Activity 2 SM-WPS Office

Casimiro, Robie L.
BSA 301-A
ACTIVITY
Samsung is one of the biggest conglomerates globally and the largest “chaebol” or family-
owned business in South Korea. Established in 1938 by Lee Byung-chul as a trading company
selling noodles and dried seafood, Samsung has since diversified into various industries,
including electronics, chemicals,shipbuilding, financial services, and construction. As a result,
Samsung is widely diversified with over 80standalone subsidiaries. The conglomerate accounts
for a fifth of all South Korean exports.
In 1987, Lee Kun-hee, the youngest son of the founder, took over as the chairman of the
conglomerate.His strategic intent was to make Samsung a world leader in high-tech industries
such as consumer electronics. To execute his strategy, Lee Kun-hee focused first on gaining
market share by invading markets from the bottom up with lower-priced products at an
acceptable value. Over time, quality and consumer perception became more important.
Samsung’s image, however, was overshadowed by Sony and Motorola, the undisputed world
leaders in consumer electronics and mobile phones during this time. During a 1993 trip, Lee
Kun-hee saw firsthand how poorly Samsung’s electronics were perceived in the United States
and Europe, and he vowed to change that. Back in Korea, to show his disappointment and
determination alike, he destroyed 150,000 brand-new Samsung cell phones in a large bonfire in
front of all 2,000 employees of Samsung’s Gami factory. Many employees credit this as the
pivotal moment in redefining Samsung Electronics’ strategic focus and initiating a successful
turnaround.
Samsung Electronics increased spending significantly on Research and Development (R&D), as

well as on marketing and design. Meanwhile, Lee Kun-hee was undertaking a complete
overhaul of the conglomerate’s structure to change Samsung’s sclerotic culture to a culture that
deeply values seniority;he introduced merit-based pay and promotion. Lee Kun-hee, who holds
an MBA degree from George Washington University, hired Western managers and designers
into leading positions and sent homegrown talent to learn best business practices from other
firms wherever they could be found. Lee Kun-hee also set up the Global Strategic Group to
assist non-Korean MBAs and PhDs with a smooth transition into their positions in a largely
homogenous cadre of Korean executives. In addition, he moved Samsung to the high end
market, offering premium consumer electronics such as flat-screen TVs, appliances,
semiconductors, and mobile devices such as its famous Galaxy line of smartphones.
Answer the following questions: (3 items x 10 points)
1. What is/are the triggering event/s that act/s as stimulus/stimuli for strategic change in the
given case?
The triggering events that acts as stimulus for strategy change given in the case are; First the
New Chief Operating Officer (CEO), on the case given Lee Kun-hee is the one who took over as
the chairman of conglomerate year 1987 he has presented different strategy to the company,
second the performance measure because Samsung Electronics is poorly perceived in the
Europe and United states so Lee Kun-hee is triggered to take action and changes in their
strategies.
2. Which characteristic/s of strategic decisions is/are described in the case study?
The characteristic of strategic decisions described in the case study is directive because Lee
Kun-hee hired Western managers and designers into leading positions and sent homegrown
talent to learn best business practices from other firms he also set up the Global Strategic
Group to assist non-Korean MBAs and PhDs with a smooth transition into their positions in a
largely homogenous cadre of Korean executives, Samsung Electronics increased spending
significantly on Research and Development (R&D), as well as on marketing and design. With
that being said his strategic decisions set precedents for lesser organizational problems and
future actions throughout an organization.
3. How will Samsung maintain its successful market position by using one of the modes in
strategic decision-making?
Samsung will maintainits successful market position by using one of the modes in strategic
decision-making this mode is the planning mode where in Samsung will continue to gather
appropriate information for situation analysis, the generation of feasible alternative strategies,
and the rational selection of the most strategy. It includes both proactive search for new
opportunities and the reactive solution of existing problems. As we can see on the given case
Lee Kun-hee personally analyzed the situation as a result he come up to change the existing
strategies. Samsung Electronics increased their research and development as well as on
marketing and design and because of that Samsung move into high end market

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Casimiro, Robie L.

Samsung Electronics increased spending significantly on Research and Development (R&D), as

2. Which characteristic/s of strategic decisions is/are described in the case study?

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