition to be able to resolve the problem.
An example of a common structured problem that Samsung could possibly face would be the negative backlash against their products. In the past, Samsung has been involved in a controversy with the Galaxy Note 7. Because of what they learned about the Note 7 crisis, they can be able to solve issues within their quality control as well as public relations issues. Samsung may have learned how to handle any crisis as well as the backlash against their products.
Based on the statement of Mr. Koh, he follows a directive decision-making style. This type of decision-maker works out the pros and cons of the situation based on what they already know.
Directive decision-makers are rational and have a low tolerance for ambiguity. The decisions of this type of people are rooted in knowledge, experience, and rationale. A directive decision-maker uses his or her own knowledge and experience in order to determine the best option. Similarly, Mr. Koh is aware that he can learn from the other competitors; however, he still knows that he knows what is best for the company based on his knowledge and experience. Mr. Koh mentioned that Samsung has its own roadmap and it will not just change its roadmap because of competition in the industry. Mr. Koh slightly deviates from the typical rational decision-maker because usually, these people do not go to others for more information. Mr. Koh noted that there are things that Samsung could learn from other companies. However, in the end, Samsung still has its own roadmap.
Rational Decision-Making Process
The first step to make a rational decision is to identify and describe the problem. It is important to define the current state and the desired states. The current state of Samsung is have declining state. The desired state is to retain the position of being a market leader at the same time regain its strength in terms of the number of sales of smartphones.
The second step in the decision-making process would be to identify the decision criteria. In the current context, the decision criteria would include a number of sales, innovative products, innovative services, innovative culture, marketing and sales strategies, the position of the company in the market, and company reputation.
The third step would be weighing the established criteria. It is important to provide weight to the established criteria. There are some criteria that are more important than the others. The criteria that would have more weight than the others given the current problem would be a number of sales, innovative products, marketing, and sales strategies.
The fourth step would be to generate a list of alternatives. It is important to list down all the possible alternatives as much as possible in order to arrive at an effective solution. The more alternatives, the greater the possibility of getting the most effective solution. Samsung should conduct research as well as gather feedback from their employees and their customers to be able to gather alternatives.
The fifth step would be to evaluate the alternatives based on the criteria in Step 2. This may take a long time depending on the number of alternatives generated in Step 4. Samsung decision-makers could use a table in order to compute for the option that would best represent the
The leadership qualities that Mr. Koh must possess in order to successfully transform Samsung to regain its position of strength would be being an excellent communicator and being an enabler of innovation in the company. An effective leader is an excellent communicator. Mr. Koh must be able to communicate to the employees from all the divisions of Samsung about the vision of the company and to promote a shared vision throughout the company. Mr. Koh also needs to establish two-way communication with the customers. Samsung needs to have a conversation with the customers regarding the products and services of Samsung. This will also improve the reputation of the company. Above all, Samsung must be able to communicate to society about what the company wants to contribute to society.
Another quality is to be able to promote innovation within the company. Mr. Koh needs to be a leader that creates an innovative organizational culture to promote the creativity and innovativeness of the employees. An innovative company can retain creative employees as well as develop relationships with the customers (Taylor et al., 2019).