questions
i. Sketch in a diagram Samsung's production network
11. How is the production network coordinated and managed?
Samsung is involved in the whole production process, from design, manufacture of components and parts to final product assembly. Discuss the pros and cons of this approach
CASE STUDY
2. Samsung's smart phones production network
Facing fierce competition and rapidly changing market demand, a manufacturing company has to continuously seek for improvement in the way that it makes products. Keys for success lie not only in technology improvement but how to organize and manage a production network. We will explore how Samsung Electronics organize and manage its global production network from three key angles (1) how production processes are organized within Samsung Electronics (u) where their factories are located, (iii) how their global production network are coordinated and managed.
About Samsung Electronics
Founded in 1969 as a division of Samsung Group, Samsung Electronics started as a TV producer In the early and mid-1990s, Samsung Electronics began producing memory and hard drives for personal computers. Nowadays, Samsung Electronics is a global IT leader. Samsung Electronics consists of three main divisions: Consumer Electronics, IT & Mobile Communication, and Device Solution. Each division is responsible for its own factories and assembly plants. No outsourcing of assembly takes place (Samsung, 2013)
IT & Mobile Communication is Samsung's best income generator. It accounted for 54% of Samsung annual sales in 2013 (Samsung 2014a). This is largely due to Samsung's mobile phones in a new position as a global market share leader. Since launching its first Android smart phone in 2010, Samsung Electronics annual sales and operating profit have signficantly increased. The phone is now in its fifth generation and regarded as one of the best smart-phones in the global market. This enables Samsung to boost its share in global smart phone market from 8% in 2010, to 19.9% in 2011, 30.4% in 2012, and 32.3% in 2013 (Samsung, 2013: Samsung 2014a). However, in 2014, Samsung's sales figure in its Business Report 2014 Quarter 1 signals a declining trend in its mobile business. Rising to dominate the global smartphone market in the past four years, Samsung faces a tough battle where its flagship Galaxy S5 handset is not selling as well as the previous year's model; Chinese and Indian low cost rivals are eating its market share, and Apple is moving toward large-screen premium phones
Samsung's Asia Production Network
The success of Samsung's smart phone arises from its successful production network in Asia. Although Asia was not Samsung's first attempt in off-shoring production, it soon became a major destination for Samsung's direct investment. Samsung's earliest overseas production efforts were a Portuguese joint venture set up in 1982 and a US subsidiary founded in 1984. But after unsatisfactory results with US production, Samsung focused on establishing low-cost manufacturing plants in Asia, and Eastern Europe. Among Samsung's total of 37 production sites around the world. 21 factories are in Asia (Samsung, 2014 f).
Samsung's production network in Asia spread rapidly since 1989, when it opened a TV assembly plant in Thailand. Samsung's production in Asia ranges from components to consumer products, and has spread from Southeast Asia to China and India. Southeast Asia and China are Samsung's important sub-production networks with the two central nodes located in Singapore and Beijing