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Implications of cultural differences for international businesses
Harvard business review case study of samsung
Harvard business review case study of samsung
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Samsung’s Cultural Influence
Samsung’s mission is “to inspire the world with innovative technologies, products, and designs that enrich peoples lives and contribute to a socially responsible, sustainable future” (Seth, 2013). Expanding its Korean roots throughout the rest of the world not only allowed the company to survive, but has made it possible for them to grow rapidly into industry leaders in technology and be internationally recognized as a top 10 global brand. This success did not come without a whirlwind of managerial challenges and controversy. The objective is to provide information on Samsung’s decision to expand internationally, describe the managerial challenges faced through cultural differences, organizational structure, human resource function, organizational environment, and corporate level strategy. With managerial challenges controversy seems to follow and “throughout 2012, Samsung was harshly criticized for poor conditions at its supplier factories, links to child labor, violations of national legislation and anti-competitive practice”(www.reprisk.com, 2012, p.7). Samsung’s consistent approach and effectiveness when faced with extreme challenges and controversy has been crucial to its global success. Specific control systems have been implemented that have made transitioning corporate structure, overcoming cultural differences, and driving growth unparalleled to its competitors. Finally, with the company battling through controversy recommendations will be made on how Samsung can prepare itself and handle the issues in a more efficient manner to prevent the international conflict and controversy in the future.
Company Culture and Reason For Expansion
Samsung, founded by chairman Byung-Chull Lee in 1938 origi...
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Kwon, O. (2013). Global harmony with people society & environment. Retrieved from
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Reuters, T. (2012). Samsung says it will fix outsourcing issues, but keep most production in
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Seth, P. (2013). Samsung Electronics Structure. Retrieved from www.prezi.com/oxpwmnbrhbms
/Samsung-electronics-structure
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The company’s reputation is on the line when bringing in a new product to a new market in a foreign country.
N.V. Philips (Netherlands) and Matsushita Electric (Japan) are among the largest consumer electronics companies in the world. Their success was based on two contrasting strategies – diversification of worldwide portfolio and local responsiveness for Philips, and high centralization and mass production for Matsushita.
The U.S. industries have been outsourcing manufacturing for several decades now. U.S. companies thought they were reducing costs by outsourcing development, manufacturing, and process-engineering abilities. Consequently, U.S. corporations’ knowledge, skilled workers, and supply chain, which are the necessities to producing advanced products, have vanished. For example, almost all notebook computers, cell phones, and handheld devices, which were once created in the U.S., are now designed in Asia. When a major U.S. company outsource, it pressures their rivals to do the same thing. They also lose the expertise of process engineering, which would interact with manufacturing on a daily basis. Minor companies and skilled workers go to where the jobs and knowledge networks are no matter where they are geographically in the world. This decline of trade in the U.S. has caused a negative chain reaction to their suppliers of sophisticated materials, tools, production equipment, and components. U.S. industries do not have a way of coming up with new ideas for the next generation of high-tech products...
Two major competitors in the global consumer electronics industry, Philips of the Netherlands and Matsushita of Japan, both have extensive histories that can be traced back more than a century. They have each followed different strategies and have had significant capabilities and downfalls along the way. In general, Philips built its tenured success on a portfolio of responsive national organizations. On the other hand, Matsushita based its global strategy on a centralized and efficient operation through Japan. As they developed and reorganized their international strategies, each company was forced to undertake its strategic posture and restructuring as its competition position fell.
The cost advantages related to raw materials may be explained by better negotiated agreements with suppliers (perhaps due to the larger volumes of purchases – comp. Fig. 5) and possibly less shipping and distribution costs that stem from the fact that Samsung’s fab facilities are geographically collocated (while competitors’ facilities are spread world-wide). In terms of labour productivity only Chinese SMIC outperformed Samsung, but that came hardly unexpectedly: low labour costs in China had been and were to remain unbeatable for some time yet.
In conclusion, companies that seek to integrate into global markets usually encounter several problems because of the effect of globalization on business practices. The challenges originating from such integration is attributed to the differences in cultures in various societies across the globe. As evident in Google’s dilemma in China, there is no single set of universal ethics that are applicable to all settings and societies across the globe. Companies such as Google need to develop varying ethical standards that are relevant and appropriate to various nations and cultures in the world. This would enable the companies that are integrating into global markets to avoid ethical issues while maintaining effective business practices.
Samsung Electronics Company (SEC) began doing business in 1969 as a low-cost manufacturer of black and white televisions. In 1970, “Samsung acquired a semiconductor business” which would be a milestone that initiated the future for SEC. Entering the semiconductor industry would also be the beginning of the turnaround phase for SEC. In 1980, SEC showed the market its ability to mass produce. SEC became a major supplier of commodity products (televisions, microwave ovens and VCRs) in massive quantities to well known original equipment manufacturers (OEMs). For this reason, Samsung was able to easily transition into a major player in the electronic products and home appliances market (Quelch & Harrington, 2008).
For over fifty years, Toyota has established over 50 bases in 26 different countries and regions. Their automobiles have found their way into over 170 countries across the entire globe. In addition, Toyota has design and R&D bases in nine locations overseas, with this they prove that they have achieved consistent globalization as well as localization. The most important part in any Toyota base is the quality assurance. They don’t stamp their product with “Made in the USA” or “Made in Japan”, but instead opt for one label for all: “Made by TOYOTA.” This shows that the product is made in the “Toyota Way.” To achieve this, the company minimized support that comes from Japan to let each of their foreign locations become self-reliant. For example, a Toyota plant recently began production in Texas has made maximum use of its sibling’s experience in Kentucky which has been cultivated over the past 20 years. Toyota believes that in order to reach their goals is through educating people. Multiple Global Production Centers have been built within Motomachi Plant in Toyota City, in United States, the United Kingdom, and Thailand to carry our corresponding activities in the Asia-Pacific, European, and North American regions. To promote the “Toyota Way”, the Toyota Institute established an internal human resources development organization in North America, Europe, Asia, Africa and Oceania. As you can see the pros of the globalization of Toyota are endless. This company alone has created millions of jobs across the world. Winners are not only the workers, but also the buyers, without globalization Toyota automobiles would only be available in Japan. Many people, including me, see globalization of this kind as a beneficial and advantageous result. Toyota companies have not only created jobs for thousands if not millions of people, but their
This paper provides the relevant knowledge of international business to examine and analyse the key issues for Huawei in its business and the international market place. Firstly, a brief introduction of Huawei will be given and its main drivers in emerging markets will be presented under the theory of foreign direct investment (FDI) before showing its entry mode. Then, there will be a discussion about the core external environmental issues that Huawei underwent when it operated its business in emerging markets: India and South Africa. Next, it looks forward to justifying the key opportunities and challenges when it moves in to India and South Africa. After that, Huawei’s international business operations with the evaluation of its company structure as well as control mechanisms will be specified. This part includes a section that how human resources management (HRM) impact its international business operations. At the end, the suggestions of external environmental issues need to be coped with in the future will show before drawing a conclusion.
In the year 1993, “new management initiative” started transform Samsung from a “cheap OEM” to a high value-added products provider”. At this point, company realized to take the brand to global platform and started thinking the importance of global positioning and the powering the brand. Initially, management targeted to build corporate brand image across 200 countries with focus on 17 selected products. But, in the early period, internal challenges of marketing misconceptions among the top level managers turned down efforts of this visionary growth measures.
... conclusion, to compete with the intense competition in today’s fast-food market, KFC China differentiates the company by being innovative. Three significant innovative strategies are localizing the menu, understanding the Chinese culture, and hiring local management. KFC demonstrates that one size fits all approach in the global market does not always work. Many typical Western approach to foreign expansion is to deliver the same products or services as their original establishment. For instance, Domino’s Pizza, an American restaurant chain, nearly failed in Australia due to the underestimation of the need to adapt their offerings to the local tastes. KFC China offers important lessons for global firms. It is essential to know that to what extend the company should keep the existing business model in emerging markets and to what extend it should be thrown away.
Large corporations have been attempting to find a balance between the traditional hierarchical structure and the flexible local entrepreneurial structure for many years. Increasing global competition has made it critical that multinational enterprises be both globally integrated and locally responsive at the same time (Bartlett & Ghoshal, 1988). Sohn & Paik (2004) describe the efforts of Toshiba to achieve a hybrid of centralized control and localized autonomy. Irrespective of the structure chosen, corporations can all be placed somewhere along the continuum between centralized and decentralized management. A centralized structure will be slower to respond to changing market conditions but provides stability and control. A decentralized structure provides autonomy for local businesses to make their own decisions quickly, ; however, the decisions may not align with the parent organizations' strategic objectives and ethics. Many business decisions involve conflict between making money and ethical treatment of employees, customers, and the environment. Centrally managed organizations are more likely to align decisions with a universal corporate code of conduct. Autonomous subsidiaries will make decisions that are reflective of the local cultural values. The risk to the parent organization is that some of these decisions may severely conflict with shareholder values. Treatment of women, children, and respect for the environment are some areas where regional differences exist.
The differences in other cultures vary from beliefs to ways of life, or norms, of the different societies. The importance of understanding and sensitivity to other countries’ differences is crucial to a business’ success. “Lack of familiarity with the business practices, social customs, and etiquette of a country can weaken a co...
If you ask anybody in the world today they will tell you that we live in a world where technology is at the core of human life. We use technology for everything today. From processing food we eat, to being social, to transportation, everything we do has some relation to technology. No technological innovation though has become so popular as the one we use to communicate with daily. The Smartphone. First starting off as foot long cellular phones which could be seen a mile away to present Smartphones which we cannot seem to live without. Smartphones have changed the way that people live. Today you can see just about everyone on a Smartphone even children, which just comes to show how popular and demanding Smartphones have become. In fact, Smartphones have become a true necessity in the lives of people everywhere. There are many types of Smartphones out there. Some of the major phones include devices such as Apple's iPhone, HTC's One, and LG's G2, but only a few have made such a huge technological impression in this industry such as Samsung has done with its Galaxy and Note, two of the most popular Smartphones right now. We all have heard the name Samsung at some point in our lives. Maybe from the televisions they create or even from the chips they produce. The truth is that Samsung is a technological giant who has been around for many years, an empire, which continues to grow. A company whose mission is to "Inspire the World, Create the Future."
In this interview Ben Bagley asks Theresa Han about the difference between Korean and American culture. Theresa is a teenager who recently moved to the United States so she has an excellent perspective for understanding the differences and similarities between these countries.