A Case Study of Samsung Company

Cross-Cultural Management in Global Business: A Case Study of Samsung Company

1.0 Introduction:

Samsung Corporation was established in the year 1938 in a place called Su-dong close to Daegu City, in Korea as a small trading company. It was established by Lee Byung-Chul, and during the time, the company had employed only 40 workers. Samsung, at the time, mainly focused on the production and distribution of groceries within Daegu City. By the year 1947, Lee had established another branch in Seoul City. Later, the company ventured into sugar production and emerged successfully within a short period of time. The founder, Lee, was very ambitious, and by the year 1954, he established the biggest woolen mill in Korea (Omer, 2019, p. 58). He did not stop there, and Lee also ventured into other sectors such as insurance sector, retail as well as securities. In the year 1960s, Samsung Group ventured into the electronics industry and released its first electronic product that was a black and white television set. Samsung Group started establishing its brand as the largest electronic company globally. Lee stated the blueprint for the company as well as what they had to do to grow the company. Samsung Group began reevaluating their culture to enhance its sustainability and success in the global business environment (Iblasi, Bader and Al-Qreini, 2016, p. 15). Presently, Samsung Group is the world’s largest supplier of smartphones, television sets, memory chips, among other products.

The constant and rapid changes in technological advancements, as well as the globalization of world trade, facilitated the company to extend its business operations worldwide, going beyond the domestic borders. With time, the company deemed its worldwide businesses as rewarding and attractive. However, the management of the worldwide operations appeared challenging and more complex because of the influence of factors like cross-cultural diversity, political situations, communication, and legal frameworks that need to be addressed from both domestic and global perspectives (Odine, 2018, p. 55). Cross-cultural diversity in the company is among the most crucial factors that may result in either a negative or positive effect on global business operations.

2.0 Literature Review-& Critical Analysis:

2.1 Nature of Culture and Diversity

Culture involves the manner in which individuals reason, speak, view things as well as how they behave. Culture is utilized to explain the behaviors that represent the overall working norms in a specific environment. In the business context, culture can be defined as the unique set of expectations regarding how businesses ought to be operated. The global business management cannot be separated from the models of cultural behaviors in which the company culture is represented through shared norms, as well as the values (Nguyen, Pham, and Ermasova, 2019, p. 870). Organizational culture comprises of several significant features including organizational climate, norms, observed behaviors, dominant values, as well as the company rules.

Diversity can be defined as any combination of things or people characterized by variances and similarities as well as consists of the collective, mixture of individual differences and similarities (Kathirvel and Febiula, 2017, p. 307). Diversity may also be explained to imply the differences among people on any characteristic that could result in the viewpoint that another individual is different oneself. Since it is crucial for managers to understand cultural diversity in a company context, there are two dimensions that allow managers to perceive cultural diversity: The primary dimensions and the secondary dimensions. The primary dimensions are usually more visible as well as differentiate a group of persons from other groups and influence personal traits like age, race, gender, and physical features. On the other hand, secondary dimensions are not much visible. However, they have more influence on traits like religion, education level, language, experience, geographical location, social class, among others. Secondary dimensions usually affect self-esteem and self-definition (Islam, 2017, p. 2167).

2.2 Cultural Dimensions in an Organization

The diversity of workers and managers can be explained based on four key-dimensions, which are referred to as the Dimensional approach to cross-cultural comparisons. The four include Power distance, masculinity vs. femininity, individualism vs. collectivism, as well as uncertainty avoidance. The power distance dimension of cultural diversity states that workers who possess minimal power influence in their work area have to agree to the inequality of power distribution. As such, in some parts with high rates of power distances (such as Russia, Argentina, or France), those workers who are highly ranked enjoy certain powers that they cannot be challenged by their counterparts who enjoy low powers. Similarly, in some parts with low rates of power distances (like Australia, USA, or the Netherlands), the persons are shown respect and recognized for their contribution (Padhi, 2016, p. 22). Another dimension, uncertainty avoidance, involves workers’ attempt to keep themselves away from future ambiguities by adhering to regulations and formal practices, work-associated norms, etc. Therefore, in parts whereby the need for avoiding future ambiguity appears to increase significantly (like in Germany, Sweden, or China), it is highly seen that workers try to avoid confrontations with uncertain events that are likely to influence the stability of their workplaces. The dimension of individualism versus collectivism involves the extent to which workers are taking care of themselves or staying together as part of their organizational groups. For instance, comparison of cross-culturalism for individualism among Russian, India, China, as well as Brazil indicates that in India, individualistic conducts are more as compared to those in Russia, Brazil, and China cultures whereas Chinese behaviors depicts more collectivism as compared to India, Russia and Brazil cultures (Bird and Mendenhall, 2016, p. 115). Cultures with high levels of individualism lead to more time taken towards direct communication, whereas cultures with high levels of collectivism lead to more time taken on indirect tasks that are not related to communication. The fourth cultural dimension is masculinity vs. femininity, which involves how emotional roles in the community are distributed according to gender. In this regard, the male accomplishment reinforces masculine, whereas the female care reinforces feminine nurturing (Odine, 2018, p. 54).

2.3 Nature of Culture in Global Business

In the contemporary business environment, the capability to communicate properly can be difficult within an international business environment. Even though when two individuals speak in the same language, could still be differences or misunderstandings as a result of their ethical or cultural variances. There are studies that demonstrate how poor communication can result in low performance of the company (Odine, 2018, p. 54). Therefore, it is paramount for the company to identify the effect of globalization on cross-cultural communication, and it is significant for companies wanting to develop a competitive edge in the international market. The economic issues encountered presently depicts the need for companies to create the internal communication capability required to manage and mitigate external risks. Individuals have become connected more internationally, and there is an increase in their capability to share or communicate across the cultural borders. Company manager needs to know how to communicate in an effective way with their workers as well as their clients who are from a different cultural background so as to accomplish the company’s objectives and gain value for the shareholders (Nguyen, Pham, and Ermasova, 2019, p. 860).

Companies that participate in international business activities indicate that the relationship between workers and their managers is paramount. A study carried out found that those who took part in the study and who did not consider nationality as significant showed low perceptions of similarity with the supervisors, minimal intentions to relate as well as minimal perceptions of the efficiency of the management. Th findings of the study clearly show that teaching individuals of various cultural backgrounds to behave similarly was an ineffective way of enhancing cross-cultural diversity in culture to develop innovativeness (Iblasi, Bader and Al-Qreini, 2016, p. 28). The teaching of persons participating in cross-cultural relationships ought to involve more than just the promotion of cultural adaptation.

Proper and successful communication for global business is paramount in assisting to explain if or not their product or service varies from those of the competitors. For a company that is effective in the communication process, cross-culture could have benefits, and they might avoid taking a lot of time as well as their resources in addressing communication challenges, whether internally or externally (Kathirvel and Febiula, 2017, p. 307). As a person, communication is paramount in expressing opinions to other people. Lack of proper and effective communication channels could result in problems and conflicts, thus preventing the company’s objectives from being realized.

2.4 Managing Cross-Culture in Samsung

Samsung Group held an event that is referred to as “Startup Samsung” at Suwon with all its employees as well as its managers to find ways of getting rid of its hierarchical business practices. Samsung was able to reevaluate its decade-long rigid organizational culture alongside its evolving leadership in order to cope with changes in the global market. The company minimized its internal rankings from seven to just four to eliminate the senior-based assessment system, that is, the seniority-based performance system (Nguyen, Pham, and Ermasova, 2019, p. 860). Through that, the company allowed its workers to refer to one another by their English names as a way of improving their communication.

Unessential meetings were minimized, and internal dialogues, together with online virtual meetings, encouraged. That is how the company perceived that policies could be implemented quickly. Samsung limited its internal meetings to just an hour, whereby each employee was encouraged to contribute on any issue during the meetings. The management was obligated to hear and respect any ideas that are raised during any meeting (Iblasi, Bader, and Al-Qreini, 2016, p. 28). Such changes in Samsung Group’s new business model enhanced the shareholder concern as well as its organizational sustainability. This new model was based on quicker implementation, creativity as well as innovativeness. Thus, the model as well led to competitive pricing, timely delivery as well as commitment.

The globalization era, as well as the increase in the presence of cheap Chinese electronic products, resulted in Samsung losing its manufacturing capability and its status as the largest electronic company globally. This led the company to plan on how to reevaluate and rebuild its culture. Therefore, Samsung Group was forced to take drastic measures to enhance the efficiency of its management by selling the non-core assets as well as through restructuring its business units that had overlapping functions (Kathirvel and Febiula, 2017, p. 307). In the new business model, Samsung has developed new guidelines on how to evaluate a worker’s performance. Workers who are found to be competitive as well as do not have disciplinary cases would be given promotions regardless of their ranking in the company. Samsung’s restructuring made the company’s executives to feel inferior as well as perceive that they are not as much as their counterparts from other companies.

3.0 Discussion and analysis

In the year 2013, Samsung Group developed and launched its strategy of becoming the top company that manufactures home appliances by the year 2015, indicating its projected year-on-year 14% growth in electronic appliances (Nguyen, Pham, and Ermasova, 2019, p. 860). The company highlighted key cross-cultural measures and strategies that would propel it into achieving these objectives. Samsung Group also plays a major role in those parts of the world where it operates and recognizes the fact that cultures can vary from one region to the other, and therefore, the company designs globally but adapts locally as a strategy for its international business success. The primary success of the company lies in its capability to research on how its consumers perceive as well as utilize its new technology. Therefore, Samsung has developed and sold products that match the customers’ needs. For instance, Samsung Group has established five Lifestyle Research Labs across various regions such as in Singapore, San Jose, Delhi, Beijing, as well as in London. These Research Labs predict future cultural behaviors and ways of living as well as indicates possible innovative designs for its products. The research centers as well describe products behavior to establish consumer’s wants and values such as the manner in which family changes to the working environment, cultural trends as well as education (Iblasi, Bader and Al-Qreini, 2016, p. 28). Furthermore, across the world, Samsung Group localizes its products to match the needs of its target market in those areas. Some of the markets and their local products that suit the needs of customers from those regions include: In the United States of America, the French Door Refrigerator that comes with a sparkling type of water dispenser. Through identifying the rising need for sparkling water throughout the United States of America, Samsung Group was able to design, develop and manufacture a refrigerator that dispenses carbonated water, thereby matching the product with the customer needs and cultural beliefs. In Africa, Samsung Group was able to develop and manufacture a SafeSurge television set that was aimed at addressing the needs of customers from the region owing to the frequent power surges that are experienced in Africa.

In Turkey, Samsung Group manufactured Top Mounted Refrigerator RT55. The locals in Turkey prefer the fresh taste of their vegetables. Therefore, as a way of addressing this particular cultural aspect for the people in Turkey, the company designed a much smaller freezer with compartments that were 21% smaller as well as designed the fridges to be narrower so as to fit be installed much easily in Turkish homes. While in India, Samsung Group manufactured a Twin Top Washing Machine that was made of wheels that would allow them to be transported easily as well as to be connected to alternative power or water source in case the usual sources were unavailable (Iblasi, Bader and Al-Qreini, 2016, p. 28). All these examples are a clear indication of Samsung Group’s prowess in the international or global business environment and its in-depth understanding of how to implement cross-cultural management successfully throughout the different parts of the world. Samsung Group has succeeded in cross-cultural management because of these highly innovative and creative ways of addressing specific customer needs while taking into consideration their cultural background.

4.0 Conclusions & Recommendations:

There are several indications that Samsung is an excellent and successful company throughout the world and in international business. For instance, as indicated by The Forbes magazine (May 2016), Samsung Group was ranked among the top 20 largest public companies, appearing at number 18, and at the time, it was valued at USD 161.6 billion. In addition to that, Samsung Group was ranked number 11 among the world’s most valuable brands. Also, The Fortune 500 (2016), ranked Samsung Group number 13 as per the revenues generated by top companies across the world (Nguyen, Pham, and Ermasova, 2019, p. 860).

Samsung Group has been encountering several problems while operating and carrying out its activities in the international business market. As an international business leader, Samsung Group has been able to operate in over 61 nations globally successfully. Samsung, as a sustainable company, has been able to manage cross-cultural challenges effectively it encounters through putting in place relevant measures and policies. For Samsung, the cross-cultural challenges its faces are converted into business opportunities through innovative and creative designing of products that are able to satisfy various needs of different people from different regions of the world. Samsung Group also understands and appreciated the fact the cultural background of its customers from Africa, for instance, is different from customers from the Netherlands. Therefore, the company finds solutions to cross-cultural challenges according to the needs of the customers from a particular region.

Samsung Group has also succeeded in managing cross-cultural diversities in communication through developing appropriate communication platforms whereby each employee is allowed time and accorded the respect for the opinions or ideas they bring forth to the management of the company. This allows individuals to seek clarification from others and enhances the company culture in addition to minimizing conflicts in cross-cultural challenges or problems.

In conclusion, Samsung’s capability to attracting, retaining, as well as motivating individuals from diverse cultural backgrounds could result in result to the company gaining a competitive edge in the global business market. Additionally, leveraging on the possible advantages of cultural diversity among the workforce could lead to a competitive advantage when it comes to creativity, innovativeness, flexibility to adapt to change, as well as problem-solving in the highly competitive and cross-cultural international business environment. Cross-cultural workgroups are becoming essential; therefore, to accomplish company objectives and mitigate possible risks, the management ought to be culturally sensitive as well as encourage creativity and innovation through flexible management practices.

4.1 Recommendations for Cross-Cultural Management

The following recommendations can help Samsung Group and other companies to improve their cross-cultural management practices:

Developing cross-cultural skills through training. Companies should recognize that working productively with co-workers who come from different cultural backgrounds needs the company to invest in the professional development of its workforce. Every culture consists of its unique way of conducting business activities, conflict resolution, and negotiating. Cross-cultural efficacy is described by four major personality traits that should be taught among the workers. These include tolerance for ambiguity – which involves the capability to tolerate uncertainty or lack of clarity in the reasoning or conduct of others; perceptiveness – which involves the capability to observe as well as recognize subtle information during the communication process with co-workers; valuing personal associations – which involves the capability of recognizing the significance of inter-personal associations or connections that are many a time significant than accomplishing one-time objectives; and flexibility or adaptability – which involves the capability of being creative and innovative in creating solutions to cross-cultural challenges and being open-minded in regard to the outcomes. By training the workforce concerning these traits, the company would develop a team that appreciates and recognizes other cultures other than theirs.
Managers should gather facts and interpretive knowledge regarding other cultures and learn to speak their language. Effective managers learn and seek to understand the basics of culture through understanding the values, lifestyles, and attitudes of a specific culture with whom they are relating with through business activities. Additionally, managers ought to learn about the political as well as the economic background of the various cultures.

References

Bird, A. and Mendenhall, M.E., 2016. From cross-cultural management to global leadership: Evolution and adaptation. Journal of World Business, 51(1), pp.115-126.

Padhi, P.K., 2016. The rising importance of cross-cultural communication in the global business scenario. Journal of Research in Humanities and Social Science, 4(1), pp.20-26.

Islam, T., 2017. Practices of Cross-Cultural Etiquette and Communication in Global Business-A Conceptual Analysis on Managing Corporate Expansion: A Review Study. J Bus Fin Aff, 6(280), pp.2167-0234.

Kathirvel, N., and Febiula, I.C., 2017. CROSS-CULTURAL MANAGEMENT AND ITS GLOBAL COMPETITIVENESS AMONG INDIAN HEALTHCARE PROFESSIONALS. International Journal of Information, Business, and Management, 9(2), p.307.

Nguyen, L.D., Pham, L.N., and Ermasova, N., 2019. Business Ethics in a Global Economy: A Cross-Cultural Study Among Working Adults in Russia and Vietnam. Global Business Review, 20(4), pp.856-870.

Odine, M., 2018. Cross-Cultural Communication for Business in Era of Globalization. Studies in Media and Communication, 6(1), pp.53-62.

Omer, S.K., 2019. SWOT analysis implementation’s significance on strategy planning Samsung mobile company as an example. Journal of Process Management. New Technologies, 7(1), pp.56-62.

Iblasi, W.N., Bader, D.M., and Al-Qreini, S.A., 2016. The impact of social media as a marketing tool on purchasing decisions (Case study on SAMSUNG for electrical home appliances). International Journal of Managerial Studies and Research, 4(1), pp.14-28.

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