7s Model Samsung

contingency Study 2. Trade and Innovation in the Korean training and Communication engine room Sector1 . Onodera, Osamu Kim, Hanna Earl OECD Journal General Papers 2008, Vol. 8 Issue 4, p109-155, 47p, 34 Charts, 20 Graphs This includes the strategy of the geological formation, the launching strategy, the culture in the organisation towards risk-taking and alteration, the motivation of employees, cross functional arrivement, companionship management and the lead off of internal and international ne dickensrks. Employees willingness to take risks very much depends on the existence of a noblame culture.A love approximately culture fosters innovation except if it is create on norms much(prenominal) as judge failure (Goffin & Mitchell, 2005, s. 265). Multifunctional nobbleing fosters innovative and learning by doing on the part of the employees and friend them keep up to date with the in vogue(p) facts of lifes. It in like manner serves as a al-Qaeda for creatin g a climate that can mold about organizational transition (Takeuchi & Nonaka, 1986). Organizations hold to gain their innovative capacity and genius powerful mechanism for doing so is to f every association in the knead to a much wider population.Mobilizing high levels of participation in the innovation march is unfamiliar and, for many a(prenominal) organizations, comparatively untested and app atomic pattern 18ntly godforsaken (Bessant, 2003, s. 767). Mobilizing and managing know takege receives a primary endure and many recipes offered for achieving this depend on mobilizing a much higher level of participation in innovative problem-solving (Bessant, 2003, s. 767) Companies alter magnitudely cannot dribble to warehouse their technologies, waiting until their ph unmatchable linees make use of them (Chesbrough, 2003, p. 32) Thirdly, the 7-S framework contains the very bear upon of innovation. The process is divided into a series of relatively well-known steps in the displace approach that seems to be standard in theory and praxis these days. However, it has been chosen to beautify this differently than conventionally, because The assumption of a sequent progression without feedback loops and recurring tasks is unrea angle of inclinationic (Saren, 1994, s. 633). Hence, the case of the process circling the innovation fundamentals.So what is contained in spite of appearance the process element of the 7-S framework? once more this can be illustrated by utilize a quotation from some of the state of the art literature There is no incertitude that for managers to incr allay the conquest rate of their untested increase efforts, they should master techniques for the planning, ontogeny, deployment, evaluation and reign everyplace of necessary competencies byout the bare-ass product (NPD) process, i. e. , from the extension of the upstart idea to the frame of the product to the groceryplace (Tzokas et al. , 2004, s. 619).In re freshful(prenominal) words, the innovation process is measured by looking at project management, project planning, top management involvement, project managers, and the activity of innovation fundamentals across the cardinal stages of the process. Companywide, we will build a content-rich line of work structure that fosters innovation in data processor hardware and package product. Building from our creative platform, we will develop refreshing agate linees in health, the environment, and renewable energy. A conjunction that epitomises the work shift of the Korean ICT quickament is Samsung Electronics.Samsung Electronics is one of the human beings leaders in semi channelor units, in particular fluid drams and fiash memories. liquid crystallizing Displays (LCDs), nomadic phones, and digital appliances such as fiat panel TVs. While Samsung had cursorily grown from an tag onr of b lack and flannel TVs in the 196()s to one of the commercialize place leaders in DRAMs i n the late eighties, do use of external engineering and establish on abroad marketplaces, it was usually a market fol lower berth rather than an pioneer even in the late mid-eighties. Changes in the business environment in the primordial nineties, i. . greater contender at the lower end of the market collectable to the change magnitude use of evolving action ne dickensrks in the Asiatic region by Nipponese producers, trade magnitude competition in the Korean internal market due to progressive change over and investment liberalisation, and withdrawal of the generalised body of preference (GSP) privileges in export markets, triggered a transformation of Samsung with a greater stress on engineering, increase globose outturn and sourcing, and enhanced international gross gross revenue and distri exception.The occurrence that Samsung now has interrogation facilities not besides in europium, US and Japan only if in like manner in Russia, India and most of late china, that it now has 27 manufacturing facilities in 12 countries, with overseas I 1ECD JOtJRNAL spheric PAreRS record 2008/4 ISSN -IMS-2821 oe C D 2008 112-CASE playing area 2 achievement compass 35. 9% in 2007, and that it has doubled its sales tietwork from 32 sales organisations in 23 countries in 2000, to 60 in 48 countries iti all regions, shows how world(a) Satnsungs operations declare become as a guide hich has become one of the leash firms in the ICT industry worldwide from a crushed position in the past two decades. The study assesses how regulatory, foxiness, and investment policy choices necessitate helped, alongside opposite detect policies, to house the right framework conditions for technology density and innovation. In addition, it examines how the private sector, and more especially Samsung, has taken prefer of those conditions to enhance its innovation capacity. The objective of this study is not to domiciliate a comprehensive history of Koreas development or to evaluate Koreas innovation policy. quite a it is an attempt to shed some absolved on the relationship between trade and innovation from the novel rapid reaping of Koreas ICT industry in the past 15 historic period. centeringes on Samsungs strategies in international RD, manufacturing, sourcing, supply chain management, sales and distri get onion. (Other key determinants of Samsungs success include its strong branding and marketing strategy, its investment strategy of investment in large capacity when some other companies are cautious, and effective human preference management.The Samsung Group is today the largest chaebol in Korea, which has businesses spanning from electronics and electro-mechanics, shipbuilding and engineering, petrochemicals and fine chemicals, life insurance and securities to profession and constructions. Samsung Electronics is its largest federation with 2006 consolidated sales of OECD ledger usual PAIRS VOLUME 2008/ 4 SSN -1995-2S21 O OECD 2U0B CASE sight 2 1 4 1 USD 92 cardinal and net income of USD 8. 5 billion.It employs 128 000 people in more than 120 offices in 57 countries, and is organized into five major businesses semi get hold ofors ( memory board chips, musical arrangement LSI devices and hard disc drives), LCDs (TFTLCD products in variant coats). telecom meshs ( diligent phones, telecommunication systems), digital appliances (washing machines, refrigerators, breeze conditioners and stoves) and digital media (TVs, audio/video products, PCs and information processing system peripherals) (Samsung. 2006). It is among the international leaders in semiconductor such as DRAM.SRAM chips, and flash memory. CDMA meandering(a) handsets, and digital media technologies such as Liquid watch glass Displays (LCDs), and has fast become a truly global multinational come with. For example, tax of tbe Samsung brand was USD 16. 1 billion in 2006 in the Brand Value discern conducted by B usiness week clipping and Intcrbrand, or 20 among all corporations in tbe worid and 7 in the IT sector. Samsung Electronics is likewise ranked 27* in the worid on Fortune magazines angle of inclination of Global well-nigh Admired Companies.Samsungs success in particulariy noteworthy in light-colored of two factors first, the keep companys medium sized interior(prenominal) market (Korea has a population of 48 million) and, second, its origins and recent history. Samsung started off in 1938 as a trading company, and piece it entered two manufacturing sectors i. e. sugar and textiles) in the mid-1950s, it was not until 1969 that the firm entered the electronics industry with the incorporation of Samsung Electronics Co. One major characteristic of Samsungs entry into the electronics industry was its creed on contradictory technology. confuse 21 provides a brief overview ofSamsungs evolution to the 1990s. give in 21. Samsung tecbnological capabilities and features of interna tional employment mid-seventies mid-eighties 1990s 20008 Key activities Main sources of capabilities take aim of technologicai capabilities foreign merchandise and scope of fundamental interaction Conglomerate diversification J/V partners, Original Equipment f/lanufacturer (OEM) buyers and overseas training Capabilities in mass takings (TVs) introduction into DRAM market OEM buyers, conflicting licensing, transposition engineering Broader product range (videocassette recorder, MWO, DRAfvl, components) only when very weak in skill to introduce a major change of productUS & EC for lowend markets (limited success). centralized intrafirm interaction Organisational reform, internationalisation Acquisitions. strategical alliances, in-house R&D Continued weakness in product development International occupation of lowend items in peripheral regions. Moving toward change intraand inter-firm interaction Transformation into a global company. In-house R&D, strategic alliances an d increasing tenseness on intellectual property. Strengthened R&D and design capabilities, with a warmness competency in product development. debut of a global action electronic vane ainly in the Asian region but similarly in other split of the globe as well. reference Kim (1994) for 1970s 1990s. IH-XD JOlRN. M. superior general paper VOLl/ME 2008/4 -ISSN -1995-2821 OECD 2008 142-CASE theater of operations 2 1970s Dependence on opposed technology Given its lack of expetience in electronics, Samsung had no choice but to turn to unlike sources of technology in management, output signal in marketing and Samsung launch a close relationship with Japanese and US firms. It created several voice ventures with foreign technology suppliers such as necrotizing enterocolitis, Sanyo, Corning churl Works and other companies. It reached numerous agreements to assemble electronic products for foreign original equipment maker (OEM) buyers, who provided it with design and en gineering agree as well as with an international market. Samsung also relied extensively on outside suppliers for the procure of congeries components. However. Samsung and its classifyd partners have change magnitude its capabilities for split supply and for some parts even began to ship parts to Korean and Japanese customers. Samsung electronics puff uped and improved its put together capacity, producing ten million black and snow-white TV sets by the end of the 1970s.Most sales were through OEM take. OEM buyers provided Samsung with product design, timber control and engineering support, leaving Samsung to increase its manufacturing ability. Samsung proceed to increase access to other international distributors and was able to renegotiate TU and ease initial geographical restrictions imposed by its jomt venture partners. Samsung expanded its OEM channels and capabilities by adding two new products VCRs and microwave ovens. As Samsung was unable to gain foreign lice nsing for these products, it use reverse engineering, and succeeded in ontogenesis its own microwave in 1978 and VCR in 1979. Samsung yet diversified into the telecommunication sector through a 1977 JV with GTE of the US. In 1974, Samsung acquired Korea Semiconductor Co. (KSC), a joint venture between Korea Engineering & Manufacturing Co. and coordinated Circuit International, a US firm, which make simple integrated circuits for electronic watches, which form the basis for Samsungs entry into the dynamic stochastic access memories (DRAMs) business. 980s and primal 1990s Upgrading of technology entry into DRAMs The 1980s was the period of magnification and diversification for Samsung.As Samsung began to experience limitations on growth in the CTW and VCR markets due to lack of component availability. Samsung make a decision to enter the IC business. To come upon its objective, Samsung once again tried to learn foreign technology through a broad range of formal and liberal c ontacts, and decided to enter the DRAM market which was considered more suitable for Samsung which had familiarity with incremental process innovation and large scale manufacturing cogency two of which could become sources of competitive advantage in this sector.In 1983, Samsung licensed a DRAM design from micron engine room, a US company, and entered the merchant market for DRAMs which require the most advanced manufacturing technologies and huge peachy outlays. In 1983, Samsung successfully developed a 64K-DRAM, followed by a 256K in 1984. and a lM DRAM in 1986. Samsung proceed to upgrade its technology and reduced its credit on outside technology, except for groovy equipment and thus rose from a around zero share in memory chips in 1984 to be the world market leader in DRAMs by 1992. tabularize 22 shows how Samsung has gradually caught up with technology leaders Samsung kept closing the chap between itself and the technology leaders, and has been the leader in DRAM deve lopment since 1992 when it the first company in the worid to develop 64 Mbit DRAM. OECD journal ordinary PAPERS VOLUME 2008/4 ISSN -1995-2821 O OECD ZIKlti CASE use up 2 1 4 3 defer 22. Samsung technology gap in DRAM 64Kbit 256Kbit IMblt 4Mbit 16Mblt 64Mbit 256Mblt IGbIt 4GbIt First development company Intel NEC Toshiba Hitachi jj Samsung SamsungSamsung Samsung stimulatement date by leader 06/1979 01/1981 07/1984 08/1987 08/1992 08/1994 11/1996 12/2000 Development dale by Samsung 12/1983 01/1984 06/1986 02/1988 07/1990 08/1992 08/1994 11/1996 12/2000 Gap between drawing card and Samsunq months 3 months . . . 1 Design licensing from Micron Technology Process technology from piercing 2 Samsung with two Korean partners Source. Kim (1997), Siegel and Chang (2006), Samsung website (http//www. samsung. com). By the late 1980s, Samsung was able to produce a wide variety of semiconductors for use in phone sets, computers, private automatic pitchfork exchanges (PABXs). acsim ile machines, and VCRs (Kim. 1997). As a result, it was able to cut back dependency on Japanese suppliers for affection components. Nonetheless the majority of the DRAMs produced in Korea were exported to foreign countries and the other non-memory chips required (I. e. microprocessors) continued to be outcomeed from other countries (Kim, 1998). The strong vision shift to semiconductors meant that development of other capabilities suffered to some extent. While Samsung Electronics Co. had a minor change capability, it remained weak in major change capability (Kim, 1997).As a result, it continued to use license technology from foreign companies for its main export products in this period. OEM channels remained dominant in the company sales at over 65% of total sales even in 1988. and Samsung keep close relationships with OEM buyers such as JC Penney, Sears Roebuck, GTE, Toshiba, IBM, Hewlett Packard, RCA and point Corporation (Kim. 1997). It was towards the end of the 1980s tha t Samsung behind started to build its own technological capability with the acquisition in 1988 of Micro quintuple Corporation, a US company, and with the establishment of Samsung Infonnation agreements the States Inc. SISA) in Silicon Valley to support export activities as well as to gather information on ICT products. It was also in this period that Samsung began its search for foreign talent as a kernel to compensate for its lack of internal expertness (Box 3). It was also in the 1980s that Samsung started to command its production for certain products such as colour TVs, audio products and microwave ovens. Samsung also sowed the seeds of its telecom business at this time, getting Korea Telecommunications in 1980 and started production of a cellular phone in 1986.Box 3, Technology transfer through hiring One of the slipway Samsung has overcome its lack of technical capabilities has been through recruiting top level engineers from world leading competitors. In ahead of ti me days, Samsung local anestheticizeed on recruiting Korean engineers working at foreign companies. Hwang Chang-gyu, a former president of Samsung Electronics, was recruited from Intel, and Chin Daeje. another former president, worked at IBMs Watson query Center in the lead being engage by Samsung, to name just a few.These people have significantly contributed to the transformation of Samsung from a me-too memory producer to the world leader by bringing up-to-date technical knowledge and managerial skills. Samsung also hired foreigners in order to gorge the gap it identifies to upgrade its technical capabilities. It is widely known that Shigeo Fukuda, who was hired from Kyocera, played a critical role in the Samsungs new initiative in 1993 known as New Management. It is believed that his critical comments on Samsung during the 1980s weightlifted the company to enhance its product development processes and design capabilities.More deep hiring has become increasingly diverse from all over the world including David Still (US), David Henri (France). Roman Sepeda (US). Nelson Allen US). Hao In (mainland chinaware), and Tung Wang (mainland China). OECD JOURNAI. GENERAL PAPERS VOLUME 2008/4 ISSN -1995-282 O OECD 2008 144-CASE STUDY 2 Transformation into a global company 1993 and onwards Several changes in the business environment faced Samsung in tbe early 1990s. First, lower trade barriers and transportation be and enhanced ICT from the latter 1980s and the 1990s resulted in greater fragmentation of the ICT industry.In the late 1980s, Japanese producers rapidly increased overseas production in repartee to increased competition from Korean competitors and the rapid appreciation of the yen, which led to greater competition at the lower end of the market. Secondly, Koreas interior(prenominal) electronics market which had long been protected from foreign competition was gradually liberalised as Korea vigilant to join the ranks of industrial nations. In 1989. import quotas on consumer electronics were removed. By 1993 there was a plan to cut the add up duty rate below 10% for all imported electronics goods.The consider of items subject to the import diversification programme wbich shielded the Korean market from Japanese competitors was steadily decreased with a schedule put in place for abolition in 1999. Thirdly, on the export side, the generalised system of preferences privileges were sequestered from Korean electronics goods by the US and EC in 1988. The Won also started to valuate against the dollar making exports from Korea less attractive. The preceding(prenominal) changes in the business environment led to a strong initiative headed by the Chairman Kun-Hee-Lee in 1993 lo become a truly global company. Under this new initiative, Samsung began its transformation from a successful company to one of the global leaders in the industry. There was a renewed tenseness placed on quality, and several new products were sub sequently introduced such as the TFT-LCD and CDMA sprightly handsets. The Asian financial crisis presented a further challenge as the interior(prenominal) market plunged, and Samsung had to undergo a fundamental restructuring of its activities, exiting from numerous businesses, gash 30% of its workforce and nifty its debt-toequity ratio from 300% to 30%.However, the Asian crisis also presented an opportunity for Samsung to consolidate its domestic market as competitors weakened their positions, while shifting more of its resources to the Liquid Crystal Display (LCD) and mobile phone businesses which has allowed it to qualify its revenues. The growth has been particularly strong in the CDMA mobile handset market, where Samsung has leapt from almost a negligible share in the global market to event one in CDMA pbones with a share of about 30%, and get two in the global market overall bebind Nokia.Below we focus on three main strategic responses of Samsung greater furiousness on technology, global productions and sourcing, and international sales and distribution. Greater focus on technology (globalisation of R&D and strategic alliances) Samsungs RD consumption in Korea bas forever increased both in terms of amount and as a percentage of sales, on average 18% p.a. from 2002 to 2006, and now approaches 10% of total sales (Figure 21). Tbe proportion of R&D staff has jumped from 16% in 1997 to 24% in 2006, and the company plans to push it up to 32% by 2010.The number of scientists and engineers at various inquiry centres in Korea has increased by 70% since 2001. Table 23 indicates how Samsung has aggressively recruited scientists and engineers with graduate degrees tbe number of Ph. D. s is up by 50% and the number of Masters degree holders has been more tban doubled. Samsung bas also changed its patenting activities since the early 1990s (Table 24). While Samsung only bad 1 704 patents for activitys made before 1994, it was presented over 2 600 patents for applications made in the three yeai- period 1994-1996, and has systematically been granted over 1 000 patents since then. * This shows how Samsung has OECD diary GENERAL PAPERS VOLUME 2008/4 ISSN -IWS-2821 OECD 200s CASESTUDY2-145 become aggressive in the application of patents in the get together States as part of its technology strategy. Figure 21. Samsung Electronics R&D expenditures 12. 00* 10,00% 0. 00% 2002 2UU3 2001 2005 2006 Table 23. Nunfiber of scientist and engineers in Samsung explore laboratories consequence Ph. D. Masters Bachelor Total 2001-02 2003-04 2005-06 1 039 873 1 537 2 980 3 453 8 320 6 038 6815 7 363 10 057 11 141 17 220 Table 24.Number of Samsung patents in the unify States 1 unmistakables by year of grant Patents by application year Patents by year of grant cont. ) Patents by application year (cont. ) Pre-1994 850 1 704 2001 1 446 1 550 1994 412 498 2002 1 328 1 804 1995 423 656 2003 1 313 2412 1996 485 1 532 2004 1 604 2 005 1997 584 1 613 20 05 1 641 890 1998 1 305 1 845 2006 2 451 216 1999 1 542 1470 2007 2 723 13 2000 1 437 1 336 Total 19 544 19 544 Source ground on US Patent and Trademark Office (2007). Samsungs efforts to strengthen its explore capabilities have not been limited to Korea.In order to improve responsiveness to the local demand conditions and tap into the pool of cutting edge scientists and engineers, the company established R&D centres in various paits of the worid (Table 24). Samsung started by put up Samsung Information Systems the States (SISA) in Silicon Valley in 1988, followed by Samsung Electronics search Institute in London in 1991. These two question facilities are typical examples of R&D facilities set up to monitor foreign as is the case with the Dallas and OECD JOURNAL GENERAL PAPERS VOLUME 2008/4 ISSN -1995-2821 O CffiCD 2008 146-CASESTUDY2Yokohama facilities in 1997. More interestingly, the company has rapidly expanded its global net profit of research centres with the obj ective of utilising the foreign pool of research talent starting with Russia (1993), India (1996) and the three recently added research centres in China focalisation on semiconductor, mobile telecommunications, and electronics. Samsung has also earnestly increased the size and capabilities of the foreign research centres its research centre in capital of the Russian Federation had only one Ph. D. and seven master in 2001 and now has ten Ph. D. s and 29 Masters its Bangalore software instalment had no Ph.D. , 17 Masters, and 37 Bachelors in 2001 and now hires four Ph. D. s, 179 Masters, and 164 Bachelors. Table 25. Samsung RD facilities Research centre Samsung Information Systems the States Samsung Electronics Research Institute capital of the Russian Federation Samsung Research Centre Samsung Electronics India Software trading operations Dallas Telecom Laboratory Samsung Telecom Research Israel Samsung Yokohama Research Institute Beijing Samsung Telecommunication Samsung Semicon ductor China RD Samsung Electronics China RD emplacement San Jose London Moscow Bangalore Dallas Yakum Yokohama Beijing Suzhou Nanjing found 1988 1991 1993 1996 1997 1997 1997 2000 2003 2004 Core tasks Strategic parts and components, core technologies Mobile phones and digital TV software Optics, software algorithms and other new technologies System software for digital products, protocols for wired/ piano tuner meshings and handsets Next generation telecommunications systems Hebrew software for mobile phones Core next-generation parts and components, digital technologies Mobile telecommunications standardization and commercialization for China Semiconductor packages and solutions Software, digital TVs and MP3 players for ChinWhile, Samsung had already begun to use strategic alliances especially for acquiring technologies, the increasing RD capabilities of Samsung is allowing it to gain from strategic alliances in evolution new cutting edge technologies (Table 26). Because there is an increasing convergence of technologies, for example between telecommunications and broadcasting, mobile phones and personal computers, telecommunication equipment and household appliances, it is proper increasingly difficult and expensive to conduct the research and development necessary to suppress all technology areas in one company.Samsung, therefore, has been using its technology base to conduct strategic alliances to build new strategic capabilities. OECD JOURNAL GEKERAL PAPERS VOLUME 2008/4 ISSN -1993-2821 O OECD 2130 i Partners Table 26. Date selection of recent strategic alliances Areas of cooperation CASE STUDY 2 -Ul Nokia April 2007 Limo Alcatel Sony (S-LCD) IBM Intel & Microsoft Discovery Salvarani sunniness Microsystems VDL Charter Bang & Olufsen Kent State University Qualcomm Toshiba (TSST) Sony (S-LCD) IBM dell Hewlett-Packard Disney Napster Sony NEC Matsushita Microsoft January 2007October 2006 July 2006 March 2006 March 2006 kinfolk 2005 July 2005 July 2 005 February 2005 January 2005 November 2004 October 2004 July 2004 April 2004 Maroh 2004 March 2004 January 2004 kinsfolk 2003 September 2003 September 2003 August 2003 July 2003 January 2003 November 2001 Co-develop technology for handsets and DVB-H standardisation solutions express a joint venture for developing a Linux platform (SAMSUNG Electronics, Vodafone. DoCoMo, Motorola and NEC) Cooperate on satellite DVB-H Jointly invest in 8th-generation LCD line (2200mm x 2500mm motherglass)Co-develop and market technologies for industrial printer solutions Co-develop UMPCs Cooperate on high-definition contents Co-develop new built in products combining household electronics and furniture Cooperation in solution business and next-generation business figuring systems Cooperate in commercialisation of routine DMB Co-develop cable broadcasting receiver and set-tcp incase for digital TV Full duplex apartment service Partner in headquarters theatre business Co-develop display technolog ies Cooperation in MDDI (Mobile Display Data Interface) technology Develop and market optical storage devices fix joint venture for 7th generation LCD (1870 x 2200 mm) line Co-develop nano-logic process technologies Supply multi-functional laser printers Share technology for ink-jet printers Supply Movie actinotherapy set-top box for VOD Co-develop and market SAMSUNG-Napster player fan out and consolidate memory stick business Cooperate in high-end business computer systems Standardise technology, co-produce and jointly market videodisc recorders Co-develop digital household electronics Source Based on Samsung homepage. OECD JOURNAL GENERAL PAPERS VOLUME 20U8/4 ISSN -1995-2821 O OECD 2008 148-CASE STUDY 2Globalisation of the production network and global sourcing Samsung Electronics began to build its global production network in the early 1980s when it established its first manufacturing facilities in the U. S. and Portugal. It went on to establish a subsidiary in the UK (1987) . Mexico (1988) and Thailand in 1988. Since then, the company has continued to expand the network by adding new countries to the network as well as setting up new facilities in countries where it has already established its production facility. In 1989. Samsung further set up production subsidiaries in Spain, China. Hungary and Turkey.Table 27 nominates the countries where the company has its production facilities and illustrates that the company has been selectively expanding its global production network. Table 28 shows how overseas production is gradually increasing in recent years reaching 35. 9% in 2007. It should be noted that while this encrypt is a measurable increase from the levels in tbe early 1990s, it remains considerably little than comparable figures for Japanese electronics companies which exceeded 70% as of the early 1990s (Table 8). The major products fabricate in overseas facilities are consumer electronics products such as TVs.VCRs, refrigerators, and microwa ve ovens. The companys Mexican production subsidiaries produce flat-screen TVs and LCD TVs and export them to the US and other Latin American countries. As Mexico is a member of NAFTA, Samsungs exports to the U. S. from Mexican plants are exempt of import tariffs. Samsung Electronics Hungarian Co. Ltd.. established in 1989, produces 3. 2 million TVs annually and exports them to Western and eastmostern Europe, and Central Asia. Recently, Samsung announce to increase its production capacity of the mobile phone manufacturing plant in Haryana, India from one million to three million units per year.In addition to the importance of the local market, India is considered as a strategic alternative to China to hedge tbe uncertainty from relying heavily on Chinese operations. In the semiconductor sector, Samsung pursues a triad strategy Giheung complex in Korea as the R&D and limit semiconductor manufacturing hub. the American facilities in Austin. Texas as strategic manufacturing hub f or the Americas, and the Suzbou complex in China as the global testing and case hub. Table 27. Samsung electronics global production network* KoreaNorth America Asia Pacific Europe South America Middle East and Africa CIS 2000 Six Facilities Mexico, U. S. China(7), India, lndonesia(2), Maiaysia(2), Thaiiand, Vietnam Hungary, Spain, U. K. Brazil None Uzbekistan 2006 eight Facilities Canada, Mexico(2, U. S. Ctir)a(13). india(2). Indonesia, Malaysia(2), Philippines, Thaiiand, Vietnam Hungary, Slovaiiia None None None The number in parentheses is tlie number ol subsidiaries in the expanse Countries in italics are those newly added to the list between 2000 and 2006. Source Samsung Electronics website (www. amsung. com/us). OECD JOURNAL GENERAL PAPERS VOLUME 2008/4 ISSN -I9I5-282I O OECD 2008 CASE STUDY 2 1 4 9 Table 28. Samsung production network (KRW million) 2003 2004 2005 2006 2007 Total municipal production Overseas production 64 817 456 deoxycytidine monophosphate% 43 582 016 67. 2% 21 235 440 32. 8% 81 57 24 963 009 snow% 632 359 70. 3% 330 650 29. 7% 80 629 510 c% 57 457 670 71. 3% 23 171 840 28. 7% 85 58 26 834604 light speed% 972 765 68. 7% 861 839 31. 3% 98 507 817 ampere-second% 63 175 968 64. 1% 35 331 849 35. 9% Source Korean Government. International sales and distributionSamsungs initial refinement of international sales was through Samsung Corporation, the throng affiliate involved in general overseas trading in the early 1970s. While this may have aid Samsung initially, it blocked Samsung Electronics further expansion and in 1978, Samsung established its own sales affiliate in the United States for the first time. Since then, Samsung Electronics has continuously expanded its sales and distribution network around the world (Table 29). In 2000, the company had a network of 32 sales organizations in 23 countries and its primary emphasis was on North American and European markets.However, the company doubled its sales subsidiaries to 6 0 in 48 countries over sixer years, and it is now paying more assistance to emerging markets, including Asia Pacific. Middle East, Africa. CIS, and South America. harmonise to Samsung Electronics homepage as of 2008, Samsung had a total of 53 sales subsidiaries and branch ofllces in 36 countries. Samsung has achieved over three quarters of its sales overseas in recent years (Table 30). Table 29. Samsung electronics global network of sales subsidiaries* 2000 2006 North America Canada, Mexico, United States (6) Canada, Mexico, United States (4) Asia PacificEurope South America Middle East and Africa CIS Australia, Hong Kong. India, Japan, Philippines, Singapore, Taiwan France, Germany2), Italy, Poland, Portugai, Sweden, The Netherlands(2), U. K. (2) Argentina, Colombia, sailor South Africa, U. A. E. Russia Australia, China(6). Hong Kong. lndia(2). Indonesia. Japan. Malaysia. Pakistan. Philippines, Singapore. Taiwan, Thailand. Vietnam Austria, France, Germany(2), Greece, Hungary. Italy, Poland, Portugal, Spain, Sweden, Netherlands. U. K. (2 Argentina, Brazil. Chile, Colombia, Panama, Peru Algeria. Iran.Jordan, Kenya. Morocco. Nigeria. Saudi Arabia. South Africa. Tunisia. Turkey. U. A. E. Kazakhstan. Russia. Ukraine. Uzbekistan The number in parentheses is the number of subsidiaries in the unsophisticated COUNTRIES in italics are those newly added to the list between 2000 and 2006. Source Samsung Eiectronics website (www. samsung. com/us). UKCD JOURNAL GENERAL PAPERS VOLUME 2008/4 ISSN -1W5-2S2I OECD 2008 150-CASE STUDY 2 Table 30. Samsung sates network 2003 2004 2005 2006 2007 Domestic sales Overseas sales % of overseas sales to total Source Korean Government