Global companies managers have been in a sleepless moments as they are bombarded by turbulent forces of increasing competition and market uncertainties.
As they try to come up with strategies to solve their internal problems affecting their companies, such as logistical and high running cost of their business and at the same time outsmart their competitors in the world market, it is no hyperbole to state that radical re-examination of their mission to reflect the uncontrollable forces as to be done. This has forced the organizational managers to come up with innovative measures to deal with their internal problems and at the same time counter their competitor’s products in terms of high volume sales and customer satisfaction through offering quality products and services. Hence, to strategically plan well in this uncertain environment, Organizational business management leaders ought to be capable to foresee any impact on their organization any new decision made will have to affect them. In line with this, I am going to look at Samsung electronic company as a growing global company case study which is well represented globally.
At the same time, I will look on what strategic measures and opportunities they applied in solving their internal problems and at the same time counter their competitors influence in the world market which has contributed to uncertainty of their products in the world market at while satisfying their customer increasing expectations. I choose Samsung Company because it is an up coming global company which operates under uncertain environment of information technology. The Samsung Company has greatly invested in information technology to manufacture information technology related devices and equipments. This being a volatile venture, and technology keep on changing very fast and its product having a short product life cycle, hence its is good to know which innovative planning strategy they have employed to remain as company of choice in the manufacturing of electronic products with this very uncertain environment for this kind of products it is manufacturing. Samsung is a Korean based electronics company with more than eight regional manufacturing branches in various parts of the world. It deals with the manufacture of telecommunication devises such as mobile phones, digital televisions, memory chips and the liquid crystal displays (LCDs) and now it is venturing into automobiles. Originally, it focused on producing low cost products as compared to his competitors and the moment they were able to produce efficiently and the production cost was manageable, it now changed its focus from low end products to more advanced products such as information technology equipments.
Its venture in manufacture of a variety of information technology products has made Samsung a superior company to its competitors in the production of not only information technology equipments but also home appliances such as fridges and gas stoves (LinkedIn, 2010, Para. 1-3). In the recent past, Samsung Company has had a tremendous growth having regional representation of about 90 offices in more than 50 counties and annual revenue of $100 billion dollars in the year ending 2008. At this moment of growth, Samsung started experiencing some problems related to its rapid expansion globally.
It become under pressure to look for ways of minimizing its logistic cost such as the flow of their products from the manufacturing point to the consumer which required some means of handling, transportation and storage in the ware houses. Secondly they had to deal with market uncertainties due to higher customer expectations and increasing competition from the rival companies such as Sony and LG companies which produces same products as theirs (Young-ho, 2008, Para. 2- 12).
Samsung situation before turn around
By the time Samsung had established a net worth of $100 billion in revenue, it was incurring high cost in the flow of their products to the market and insecure supply of raw materials, and it had to be very mindful about inherent risks and a need for regular innovation and market predictability to avoid over purchase of raw materials or over production of its products in the market. In their quest to meet customer demand and check on their competitors, Samsung employed the use of information technology as an innovative business strategy to advancing its capabilities of increasing its efficiency and reduces its logistic cost, hence upgraded its existing supply chain management to match its products supply and respond to the customer demands. With the company implementation of the supply chain management, it was able to achieve high efficiency and in general, there was reduced business cost due to the implementation of this information technology supply chain management system. It also reduced its inventory and doubled its inventory material goods distribution rates as compared to the previous years before the implementation of this system. However, with the implementation of the supply chain management system, and the good result which came from it were able to be recognized, the Samsung Company still experienced a strong market competition from its rival companies and the consumer expectations were on an increase, resulting to market uncertainty. Hence, it needed to improve its strategy planning to come up as a world leader in the manufacture of electronic goods so as to gain consumer confidence on its products. To achieve this, it established a scenario approach to come up with a management system which can recognize signs of market change and act accordingly to these changes (Microsoft Case Studies, 2009, Para.
1- 3). To hold up this new strategic transformation, it advanced its information technology system to solve and present insights into the already existing supply chain management system. This supply chain management had already worked well as it was able to integrate its competitors’ data within and even project the global demand for their electronics goods, but the problem was still that it was not able to detect quickly global market changes and adapt to the necessary changes as first as possible. The new system placed more emphasis on management as a survival approach to a manufacturing company with unpredictable future. So it adopted the market based supply chain management to respond rapidly to global market environment with the help of Microsoft Business intelligence (BI) solution that developed the soft ware part. However, its benefits have not yet fully seen as the company has only implemented this system in the video display business sector and it is expecting to increase its projection accuracy for its product demand in the market by about 25% (Microsoft: Case Studies, 2009, Para. 2-9). It can be seen that Samsung Company was experiencing market uncertainty and competition prompting it to look for ways to monitor and control these variables, hence, the implementation of the market based supply chain management.
I order to effectively deal with the market uncertainty and counter their competitors; Samsung Company had to plan in this uncertainty to accurately and continuously monitor its external environment changes. In his case, the Samsung Company was not more concerned with the future of their market share or company’s future development plans that might occur, rather they were concerned with external environment which predict market forces and trends of the consumers and to evaluate internal factors to see in what situation they were in as compared to its competitors. Hence, in analysis of the strategy to come up with this market based supply chain management system to monitor the market trends, gain a competitive edge against its competitors and at the same time meet the customer demand; Samsung Company had to use a scenario strategy to make decision process and logic to come up with this new management system which was able to give the required information promptly (Byars, 1991, P. 65- 70). The scenario building concept must have been a suitable tool to use for decision making process given the external uncertainty environment they were facing and the need for long term perspectives that can identify the likely future they need and action in unknown period.
Hence, it had to follow certain decision and logic process as part of their scenario strategy to solve the underlying issue of monitoring market trends and the uncertainty due to competition and demand. To start with, the Samsung Company started its scenario strategy development by identify its decision basing to its internal organizational objective of future growth of the company, hence to effectively lay a basis for scenario planning and make decisions a long term strategy was a means of identifying its decision focus and sustain its continuous growth. This was to ensure that it does not digress from their process focus of the company growth prospects in the uncertain future to aimless speculation (Myatt, 2010, Para. 2- 16). Having analyzed its decision focus, it had to explicitly spell out the key decision factors that affect or influence its successful growth or failure. The key factors it considered were both internal and external which included products cost, world economic status, the quality of their products, and marketing strategies put in place and the external factors were market demand and competition growth from its rivals in the future so that it can make any decision on which to base its growth strategies. After analyzing its decision focus of market demand and completion growth, the next step was to single out the environmental forces that were to determine the course and value of their major decision factors to develop and implement market based supply chain management system. This was to help them make a good theoretical mock-up of the external environment forces and how they were to be incorporated in the system.
These forces were first economic in nature such as the level of consumer spending on electronic equipment and the world economy since the Samsung Company was global. Secondly, these forces were associated to Samsung market change in demand trends of its products and competition by its rivals. And lastly, their capability to impact the market, industry and macro environment at the same time shape its future were influential forces (Nuefewld, 1985, P. 39- 52).
The next step was to logically narrow down the environmental factors and establish the importance or success of their decision on customer demand and competition trend environmental factors and the extent of uncertainty, overall company strength, global economic and demand for its products. The Samsung Company must have narrowed them to uncertainty, demand for electronic products and the world economy which were more important and each explaining fundamentally different result. This market demand chain supply chain management system had to incorporate these factors in order to meet the company strategic mission (Wack, 1998, P.
139-150). Select alternatives scenarios and elaborate on the scenarios to reflect the future. In Samsung case, they had to weigh between high demands of electronics product against high global economic for it to expand its market globally. This happened to be a fine situation in which the increase in economy is interjioned with soaring demand for its products, hence enabling the company to really turn into global electronic manufacturing company. Competitive rivalry due to low demand and high economy scenario must have employed by the Samsung Company to out smart their competitors this is because more recent technology is more appealing to customers (Morrison, & Ian., 2000, Para. 3- 6).
To finally close the loop of scenario strategy, signpost indicators of various scenarios and implication which had to be identified so as to come to terms with the decision focus of the first step. The Samsung management used this scenarios and brain storming to identify implications and build a mutual vision and a flexible plan for the company to be a world leader in the production of electronic products (Wilson, 1994, P. 12- 24).
In conclusion, environmental examination is an important step to identify the underlying issues and develop a management plan in organizations learning from uncertain environment. Samsung being a global manufacturing company mostly in information technology electronics products that have low product life cycle, it was able to develop a strong business management plans as a cause of its competitiveness. By establishing a management plan that reveals the customer demand and economic environment, Samsung Company was able to institute the best possible market scenario that was to eventually increase it revenue and promote its products distribution in the market. Scenario planning has enhanced its decision making process, as it was able to establish best market scenario to regulate itself in this uncertain environmental changes hence, having one step ahead its competitors.
Frequent evaluation of the external environment in an organization is necessary and for any case which deals with uncertainty I will recommend the use of scenario approach which considers a blend of uncertainties in each situation to try to expose the planners to key interactions of variables. Finally not only use of scenario planning as a decision making tool, but also other methods of planning such as PESTEL and SWOT analysis can be integrated in strategizing a company decisions according to the circumstances facing it.
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