Samsung Electronics Case Study

Samsung Electronics Company

In 2003, Samsung ranked at number 25 in Business Week’s annual ranking of the worlds most valuable brands. They also had a valuation of $10.8 billion. In 2000 when Eric Kim, executive vice president of global marketing operations at Samsung Electronics Company (SEC), became the head of marketing they did not make the list. Not only did they not make the list, but they were also in financial trouble. In 1997 after the Asian financial crisis, SEC sales were $16 billion with negative profits and a debt of $15 billion. In 2002, the debt was reduced to $4.6 billion and they produced $44.6 billion in sales with a profit of $5.9 billion. This corporate turnaround was led by SEC Chairman Kun Hee Lee in 1993 after he launched “new management initiative”. Lee demanded that Samsung rethink their key fundamentals in order to improve the company by investing in innovation, premium products and brand value.

The main ingredients in SEC’s corporate turnaround strategy were vertical integration, hardware focus, product breadth, digital product innovation, and digital convergence. Among those strategies, the most important were product breadth and digital product innovation. In the 1970’s and 1980’s Samsung was known as a low-cost manufacturer and “cheap OEM”. That all changed when Yun Jong Yong, vice chairman, refocused the company to spend more time and money on the innovation of higher-quality products. This change pushed Samsung in the right direction. In 2003, the company was associated with the latest products such as LCD televisions, and video cell phones. Also, they were now ranked in the top three of brands by market share. The next important strategy came in the late 1990’s when Samsung made the change from analog to digital technology. This change stemmed the continuous flow of new products from the 17,000 scientist’s, engineers, and designers who worked in Samsung’s R&D centers. They were now able to compete with their rivals, and produce top quality products from start to finish in five months (twice as fast as its Japanese rivals).

Samsung not only needed to transform their products, they also needed to communicate their premium brand to consumers. This meant that an increased emphasis was placed on marketing meaning that Eric Kim needed to put together a team of marketers who would be able to make the Samsung competitive not only regionally, but also