Table of Contents

1.0 Introduction ............................................................................................................................... 1

2.0 Question 1 ................................................................................................................................. 2

2.1 Quality ................................................................................................................................... 2

2.2 Competitiveness .................................................................................................................... 2

2.3 Relation between quality and competitiveness ..................................................................... 3

3.0 Question 2 ................................................................................................................................. 4

3.1 Samsung ................................................................................................................................ 4

3.2 Quality Gurus ........................................................................................................................ 8

4.0 Conclusion .............................................................................................................................. 12

5.0 References ............................................................................................................................... 13

1.0 Introduction

This research has shown the analysis of the development in international management
standards from a procedural to process based approach to management and the important of
the sustaining quality goods and services. The goal of this research is to demonstrate theoretical
and applied knowledge of the use of contemporary benchmarking standards and how these
may inform a repositioning of the organization of the organization to its stakeholders by using
Samsung as an example for this research. Samsung is
2.0 Question 1

2.1 Quality
In business environment, the concept of quality needs to be more accurately understand
and clearly explained to everyone in the organization. In other words, quality can be
understood as meet or exceed customers expectations. (Kehoe, 1996)

Quality is important to customer. If the customer expect excellence in everything he

bought, then he has a high expectations. Still, this may be show to be indefinable to the
customer when they gets a product or service that they had paid for. For example, a
passenger traveling in economy class flight cannot expect to have a service like a first
class passenger. Knowing that a first class passenger paid 2 to 3 times extra for the first
class. A customer who gets something more than his expectation would be pleased.
This is how a brand loyalty is constructed where the product or service supplier put in
that slightly additional attempt to make the lift of a customer better and pleased.

In a survey of almost 200 senior marketing managers, there is 71% respondents said
they found a great customer satisfaction metric very useful in managing and monitoring
their business. Therefore, customer satisfaction is important because it provides
marketers and business owners with a metric that they can use to manage and improve
their businesses. (Farris, Bendle, Pfeifer & Reibstein 2014, p. 11)

2.2 Competitiveness
Competitiveness can be related to the ability and the performance of the company, to
sell and supply goods and services in the market, in relation with the ability and
performance of other company in the same market. (Business Dictionary, 2014)

Competition is a crucial element in the efficient working of markets. It brings

significant benefits to the customer by encouraging enterprise, innovation, efficiency,
and a variety of choice to enable customer to get the opportunity to pick and choose
who gets their money, time and focus.
 Through competition, the company will improve to compete. When the company is in
the routine of a business exploit there just does not have sufficient time in a day to
stopover and assess each customer. Therefore, company shall able to retain and treat
the customer right.

In addition, competition helps company to recognize the strengths and weaknesses. The
company may not always know until the competition points out. Competition
narrowing focus and focus on what is the strength of the company where the
competitors are not in. Moreover, it helps to identify the potential threats to the
business; hence the company able to learn from other competitors what works and what
does not works. Through learning, company will able to interpret what plans and
strategies or even products would be harmful to the business.

2.3 Relationship between quality and competitiveness

Quality and competitiveness both are equivalent important. This happens when the
quality of the product is high, the competitiveness will increase. This is because
customer always preferred quality product, hence the quality of the product is higher,
and then the competitiveness of the industry will increase due to a special specification
of the particular product. For example, knowing Singapore Airlines (SIA) provides the
best service quality of the airline industry, therefore there is more customer choose to
fly with SIA rather than Malaysia Airlines (MAS).

The vice versa of the relationship can be shown using MAS and SIA. Malaysia Airlines
do provide quality, but not as well as SIA, and due to the air crash happens on
September and March respectively, this caused MAS loses majority of the customer
and the business is sliding downhill. Because of this issue, the competitiveness of MAS
is decreasing.
3.0 Question 2

3.1 Samsung
Samsung was established in 1938 in South Korea. Samsung had developed from an
ordinary operating company to a multi-national corporation with the yearly income of
nearly $100 billion in 1997. Samsung focus in three major markets electronics,
engineering and chemical, and Samsung hire people in beyond 60 countries around the
world. The business philosophy is to dedicate its human resources and technology to
the growth of a global civilization through better product and service.

Figure 1: Samsung Operating Profit from Q3 2011 to Q3 2014.

(Source: http://i-cdn.phonearena.com/images/articles/142139-image/Samsung-Q3-
earnings-prediction.jpg)

Recently, Samsung has reported several consecutive financial reports throughout the
year that were disappointing. Insider analysts is predicting that there will be another
round of underperforming financial results for the accounting period that started on Q3.
Besides, Samsungs operating profits are expected to have fallen 45% year-over-year,
which means that only $5.28 billion will be brought back, which is a result that is on
par with the companys 2011 ones.

Figure 2: Samsung Electronics stock exchange.

(Source: http://i-cdn.phonearena.com/images/articles/126460-thumb/samsung-
stock.jpg.)

According to experts, this trend may not just a bad period for Samsung, but more to
reasonable market situation that reflects the new state of smartphone market the
noticeable entry of China-based manufacturers has hurt Samsungs Sales the most, and
it seem that Samsung does not know what to do in order to recover some of its lost
market positions. Another possible cause is the weak sales of the Galaxy S5, along the
uncompetitive entry-level and mid-range devices.
 Figure 3: Strategy Analytics says Xiaomi was the star performer in Q2 2014.
(Source: http://www.phonearena.com/news/Xiaomi-surpasses-LG-as-fifth-largest-
smartphone-maker-breathes-down-Lenovo-and-Huaweis-necks_id58817)

Figure 4: Apples fiscal year revenue between 2000 and 2014

(Source: http://images.worldofapple.com/2014/10/fiscalyear_revenue_fy14-
728x374.png)
Meanwhile, at Apple, they recently announced financial result for its fourth fiscal
quarters of 2014. In the quarter, Apple posted revenue of $42.1 billion and net
quarterly profit of $8.5 billion.

Figure 5: Apple revenue by quarter.

(Source: http://cdn.macrumors.com/article-new/2014/10/linechart.png).

In this financial year, Apple completed an amount of $182.79 billion for profits, this
compares to $170.91 billion in FY2013. Gross margin for the quarter was 38%
associated to 37% in last year quarter. International sales accounted for 60% of the
quarters income.
3.2 Quality Gurus
Samsung aims to be a borderless, global brand that is an everyday term wherever the
products and services of Samsung are accessible. The objective is concentrated on the
of the companys four major businesses mobile, office networks, home and core
components. The stress is on forming a firm outline for the business by enhancing the
supply chain to make operations as effective and well-timed as possible.

Figure 6: Samsungs Integration of Six Sigma

(Source: Evans and Lindsay (2008) In: Managing for Quality and Performance
Excellence)

In order to reach the goal of efficiency and well-timed, Samsung introduced Six Sigma
to its approach to the product, process and the development of employee.

Samsung started by practicing a universal goal by developing Samsung internal

resources, to put invention first in the progress and design of the manufacturing,
products and marketing, and in the development of employees. With the establishment
of strategic objective, Samsung was ready for the Six Sigma process to start in the late
1999 and early 2000 with training for Samsungs management and employees who is
responsible for deployment planning with the help of Juran Institute Inc. for the training.
 Three years after the deployment, the number of MBBs 1 , BBs 2 and GBs 3 already
increased to 15,000 which is almost one third of employees. With a business goal of
achieving 100 MBBs, 3,000 BBs and 30,000 GBs by 2004, Samsung considered to
developing Six Sigma skill in a workforce of about 49,000 worldwide in 89 offices and
47 countries. There is no individual or operation in Samsung is excused from the
training, including staff members in management, personnel, accounting and
procurement. BBs are expected to guide numerous projects per year, which further
upsurge each projects return on investment. Promotion, other awards and
encouragements are awarded by the operation in which employee is allocated.

On 2000, the uses of Six Sigma began in manufacturing by using define, measure,
analyze, improve and control (DMAIC) discipline. Then it was expanded for designing
new products. Transactional Six Sigma is then applied to business and support
processes internally and externally where the customer needs and communications
have become more and more important. In addition, Samsung do provides Sigma Park,
an intranet website which is available to all Samsung worldwide facilities by providing
benchmarking opportunities, report to senior management, reference materials and
improve of Six Sigma projects whose team member span in several regions. Cross-
border organizational learning is advanced as the Six Sigma is applied constantly from
location to location.

1
Master Black Belts.
2 Black Belts.
3
Green Belts.
 Figure 7: Samsung 2001 Financial Statement.
(Source:http://www.samsung.com/us/aboutsamsung/ir/financialinformation/annualre
port/downloads/2001/07FinancialReport.pdf)
As a result, on 2001, Samsung earned a net income of $2.2 billion on total revenues of
$24.4 billion. Market capitalization mounted at $43.6 billion. Referring to Samsungs
2001 annual report, Samsung is one of the top 10 electronic and electrical equipment
manufacturing firm in the world, with the best operating profit proportion and greater
monetary security. The report says that the debt to quality ratio is minor compared to
any high position company, and the shareholders equity to net assets ratio exceeds the
average.

Even though there is a world economy downturn and a reduction in export to United
States, credit for Samsungs current operating profit margin of 8.5% is due to the
quality improvements and the deployment of Six Sigma. Furthermore, Samsungs
quality and innovative strategy helped in reaching the number one position in the
Business Week 2002 information technology guide. The guide noted Samsungs
computer monitors, memory chips, telephone handsets, and other digital products,
focusing on four Standard & Poors criteria: shareholder return, return on equity,
revenue growth and total revenue.

Few years before 2003, Samsungs products were almost unknown by the Americans
or were known as the cheaper, lower quality substitute for the Japanese brands. This
perception is changed. On 2013, U.S. market now represents 37% of Samsungs total
sales.
4.0 Conclusion
In conclusion, the implementation of Six Sigma strategically helps Samsung to
turnover generate capital faster, minimize capital expenditure, and make current
capacity available and new capacity which is redundant, and product even better
outcomes from the drawing and Research and Development purposes. Such outcome
fostered a working situation that encourages employee development, morale,
inspiration, authorization and obligation, leading to enlarge the occasions for
endorsements.

Not many people realize Six Sigma is making major impact in a wide range of new
functions and processes. These include the transactional activities such and completing
an invoice, designing the procedures to improve cycle time and improving processes in
human resources, accounting, business, call centers, business planning and customer
services.

Although Samsung is not doing well for 2014, but this bad period made Samsung
realize that the influx of Xiaomi has hurt Samsungs most of the sales, and because of
the weak sales of Galaxy S5. As what Samsung might face on next year, hope Samsung
can do the quickest retrieval of the market condition, by develop a new business
strategies with an supposition that the condition might get worse on next year and steer
the company through this challenge.
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