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MTI Samsung Electronics

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Management of Technology and Innovation DEVARAJAN K | SHALABH DHANKAR | SONAM BHARGAV | AMARENDRA KR.GORAI | BHARATH BALAJI | AKSHATA V M | KARTHIKA S| NEELAM | VIGNESHWAR M | AMOY KUMAR D | KULBHUSHAN SINGH BAGHEL | MAHTAAB KAJLA Group III Samsung, the most innovative company in high technology
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Page 1: MTI Samsung Electronics

Management of Technology and Innovation

DEVARAJAN K | SHALABH DHANKAR | SONAM BHARGAV | AMARENDRA KR.GORAI | BHARATH BALAJI | AKSHATA V M | KARTHIKA S| NEELAM | VIGNESHWAR M | AMOY KUMAR D |

KULBHUSHAN SINGH BAGHEL | MAHTAAB KAJLA

Group III

Samsung, the most innovative company in high technology

Page 2: MTI Samsung Electronics

Management of Technology and Innovation

Flow of presentation

Company Overview

Differentiating features and innovation

process

Spiral Model at Samsung Electronics

Future Growth Strategy and new

Areas for Samsung

KM and Process Innovation in Samsung SDI

Q&A

Page 3: MTI Samsung Electronics

Management of Technology and Innovation

Assignment Question What is Samsung’s strategy of innovation that has enabled it to catapult from a $20 billion company to a $100 billion company in 10 years?

Page 4: MTI Samsung Electronics

Management of Technology and Innovation

Company Introduction

• South Korean multinational conglomerate corporation headquartered in

Samsung Town, Seoul, South Korea

• Notable Samsung Group industrial subsidiaries include Samsung

Electronics (the world's largest technology company measured by 2010

revenues),Samsung Heavy Industries (the world's second-largest

shipbuilder measured by 2010 revenues), and Samsung Engineering and

Samsung C&

• Samsung Group accounts for about a fifth of South Korea's total exports

• ―World‘s Most Reputable Companies 2010‖ ranking published by

Reputation Institute of the US, Samsung was placed at 22nd, a large

advancement from prev. yr.‘s 74th

• Samsung was ranked 11th in ―50 Most Innovative Companies 2010‖ list

by Business Week, a five-notch increase from the previous year‘s 16th

• Samsung had emphasized innovation in its management strategy since

the early 2000s and it again highlighted innovation as part of core

strategies when it announced Vision 2020 in which the company set an

ambitious goal of reaching $400-billion sales revenue within 10 yrs.

Page 5: MTI Samsung Electronics

Management of Technology and Innovation

Differentiating features of Samsung

Strategic thinking

Long-term growth than short-term profits Chaebol (Conglomerates) model

State Intervention

South Korea : directed cheap credit Asian Financial Crisis 1997-98: reckless expansion Generates cash to finance its expansion plans

Concentrate on growth sectors

Invested $20 billion in 5 fields in which it is a relative newcomer: solar panels, energy-saving LED lighting, medical devices, biotech drugs and batteries for electric cars

Identify these as opportunities

New Environmental rules (solar power, LED lights, electric cars) or exploding demand (medical devices, drugs)

Large scale Manufacturing and lower costs

Page 6: MTI Samsung Electronics

Management of Technology and Innovation

Samsung model is not easily replicable

• Patient and bold (Strategic thinkers)

– Family of its late founder, Lee Byung-chull, wants it

to be family controlled

– Family control is guaranteed by a complex web of

cross-shareholdings

Page 7: MTI Samsung Electronics

Management of Technology and Innovation

Key growth facts of Samsung

Batteries for digital gadgets - 2000

Ten years later, Samsung sold more

of them than any other company in the

world

Flat panel televisions in 2001

Within four years it was the market

leader

Flash memory in 2002

The technology it delivered made the iPhone and iPad a reality, and made Samsung Apple‘s biggest supplier—

and now its biggest hardware competitor.

Page 8: MTI Samsung Electronics

Management of Technology and Innovation

Key innovation strategies of Samsung

• Shift from easily substitutable gadgets

towards more essential industrial goods

• Just as electronics was a hit in the 20th

century, the company believes green

technology and health care will be

central to the 21st

• Diversify away from consumer

electronics, a market that suffers from

falling prices, thin margins, fast product

cycles and fickle customers

• open itself up to work with partners and

even make acquisitions - new skills,

sales channels and customers.

• spotting areas that are small but

growing fast - Typically capital intensive

areas, making it harder for rivals to

keep up

When it pounces, the company

floods the sector with cash. -

moving into very high volume

production as fast as possible

not only gives it a price

advantage over established

firms, but also makes it a key

customer for equipment makers.

Page 9: MTI Samsung Electronics

Management of Technology and Innovation

New business areas for Samsung

Page 10: MTI Samsung Electronics

Management of Technology and Innovation

Unique innovation strategy

Acting as supplier to rest of industry

Supplying the rest of industry drives down Samsung’s costs yet further, with its rivals in effect financing its success

It is also Apple’s greatest competitor

in those markets.

Samsung - Apple’s most important supplier in the smartphone and tablet-computer markets. Samsung components, which include all the product’s application processors, account for 16% of the value of an iPhone.

Page 11: MTI Samsung Electronics

Management of Technology and Innovation

Unique innovation strategy

Acting as supplier to rest of industry

Apple is now suing the socks off the company for copying the look and feel of its products.

Problem

Page 12: MTI Samsung Electronics

Management of Technology and Innovation

Multi-fold strategies for growth

The company has pushed out older managers and restructured its divisions over the past two years despite posting

record profits even in the global financial crisis

It has aimed products at poor countries, too. This not only gave Samsung scale, but also market shares in the world‘s fastest-

growing economies – making it resistant to recession

New sectors have synergies - experience in semiconductors and flat-screen televisions fits easily with solar cells and LED lighting: the technology, materials and production

processes are similar.

Close watch on competition - Chairman Lee‘s fear is that successful companies get

flabby when they hit middle age. He saw that in Sony, founded in 1946, which has

been struggling since the 1990s. Samsung Electronics turned 40 in 2009, which

prompted Mr Lee to lay the groundwork for the five new growth areas

Page 13: MTI Samsung Electronics

Management of Technology and Innovation

Spiral process model of indigenous technological innovation capabilities (ITICs)

• Firms in a developing country initiate, imitate, improve and make innovative

technologies

• Any technological innovation passes through four stages:

Technological innovation (TI)

Transfer of technology (imitation)

Adaptive technological

innovation (improvement)

Indigenous

technological

innovation (local

innovation)

Initiation(technology acquisition)->Imitation -> improvement ->Self-innovation

Page 14: MTI Samsung Electronics

Management of Technology and Innovation

Technological Innovation Process

Page 15: MTI Samsung Electronics

Management of Technology and Innovation

How, Late-Starter, Samsung Electronics built its ITICs

• Four developmental stages at Samsung Electronics

Entrance of foreign companies into the Korean market and their refusal to transfer their technologies to Samsung initiating its ITICs

Samsung started TICs by means of reversing the engineering of imported foreign technologies and transfer of technology

Improved TI by means of adaptive technological innovation strategy

The capability to establish their own ITICs, to become one of the leading companies in the world which challenges firms from advanced countries in the global market

Page 16: MTI Samsung Electronics

Management of Technology and Innovation

Implementation of spiral process model

Transfer of Technology

Adaptive technology innovation

Indigenous Technology Innovation

Starting point technology innovation

Mass production

Reliance on foreign

technology

A follow-the-leader

strategy

Government Support

Page 17: MTI Samsung Electronics

Management of Technology and Innovation

Implementation of spiral process model

Internal Technological Capabilities

US based R&D

Management Strategies

Crisis Construction

Affiliation with

suppliers

Product Innovation

Product

Process

Technology

Business

Page 18: MTI Samsung Electronics

Management of Technology and Innovation

KM and Process Innovation in Samsung SDI

Aim of

Knowledge Management

Not to build KMS To enhance organization

competitiveness through capitalizing the potential of knowledge

• Process innovation based KM strategy provides the sustained competitive advantage

• To realize the value of knowledge in companies KMS should be executed in parallel to

PI

Page 19: MTI Samsung Electronics

Management of Technology and Innovation

KM and Process Innovation in Samsung SDI

Page 20: MTI Samsung Electronics

Management of Technology and Innovation

KM Implementation based on process knowledge

Knowledge produced through PI

• Transformation from tacit to

explicit knowledge

• Capitalization of knowledge

• Knowledge is bound to the

context

Knowledge outcome of

innovation process

• Not the process itself, but

tasks related to

performance

• Should be combined with

tacit and explicit knowledge

.

Methodological

Knowledge

Accumulative

Knowledge

Page 21: MTI Samsung Electronics

Management of Technology and Innovation

Knowledge Transformation path

KMS in Anglo – American culture

Construct by market oriented , numerical and analytical approaches

Complexity reduced by codification and abstraction – Cognitive energy

MNS in East- Asian culture

Relationship centered and clan centered approach

Absorption of complexity

Page 22: MTI Samsung Electronics

Management of Technology and Innovation

References

Article ‗Asia‘s New Model Company: Samsung‘s recent success has

been extraordinary. But its strategy will be hard to copy‘ – Economist Oct

1st 2011

Article ‗The next big bet: The world‘s biggest information-technology firm

is diving into green technology and the health business. It should take

care; its rivals should take notice‘ – Economist Oct 1st 2011

A spiral process model of technological innovation in a developing

country: The case of Samsung : Kichan Park1*, Murad Ali1 and

Françoise Chevalier2

Integration model of technology internalization modes and learning

strategy: globally late starter Samsung‘s successful practices in South

Korea Y. Gil1, S. Bong, J. Lee

Knowledge Management and Process innovation – The knowledge

transformation path in Samsung SDI Seungkwon Jang, Kilpyo Hong,

Gee Woo Bock, Ilhwan Kim

Page 23: MTI Samsung Electronics

Management of Technology and Innovation

Q & A

Page 24: MTI Samsung Electronics

Management of Technology and Innovation

Appendix - Types of Technology Internalization

Page 25: MTI Samsung Electronics

Management of Technology and Innovation

Appendix - Types of Technology Internalization

Page 26: MTI Samsung Electronics

Management of Technology and Innovation

Appendix - Types of Technology Internalization


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