Case 2: Samsung Electronics: Innovation and Design Strategy

Anyone who select this case can start a discussion here :-)

wujia_10GA wrote:Anyone who select this case can start a discussion here :-)

i didn't choose this case, but I still have a few words to say:P

I thinks sumsung is a successful company,and i like their products very much
1, being creative is not only the creative designs of appearance or functions, but also involves with creative business models.Keeping a portfolio products is a wise strategy, and sumsung did it.
2, it’s hard to keep the balance between innovation and implementation. Sometimes it needs time to R&D, and before the new product comes out, it might have already become old fashioned. So, whatever you do, do it as quick as possible.

It is well known that the market of consumer electronics goods is almost completely competitive. It is also renowned that in the pro-era of 2008 global financial crisis, companies crazily tend to be the copycats of the successful design strategies and processes.

There are three main risks Samsung Electronics currently is faced with. One is the profitability at risk in the competitive industry, another is the suitable management of R&D strategy, the third is the dealing with R&D outsourcing mode.

Yet, Samsung Electronics should response positively to the hidden risks in the industry to defend its market position and profitability.

Honestly, within an electronic industry, we have the technology of the future already in development today and the designs are world-stunning, the world-wide brands have similar features, just the positioning, users are different. So, what else we could do to be outstanding or different among the competitors?

I wondering if Samsung has an international hotline for variety of its product lines.

Understand how to create better innovation opportunities for the products by listening closely to customers’ needs through customer service department, focusing on researching current customers to identify the problems and gather new ideas. The efforts typically result in incremental improvements, not radical innovations. Thus, close on-going contact with customer is both desirable and characteristic of the interactions. An invention on CS conception is adoptable and executable.

The idea of customer service expansion for variety product lines is generated for Samsung’s current issue.

I also wondering if this idea is logical.

The creation of the customer service department could firstly be divided into 2 sections: Pre-sale and After-sale. Pre-sale group will help Samung with product configuration assistance, pre-sales questions; also, we could get some ideas through the inquiries. For example, the customer inquired about the product feature, if the answer fits his/her needs, which is fine. However, if the customer shows more demands toward to the functionality of the product, and more than 100 people want the same feature, such data could help on product designing. Regarding the after-sale service, it can be very convenient for customers, services and relationship maintenance. The raw data of customers’ requests and suggestions would be a huge help on customer satisfactions research. For example, different user experiences between age group 20-25 and age group 30-35 would help on target customer segmentation. Other briefly benefits on having customer service department are listed below:
 VOC collection:
Through calls, chats, emails, BBS to collect the voice of customers, we could learn the buying behavior of the customers; we could find both the advantages and the disadvantages of the products/services; we could hear the suggestions from customers, and make a pool of constructive suggestions available for the improvement, such as product feature, product appearance, etc. In addition, each change Samsung made that based on the voice of customers; they’d notice that their voices are heard and being cared.
 Geographic analysis
Market segmentation can increase marketing opportunities when customer groups with varying needs and wants are recognized. Price strategy is usually used for target customer segments, before we divide customers into different groups, we need customer information to locate the right market for the right pool of people. For examples: high-end or premium products could be sold at urban and low-end products could be sold at rural.
 Success of the promotion or advertising
There’re varieties of sales promotion and advertising for marketing strategies, how do we know which strategy is the most effective way of grabbing customer’s attention? Analysis of each campaign could reveal the answer, and the volume of inquiries helps for the quantitative analysis. In addition, the right media depends on who the viewers or readers are, thus, each analysis could help marketing department spend the money on the right channel and strategy.

From this case of samsung electronics, we can see the innovation is a source and motivation to develop enterprise. and every company in developing period will be met his bottleneck, especially in today's increasingly intensified competition of society, innovation is indispensable. in the first stage, samsung choose to increase R&D investment in the global R&D center, then, to broaden market for the local market demand-oriented, so the technology to combine market, attracting eyeballs of customers, will occupy the market opportunities.
Actually each enterprise development is such, the customer is god, our products are used for consumers, in today's competitive society, product diversification, the price also gradually decrease, customer in choosing products mostly with priority to quality and comfort. So the enterprise want to broaden market, the key is to survey the local consumer habits, and make full use of social resources, company and product design concept to lay a solid foundation for the local consumers.
In this case, samsung is also emphasize the factors in a person, each one has its own original ideas, but the success of the product, need to take these insights to organic together, we often say, each team's strength in their professional is more effective, communicate and high efficiency can "spark" touch. Finally, in maintaining the normal development of the enterprise, the profit is an important index, how to reduce the cost and expand our profit margin, I believe each enterprise regard it as the ultimate goal.

in case there to point out Samsung Electronics invested about 9% of net sales in R&D of newer technologies, features and designs to offer newer products and attract customers.but in exhibit 3,its budget only average 6.96%,who can tell me where difference?

From my perspective, more focus should be put on costs strategy at Samsung:

1. Comparatively speaking, both R&D and marketing spending at Samsung are significantly higher; despite no pickup demand for CE products Samsung still invested $ 2 billion on R&D in 2009, which takes up 10% of total sales in order to maintain technological leadership, which drives Samsung farther away from low-costs and profitability in this competitive environment. Some of competitors like Apple, Sony and LG have significantly lower R&D expenditures per product.

2. Detailed analysis, possible solution and feasibility need to be conducted to compare other companies’ product design model, design center outsourcing structure and time-to-market shortening, also marketing expenditure reduction and efficiency.

Below aspect which Samsung can think over.
1. Biz Unit focused or set priority fot its different biz. Samsung has many categories and faces rivals in each areas. It fights with SONY, LG in LCD TV area, beats Nokia and Motorola in mobile phone segment, and is threaten by APPLE in pocket music player category. No focus, no targets. It should cut low profit product lines and focus on core tech. and high margin industries.

2. start outsourcing design for low-end products to save R&D cost, but keep and strength its capability on core tech. and high-end product design and innovation.

3. review its brand mkting strategy. Samsung is renowed, but it is obscure that which category or product Samsung is good at. We know Samsung, but we dont know its hero or key category. Deliever a clear brand position to customers is important to differentiate Samsung with others.

I wanna post a dilemma Samsung might be facing:

-how to balance over-diversification with enhancement of core innovation?

I think Samsum's problem is not his creativity but the corporate mangerial ability per its diversification strategy. it seems a little bit over, from heavy duty industries, construction, consumer electronics, anssurance, monetary market, home appliance etc. on a few big groups in world can own so various products acorss so many area. Furthermore, it must bring out a great challenge to corporate level management: is samsumg ready to go for all? there is no solid evidence that can support this point, even if samsung is most likely to try its best to become a next GE, Siemense or Sony.

Enhancement of core innovation is related to corporate strategy as well as resource power.
resource looks like a more fital factor in process of creative products' coming out. we all know Samsung has a diversification currentlly, does it has enough resource espectially talents with imagination to support all product portfolio? answer from samsung is not clear, only by some outsourcing like Taiwanese even other creative regions, or by recruiting some US talents, with local krean telents, that so far cannot support its innovative branding image.

we know innovation in all area is incredably hard for any company in the world, but samsung spurring its best to build a high level innovative image with a diversified product lines definetly will question its managerial ability and talents, which may be a bottle neck itself.

Leng Shijie 2010960064 (10GA)

There are really so many players in the electronics industry, the competition is too fierce. It's hard to cover all the products area and make every products distinguished and different to others. Apple and Nokia are focusing on their own product area only so far, hence they are able to deal with the uniqueness of their product. Is it worth keeping focus on product innovation and design as major task according to Samsung's big base?

For my impression, SamSung have many products in nearly all areas of electronics industry, but have not a famous product in one area. SamSung need to choose some areas to focus on.

JuliaWu 10GB wrote:There are really so many players in the electronics industry, the competition is too fierce. It's hard to cover all the products area and make every products distinguished and different to others. Apple and Nokia are focusing on their own product area only so far, hence they are able to deal with the uniqueness of their product. Is it worth keeping focus on product innovation and design as major task according to Samsung's big base?

Samsung can study from Toyota. Lexus is a car brand focused on premium customers . But many people don't know it was a brand under Toyota.
Samsung could create a new brand as well.

Sumsung now steps into a dilemma with high R&D cost but low profit margin. I think Sumsung must first find out its core competence, and focus on one area which it has huge advantage compared to its competitors.

Diversification often costs a lot, and disperses the company’s capacity and energy. With so high R&D costs, Sumsung should concentrate on one aspect and then try to shape the corporate image. Start from one specific and then diversify.

Huang Xiaojie_GA_2010960806

One of potential solutions is to implement custom-built strategy in China, India, Russian, Latin America and other high-growth countries. Let us take China as example. We all know, outsourcing products and design will largely cut cost of R&D and production. Should we do the this in China?

Absolutely, China is recognized as high-growth country in the world. Is high-growth country always linked with low-cost? The answer might be true in China if we bring back this question to one decade ago. However, things are changing today. In the next decade, emerging-market economies will rapidly evolve from being peripheral players, largely reacting to events set in motion by wealthy Western nations, into powerful economic actors in their own right.

Considering this coming threat, Samsung Electronics might adjust its implementation plan in China from “outsourcing production and design” to “outsourcing production but enforcing local R&D capabilities in China”.

Cai Jing_2010GA

Samsung Electronics started to adopt innovation and design strategy officially in 1980’s by setting up their first R&D center in Japan. Then further implemented the strategy to survive in the market in 1990’s, and reached their leading market position after 2000 in electronics industry.

Their recent challenges could be the i) fast rhythm of technology update, ii) uncertain direction of customer lifestyle need, and iii) fierce competition among electronics industry.

They have two types of competitors. One is product featured competitor who is specialized in design and marketing without manufacturing segment. The other is horizontal competitor who is similar to Samsung Electronics in business structure.

The disadvantage of Samsung Electronics seems it is hard to surpass both types of competitors either in design and quality or marketing and sales without featured specialties. The advantage of Samsung Electronics is its settled manufacturing base and abundant capital supply.

Samsung Electronics could take advantage of their strengthens in manufacturing and capital supply to further develop other valuable business function — OEM service for industry players. Through the innovation and design in new business domain other than endless product innovation and design, Samsung Electronics might avoid the direct competition with so many competitors and create her own specialties to maintain long term profit.

From GA Yu Yong 2010960703

The recommendations are:
• Continue to keep the investment into the R&D especially the core technology and advanced technology which will impact Samsung ten years later.
• Enhance cooperate with partners.
• Be creative and watch the new opportunities and target customer in the market.