Samsung Electronics: Success by Design

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Case Details:

Case Code : BSTR228
Case Length : 16 Pages
Period : 1993-2006
Organization : Samsung
Pub Date : 2006
Teaching Note :Not Available
Countries : Worldwide
Themes: Differentiation Strategies | Innovation
Industry : Consumer Electronics

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"An enterprise's most vital assets lie in its design and other creative capacities. I believe that the ultimate winners of the 21st century will be determined by these skills."¹

- Kun-Hee Lee, chairman, Samsung Corp., in 2006.

"We want to be the Mercedes of home electronics."²

- Yun Jong Yong, chief executive, Samsung, in 2004.

"Good design is not simply about aesthetics or making a product easier to use. It's a central part of the business process, adding value to products and services and creating new markets."³

- Tony Blair, prime minister, UK.

Introduction

In the 2006 IDEA (Industrial Design Excellence Awards⁴) competition, Korea-based Samsung Electronics Co. Ltd. (Samsung) won a gold (for a touch messenger⁵) and two silver (for a portable digital projector and a digital presenter) awards. With these wins, Samsung held on to its number one position as the company that had won the most IDEAs in the last five years.

Samsung had made the decision to adopt design as a source of competitive advantage in the 1990s. Earlier, the company's products had been uninspiring and undifferentiated. In the early 1990s, the Group chairman, Kun-Hee Lee (Lee), initiated Samsung's transformation from a low-end OEM⁶ into a world-class electronics company.

Sharpening the company's design skills was a significant part of the initiative.

However, this required major changes in culture, processes, and systems within the company. The decade-long initiative proved to be successful and Samsung came to be perceived as a company with an exciting product portfolio. The IDEAs and numerous other awards that Samsung won in the 2000s reaffirmed the company's newly-acquired design prowess.

With stylish products in its portfolio, the company was able to record higher sales and higher profits. Interbrand⁷, a leading branding consultancy firm, named Samsung as one of the fastest growing brands in its 2005 brand survey. The top management attributed the company's success to a great extent to its new design capabilities.

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1] Luke W., "Design vision: In Korea,"www.lukew.com, February 19, 2006.

2] David Rocks and Moon Ihlwan, "Samsung design,"www.businessweek.com, November 29, 2004.

3] Roberto Verganti, "Managing design-driven innovation for competitive advantage,"www.innozone.dk, 2006.

4] IDEAs, sponsored by BusinessWeek, are given away each year to the best industrial designs from across the world. The entries are judged by Industrial Designers Society of America (IDSA) and the results are published in BusinessWeek.

5] A touch messenger helps the visually impaired to send and receive text messages.

6] OEM or Original Equipment Manufacturer refers to an entity that manufactures products which are then sold by other companies under their brands.

7] Interbrand Corp. was established in 1974 in London. Its services include brand research, brand valuation, brand strategy, naming and verbal identity, brand design, internal brand alignment, integrated marketing, digital brand management, and brand protection.