Sometimes, people who own businesses think about adding new products or services to their business to make it even better than what they already have, which makes it even better. Some people don’t like the process of diversifying, but others enjoy it and use it as part of their business plan! When a small Korean company did this, it became a well-known name all over the world.
It all began in 1938 when Samsung was a small exporter of fruit and dried fish. They started the company 30 years ago. They were part of the government’s drive to get more businesses to work for the government. It was used in electronics, petrochemicals, machine-building, and other things, as well. In a short time, the company was known for making cheap air conditioner units and cheap TVs.
After Kun-hee Lee’s father died in 1987, he took over.
People thought he was a child because he was raised in both Japan and the United States. After a few years of diversifying their business, the company started to enter the cell phone market as well. It was a gift from the Samsung factory to Kun-hee Lee on New Year’s Day in 1995. Her first cell phone came then. It didn’t work in this case. In the end, the CEO decided to go to Gumi, which is where Samsung has its most important factory.
At first, people thought Kun-hee Lee was a joke. Soon, they found out that he had big plans for his father’s business, and they were shocked. People at the factory asked that fax machines to cell phones be smashed and burned, so they did it. He told the factory to do this. It was part of a cleansing ritual for the staff to wear headbands with the words “Quality First” around their heads. You can see it on a banner in front of the equipment graveyard that says “Quality Is My Pride.” Everybody at Samsung wept at the end of it all. At that point, Samsung was born again.
As a child, Kun-hee Lee wanted to beat Sony. Because at that time, Sony had a lot of new things to show off, and it had a lot of people who liked it. Sony did this. They were now into movies and music. You can say that it didn’t have a lot of electronics in there Samsung came up with a way to fill in the gap in the market, and they did it.
Balance of Reason
When Kun-hee Lee was making a project, she wanted it to look good and be done well. Samsung needs to make their products look good if they want to be liked by people. A Japanese consultant helped him write Samsung’s design philosophy, with a little bit of Korean culture in it. He went to Japan to look for ideas and hired him to help him write them. Balance of Reason and Feeling: Later, the company said that this would be the new slogan for them.
When there were problems with the Asian economy in the late ’90s, the design revolution led by Kun-hee Lee came to an end. In the beginning, memory chip prices started to fall. This made the Korean won lose half its value. There was a big rise in the interest rates that banks charge people. Samsung was in debt and couldn’t get any more loans, so it had a shaky future ahead of it.
This is how the company moved around. For the company to pay off its debt, Kun-hee Lee cut back on spending on capital projects. It didn’t do what the Korean chaebol thought it would do, though. It cut 30 percent of its workforce and shut down a lot of businesses. It didn’t work out very well when it tried to start a car business. After that, it sold the business to Renault. Samsung moved some of its manufacturing to other countries, like China, Brazil, and Slovakia, because the wages in Korea were too high for the company to keep up with.
Sony & Samsung
A lot of people use superfast memory chips (SDRAM) in their personal computers, and the company that made them sold them to Sony so that they could use them in the PlayStation 2 and other games. Globally connected, Samsung can make its gadgets and sell parts to its competitors at the same time. They both win for Sam-sung.
As of the end of 1998, Samsung was very interested in the new technology that was out there. To buy flash memory devices and liquid crystal displays, they spent a lot of money. They also bought more custom memory chips.
As competitors tried to save money by cutting back on costs, the company was ready to take the lead.
A good time for Samsung to change from an engineering company to a business that sells things. To make this change, Kun-hee Lee hired Eric Kim, a marketing expert from Korea and the United States, to help with the project. Kim didn’t get a warm welcome from the senior management team at her new job. So that no one would do anything bad, Kun-hee Lee said that anyone who crossed Kim would be fired from their job.
Samsung & Apple
Today, Samsung is a very big company that sells everything from life insurance to home appliances and electronics, and it has a lot of money. In 2011, it made more than $135 billion. Samsung and Apple have been fighting over patents for phones and tablets, and they want to be at the top of the list. This means that Samsung has won in some markets. Apple has won in other markets. This is because Apple is better in some places than Samsung is.
The same thing is happening again. In the October issue of The Economist, Samsung said that it was going to stop making electronics and start making things that were better for the environment and the world. For the next 10 years, it plans to spend about $ 20 billion on solar panels, electric-vehicle batteries, LED lights, biotech drugs, and medical devices, among other things. As a company, Samsung thinks that health care and green technology are the industries that will be the most important in the next few decades.
Even though it’s not practical for most businesses to change as often and as dramatically as Samsung, the Korean conglomerate success story shows how to be a big winner. From the bottom-up or top-down, the leader of an organization needs to have the vision and a mission that guide his or her team to work together. Timing is very important. The team must be ready to let go of the old to make room for the new so that they can diversify and take advantage of new market and segment opportunities.