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Management of Technology and Innovation
DEVARAJAN K | SHALABH DHANKAR | SONAM BHARGAV | AMARENDRA KR.GORAI | BHARATH BALAJI | AKSHATA V M | KARTHIKA S| NEELAM | VIGNESHWAR M | AMOY KUMAR D |
KULBHUSHAN SINGH BAGHEL | MAHTAAB KAJLA
Group III
Samsung, the most innovative company in high technology
Management of Technology and Innovation
Flow of presentation
Company Overview
Differentiating features and innovation
process
Spiral Model at Samsung Electronics
Future Growth Strategy and new
Areas for Samsung
KM and Process Innovation in Samsung SDI
Q&A
Management of Technology and Innovation
Assignment Question What is Samsung’s strategy of innovation that has enabled it to catapult from a $20 billion company to a $100 billion company in 10 years?
Management of Technology and Innovation
Company Introduction
• South Korean multinational conglomerate corporation headquartered in
Samsung Town, Seoul, South Korea
• Notable Samsung Group industrial subsidiaries include Samsung
Electronics (the world's largest technology company measured by 2010
revenues),Samsung Heavy Industries (the world's second-largest
shipbuilder measured by 2010 revenues), and Samsung Engineering and
Samsung C&
• Samsung Group accounts for about a fifth of South Korea's total exports
• ―World‘s Most Reputable Companies 2010‖ ranking published by
Reputation Institute of the US, Samsung was placed at 22nd, a large
advancement from prev. yr.‘s 74th
• Samsung was ranked 11th in ―50 Most Innovative Companies 2010‖ list
by Business Week, a five-notch increase from the previous year‘s 16th
• Samsung had emphasized innovation in its management strategy since
the early 2000s and it again highlighted innovation as part of core
strategies when it announced Vision 2020 in which the company set an
ambitious goal of reaching $400-billion sales revenue within 10 yrs.
Management of Technology and Innovation
Differentiating features of Samsung
Strategic thinking
Long-term growth than short-term profits Chaebol (Conglomerates) model
State Intervention
South Korea : directed cheap credit Asian Financial Crisis 1997-98: reckless expansion Generates cash to finance its expansion plans
Concentrate on growth sectors
Invested $20 billion in 5 fields in which it is a relative newcomer: solar panels, energy-saving LED lighting, medical devices, biotech drugs and batteries for electric cars
Identify these as opportunities
New Environmental rules (solar power, LED lights, electric cars) or exploding demand (medical devices, drugs)
Large scale Manufacturing and lower costs
Management of Technology and Innovation
Samsung model is not easily replicable
• Patient and bold (Strategic thinkers)
– Family of its late founder, Lee Byung-chull, wants it
to be family controlled
– Family control is guaranteed by a complex web of
cross-shareholdings
Management of Technology and Innovation
Key growth facts of Samsung
Batteries for digital gadgets - 2000
Ten years later, Samsung sold more
of them than any other company in the
world
Flat panel televisions in 2001
Within four years it was the market
leader
Flash memory in 2002
The technology it delivered made the iPhone and iPad a reality, and made Samsung Apple‘s biggest supplier—
and now its biggest hardware competitor.
Management of Technology and Innovation
Key innovation strategies of Samsung
• Shift from easily substitutable gadgets
towards more essential industrial goods
• Just as electronics was a hit in the 20th
century, the company believes green
technology and health care will be
central to the 21st
• Diversify away from consumer
electronics, a market that suffers from
falling prices, thin margins, fast product
cycles and fickle customers
• open itself up to work with partners and
even make acquisitions - new skills,
sales channels and customers.
• spotting areas that are small but
growing fast - Typically capital intensive
areas, making it harder for rivals to
keep up
When it pounces, the company
floods the sector with cash. -
moving into very high volume
production as fast as possible
not only gives it a price
advantage over established
firms, but also makes it a key
customer for equipment makers.
Management of Technology and Innovation
New business areas for Samsung
Management of Technology and Innovation
Unique innovation strategy
Acting as supplier to rest of industry
Supplying the rest of industry drives down Samsung’s costs yet further, with its rivals in effect financing its success
It is also Apple’s greatest competitor
in those markets.
Samsung - Apple’s most important supplier in the smartphone and tablet-computer markets. Samsung components, which include all the product’s application processors, account for 16% of the value of an iPhone.
Management of Technology and Innovation
Unique innovation strategy
Acting as supplier to rest of industry
Apple is now suing the socks off the company for copying the look and feel of its products.
Problem
Management of Technology and Innovation
Multi-fold strategies for growth
The company has pushed out older managers and restructured its divisions over the past two years despite posting
record profits even in the global financial crisis
It has aimed products at poor countries, too. This not only gave Samsung scale, but also market shares in the world‘s fastest-
growing economies – making it resistant to recession
New sectors have synergies - experience in semiconductors and flat-screen televisions fits easily with solar cells and LED lighting: the technology, materials and production
processes are similar.
Close watch on competition - Chairman Lee‘s fear is that successful companies get
flabby when they hit middle age. He saw that in Sony, founded in 1946, which has
been struggling since the 1990s. Samsung Electronics turned 40 in 2009, which
prompted Mr Lee to lay the groundwork for the five new growth areas
Management of Technology and Innovation
Spiral process model of indigenous technological innovation capabilities (ITICs)
• Firms in a developing country initiate, imitate, improve and make innovative
technologies
• Any technological innovation passes through four stages:
Technological innovation (TI)
Transfer of technology (imitation)
Adaptive technological
innovation (improvement)
Indigenous
technological
innovation (local
innovation)
Initiation(technology acquisition)->Imitation -> improvement ->Self-innovation
Management of Technology and Innovation
Technological Innovation Process
Management of Technology and Innovation
How, Late-Starter, Samsung Electronics built its ITICs
• Four developmental stages at Samsung Electronics
Entrance of foreign companies into the Korean market and their refusal to transfer their technologies to Samsung initiating its ITICs
Samsung started TICs by means of reversing the engineering of imported foreign technologies and transfer of technology
Improved TI by means of adaptive technological innovation strategy
The capability to establish their own ITICs, to become one of the leading companies in the world which challenges firms from advanced countries in the global market
Management of Technology and Innovation
Implementation of spiral process model
Transfer of Technology
Adaptive technology innovation
Indigenous Technology Innovation
Starting point technology innovation
Mass production
Reliance on foreign
technology
A follow-the-leader
strategy
Government Support
Management of Technology and Innovation
Implementation of spiral process model
Internal Technological Capabilities
US based R&D
Management Strategies
Crisis Construction
Affiliation with
suppliers
Product Innovation
Product
Process
Technology
Business
Management of Technology and Innovation
KM and Process Innovation in Samsung SDI
Aim of
Knowledge Management
Not to build KMS To enhance organization
competitiveness through capitalizing the potential of knowledge
• Process innovation based KM strategy provides the sustained competitive advantage
• To realize the value of knowledge in companies KMS should be executed in parallel to
PI
Management of Technology and Innovation
KM and Process Innovation in Samsung SDI
Management of Technology and Innovation
KM Implementation based on process knowledge
Knowledge produced through PI
• Transformation from tacit to
explicit knowledge
• Capitalization of knowledge
• Knowledge is bound to the
context
Knowledge outcome of
innovation process
• Not the process itself, but
tasks related to
performance
• Should be combined with
tacit and explicit knowledge
.
Methodological
Knowledge
Accumulative
Knowledge
Management of Technology and Innovation
Knowledge Transformation path
KMS in Anglo – American culture
Construct by market oriented , numerical and analytical approaches
Complexity reduced by codification and abstraction – Cognitive energy
MNS in East- Asian culture
Relationship centered and clan centered approach
Absorption of complexity
Management of Technology and Innovation
References
Article ‗Asia‘s New Model Company: Samsung‘s recent success has
been extraordinary. But its strategy will be hard to copy‘ – Economist Oct
1st 2011
Article ‗The next big bet: The world‘s biggest information-technology firm
is diving into green technology and the health business. It should take
care; its rivals should take notice‘ – Economist Oct 1st 2011
A spiral process model of technological innovation in a developing
country: The case of Samsung : Kichan Park1*, Murad Ali1 and
Françoise Chevalier2
Integration model of technology internalization modes and learning
strategy: globally late starter Samsung‘s successful practices in South
Korea Y. Gil1, S. Bong, J. Lee
Knowledge Management and Process innovation – The knowledge
transformation path in Samsung SDI Seungkwon Jang, Kilpyo Hong,
Gee Woo Bock, Ilhwan Kim
Management of Technology and Innovation
Q & A
Management of Technology and Innovation
Appendix - Types of Technology Internalization
Management of Technology and Innovation
Appendix - Types of Technology Internalization
Management of Technology and Innovation
Appendix - Types of Technology Internalization
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