Page | 1

Organizational Structure and Global Business Strategies of

Samsung Electronics

ABSTRACT

Samsung is one of a sustainability multinational company (MNC) that is successful in global

business especially in producing electronic appliances. This Korean company had gone through a
long historical journey before becoming a successful company. The behind story of Samsung
was its structure and business strategies. The purpose of this study is to learn about this
successful structure of the organization. The paper gives a detailed description of the corporate
structure of Samsung Electronics and what strategies they have adopted that led to successful
global business. In findings, the paper gives a few exceptional changes that were made in a
subsidiary that is situated in India. All the information are collected from secondary sources like
online articles and business reports etc.

Page | 2
 ACKNOWLEDGMENT

In the process of completing the term paper, it became quite clear to us that anyone can hardly
complete a term paper alone. Many people and institutions deserve thanks and appreciation for
their valued contributions. As the list of individuals, we wish to thank all but it cannot be
accommodated in this limited space, we therefore would like to thank some specific ones for
their dedicated support.

First, we must express our gratitude to Dr. Sumayya Begum, our faculty advisor, who helped us
decide on a topic that was of interest. Her guidance in helping us to separate the important and
necessary details from the unnecessary certainly helped us to stay on the correct track. It was
really insightful to work on this topic.

Our gratitude goes out to all our friends as well as family who helped during the difficult times
when we felt like work was hard and ready to give up. They gave us back life, just by motivating
and helping throughout the process.

Page | 3
 LETTER OF TRANSMITTAL

October 30, 2020

To
Dr. Sumayya Begum
Associate Professor
Department of Business Administration in Management Studies
Bangladesh University of Professionals
Subject: Submission of Term Paper.
Respected Ma’am,
It gave me immense pleasure in presenting this term paper, which was assigned me in the
“International Management” course of the BBA in Management program. In this paper, I have
tried my level best to present the organizational structure and global business strategies of
Samsung Electronics.
I consider myself very privileged to prepare this plan under your guidance. This has been an
enormous opportunity for us to learn about this sector. I am extremely thankful to you for your
valuable guidance, tiresome effort, and constant attention whenever required.
I will be pleased to answer any sort of query you think is necessary, as now and when needed. I
would like to draw attention particularly on the matter that there is always a space for
clarification of any relevant topic. I will be available for any sort of discussion.
Thank you.
Sincerely yours,
Sinthya Chakma-18241003
ID: 18241003
Section: A
BBA (Management)-2018
Faculty of Business Studies,
Bangladesh University of Professionals

Page | 4
 TABLE OF CONTENTS

CONTENTS PAGE NUMBERS

Introduction

Organizational Structure

Samsung’s Organizational Structure

Type and its Characteristics

Samsung’s Corporate Structure’s

Advantages & Disadvantages

Findings

Samsung’s Strategy in Global Business

Conclusion

Reference

Introduction
Page | 5
Samsung is one of the leading smartphone companies in the world. Samsung Electronics Co.,
Ltd. is a South Korean multinational electronics company headquartered in the Yeongtong
District of Suwon. Samsung Electronics has assembly plants and sales networks in 74 countries
and employs around 290,000 people. It is majority-owned by foreign investors. It is the world's
largest manufacturer of consumer electronics by revenue. As of 2019, Samsung Electronics is the
world's second largest technology company by revenue, and its market capitalization stood at
US$301.65 billion, the 18th largest in the world . Samsung Group has a leading international
market position in large scale business. It is composed of more than 30 affiliated companies with
various activities. We can describe the group as a big conglomerate. It is acting as supplier,
manufacturer, engineering and also offering various services.
Samsung’s organizational structure has been one of the main reasons behind the massive success
of the company over the years. Samsung has come up with so many strategies which has been
proved to be success for doing global business in this era. Their organizational structure has been
developed in such a manner that it has enabled the management team of the company to
effectively and efficiently manage, govern and control the business activities and processes. The
management of the company has employed different kind of strategies for the different kinds of
market. The structure gives power to the functional heads of the company to effectively organize
and align the processes and employees working with in the function. The organizational structure
has enabled the company’s management team to implement strategies like market development
planning and effective market penetration. It also provides valuable supports to the functionality
of the company.

Page | 6
Organizational Structure
Organizational structure defines the manner in which the roles, power, authority, and
responsibilities are assigned and governed, and depicts how information flows between the
different levels of hierarchy in an organization.
Organizational structure affects organizational action and provides the foundation on which
standard operating procedures and routines rest. It determines which individuals get to
participate in which decision-making processes, and thus to what extent their views shape the
organization's actions. Organizational structure can also be considered as the viewing glass or
perspective through which individuals see their organization and its environment.
Large multinational corporations require an organizational structure that can house the usual
business functions – finance, marketing, R&D, production, etc as well as those functions
required for being successful beyond the domestic market. The most appropriate organizational
structure will be determined by the overall global strategy of the firm, the relative size of
international operations as compared to domestic operations, and the characteristics of the
marketplace in which the firm competes.
An organizational structure is either centralized or decentralized. Traditionally, organizations
have been structured with centralized leadership and a defined chain of command. The military
is an organization famous for its highly centralized structure, with a long and specific hierarchy
of superiors and subordinates. There has been a rise in decentralized organizations, as is the case
with many technology startups. This allows companies to remain fast, agile, and adaptable, with
almost every employee receiving a high level of personal agency.
Some of the common organizational structures are-
Functional Organization Structure
The functional structure is the most common model found in most organizations. Organizations
with such a structure are divided into smaller groups based on specialized functional areas, such
as operations, finance, marketing, Human Resources, IT, etc. The organization’s top
management team consists of several functional heads (such as the VP Operations, VP
Sales/Marketing). Communication generally occurs within each functional department and is
communicated across departments through the department heads.
This structure provides greater operational efficiency as employees are functionally grouped
based on expertise and shared functions performed. It allows increased specialization as each
group of specialists can operate independently. In spite of these benefits there are some issues
that arise with this structure. When different functional areas turn into silos they focus only on
their area of responsibility and do not support other functional departments. Also expertise is
limited to a single functional area allowing limited scope for learning and growth.
Divisional or Multidivisional Structure

Page | 7
The second type is common among large companies with many business units. Called the
divisional or multidivisional structure, a company that uses this method structures its leadership
team based on the products, projects, or subsidiaries they operate.
The advantage of divisional structure is that it uses delegated authority so the performance can
be directly measured with each group. This results in managers performing better and high
employee morale. Another advantage of using divisional structure is that it is more efficient in
coordinating work between different divisions, and there is more flexibility to respond when
there is a change in the market. The disadvantages of the divisional structure is that it can support
unhealthy rivalries among divisions. This type of structure may increase costs by requiring more
qualified managers for each division. Also, there is usually an over-emphasis on divisional more
than organizational goals which results in duplication of resources and efforts like staff services,
facilities, and personnel.
Matrix Organizational Structure
A matrix structure is organized to manage multiple dimensions. It provides for reporting levels
both horizontally as well as vertically and uses cross-functional teams to contribute to functional
expertise. As such employees may belong to a particular functional group but may contribute to a
team that supports another program. This type of structure brings together employees and
managers across departments to work toward accomplishing common organizational objectives.
It leads to efficient information exchange and flow as departments work closely together and
communicate with each other frequently to solve issues.
There are advantages and disadvantages of the matrix structure. Some of the disadvantages
include tendencies towards anarchy, power struggles and 'sinking' to group and division levels.
[13] Matrices increase the complexity of the chain of command, which can present problems
because of the differentiation between functional managers and project managers. This, in turn,
can be confusing for employees to understand who is next in the chain of command. An
additional disadvantage of the matrix structure is higher manager to worker ratio that results in
conflicting loyalties of employees.
Product Organizational Structure
This is another commonly used structure, where organizations are organized by a specific
product type. Each product category is considered a separate unit and falls within the reporting
structure of an executive who oversees everything related to that particular product line. For
example, in a retail business the structure would be grouped according to product lines. It
promotes depth of understanding within a particular product area and also promotes innovation.
It enables clear focus with accountability for program results.
As with every model, this model also has a few downsides like requirement of strong skills
specializing in the particular product. It could lead to functional duplication and potential loss of
control; each product group becomes a heterogeneous unit in itself.

Page | 8
https://www.tutorialspoint.com/management_principles/management_principles_organizational_
structure.html
https://www.investopedia.com/terms/o/organizational-structure.asp#:~:text=An
%20organizational%20structure%20is%20a,between%20levels%20within%20the%20company.

Samsung’s Organizational Structure Type and its Characteristics

Samsung has a product-type divisional organizational structure. This structure type uses product
categorization as the basis for determining which resources and business operations belong to
certain divisions, such as the company’s Device Solutions division. The entire corporate
structure is unified via Samsung’s headquarters, which are located in Seoul. Strategic
management directions from the corporation’s headquarters are implemented through strategic
objectives specific to the structural divisions’ contexts, such as the context of the U.S. market for
consumer electronics. Samsung’s corporate structure has the following main characteristics:
1. Product-type divisions
2. Centralized corporate hierarchy
3. Geographical groupings

Product-Type Divisions
Samsung’s organizational structure’s main characteristic is its product-type divisions. Each
division is a group of resources and operations that represent a product category, such as
resources and operations for the production, distribution, and sale of consumer electronics. The
corporate structure’s emphasis on technological innovation and product development in these
divisions helps in achieving Samsung’s corporate vision and mission statements. The technology
conglomerate may add, merge, or disband divisions, depending on current business needs and the
development of the organization, considering that further business diversification is possible.
The following are the product-type divisions in Samsung organizational structure:

1. Consumer Electronics
2. Device Solutions
3. IT & Mobile Communications

Page | 9
As it is illustrated in figure above, apart from three divisions, Samsung organizational structure
also integrates corporate management office and Samsung Advanced Institute of Technology
(SAIT). Corporate management office deals with overall management of the group and also has
administrative responsibilities. SAIT is Samsung Group’s R&D hub, established as the incubator
for the development of new products and services.
The senior management completed its review of optimal organizational structure on April 2017
and decided not to convert to a holding company structure. Following a series of recent scandals
involving Samsung management that culminated in Jay Y. Lee, the former de facto head of the
Samsung conglomerate being jailed for 5 years, it can be argued that Samsung organizational
structure will change in the foreseeable future. Specifically, Samsung organizational structure
may change to make governance and decision making practices more transparent to eliminate or
at least to reduce the cases of future scandals.

Centralized Corporate Hierarchy

Samsung’s corporate structure involves a hierarchical model, despite its product-type divisions.
The corporate headquarters are the most notable manifestation of this hierarchy, which is part of

Page | 10
an organizational design for ensuring that the conglomerate’s operations are unified and
effectively directed towards growth and operational effectiveness. This characteristic of the
organizational structure involves centralization of overall strategic planning, as well as vertical
lines of command and authority that relay strategic directions from the headquarters to the daily
operations in the Consumer Electronics, Device Solutions, and IT & Mobile Communications
divisions.
Geographical Groupings
Samsung uses geographical groupings or divisions as a minor characteristic of its corporate
structure. In the company’s organizational chart, these geographical divisions are generally under
the product-type divisions. For example, Samsung Electronics North America is a geographical
division within Samsung Electronics, which is a product-type division. Through this
characteristic of the organizational structure, the company implements region-specific strategies,
such as strategies intended for the North American market for Device Solutions.
http://panmore.com/samsung-corporate-organizational-structure-characteristics-analysis

Samsung’s Corporate Structure’s Advantages & Disadvantages

Advantages
Samsung’s corporate structure has the advantage of extensive support for product development,
especially in terms of technology and innovation. This support comes through the structural
framework of the conglomerate’s product-type divisions.
Another advantage of this organizational structure is the company’s ability to fine-tune its
strategies and operations based on market characteristics. This is possible through the
geographical groupings or divisions within the product-type divisions, such as IT & Mobile
Communications. These structural advantages couple with the strengths shown in the SWOT
analysis of Samsung to buttress the business against fierce competition. In this way, the
organizational structure supports the company’s competitive advantage, especially against major
competitors like Apple Inc.

Disadvantages
Samsung’s organizational structure has the disadvantage of limited autonomy of the product-
based divisions. For example, because of the centralized hierarchy, the product-based divisions
need to follow strategic directives from the company’s headquarters in Seoul. Nonetheless, this
structural hierarchy is necessary to keep Samsung’s entire organization unified toward its
mission and vision involving superior technology and technological products. In relation, the
corporate structure presents challenges in expanding the business in regional markets,

Page | 11
considering the low priority given to the geographical groupings. Nonetheless, Samsung’s
corporate culture helps in minimizing the negative effects of these structural disadvantages. Also,
its current global success means that the technology company effectively uses the advantages of
its corporate structure in spite of the disadvantages.

Findings
Structural Changes Made in India

1. Samsung to make a paradigm shift by becoming a soft driven company and established
a ‘Software Center’ in order to increase their software capacity until its on a par with
their world renowned manufacturing.
2. Changes in the Device Solutions (DS) division also took place including expansion of
the organizations in charge of software, controller and solution development to ensure
separate teams for each.
3. It also expanded the organization in charge of bio and medical device business and
expanded the Bio Lab at Samsung Technology Research Center into the Bio Research
Center. They also hired bio material experts to strengthen their research in this area and
increased support for biosimilar and bio medical research.

Samsung’s Strategy in Global Business

The Samsung products were sold in million unit everyday around the world to customers. With a
worldwide customer base, Samsung does not subscribe to a one size fits all philosophy. In
addition, its employees pride themselves on finding inspiration from observing people’s lives
and giving them options that meet their varying cultural and regional needs.
At IFA 2013, Europe’s largest consumer electronics show, Samsung outlined its strategy in
becoming the number one home appliance brand by 2015, highlighting its year-on-year 14%
growth in digital appliances (“Samsung Designs Globally and Adapts Locally for Worldwide
Success,” 2013). The key of success is the research that the company know how the customers
approach and use new technology. So, Samsung has created and sell the app (Lowell & Bharat,
2012) that fit those needs.
Samsung plays an active role in each region in which it operates and understands that cultures
can be subtly different (“Samsung Designs Globally and Adapts Locally for Worldwide
Success,” 2013). Samsung believes that understanding and meeting local needs is the principal to
create the best possible experience. Therefore, Samsung creates product based on local need and
taste.

Page | 12
Samsung had setup five Lifestyle Research Labs in Delhi, London, San Jose, Beijing and
Singapore. The Labs forecast future ways of living and describes innovation designs. These labs
also define products behavior to predict consumer’s future needs and values including how
family evolves to working environment, education and cultural trends.
Five Product Innovation Teams research had been setup from the labs which support Samsung’s
product division to create innovative and solution concepts. They produce product concepts 18-
24 month ahead of present market. The process started with two until four month’s period by
conducting research in term of consumer views. From that, researcher gathers the finding and
gives to team designer division to build and refine ideas innovatively. The other unit formulates a
business strategy and creates the concepts of the products.
Complementing these two divisions are six Design Centres in San Francisco, London, Delhi,
Tokyo, Shanghai and Seoul, working to bring the research and concepts to life with award
winning design excellence. This undertaking is part of Samsung’s extensive research and
development commitment that saw a $10.8 billion investment in 2012 and encompasses over
60,000 employees (“Samsung Designs Globally and Adapts Locally for Worldwide
Success,”2013).
Finally, throughout the whole world, Samsung localizes its products to suit specific market needs
and desires. The following are a few examples of market and its local products. In United States
– French Door Refrigerator with Sparkling Water Dispenser. By observing the increasing
demand for sparkling water in the United States, Samsung introduced a refrigerator that
dispenses carbonated water at the touch of a button. In Bulgaria – Samsung create Smart
OvenMC32F. On the other hand, yogurt is an important part of the local diet so Samsung
developed an oven able to produce the perfect homemade yogurt in seconds.
While in Africa, firstly, Samsung produce Safe Surge TV – To protect against the region’s
frequent power surges and outages, Samsung created LED TVs with increased pressure resistant
capacity. Secondly, Free Satellite TV – Satellite tuners were installed directly into TVs to enable
viewers to watch free TV services in isolated regions with no cable access. Thirdly, Dura cool
Refrigerators – These specially insulated refrigerators keep food fresh for eight hours in the
event of a power cut.
In Turkey, Samsung produced Top Mounted Refrigerator RT55. The local taste for fresh
vegetables led Samsung to reduce the size of freezer compartments by 21% and made the fridges
narrower to fit the space better available in Turkish homes. Meanwhile in Middle East –
Samsung produce DVM Desert which to handle the region’s scorching 40°C+ temperatures,
Samsung built air-conditioners with specially-developed compressors.
In India, Samsung produce Twin Top Washing Machine. This a range of washing machines have
been fitted with wheels to ensure they can be easily moved and connected to alternate power or

Page | 13
water sources in the event of outages. They are also fitted with a special basin to meet the custom
for hand-washing certain clothes before the full wash-cycle.
In China market, Samsung produce Fu Yun Monitor, Ji Xiang Fa TV F4280, Ru Yi Hong TV
F5080. This color red and the number 8 are considered lucky, so Samsung’s Chinese product line
includes PC monitors with red back-covers and LED TVs fitted with 8-shaped stands. While in
Korea, Samsung produce Kimchi Refrigerator M9000. Koreans have kimchi, a fermented
vegetable delicacy, with almost every meal, so Samsung developed a bespoke refrigerator that
keeps the air-flow and temperature just right for the perfect kimchi.

Conclusion
Reference

Page | 14