Analysis of the Internationalization Process of Samsung Electronics Company
Introduction
Samsung Electronics (SE) is part of the conglomerate company of Samsung Group, which was found by Lee Byung-Chul in 1938. The company started as a grocery-retailing venture in the city of Su-dong. It was not until the 1960s when Lee Byung-Chul decided to venture into the electronics industry. By 1980, the company had ventured into the telecommunication hardware industry. In 1982, Samsung built its first foreign manufacturing plant in Portugal (Almutairi et al.). During that decade, the company also invested in additional research and development centers in Germany, Tokyo, New York, and England (Simonin). According to Almutairi et al., the company’s first internalization process aimed at exporting and marketing black and white television sets to Panama. However, over the years, Samsung Electronics’ primary internationalization strategy transformed to direct investment in foreign markets through joint ventures and launching subsidiaries. According to the company’s 2018 annual report, it has two-hundred and fifty-two subsidiary branches across the world (Kim and Roh). Today, the company operates in more than a hundred countries around the globe.
Samsung Electronics is one of the most successful multinational company in the world despite its origin emanating from the emerging market of South Korea. According to Simonin, the company has recorded revenue growth of more than five thousand and seven hundred percent in a period of two decades. Such success has been driven by the unique internationalization process of the company. The company’s internationalization process is a mixture of strategic market entry through joint venturing and subsidiaries, and market domination through inventiveness and positive CSR (Simonin; Lee et al.). One example where the company has used these strategies effectively is in the Chinese electronic market. It was in 1992 when SE developed this internationalization strategy by forming a joint venture with a local Chinese company, Sony Corporation. This joint venture enabled the company to enter the Chinese market. However, it also allowed SE to learn more about the emerging market, thereby understanding the socio-political and economic environments. Therefore, this form of market entry allowed SE to analyze the market and make the necessary adjustments to its corporate functioning that alleviate the identified risks in China. The company eventually grew its manufacturing and sales subsidiaries in the country from one in 1992 to eighteen in 2004 (Lee et al.).
Over the years, the company has remained one of the leading companies in inventions in the electronics industry. Most of the company’s ingenuity is a fruit of its internationalization process. The company has used foreign markets as learning spaces to create new inventions as solutions to end customer needs. However, the company does not fail to recognize its responsibility in whichever market it enters. Lee et al. case study reviewed how the company has prioritized corporate social responsibility as one of its key internationalization strategies. In return, the company’s CSR activities have helped SE to gain trust and learn from such markets. Therefore, understanding the Samsung Electronic internationalization strategy could enlighten many other business models hoping to franchise in the future. This paper will critically analyze these internationalization strategies employed by Samsung Electronics, and evaluate the company’s choices of market entry mode and its performances.
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