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Lee Kun-hee saw firsthand how poorly Samsung's electronics were perceived overseas in 1993. In response, he destroyed 150,000 phones in front of employees to signal the need for strategic change. Under his leadership, Samsung increased R&D and marketing spending, overhauled its culture to value merit over seniority, and hired Western managers. It also focused on premium products like flat-screen TVs and smartphones. These strategic decisions helped Samsung transform its image and become a global leader in consumer electronics.

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Krystier Jade Sanaco
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100 views1 page

02 Activity 1

Lee Kun-hee saw firsthand how poorly Samsung's electronics were perceived overseas in 1993. In response, he destroyed 150,000 phones in front of employees to signal the need for strategic change. Under his leadership, Samsung increased R&D and marketing spending, overhauled its culture to value merit over seniority, and hired Western managers. It also focused on premium products like flat-screen TVs and smartphones. These strategic decisions helped Samsung transform its image and become a global leader in consumer electronics.

Uploaded by

Krystier Jade Sanaco
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BM2212

Names Section Date

ACTIVITY
Samsung
Samsung is one of the biggest conglomerates globally and the largest “chaebol” or family-owned
business in South Korea. Established in 1938 by Lee Byung-chul as a trading company selling noodles and
dried seafood, Samsung has diversified into various industries, including electronics, chemicals,
shipbuilding, financial services, and construction. As a result, Samsung is widely diversified, with over 80
standalone subsidiaries. The conglomerate accounts for a fifth of all South Korean exports.
In 1987, Lee Kun-hee, the founder's youngest son, took over as the chairman of the conglomerate. His
strategic intent was to make Samsung a world leader in high-tech industries such as consumer
electronics. To execute his strategy, Lee Kun-hee focused first on gaining market share by invading
markets from the bottom up with lower-priced products at an acceptable value. Over time, quality and
consumer perception became more important. Samsung’s image, however, was overshadowed by Sony
and Motorola, the undisputed world leaders in consumer electronics and mobile phones during this
time. During a 1993 trip, Lee Kun-hee saw firsthand how poorly Samsung’s electronics were perceived in
the United States and Europe and vowed to change that. Back in Korea, to show his disappointment and
determination, he destroyed 150,000 brand-new Samsung cell phones in a large bonfire in front of all
2,000 employees of Samsung’s Gami factory. Employees credit this as pivotal in redefining Samsung
Electronics’ strategic focus and initiating a successful turnaround.
Samsung Electronics increased spending significantly on Research and Development (R&D) and
marketing and design. Meanwhile, Lee Kun-hee was undertaking a complete overhaul of the
conglomerate’s structure to change Samsung’s weak culture to a culture that deeply values seniority; he
introduced merit- based pay and promotion. Lee Kun-hee, who holds an MBA from George Washington
University, hired Western managers and designers into leading positions and sent homegrown talent to
learn best business practices from other firms wherever they could be found. Lee Kun-hee also set up
the Global Strategic Group to assist non-Korean MBAs and PhDs with a smooth transition into positions
in a largely homogenous cadre of Korean executives. In addition, he moved Samsung to the high-end
market, offering premium consumer electronics such as flat-screen TVs, appliances, semiconductors, and
mobile devices such as its famous Galaxy line of smartphones.

Answer the following questions: (3 items x 10 points)


1. What is/are the triggering event/s that act/s as stimulus/stimuli for strategic change in the given
case?
2. Which characteristic/s of strategic decisions is/are described in the case study?
3. How will Samsung maintain its successful market position by using one of the modes in strategic
decision-making?

Rubric for grading:


CRITERIA PERFORMANCE INDICATORS POINTS
Content Provided pieces of evidence, supporting details, and
8
factual scenarios
Organization Expressed the points in a clear and logical
2
of ideas arrangement of ideas in the paragraph
TOTAL 10
Reference:
Rothaermel, F. (2017). Strategic management (3rd ed.). New York, NY: McGraw-Hill Education.

02 Activity 1 *Property of STI


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