The Introduction of the Samsung Color TV

The Introduction of the Samsung Color TV

Background

Samsung as a company was founded in 1938 in Korea. 46,500 employees are working at six Samsung Electronics facilities in Korea. Although they are at different locations, all share the same goal and that goal is satisfying global customers by producing a quality product. Here in the U.S. Samsung is a very recognized brand, sitting along side Sony, Panasonic, Phillips, Toshiba, Matsushita and other more know brands of TVs. In South Korea, Samsung was a governmentally subsidized large business until in the 1990’s. In the mid 1990’s one of the most significant threats to Korean corporations was that their major advantage in low labor cost had been deteriorating against the labor costs in many of the competing Southeast Asian countries. The average wage of $1,144 a month that Korean workers earned was one of the highest wages paid in Asia outside of Japan. Korea had been the low cost labor supplier until the point at which The Peoples’ Republic of China entered the competition for manufacturing of color TVs. The low cost of labor in China would cause Korea’s position being the lowest cost provider to be a position that was in danger. The Korean government at this point was discontinuing subsidies and export credits to Korean manufacturers and at this time the Korean products which had been the low end market

Strategic Planning

In 1995, production of color TV sets in China was starting to hit a high volume. It was estimated that 16 million sets were produced, including two million that were exported to Europe, North America, Africa, and Australia. At the time, the Chinese government felt its production of color TVs were fulfilling their expectations in regards to demand in export and domestic markets. As 1995 ended, the Chinese color TV market was the second largest behind the United States and the third largest behind NAFTA and EU in regards to unit sales.

With the increase in demand of color TVs in China, Samsung China Headquarters (SCH) was born in 1995 in Beijing. SCH began to coordinate more than 16 operations, with each being separately managed by various units of the Samsung Group. The establishment of SCH helps the image of Samsung in China since it already showed commitment to the Chinese market.

In October 1995, Chung Yong, President of SCH, met with the SCH mar...

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... must become a wholly owned corporation with a home in China.

Recommendations & Next Steps

• Mr. Chung and his division of Samsung, SCH, has been in the Chinese market for some time and have a good read on the society and the current trends in the political, economic, and social events in China. Their recommendations for moving into the high-end market should be followed.

• There should be close monitoring from the Samsung Seoul Headquarters of all the sales and manufacturing data to determine if all benchmarks and targets are being realized.

• If the trends have not been read by Mr. Chung’s divisions correctly and the transactional data is showing a negative impact by losing market share; Samsung should pull back quickly and revert to the market they know best which is low-end to medium-end product. But Mr. Chung should be given reasonable time to prove his market.

• SCH should continue to manufacture the low-end to medium-sized TVs to also capture the market group in the 220 million rural households where only 28% have color TVs. That market segment will soon grow in per capita income and the first TVs they will purchase will be low-end or medium sized.