Asia-Pacific Journal of EU Studies Vol. 9 No. 2 1

Samsung’s Global Business Strategies Focused on the EU Market1

SANG-CHUL PARK* Korea Polytechnic University, Korea and Gothenburg University, Sweden

Samsung Electronics is a subsidiary of the Samsung Group. The company was established in 1969 with an investment of 330 million won (about 1 million US dollar). At that time, few expected the company to become the flagship of the Samsung Group. However, since 2005, the company started to make tremendous achievements. Samsung Electronics started to emerge as a global company by developing new technologies and innovative products as well as by improving brand power. As a result, the company has become the best selling electronics com-pany in the world particularly since 2005. Thus, it may be worth to explore how the com-pany expanded its comprehensive capability in terms of marketing, research and development (R&D), technological development, product development, design and etc. within four decades. The paper discusses and analyses the company strategies of how to become a global leader from a national champion in the EU market.

Keywords: Global Business, Marketing Strategy, Entrepreneurship, EU Market, B2B, B2C

I. BACKGROUND

Samsung Electronics is the flagship company of the Samsung Group, which is regarded as one of the world’s leading conglomerates. It has made remarkable achievements in recent years. During the 1990s, most products from Samsung Electronics were categorized as low-or-medium-priced consumer goods except for semiconductors sold in advanced coun-tries, despite the fact that it has been the dominant player or the ‘national champion’ in the domestic market for several decades. Moreover, when Samsung Electronics was badly hit by the Asian financial crisis in 1997,

* Professor at the Graduate School of Knowledge Based Technology and Energy, Korea Poly-

technic University, Korea and Visiting Professor at Graduate School of Business, Economics, and Law, Gothenburg University, Sweden; E-mail: scpark@kpu.ac.kr, Sang-Chul.Park@ handels.gu.se

Samsung’s Global Business Strategies Focused on the EU Market 2

Chairman, Lee Kun Hee was severely criticized as one of major reason providers due to his newly started automobile business, Samsung Auto-mobile Co. As a result, the owner of Samsung Electronics handed his be-loved automobile business over to the French Automobile company, Ren-ault Car Corporation, owing to the government a big deal policy. The government policy was one of the solutions for excessive industrial pro-duction capacity at a national level. Along with the policy, Mr. Lee was able to clean up its business loss. In addition, he also had to restructure his entire Samsung Group in order to overcome the then massive crisis. In line with the process, he sold out Samsung Heavy Equipment Co. to the Swed-ish Volvo Group. Samsung and Volvo’s business deal accounted for 700 million US dollars in 1998 which was the single largest foreign direct in-vestment (FDI) in South Korea.

In the mid 1990s Samsung Electronics chose Swedish Eriksson as one of the benchmarking companies along with General Electronics in the United States and Sony in Japan in order to strengthen its image as the state-of-art technology based company. It adopted Eriksson’s business strategy to be a leader in its own technology field, such as mobile communication te-chnology equipment. By importing blue tooth technology from Eriksson in the end of the 1990s, Samsung Electronics was able to launch its mo-bile telephone business and in 2005, became the second largest mobile phone producer in the world. Sony Eriksson’s global ranking, on the other hand, declined from the 3rd to the 5th.

In the field of home appliances, Samsung Electronics set the target to take over Sony’s position in the global market. Sony produced luxury TV sets and held the largest market share in the 1990s and 2000s. Compared with Sony, Samsung’s TV sets were regarded as medium-priced products in the advanced nations despite the fact that Samsung Electronics was the largest TV producer in the 1990s. Entering to the luxury TV markets in the beginning of the 2000s seemed to be a highly risky decision due to high technological barriers and already existing Sony’s strong market posi-tion. Additionally, the majority of Executive Vice Presidents in Samsung Electronics were skeptical to choose the luxury TV market as the strategic target.

However, the Chairman’s idea was different. Despite opposition within the company, he set the target to overtake Sony in the global market. By competing with Sony in the global market he saw opportunities to in-crease Samsung Electronics brand power in private households. In the mid 1990s Samsung supplied more than 20 percent of total integrated circuit (IC) chips and became the largest IC chips producer in the world. How-ever, the sale of these products was based on business to business (B2B) practice. Therefore, private consumers were not well aware of Samsung

SANG-CHUL PARK 3

Electronics as a brand. Accordingly, Mr. Lee focused his corporate strategy on business to customer (B2C) area as well. His idea and strategy were proven successful as Samsung Electronics took over Sony’s place in 2005. Finally, Samsung Electronics became the largest electronics company in the world and its brand power based on luxury TV sets and mobile tele-phones grew rapidly in the mid 2000s. As a result, the company suc-ceeded in becoming a global leader in the electronics industry.

This paper focuses on Samsung Electronics’ corporate strategies of how the company could succeed in expanding its market share in the EU and increasing its brand power in the region. Furthermore, it argues which business areas have been the most important strategic areas to become the market champion.

II. THEORETICAL BACKGROUND

Internationalization and globalization may be regarded as a process in which multinational companies expand their organizational network into another country. Accordingly, foreign market entry is an initial step of expanding business networks. During the initial process firms use to act within their existing business network that affects the new entries to the foreign market. In this phase, learning and commitment of firms play key roles in interaction between new entrants and the local business actors. Furthermore, it produces different networking patterns layering on the existing business network. By implementing internationalization processes, industry characteristics, company strategy, turbulence in the market envi-ronment, and technological advancement are also significant factors for multinational companies to make decision on their internationalization and globalization.1

The business network theory regards the multinational corporation as an important institution of the modern society, one that has control over its resources all over the world and conduct different business activities in most of the countries and between almost all countries. Its efficiency and ability to generate large profits is often related to its corporate manage-ment that formulates strategies, allocate resources or controls the different stages of the corporate development. However, this perception could be misleading as the multinational corporation is seen as a complex organiza-tion where power relations between its different units may affect the re-source distribution.2

1 Hadjikhani et al. (2008, pp. 912-924); Makhija (1993, pp. 225-242). 2 Forsgren et al. (2006).

Samsung’s Global Business Strategies Focused on the EU Market 4

Furthermore, a multinational corporation is described as an inter-orga-nizational network that is integrated in an external network consisting of customers, suppliers, regulators with which the different units of the mul-tinational corporation must collaborate with one another. The importance of this interaction with external actors is further discussed by other schol-ars.3 According to them, such an integrated relation may influence the performance of subsidiaries or branch offices in the markets and develop its competence within the multinational organization. Each subsidiary and branch office presents a specific context and different network linkages, therefore their ability of assimilating external knowledge or other benefits might be divergent. This divergence consolidates the competitive advan-tage of the multinational companies while the variety of its network re-sources increases.4

III. CORPORATE STRATEGY FOR NATIONAL CHAMPION

Samsung Electronics is a subsidiary of the Samsung Group. The com-pany was established in 1969 with an investment of 330 million won (about 1 million US dollar). Samsung Group started with the founding of Sam-sung Corporation, a trading company, which was established by the group founder, Lee Byung Chull in 1938. It had a humble beginning, but the business expanded into foods, textiles, various financial services, petroche-micals, ship-building, heavy equipment, and aerospace.5

Samsung Group established Samsung Electronics to diversify its busi-ness area, which could generate high economic growth as well as com-pany’s revenue. In the end of the 1960s, electronics industry was near de-sert in South Korea. Therefore, the company had to take a high risk to carry out the new business. Samsung Electronics began operations in 1970 by producing black and white TV sets, which were an outdated product even at the time. The company was not able to produce color TVs due to the lack of technology capability.

In order to overcome the technological barrier in producing color TVs, the company asked Japanese TV manufacturers to supply picture for TVs in 1974. Japanese manufacturers thought Samsung Electronics was far behind to observe the picture tube technology and offered it. As a result, Samsung Electronics was able to buy color TV picture tubes from Matsu-shita Electric and started the production of their own color TVs.6

3 Ghoshal and Barlett (1990, pp. 603-625); Andersson et al. (2002, pp. 979-996). 4 Andersson et al. (2002). 5 Chang (2007). 6 Kang (1996).

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In fact, Samsung Electronics was only able to assemble its parts and key components imported from Japanese suppliers until the late 1970s. As it began producing its own products, many of them were of extremely poor quality. The concept of quality control did not exist, and the company was not able to improve the quality of its products by itself. In order to in-crease its production capability, the company often used to purchase com-ponents from other firms. In fact, Samsung Electronics secured technology and production facilities for microwave products by acquiring a U.S. com-pany, Ampherex, which produced a key component named magnetron. As a result, microwave products became a flagship export item for Samsung Electronics for a long time. Additionally, Samsung Electronics also used to secure production technologies by acquiring private exchanges, jointly developed by the U.S. public company, General Telephone and Electron-ics Corporation (GTE) and Korean Institute of Science and Technology (KIST).7

Despite the technological barrier, the company was able to produce re-frigerators, washing machines, color TVs, computer monitors, and micro-waves. Furthermore, it tried to be vertically integrated by manufacturing electronic parts and components as it set up affiliates such as Samsung Corning, supplying glass for picture tubes, Samsung SDI, manufacturing TV tubes, and Samsung Electro-mechanics, manufacturing other various items. The vertically integrated structure enabled the company to grow rapidly and systematically, demonstrating one of the major advantages of a conglomerate. As a result, the revenue of Samsung Electronics grew sig-nificantly with time. However, home appliances in Samsung Electronics were mainly original equipment manufacturer (OEM) products until the early 1990s.

It was not very difficult for Samsung Electronics to expand its domestic market share. In 1985, the Korean government carried out so called, ‘pick-ing up champion policies.’ Electronics industry was regarded as strategic industrial area under the government policies. Samsung Electronics and LG represented the electronics industry and they competed with each other to become a national champion. In the early 1990s, the Korean gov-ernment chose Code Division Multiple Access (CDMA) as a standard technology for the mobile communication system that enabled Samsung Electronics to be the first movers in CDMA technology. Indeed, the suc-cess of Samsung Electronics becoming the national champion is closely linked to the industrial policy of the government as well as the aggressive investment based on the strong entrepreneurship of its founder.

7 Chang (2007).

Samsung’s Global Business Strategies Focused on the EU Market 6

The strong entrepreneurship of the founder enabled Samsung Electron-ics to enter into the semiconductor business, which was regarded as a turning point of the company. The reason for jumping into semiconductor business was to secure a stable supply of semiconductor components. Dur-ing the first oil crisis in 1973, Japanese companies could not supply semi-conductors properly that it affected Samsung Electronics to stop its TV and refrigerator production. It caused vast scheduling problems.

Although opportunities for semiconductor businesses were obvious, all leading companies in the industry were only from Japan or the U.S. At that time, Korean semiconductor companies were only capable of assem-bling OEM products. Moreover, U.S. companies, such as Motorola or Fairchild, already entered the Korean market and they refused to carry out any technology transfer. Additionally, the semiconductor industry re-quired a vast capital investment in production facilities, which created a high entrance barrier.

Despite such barrier, in 1974, the Samsung Group’s founder decided to acquire Korea Semiconductor, which was near bankruptcy. He was ready to venture into the semiconductor business. Soon afterwards, however, Samsung Semiconductor faced product quality problems due to its lack of technical know-how. Business timing for producing semiconductor chips was not proper. As a result, Samsung Semiconductor was almost out of business by the late 1970s. The successor of the founder, Lee Kun Hee rescued the company by bringing in Japanese semiconductor engineers to transfer technological know-how to engineers at Samsung Semiconductor. Additionally, he continuously improved production facilities and reorgan-ized the technical workforce.8

After the semiconductor business became stabilized in the early 1980s, Lee was keen to enter the Very Large Scale Integration (VLSI) semicon-ductor business although Samsung Semiconductor was not capable to carry out the business area properly. The reason for it was based on his personal strong belief in the strong demand possibility of memory chips as the information industry grew. He selected general purpose technologies such as Dynamic Random Access Memories (DRAMs). In this business area, economies of scale played the most important role in achieving busi-ness success. Finally, he built factories in Giheung, near Seoul and Sam-sung Electronics became the world’s largest semiconductor producer in 1993. Samsung Electronics became the national champion in its industrial sector by the 1980s and moved continuously as an Asian company in the beginning of the 1990s being known mainly for exporting cheap, generic OEM products.

8 Lee (1997).

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Based on the development process, corporate strategies of Samsung Electronics that led the company to become the national champion can be analyzed as the following. First step is to acquire foreign firms in order to overcome technology barriers as soon as possible. Second step is to take advantage of the government’s industrial policy providing various benefits such as R&D fund, financial subsidy, creating technological standard and etc. The last step is the strong entrepreneurship of the owners willing to take a high risk and invest vast capital (Figure 1).

FIGURE 1: MAJOR FACTORS OF CORPORATE STRATEGIES THAT LED SAMSUNG

ELECTRONICS TO BECOME THE NATIONAL CHAMPION

Source: Author’s own adaptation.

IV. CORPORATE STRATEGY FOR GLOBAL LEADER

In September 1993, the second chairman of Samsung Group, Lee Gun Hee called for the Frankfurt Conference. All CEOs of the group partici-pated in the conference, where the Chairman Lee declared a new man-agement changing everything except their wives and children. At that time Samsung Group was the largest conglomerate in Korea. In most business areas Samsung was the national champion. However, Mr. Lee was shocked when he saw Samsung products being displayed at the corner of major department stores in advanced countries. He showed his CEOs how their products were treated and regarded in Frankfurt, Germany. After realizing the bitter fact that Korea’s national champion is treated as

Samsung’s Global Business Strategies Focused on the EU Market 8

a second class in the global market, Samsung’s leadership set the target to become the global leader. Samsung Electronics became its flagship to real-ize its goal without any doubt.

Among companies within the Samsung Group, the first company to acquire the title of ‘global leader’ in 1993 was Samsung Semiconductor. When Japanese producers introduced the 4M DRAM, Samsung Semicon-ductor was just slightly behind. However, Samsung Semiconductor caught up to Japanese producers when it introduced the 16M DRAM and finally surpassed them with the introduction of 64M DRAM. Samsung Semicon-ductor could maintain its lead continuously through its introduction of the world first Giga DRAM chip in 1999. Eventually Samsung Semiconductor became the industry’s technological leader in global market.9

Samsung Electronics had been faster than any other competitors in time because it had not only increased its investment in R&D but also carried out the so-called, ‘parallel development strategy’. This strategy called for the development for next generation products, while developing and mass producing the current generation products. As a result, it contributed to accelerate new product development and generate new technologies, which could be directly applied to next generation products. Furthermore, Samsung Electronics adopted the parallel development method to other related memory products such as flash memory that could accelerate the development speed of all products.10

Samsung Electronics also developed a combined production process technology, which improved production yields. The basic function of the production process technology is to allow close interaction between the R&D and production departments in order to avoid the traditional se-quential approach from the process engineers after completing design to the test engineers after taking over the production process. Samsung Elec-tronics also strives for cooperation between engineers from design depart-ment and manufacturing department to solve the many technical prob-lems arising from product development and mass production process.11

Furthermore, the company has also developed a yield estimating system from the pilot development stage by integrating the development and production processes. It has built an internal knowledge sharing system. It means that detailed information collected during the development and production processes is stored and it assigns more than half the engineers having worked on existing lines in order to build new ones. As a result, the developed system has enabled knowledge sharing between existing and new lines. 9 Chang (2007). 10 Shin and Jang (2006), Chang (2007). 11 Shin and Jang (2006).

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The second strategy of Samsung Electronics is focusing on technologies with clear trajectories. After becoming the global leader for DRAMs, the company has expanded into flash memory and Liquid Crystal Displays (LCDs). These are high value added products and their production proc-esses are rather similar to that of DRAMs. Therefore, their production lines can be easily shared. Additionally, these products have industrial stan-dards like that of DRAMs that can be produced with general purpose technologies. This allows Samsung Electronics to gain competitiveness against others by being able to produce commodities with cost advantages. Accordingly, Samsung Electronics use to strategically invest in technolo-gies, which have clear trajectories with clear evolutionary progress and industrial standards. As a result, the company achieved a rapid growth of U.S. patents since the mid 1980s. Furthermore, the company has had a high patent to investment ratio compared to its competitors, while its R&D investment ratio has not been extremely high. The company’s focus on general purpose technologies has enabled it to concentrate on swift new product development and production efficiency despite its weakness of technological know-how12 (See Figure 2, Figure 3).

FIGURE 2. SAMSUNG ELECTRONICS’ U.S. PATENTS (FROM 1991 TO 2009)

Source: www.uspto.gov (2011).

The third strategy of Samsung Electronics was aggressive investment

and high speed for TFT-LCD business in the mid 1990s. At that time the company had defect rates as high as 40 to 50 percent on its 11 inches line for personal computers (PCs) due to technological weakness. During this time, Japanese companies aggressively declined their product prices in

12 Chang (2007).

Samsung’s Global Business Strategies Focused on the EU Market 10

order to defoliate Samsung Electronics in the global LCD market. Sam-sung Electronics responded to the crisis with aggressive investment in LCDs and outflanked Japanese competitors by starting a 12 inch line, while the Japanese firms still produced 11 inch models. It was a turning point for Samsung Electronics to expand rapidly to the global market of LCDs. Since then, the company has reinvested its profits to produce up to 46 inch panels by using the aggressive investment strategy just as it did in the semiconductor business.

FIGURE 3. SAMSUNG ELECTRONICS’ R&D EXPENDITURE (FROM 1991TO 2010)

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

5 6.5 5 7 4.5 5 4.5 6 3.8 3 5 4.8 4.9 5 5.3 5.4 5.7 5.3 10 12

R&D Expenses (100

milliion US dollars)

R&D/Sales(%)

200

180

160

140

120

100

80

60

40

20

0

Source: Korea Investors Service (2011), www.samsung.com (2011).

Another example is the mobile phone business. Samsung’s design engi-

neers can complete their design work for a new product within three to six months and develop eight to ten new platforms per quarter. This is the world’s highest speed as well as broadest platforms compared to its global competitors, such as Nokia and Motorola, which can release only four to five new products per year with a design cycle of 12 to 18 months. Sam-sung’s unique high speed of new products comes from strong competition between development teams. It means that the competition among mod-els speeds up new product development in Samsung’s mobile telecommu-nication division.

The last strategy is vertically integrated production processes for key parts such as IC chips or LCDs. Samsung Electronics has set its strategic targets to control four components, such as semiconductors or LCDs, computers, communication, and consumer electronics. Such an attempt means vertical integration that can strengthen the competitiveness of the

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final products. In fact, Samsung Electronics has its competitiveness in this structure compared to other companies. For instance, DRAMs, flash memory, and mobile phone chips produced by Samsung Electronics Semi-conductor Division have been supplied to the firm’s white goods appli-ances, computers, digital home appliances, communication and etc.13

The largest adventure of vertically integrated business structure is to minimize procurement costs and to enhance the speed of design, devel-opment, and production. Additionally, Samsung Electronics uses supply chain management (SCM) in order to create fast delivery and low inven-tory costs. As a result, the company can supply products within two to four weeks after receiving an order from foreign dealers. Thanks to the SCM system, the company can forecast demand precisely and optimize the results in connection with enterprise resource planning (ERP) by consider-ing various variations such as market demand, trends, past experience and target market share14 (See Figure 4).

FIGURE 4. MAJOR FACTORS OF CORPORATE STRATEGIES THAT LED SAMSUNG

ELECTRONICS TO BECOME THE GLOBAL LEADER

GolbalLeader

Paralleldevelopment

strategy

Focus ontechnologies

with cleartrajectories

Aggressiveinvestmentand highspeed

Veticallyintegratedproduction

process Source: Author’s own adaptation.

V. SAMSUNG ELECTRONICS’ BUSINESS STRATEGY IN THE EU MARKET

1. Expansion in the EU market

The EU market is one the three major global markets for Samsung

13 Jin (2006). 14 Chang (2007).

Samsung’s Global Business Strategies Focused on the EU Market 12

Electronics along with North America and China. Its revenue accounted for 155 trillion won (136. billion US dollars), and 17.3 trillion won (15.2 billion US dollars) profit was the record high in the company history in 2010. On the revenue basis, Samsung electronics took the number one spot among global IT companies. The total amount of net sales in the European territory reached 36.1 trillion won in the same year that ac-counted for 23 percent of the total net sales in the global market. In fact, Europe had been the largest market for Samsung Electronics based on the amount of net sales until the year 2009. However, it was caught up by the North American market in 2010. In the European market, the EU covers more than 95 percent15 (See Figure 5).

Samsung Electronics has had its largest market share at B2B area in semiconductor products since the mid 1990s. After launching 64M DRAM in the end of the 1990, this trend had been escalated in the EU market. However, the brand power of Samsung Electronics was weak and Sam-sung was regarded as low or mid-end product producer. In order to strengthen its brand image, the leadership of the company set the target of business strategy in the EU market. There was a clear shift of strategic focus from B2B to B2C. The company built production facilities to secure entry into local markets focused on producing high price-ranged products. It also established regional control headquarter, local marketing center as well as R&D and design centers (See Figure 6).

FIGURE 5. NET SALES BY REGIONS (FROM 2008 TO 2010)

Source: Samsung Electronics (2011).

15 Samsung Electronics (2011).

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FIGURE 6. SAMSUNG ELECTRONICS’ BUSINESS STRATEGY

Source: Samsung Electronics (2010).

A turning point for the business strategy took place in 2005 by intro-

ducing a series of a high-end LCD TV product named Bordeaux, which won the best design award from the consumers survey. The LCD TV products changed consumers’ life style and contributed to enlarging their living room space by creating slim size with 29 mm thickness. It changed consumers’ perception of TV sets from a square and heavy product to a design-based product for their space. The LCD TV sets became a mile-stone for shifting its business strategy in the market. After introducing the product, Samsung Electronics started to be recognized as a global com-pany in the market by competing with other competitors such as Sony and Panasonic in the high-end consumer market.

With the great success of home appliance products, Samsung Electron-ics gained its competence in the high-end market and realized the impor-tance of brand power in B2C. Therefore, it emphasized to boost a new B2C market with mobile phone. Unlike the LCD TV set, Samsung’s mo-bile phone products were not regarded as premium products in the EU market although its market share showed constant increase, and the com-pany became the world’s second largest mobile phone producer after Nokia in 2007. In order to penetrate into the market deeper and broader, Samsung Electronics looked to increase brand marketing activity in a bid to leverage the opportunity presented by its portfolio-wide sponsorship to the 2008 Beijing Olympic Games. It was a part of corporate marketing

Samsung’s Global Business Strategies Focused on the EU Market 14

strategy to expand its brand power to the customers as an official sponsor to the Olympic Games.16

Continuously, the company created its systematic framework, Samsung European Forum (SEF), in order to introduce new products and to an-nounce new strategies for the EU market in 2009. In the forum, LED TV, a more advanced TV than LCD TV and new species of Flat-Panel TV made an official debut in the EU market. Additionally, the company em-phasized its strategic focus on overcoming the economic downturn by strengthening relationships with consumers and retailers while exploring B2B business opportunities in printer and notebook PC market.

The business strategy in the forum can be summarized as blending in-novation with advancement in new markets. An array of new products such as LED TVs, Premium Blu-Ray Players and Cinema Systems, new generation of digital camera and camcorder, and notebook PCs were dis-played. The new products represented a new generation of converged products that blend technology with the active lifestyles of EU consumers. By doing so, Samsung electronics was able to appeal to the consumers changing their perceptions of LED TVs as art pieces and environmental friendly products consuming 40 percent less electricity than LCD TVs.17

Since 2005, Samsung Electronics became the largest electronics com-pany in the world. It surpassed Japanese competitors like Sony and Pana-sonic not only in revenue, but also in profit. It was not an easy task for the company to strengthen its brand power in the high-end market because EU consumers’ behavior is uppermost conservative and they have high expectation compared to other advanced market.

The latest strategy of Samsung Electronics in 2011 was set to become the number one market share in all business areas from B2B to B2C. In order to meet the goal, the company targeted to become an ultra pre-mium and ultimately iconic brand that is preferred throughout the EU market. Implementing measures were as follows; Innovations in internet connected TVs, consumer inspired digital cameras, and the latest mobile technology combined with plans for developing the company’s regional market presence in B2B, notebooks, printers and digital imaging were major driving force in the context of Samsung’s unifying principle named as the smarter life based on smart design, smart experience and smart connections. The smarter life has been supported by Samsung’s philosophy of smart thinking and its commitments to advance in the market through constant innovations in technology and energy efficiency. As a result, the company achieved its goal in most of their business areas except mobile

16 www.marketingweek.co.uk. 17 www.prnewswire.co.uk.

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phone due to strong existence of Nokia, notebooks, digital camera and etc. in B2C.18

2. Analysis on business strategy in the EU market

Samsung Electronics’ business strategy in the EU market has evolved periodically and strategically being adjusted from internal to external business and economic environment. In the mid 1990s, the company be-came the largest DRAM provider in the B2B market. Samsung Electron-ics shifted its core business areas from B2B to B2C in order to strengthen its brand power for the EU consumers by launching the LCD TVs that contributed to changing consumer perceptions on electronic products. It was the turning point for the company to become from a copycat to a global company in the high-end market. On the basis of its strength in B2B and B2C markets, Samsung Electronics has developed its business strategies to expand B2B and B2C markets continuously and finally be-come the No.1 market share company in most business areas in the EU (See table 1).

TABLE 1. SAMSUNG ELECTRONICS’ BUSINESS STRATEGIES IN THE EU MARKET

Period Products Area Strategy Consumer Perception

Creating Value added

1990s DRAM and home appliances

B2B B2C

The world first and foremost advanced products (B2B) Price advantage (B2C)

High-end in B2B Low-end in B2C

Rapid development of IT products (B2B)

2000s LCD TVs, digital camera, PCs, printer

B2C B2B

Design based products, focusing on high-end market

Global company

Design products

2010s

LED TVs, Notebook, Smartphone, Touchdown fad

B2C B2B

Digital marketing, No.1 market share, Smarter Life (design, speed, connection)

Global leader

Art products Mobile and mobility, New life style (digital nomad)

Source: Author’s own adaptation based on own analysis. From 2008 to 2010, the net sales in the European market increased

from 34 trillion won to 36 trillion won, while its portion of global net sales decreased from 28 percent to 23 percent. From the global market perspective, the net sales increased in all regions in general, but a strong increase in the North America in particular. As a result, the portion of

18 www.imaging-resource.com; www.displaybank.com.

Samsung’s Global Business Strategies Focused on the EU Market 16

global net sales in the North America increased from 21 percent to 28 percent. It means that the business strategy in the EU market has worked out properly, but shows its limitation because the EU market handed over its status of the largest market to the North American market.19

The company has been the world’s leading IT company by sales since 2005 and has been ranked the 1st among IT firms in the Carbon Disclo-sure Leadership Index (CDLI). Furthermore, the company received Inno-vation Awards of 37 products at the Consumer Electronics Show (CES) in 2011. Despite such tremendous successful records, Samsung Electronics’ brand value ranked 19th in 2010 and 17th in 2011. Its value increased from 19.5 billion US dollars to 23.4 billion US dollars in the same period, which was over 20 percent increase in value. However, its competitors in electronics such as Intel, Apple, HP, Nokia are still ahead Samsung in rank and value.20

In order to catch up its global competitors in brand value, Samsung Electronics launched a new vision of 2020 entitled, “Inspire the world, create the future” in 2009. The new vision set its sales target from 136 billion US dollars in 2010 to 400 billion US dollars in 2020. Additionally, it targets to become the global top five brand value as well as most inno-vative company in the same year.21 It is not an easy task, but not impos-sible only if the company can continue to realize its No. 1 market share strategy with new technologies, innovative products and creative solutions not only in the EU market, but also in the North American market.

VI. CONCLUSION REMARKS

The history of Samsung Electronics is not long, just slightly over 40 years. Its development path and expansion capability is regarded as in-credibly broad, deep, and strong. It has developed by taking two steps. First step was to become the national champion in the electronics industry by taking advantage of the government industrial policy in the 1970s and 1980s and by purchasing existing companies and importing foreign tech-nologies and engineers. By doing this, the company realized the impor-tance of upgrading technological capability of semiconductor products for the final electronics goods. Initiating the semiconductor business took high risks due to a vast capital investment and need of highly skilled labor forces. After facing difficulties close to a bankruptcy owing to production failure based on technology incapability, Samsung Electronics succeeded 19 Samsung Electronics (2010); Samsung Electronics (2011). 20 www.interbrand.com. 21 Samsung Electronics (2011).

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in producing 16M DRAM in 1991, competing with foreign competitors such Toshiba, Sharp, NEC and etc. Since then, the company became the first runner in the semiconductor business in the global market. A strong entrepreneurship of Samsung’s owner played a significant role in entering the new and high risk business area. The award for it was a tremendously strong impact in the global market. Samsung Electronics became the larg-est producer of semiconductor products in 1993.22

Second step was based on strategic transformation. The company shi-fted its business strategy from B2B to B2C based on the strong position of B2B platform. Entering the high-end LCD TV products in the EU market was a starting point for the company to transform as a global company changing consumers’ perception based on design and art products. Even in the sluggish EU market hit by the 2008 global financial crisis, Samsung Electronics initiated aggressive marketing strategy in 2009 that created a solid framework named as Samsung European Forum introducing its products portfolio and annual strategy. By practicing such a marketing strategy, the company utilizes its business networks maximum created by B2B and approaches to dealers and consumers online and offline. Despite such various measures to realize its goal as smarter life creating future, its brand value is behind other global IT companies. This is the company’s assignment to address in the near future.

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