I/ Samsung's Business Strategy

The framework consists of four strategies, but for Samsung, the company primarily uses
two: the "global strategy" and the "transnational strategy."
1/ Global Strategy
The global strategy means that the company faces high pressure for global efficiency
(pressure to reduce costs) and low pressure for local responsiveness and flexibility.
 Reasons for Samsung’s Global Strategy:
- Cost Optimization and Economic Efficiency: The global strategy allows Samsung to
standardize products on a large scale, reducing production costs by leveraging (tận dụng)
mass production.
- Maintaining Uniform Quality: Standardizing product lines, such as the Galaxy series,
ensures that Samsung’s products maintain consistent quality worldwide, regardless of
location (bất kể vị trí nào). This strengthens global customer trust and creates strong
brand recognition.
- Global Brand Development: By adopting this strategy, Samsung builds a unified and
consistent brand image globally (hình ảnh thương hiệu thống nhất và nhất quán trên toàn
cầu).
 Application of the Strategy:
Samsung, a multinational corporation with subsidiaries in most countries, focuses on
economic efficiency through business diversification and product standardization to reduce
production costs and maintain uniform global quality.
This strategy is reflected in the Galaxy series phones, with standardized features and
specifications worldwide. The Galaxy S and Galaxy Note series are considered the anchor for
Samsung's other product lines. Additionally, Samsung, as one of the largest smartphone
manufacturers, often highlights feature-rich products in competitive advertising. Even if
consumers aren't familiar with all of Samsung's product lines, they trust that its premium
products will have all the advertised features, which is a key strength of its global strategy.
2/ Transnational Strategy
The transnational strategy becomes relevant when a company faces high pressure to
reduce costs and high pressure for local responsiveness. A company following this strategy must
aim to achieve two goals simultaneously: cost reduction and local responsiveness.
 Reasons for Adopting This Strategy:
- High Pressure to Reduce Costs: Samsung’s competitors, like Apple, Sony, and LG,
have all implemented cost-cutting strategies. Sony uses robots in its production lines,
reducing costs by 70% at its Malaysia plant in 2023 compared to 2018. Apple shifted
from Taiwanese to Chinese suppliers to cut costs. Samsung, like other electronics
companies, also faces high pressure to cut costs due to the nature of currency, which is
hard to hold, save, and always scarce.
 - High Pressure for Localization: Samsung has witnessed the consequences of not
adapting its products to local markets, which allows competitors to capture market share,
a lesson learned from Nokia’s downfall. Therefore, Samsung must also evolve.
- Application of the Strategy:
(With such high pressure to reduce costs, what has Samsung done to gain a low-cost
advantage to compete in the market?) Samsung has made significant investments in Vietnam,
establishing a high-tech production complex in favorable locations like Bac Ninh and Thai
Nguyen. This has drastically reduced Samsung’s production costs due to the Vietnamese
government’s incentives, such as infrastructure, cheap labor, and tax breaks for high-tech
projects.
To ensure local responsiveness, Samsung has created the Life Research Lab, a core
department of its product innovation team. They continuously research how consumers interact
with technology today, understanding preferences, infrastructure, and income differences in
various regions. For instance, research showed that Southeast Asian consumers wanted to add
clothes to the washing machine after it started, leading to the development of the AddWash
washing machine, with a small door on the main door allowing users to add clothes mid-cycle.
3/ Corporate-Level Strategy
Corporate strategy attempts to define the domain of businesses in which the firm intends to
operate. These decisions involve identifying the company’s scope of activities, including
whether to invest in new industries or keep expanding in its core areas. At the corporate level,
Samsung follows an unrelated diversification strategy, which involves investing in industries
with good profit prospects rather than expanding activities within the company's current value
chain.
 Advantages: It helps the company avoid the risk of relying too much on one specific
industry because when one sector faces difficulties, others can compensate, and it helps
diversify the investment portfolio.
 Disadvantages: It creates various costs, such as management, administrative expenses at
headquarters, coordination and decision-making between headquarters and member units,
and scattered resources.
II/ Organizational Structure
There are five factors influence organizational design: national culture, size,
environment, technology, and strategy. Size and strategy are the most influential factors. With an
unrelated diversification strategy, Samsung has designed its organizational structure based on
global product design.
a/ Global product design
This is the most common form and is suitable when a company has multiple product lines
or operates in different markets, as it doesn't require close coordination between product lines.
For unrelated products, this is called H-form design, representing "holding," meaning companies
operate independently with little interdependence. Samsung Group uses the H-form global
product design.
Chaebols are organized into four main sectors: electronics, chemicals, financial services,
and a group of smaller businesses. Each sector operates independently from the others. Similarly,
the group includes unrelated businesses like food services, small hotel chains, amusement parks,
a professional baseball team, and a group of hospitals and medical centers.
b) Advantages and Disadvantages:
 Advantages:
- Specialization: Each product group focuses on a specific product or product group (e.g.,
smartphones, TVs, home appliances), allowing managers to gain in-depth knowledge and
compete more effectively globally.
- Increased Production Efficiency: Managers can produce where costs are lowest and
easily adjust production between plants based on global demand and costs. Recently, in
2024, Samsung continued optimizing production by allocating factories in low-labor-cost
countries like Vietnam and India. Vietnam currently houses Samsung’s largest phone
production hub, helping the company reduce costs and flexibly adjust production to meet
global market demand. When demand surges in regions like India, Samsung can quickly
increase output at local factories, ensuring production efficiency and cost management.
- Quick Response to Technological Changes: Thanks to deep product knowledge,
Samsung’s managers can integrate new technology quickly and flexibly. This allows
Samsung to stay ahead of technological trends and maintain a leading position in the
industry.
- Effective Global Marketing: Each product line can develop its marketing plan, allowing
Samsung to flexibly introduce, promote, and distribute products globally.
- Global Mindset Development: Global product design helps Samsung foster a
"geocentric" mindset, where the company views international markets holistically. This
enhances international skills and global collaboration.
 Disadvantages:
- Costly Duplication: Each product group must build its own functional departments, such
as marketing, finance, information management, and even manufacturing, distribution,
and R&D facilities, leading to wasted resources, especially when multiple groups work
independently without sharing resources.
- Coordination and Knowledge Sharing Challenges: Coordination and sharing
knowledge between product groups becomes difficult, which can reduce efficiency if
coordination is essential to the company’s international strategy.
c/ Conclusion
Samsung's international organizational design is clearly demonstrated through its
diversification strategy and flexibility in managing products and global markets. The company
has adopted a Global Product Design model, which helps optimize production, distribution, and
marketing processes while taking advantage of market differences and local demand.