Analyzing the Viability in Investing in Samsung Electronics (Research Paper Sample)

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Analyzing the Viability in Investing in Samsung Electronics
Introduction
In the business field, making any investment decision always involves some degree of risk. The investor has to conduct an in-depth research regarding the potential company they want to invest in. This concept is known as pre-investment research and is primarily guided by facts and objectives of the pre-purchase analysis. A well conducted pre-investment study enhances the chances of making sound decisions on whether or not to carry on with the venture. Company information found on the corporation's website or accessed via third parties such as SEC provides vital data about a given business organization. Some of the relevant facts accessible via the company's website are goals, objectives, strategies, leadership, accomplishments among others. This paper seeks to conduct a pre-investment research about Samsung Electronics Group before offering the recommendation to potential investors and a conclusion.
Samsung Company’s Information
Organization Structure. A company’s organization structure plays a vital role in determining the performance and the growth of the company in the long run. This is because the structure used may hinder or enable the company towards implementation of the formulated strategies. At Samsung, the company has adopted a matrix organizational structure since its inception. Samsung organization structure involves the amalgamation of division and functional units. The rationale behind the adoption of a matrix organization structure at Samsung is due to its size (multinational company). Matrix structure enables a company to simultaneously have divisional and functional structures. This favors big businesses that have subsidiary businesses under the umbrella of the parent company. However, organizations that use matrix structures have been observed to experience frequent power struggles as most of the areas in the business tend to have a dual management. Moreover, innovation in these companies is also limited as organizational complexity constrains employees' creativity due to regular supervision from the superiors. For instance, Samsung was sued by Apple for patent infringement and despite the court decision to drop the case, the company has faced sharp criticism from customers (Song and Lee 98).
However, Samsung has put in place numerous incentives to motivate its staffs and enhance their job performance and satisfaction in the long run. The incentives are offered based on individual and group performances. An employee whose work makes a great contribution to the society receives bonuses on top of contracted salary. Also, a group that portrays efficient teamwork and excellent productivity receives rewards from various functional units based on the task accomplished.


Figure 1: Samsung Electronics’ organizational structure (Samsung.com)
The Board of Directors. Samsung Electronics Board of Directors comprise nine members. These are Dr.Oh-Hyun Kwon (CEO), Jong-Kyun Shin, Boo-Keun Yoon, Sang-Hoon Lee, Byeong-Gi Lee, Kwang-Soo Song, In-Ho Lee, Eun-Mee Kim and Han-Joong Kim (Samsung.com). The board members are keenly appointed based on their qualifications to ensure that every member brings on the board unique skills and competence. The members are selected from various fields of learning such as law, medicine, management, education, sociology among others. The independence of the board is safeguarded to ensure the company addresses the interests of all stakeholders involved. Samsung Electronics has six board committees that are established and operated in line with Article 28-2 of Articles of Incorporation. These are management committee, compensation committee, audit committee, CSR Committee, Related Party Transactions Committee and Independent Director Recommendation Committee (Samsung.com). Each committee is independent and has a unique role in the company. Any agenda approved by board committees is notified to all members immediately. The Board works together with all committees to ensure corporate transparency in the enterprise.
Chief Executive Officer of Samsung Company. Dr. Oh-Hyun Kwon is the current vice chairperson and Chief Executive Officer in Samsung Electronics. Apart from being the CEO, Dr. Kwon heads Device Solutions. He joined Samsung Electronics in the year 1985 and played a significant part in the advancement of the company in the semiconductor industry (Song and Lee 107). The current CEO has an Electrical Engineering degree from Seoul National University, a master’s degree in the same discipline from KAIST and a Ph.D. in Electrical Engineering from Stanford University. Dr. Kwon has a vast experience in semiconductor field and has accomplished a lot in Samsung Electronics. For instance, he spearheaded the installment of the original 64Mb DRAM in the semiconductor industry in 1992 (Samsung.com). He also has a special recognition for successfully enabling Samsung to achieve top market shares in application processors, CMOS image sensors, and display driver ICs
Critically analyzing Dr. Kwon achievements and educational background, he appears to embrace pacesetting leadership style. The underlying presumption is that employees will work in ‘do as I do' perspectives utilizing their skills and seeking motivation from their leader. In 2014, Dr. Kwon earned $6.4 million regarding gross salary (Kim 1). Compared to the earning of Apple CEO Tim Cook, which is Samsung’s close rival in the industry, Dr. Kwon earnings were much higher. Despite that globally, Apple is the most profitable tech company, Samsung emerged as the world's biggest technology corporation in 2013 in regards to revenue. The company also emerged as the leader in the global Smartphone market in 2014 outshining Apple via flagship of Galaxy handsets.
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