Samsung Electronic Globalization in China (Research Paper Sample)

Samsung Electronic Globalization in China
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Samsung Electronic Globalization in China
Introduction/Overview
When the concept of globalization is mentioned, what springs to mind is the development of mobility across geographical boundaries while operating on a global scale and developing international influence. Globalization has permitted larger firms to grow and evolve into MNCs- multinational corporations or TNCs- transnational corporations. A popular example of a known MNC is the Samsung Group. Established in 1938 in Taegu, Korea, by Lee Byung-Chull, the organization was initially intended for trade export, selling fruit and vegetables to Beijing and Manchuria, and selling dried Korean fish (Samsung Group, 2014). Ultimately, Samsung advanced, establishing strategic foundations for prospective growth. This witnessed the organization delving into the petrochemical and chemical industries in the 1970s. One of its subsidiaries, Samsung Electronics, introduced its first Black and White television set in 1970, an event that pioneered its consumer electronics line that persist to-date.
Samsung’s Mission and Objectives in the International Market
As the company boldly declares, its mission is to "Inspire the World, Create the Future" (Samsung, 2014, p. 2). In other words, the company desires to utilize its three critical strengths (see figure 1): creative solutions, innovative products, and new technology to promote a better world with richer experiences for everyone. During Samsung’s 55th anniversary, the organization decided to publicize its new corporate identity as a way of keeping it competitive in the prevailing global markets. The underlying objective was to assign technology and human resources to develop superior products, services, and an advanced global society, despite insisting that this adjustment was just an extension of Samsung’s 55-year-old tradition (Business Korea, 1993, p. 30). During this time, the organization reinvented its logo, philosophy, and song (its previous logo was not in English and was considered outdated). This reinvention was meant to cement the organization’s position among the globe’s top ten leading companies in the 21st century.
Figure 1: Samsung's vision of inspiring the globe
Adapted from Samsung Group (2014)
In pursuit of this, the company was ranked 13th on the Forbes 500 Magazine, surpassing Apple Inc., one of its greatest rivals. Samsung has also been the World’s Largest Information Technology Company (in terms of revenue) since 2009, according to the Financial Times (2014). At present, the company’s consumer electronics portfolio ranges from household devices to smartphones. Additionally, as reported by The Guardian (2013), Samsung was voted the globe’s biggest manufacturer of cell phones and smartphones, which emanated from the popularity of its Flagship Samsung Galaxy devices. The company’s success in the 21st century electronics consumer market can be also be attributed to its introduction of the flat-panel TVs in 2001, and the "flash" memory (the technology that heralded the Apple Ipad and Iphone devices).
Staying in the global market, Samsung’s vision for enhancement of Green Management is envisaged by its slogan, "Planet First" (Samsung, 2014, p. 2). The company has stressed its commitment to sustainable management in all aspects of their business. It has also run an "Environmental Science Class" (Samsung Group, 2014, p. 3) targeting elementary school-going children in local communities. It also strives to improve the communities’ living standards, for instance, through the EM Mud Ball Activity that enhances water quality for residents in and around Hwaoseng and Gihueng (Korea) (Samsung Group, 2014).
Samsung Electronics (China) is part of its globalization strategy. This venture was partially driven by the availability of resources (raw materials and labor) that the Chinese provinces offer. This paper will analyze international business with focus on Samsung Electronics’ globalization approach in China, including the manner in which the company and the country have affected each other.
Samsung Electronics’ Internationalization Process
Regardless of size, internationalization represents a major challenge that any organization faces if it is to survive in an increasingly intricate and global (Casillas, Moreno, & Acedo, 2013). Entry into foreign markets implies breaking into uncertain markets and requires various structural changes within the organization, for instance, in the manufacturing processes, distribution channels, and access to new sources of funding, among others. Despite being considered a latecomer into the global market, Samsung Electronics has overcome challenges to thrive as one of the globe’s dominant companies in the consumer electronics market (Sun, Sun, & Xu, 2012).
According to Lee, Jun, & Johanson (2006), internationalization of organizations is typically portrayed as the process of sequential learning and devotion to foreign operations and markets. This implies that market entry plays a critical role in the process. Samsung has consistently approached market entry with caution. For instance, it entered India by first creating awareness by making Aamir Khan its mobile brand ambassador in 2008 (Laiq Qureshi , 2008). The use of a celebrity in this case created an alluring image of the mobile phones and made them known as quality brands. Samsung has also entered different markets such as the U.K, Canada, and Finland where it has created great competition for LG, Motorola, Apple, and Nokia. The identification of market information prior to international venture implies the company has adopted the Uppsala internationalization model (see figure 2 below). The Uppsala model recognized four different stages referred to as the establishment chain (Leelapanyalert, 2009). The stages portray different stages, all of which demand different resource commitment by the company.
19050154305Figure 2: Overview of the Uppsala internationalization modelSource: (Johanson & Vahlne (1977)
As per the model, organizations will tend to venture into nearby markets before those that are further away, and Samsung’s case, China. Here, the elementary assumption is that insufficient knowledge about the information can present hindrance in entering the market (Johanson & Vahlne, 1977). However, sufficient knowledge about the foreign market conditions can eliminate this challenge. Learning and dedication demonstrated by the organization will affect the interaction between it and the local business actors, determining its eventual business network in the foreign country (Hadjikhani, Lee, & Ghauri, 2008). For instance, local learning assists Samsung to comprehend the significance of establishing a business base in China and exploiting the benefits that this new location offers. At this juncture, it is significant to analyze China’s environment in light of Samsung Electronics’ venture.
Political Economy
According to Wild, Wild, & Han (2008), the political economy and legal framework of a country are interdependent; they possess the capability of influencing and interacting with each other, and in the process, affect the economy’s wellbeing. Here, aspects such as supply chain distribution, political interference, exchange transfer, sovereign non-payment, and legal and regulatory structures are assessed. Over the recent decade, and particularly with its joining of the World Trade Organization in 2001, China is increasingly debunking the perception that its single-party government meddles into business affairs (Fewsmith, 2010). However, critics have contended that the state’s formal and formal rules tend to guide how foreign MNCs like Samsung Electronics operate in the country. The Chinese government holds great importance to its technological industry, with aspects such as digital technology drafted in its short- and long-term development strategies.
Additionally, the Chinese legal framework is strict when it comes to safeguarding consumer rights, privacy, and protection of domestic organizations (Veeck et al., 2011). However, it is imperative to note that the country still lags behind when it comes to recognition of digital signatures and validation of electronic contracts, features that are critical to Samsung’s business. In spite of these setbacks, political analysts have stated that the Chinese legal system is adapting quickly as it seeks to meet business needs of MNCs.
Corruption
As per the 2013 corruption perception index (CPI) results, China was ranked 80th out of a total 178 nations (Transparency International, 2013). This represents extensive corruption where individuals are used to receiving gifts prior to business interactions. In China, corruption also occurs because government officials solicit bribes or utilize public resources for private benefits (Fewsmith, 2010). Adverse effects for international business include creation of monopolistic tendencies (hindering free markets), productivity drain, and exploitation of public systems by host officials, for instance, by inflating tax regimes.
Entry Mode
The mode of entry into foreign markets has been a significant topic for research since the 1970s. In light of the internationalization phenomenon being feasible and achievable for many firms t present, focus on entry modes cannot cease. Samsung will adopt the entry mode fronted by Hill et al (1990), as cited by Jones (2009). Here, entry modes signify a spectrum of involvement ranging from exportation through to fully-owned manufacturing subsidiaries. Assumptions include a continuum of control, ...