Samsung – Asia’s Newest Rising Star

May 4, 2012 | By More

Founded in 1969 as a subsidiary of the Samsung Group, Samsung Electronics has since become world leader in R&D, marketing, and design, with a brand more valuable than Pepsi, Nike, or American Express. Its meteoric rise has meant Samsung has become Asia’s rising star. In 2011 Samsung has become the 17th largest and most popular consumer brand in the world according to Interbrand, surpassing even Sony, who dropped to 35th. [Click here to read more.]

With its 2011 revenues at US$142 billion, few would have expected the company to move so rapidly into so many technology sectors – and be good at it.

For example, in 2000 Samsung started making batteries for the consumer market. Ten years later, it sold more than any of their competitors. In 2001, they started making flat-panel televisions and who would have expected Samsung to be the market leader in just four years! Even Sony had to retreat the TV business – as implied by the new Sony CEO Kazuo Hirai at his first press conference in April 2012.

By 2020 Samsung expects to be a $400 billion company with five new business areas providing $50 billion of the revenue. They are solar panels, LEDs, electric-vehicle batteries, medical devices and biotech drugs. And to achieve that, Samsung is planning to spend $20 billion over ten years in these areas.

So what is Samsung’s secret to success?

Gartner attributed Samsung’s success to “good execution” as the company’s strong leaders have the vision to meet the objectives it had set out to achieve.

As the biggest smartphone in the US in 2011, Samsung also supplies 26% of the component cost of Apple's iPhone, the number two.

Samsung has successfully fused Western business practices into an essentially Japanese manufacturing system with a strongly Confucian workforce. They bravely introduced merit pay and promotion, sometimes putting young people in positions of authority over their elders.

Frost & Sullivan identified Samsung’s ability to correctly pick emerging growth platforms and markets.

Samsung’s successes come from spotting areas that are small but growing fast. When it does, the company floods the sector with cash by buying technology rather than building it. It wins as a “fast follower”.

Much has been written about Samsung’s success elsewhere and more can be learnt.

Some lessons for entrepreneurs anywhere:

  1. Think strategically. Spot new markets, then use your resources well to focus on the technologies you have picked.
  2. Focus, commit and be determined to work on your plan. Execute, execute, execute.
  3. Motivate your people well.
    Balance between your own cultural strengths and ‘western’ ways of doing things.
  4. Have strong leaders in your company.

 

Read more here about the secrets of Samsung’s success.

The Economist: Asia’s new model company
The Economist: Samsung, The Next Big Bet
ZDNET: ‘Good execution’, leaders key to Samsung’s success
HBR: The Globe: The Paradox of Samsung’s Rise

 

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About the Author ()

EngTong, pioneer and innovator. Graduated from Imperial College London with an MBA from Cranfield School of Management. Lived in Scotland, England, California, Beijing and led teams in Italy, France, Japan, Taiwan and Malaysia to do the impossible. Now based in Singapore and believes the future is to blend the sophistication of western management practices with the strength of Asian Values. Trained as a Chartered Engineer. Member of IET, Associate of City and Guilds and a certified SixSigma Champion.

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