Samsung, the most innovative company in high technology Group III

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 Management of Technology and Innovation

Flow of presentation

Company Overview

Spiral Model at Samsung Electronics

Future Growth Strategy and new Areas for Samsung

Differentiating features and innovation process

KM and Process Innovation in Samsung SDI

Q&A

Management of Technology and Innovation

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

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

Worlds 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 years 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.
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 New Environmental rules (solar power, LED lights, electric cars) or exploding demand (medical devices, drugs) Large scale Manufacturing and lower costs

Identify these as opportunities

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

Management of Technology and Innovation

Key growth facts of Samsung

Batteries for digital gadgets - 2000

Flat panel televisions in 2001

Flash memory in 2002

Ten years later, Samsung sold more of them than any other company in the world

Within four years it was the market leader

The technology it delivered made the iPhone and iPad a reality, and made Samsung Apples biggest supplier and now its biggest hardware competitor.

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.

Management of Technology and Innovation

New business areas for Samsung

Management of Technology and Innovation

Unique innovation strategy

Acting as supplier to rest of industry
Supplying the rest of industry drives down Samsungs costs yet further, with its rivals in effect financing its success

Samsung - Apples most important supplier in the smartphone and tablet-computer markets. Samsung components, which include all the products application processors, account for 16% of the value of an iPhone.
Management of Technology and Innovation

It is also Apples greatest competitor in those markets.

Unique innovation strategy

Acting as supplier to rest of industry

Problem

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

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 worlds fastestgrowing 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 Lees 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

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

Management of Technology and Innovation

Technological Innovation Process

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

Management of Technology and Innovation

Implementation of spiral process model

Transfer of Technology

Government Support
Starting point technology innovation Adaptive technology innovation

Mass production

A follow-theleader strategy

Reliance on foreign technology

Indigenous Technology Innovation

Management of Technology and Innovation

Implementation of spiral process model

US based R&D

Product

Affiliation with suppliers

Internal Technological Capabilities

Management Strategies

Business

Product Innovation

Process

Crisis Construction

Technology

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

Management of Technology and Innovation

KM and Process Innovation in Samsung SDI

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

Accumulative Knowledge

Methodological Knowledge

Knowledge outcome of innovation process Not the process itself, but tasks related to performance Should be combined with tacit and explicit knowledge

.
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

Management of Technology and Innovation

References
Article Asias New Model Company: Samsungs recent success has been extraordinary. But its strategy will be hard to copy Economist Oct 1st 2011 Article The next big bet: The worlds 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 Franoise Chevalier2 Integration model of technology internalization modes and learning strategy: globally late starter Samsungs 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

Management of Technology and Innovation

Q&A

Management of Technology and Innovation

Appendix - Types of Technology Internalization

Management of Technology and Innovation

Appendix - Types of Technology Internalization

Management of Technology and Innovation

Appendix - Types of Technology Internalization

Management of Technology and Innovation