Workforce 2020 Executive Report

Samsung Electronics

Latrice Jones

Argosy University

2/26/2014

Samsung Electronics

Samsung Electronics is a multinational company that enjoys a commanding position in the global consumer electronics industry. This company has its headquarters in the city of Suwon, South Korea. One of the major products that Samsung produces is Smartphone. Other notable products include televisions, refrigerators, lasers, cameras as well as computer hardware and software (Michell, 2010). The company overtook Nokia in 2012 to become the world’s biggest mobile phone manufacturer. Nevertheless, it faces stiff competition from other industry players including Siemens, Sony, Apple Inc., Motorola and Nokia. In 2012, Samsung registered a net profit of $4.5 billion (McShane & Glinow, 2013).

Employee motivation plays a central role in the success of any company. Samsung motivates its employees through various ways. First, it has set up a competitive employee reward program that acknowledges the input from all employees and rewards them accordingly (Michell, 2010). The major components of its pay for performance reward structure include realistic commission plans, merit pays, bonuses and profit sharing for its best performing employees. The incentive programs have helped to improve employee morale and satisfaction, which have subsequently led to better performance (Michell, 2010).

In addition, Samsung caters for the employee’s health, education, mortgage and post-retirement benefits. It offers these benefits through the national pension scheme, industrial accident insurance, employment insurance and comprehensive health insurance (McShane & Glinow, 2013). The company also gives employees paid leave to as a way of motivating them. This ultimately increases their job engagement, satisfaction and productivity. The strategies employed by Samsung to motivate its employees have been very successful in improving their morale, which has led to dramatic increases in profit margins and sales profits for Samsung products (Michell, 2010).

Samsung’s workforce has continued to increase over the past decade. The main reason for this has been the surge in demand for its products, most notably the Galaxy S Smartphone series (Obstfeld & Mason, 2012). During the same period, the company has also laid strong emphasis on market diversification and has managed to open up new subsidiaries in the emerging markets. The new ventures need the services of skilled workers, which have led to an increase in the number of employees at the firm. As of 2013, the company boasted of over 570 offices in 79 countries that employed over 369,000 employees globally (McShane & Glinow, 2013).

Even though Samsung Electronics continues to register growth in net sales and employee relations, it needs to address various issues in order to become more competitive. Recently, the company has faced allegations of environmental degradation in its operation sites especially those located in less developed countries (Michell, 2010). This goes contrary to its corporate social responsibility and can have a devastating effect the company’s image. To address this problem, the company should use environmentally sustainable practices in all its operational and production process.

Furthermore, Samsung has faced some criticism on its treatment of employees. Industry observers have pointed out that the company’s suppliers have repeatedly engaged in unfair labor practices and mistreated of workers in foreign subsidiaries. For example, McShane & Glinow (2013) note that Samsung’s HEG subsidiary in China hired many underage workers and subjected the employees to deplorable working conditions such as long shifts. Such issues have a negative effect on employee’s motivation and performance. Samsung needs to make periodic monitoring and appraisals of all its suppliers to ensure that they adhere to business best practice in their operations (Michell, 2010). This will aid to ensure that all its subsidiaries operate with integrity as stipulated in the company’s global code of conduct.

A company that can serve as a benchmark for Samsung to emulate is Apple Inc. Although it too had some issues with its external supplier (Foxconn) in China, it nevertheless managed to address the issue and currently encourages business best practice in all its spheres of operation. The company treats its employees with utmost dignity and observes environmental sustainable process in all its areas of operation. Apple Inc has been a major advocate of the ‘going green’ campaign and Samsung should strive to follow a similar direction to be more successful (Michell, 2010).

Overall, various industry trends are affecting Samsung and other players in the electronics sector. The trends range from political, technological, economic, social and cultural. The increasing cost of raw materials such as tin and other rare earth is having a devastating effect on the electronics industry (Michell, 2010). This leads to an increase in production costs and subsequently an increase in the product prices, which can lead to decreased sales. The shift in consumer preferences and tastes over the recent past is also an industry trend that impacts Samsung’s performance. It can affect brand image and lead to declining sales in products such as Galaxy Smart phones.

The need to keep up with emergent technologies is yet another trend that is affecting the electronic industry and Samsung in particular. This calls upon the company to invest heavily in research and development initiatives in addition to providing extensive training to employees to improve their skills and competencies (Michell, 2010). In the end, this can prove to be costly for the firm. Furthermore, the global economic downturn has manifested a negative implication of firms operating in the electronics industry. This is because it has led to the decline in consumer’s spending and purchasing powers, thereby reducing sales volumes across the globe (McShane & Glinow, 2013). Even though the electronics industry is growing worldwide, companies such as Samsung need to take decisive measures such as production of quality products, continuous improvement and strong employee relations in order to stay competitive.

References

McShane, S. L., & Glinow, M. A. (2013). Organizational behavior: emerging knowledge, global reality (6 ed.). New York: McGraw-Hill Irwin.

Michell, T. (2010). Samsung Electronics and the struggle for leadership of the electronics industry. Hoboken, NJ: Wiley.

Obstfeld, M., & Mason, A. (2012). Global economic crisis : impacts, transmission and recovery. Cheltenham ; Northampton, MA : Edward Elgar.