Saturday, September 14, 2019
Innovation and Design Strategy Essay
Samsung Electronics: Innovation and Design Strategy Introduction: The case study commences with the integration of innovative design and brand management by Samsung Electronics which started a new trend in the electronics industry. As discussed in the case, initially Samsung was not much popular and lacked design identity but later it relocated itself by: * Improvement in the product development processes * Increasing their investments in R&D and product design i. e. R&D globalization. * By adopting right innovation strategies. By mastering the less tangible, more intuitive qualities of superior design. By diversification of products and step by step or continual improvement. * Implementing Global localization strategy. * Achieving Vision of leading in digital convergence by using e-processes (electronic integration of processes by going online). All these methods were implemented by Samsung in order to improve its productivity and to gain competitive advantage over its competitors l ike LG Electronics, Sony, Apple Computer Inc. , etc. Despite this, Samsung is facing the challenge to stay ahead in competition in the near future. Consumer electronics industry is facing a tough competition and the need of the our is to optimize the R & D costs, having relevant information regarding the IPR (Intellectual Property Rights) while design outsourcing and using appropriate product design followed by appropriate market strategy. Case Analysis: As mentioned in the case, the background of Samsung can be discussed in a tabular form: * Started by Byung-Chull Lee in 1939 as an exporter of agricultural products. I * Samsung Electronics established in 1969 followed by product diversification. I * Strategic Joint Ventures with NEC, Sanyo and Corning Glass work in 1970 | Brought 50% stake in Korea Semiconductor Inc. I * Acquisition of Korea Semiconductor Inc. in 1978 followed by the successful implementation of reverse engineered product design I * Vertical integration by developing their own ICÃ¢â¬â¢s DRAMS(Dynamic Random Access Memories in 1985 Focus on qualitative growth than quantitative growth in 1990 | * Loosening of import restrictions by South Korean government I And Samsung achieved price competitiveness in 1991. | * In 1992, Samsung established R;D center in European markets. I * In 1994, Samsung established R;D center in US markets. I * In 1997, Samsung cuts its Korean and overseas workforces due to Asian Financial crises. I * In 1999, Samsung was regarded as worldÃ¢â¬â¢s premiere consumer goods and services industry By Forbes. I * In 2000, Samsung embarked vision to convert itself into a Digital- e company. * Increased design staff and 2004 | * In 2005, Samsung increased its design budget by 20%-30% | * In 2006, Samsung registered 17,377 patents worldwide I * In 2007, Samsung held management, product design and investment in R&D provided them advantages over its competitors. Hence, they improved step by step with the product iversification, Mergers and Acquisitions, vertical integration and implementation of new technology. They were aggressively involved in marketing and improving their brand image in the minds of their customers. The Samsungs learning and leveraging matrix can be explained as: Dedicated business units e. g. Informal technology transfer I New venture department or division, e. g. Ã¢â¬Å"skunkworks( Investments in R&DÃ¢â¬â¢s) I Independent business unit, e. g. Predivestment or potential spinout I Direct integration or business team ( Vertical Integration by developing their own ICÃ¢â¬â¢S) I High Low Leveraging existing competencies Innovation and product Design at Samsung Electronics Samsung Electronics leading position was contributed by the enlisted factors: * Creative people in the organization which contributed in the development of technology. * Co-operation between the business partners throughout the supply chain * Firms ability in exploring end penetrating into the new markets * Speed of innovation and product development. Along with this Samsung also increased the investments in their R&D centers. After doing the trend analysis for the Exhibit 3 which shows the Samsung R&D udget and percentage sales, We arrive at the conclusion that the SamsungÃ¢â¬â¢s R;D budget increased till the year 2007 linearly. But there is decline in the percentage of sales in the year 2007, which suggests that the Samsung will need to rethink this strategy. There is an urgent need to optimize the cost related to SamsungÃ¢â¬â¢s R&D expenditure to prevent the decline of sales in future. Samsung globalized their R&D network worldwide to develop technologies which can be commercialized in the future. Basically the main idea behind the globalization of R&D network is to: * Focus n innovation and generating new products for global market. * There is a huge scope of product improvement. * This provides an access to the emerging markets. * Leverages the market opportunity for the firm. User- Centric Design Philosophy SamsungÃ¢â¬â¢s philosophy was to strike the balance between the reasons and feelings. This was done by them with the rationalization of the design of product by using geometric and technological parameters and enhancing the design to the product so that it can make the emotional connection with the user. Their global localization strategy helped them to become a top class consumer lectronics company. Marketing Samsung used electronic processes to achieve their vision of leading in digital convergence. The Convergence and integration between manufacturing, promotion ; distribution of electronics included releasing, promoting and marketing. This * Helped in product differentiation * Better value propositions or bundle of benefits to the customers. This graph shows net sales and operating profit of Samsung Electronics 2007 Samsung ElectronicsÃ¢â¬â¢ E-processes comprised of: The SCM, R&D management and Customer management processes were ntegrated with ERP (Enterprise Resource Planning). ERP implementation provided them a wider access to the Samsung ElectronicsÃ¢â¬â¢ operations. This improved their overall processes and improved efficiency.