Samsung Electronics: 
Success by Design 
Case Study Analysis of Strategic Management 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9/21/2008 
TANMAY KUNDU (3052) 
SUKANYA DUTTA (3049) 
PAMELA PRAMANICK (3031) 
NISHA BHOIR (3014) 
DAIPAYAN LODH (3015) 
Samsung Electronics: Success by Design 

CASE Abstract
Samsung Electronics is a Korea-based consumer electronics company. The case describes
Samsung's journey from a company focused on manufacturing to one known for the excellence
of its product design.

It discusses how the company came to use design as a differentiator and for competitive
advantage.

It describes the steps that Samsung took on the people, process, and system fronts to improve its
design capabilities. The case also talks about Samsung's design philosophy, and ends with a brief
discussion on the use of design as a competitive advantage.

Focused Issues
¾ Gain insights into a company's design delivery process

¾ Appreciate the importance of design in consumer products

¾ Understand a company's efforts to gain a competitive advantage using design as a

differentiator

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Samsung Electronics: Success by Design 

Acknowledgement
“There is joy in work. There is no happiness except in the realization that we have
accomplished something” - Henry Ford

The making of any project requires contribution from many people, right from inception till its
completion. In our case also, there had been a few people who have made this happen. It was not
only learning but also an enriching experience.

We would like to thanks Prof. Saravan K. for explaining the concepts of Strategic Management
to us, for being a source of inspiration and for the valuable suggestions provided throughout. His
constant follow-ups and result orientation ensured that we successfully meet the deadlines.

“Teachers open the door, but you must enter by yourself” - Chinese Proverb

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Samsung Electronics: Success by Design 

Contents

CASE Abstract 2
Focused Issues 2
Acknowledgement 3

Introduction 4

• Background Note 5
• Samsung's Focus on Design Innovation 7
• Bringing Cultural Changes 7
• Systemic and Process Changes 7
• Samsung's Design Successes 8
• Criticism 8
• Outlook 9

SWOT Analysis 9

Samsung Strategies in India 10

Porter’s Generic Competitive Model and Samsung Electronics 11

Value Creating Activities Associated with the Differentiation Strategy and Samsung
13
Electronics

Creating a Premium Brand 15

Leadership through a continuous commitment to R&D 15

Questions for Discussion 16

• Additional Questions 18

Conclusion 20

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Samsung Electronics: Success by Design 

Introduction
In the 2006 IDEA (Industrial Design Excellence Awards4) competition, Korea-based Samsung
Electronics Co. Ltd. (Samsung) won 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.

However, as of 2006, several small and big companies were following in Samsung's footsteps,
and hiring design houses and consultancies to improve their product designs. It seemed that in
the future, design itself was in danger of being commoditized.

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Background Note 
The Samsung Group was founded by Byung-Chull Lee (Byung) in 1938, in Taegu, Korea, as an
exporter of dried fish, vegetables, and fruits. Byung later established flour mills under the
Samsung name (Korean for three stars). He also produced confectionery machines in this period.
In 1951, Samsung Moolsan, a holding company, was established, which later became Samsung
Corp. In 1953, Cheil Sugar Manufacturing Co. was set up, which later became an independent
company. In 1958, Samsung acquired Ankuk Fire and Marine Insurance (later renamed Samsung
Fire and Marine Insurance) and DongBang Life Insurance in 1963 (later renamed Samsung Life
Insurance).

In 1966, the Group founded Joong-Ang Development, an entertainment (theme parks) and
Services Company, which was later, renamed Samsung Everland.

In 1969, Samsung Electronics Manufacturing Co. (SEMC) was incorporated. In the 1970s, the
Samsung Group forayed into the shipbuilding, chemical, and petrochemical industries. In 1974,
the Group8 acquired a 50% stake in Korea Semiconductor Co., a joint venture between Korea
Engineering & Manufacturing Co. and Integrated Circuit International. SEMC started exporting
its products in the 1970s. In 1978, the Group's electronics exports crossed the 100 billion won
mark.

In February 1984, SEMC was renamed as Samsung Electronics. In the mid-1980s, the Samsung
Group began to concentrate on R&D activities.

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Samsung Electronics: Success by Design 

Samsung's Focus on Design Innovation 
Samsung's journey toward design excellence started in 1993. That year, Lee reportedly visited an
electronics store in Los Angeles, USA. He noticed, to his dismay, that the Samsung products on
display looked unattractive, while the products of Sony and some other companies looked much
more appealing.

He found too that the sales personnel at the store were themselves ignoring the Samsung
products. Lee realized that Samsung was paying too much attention to volumes and the cost of
production, while ignoring customer value. He recognized that in order to survive, Samsung
would have to make high quality, exciting products.

Lee said, "…having taken responsibility for the management of the group for five years, I have
come to realize that Samsung has reached a turning point where it simply has to change. We are
not yet adapting ourselves to the new economic environment. Our management is still
maintaining a policy that puts priority on quantity rather than quality. We have to change if we
are to survive. That is our only chance."

Bringing Cultural Changes 
Although Samsung had no problems in funding and creating the design infrastructure, it faced a
more difficult task in convincing the rank and file at the company that design was necessary for
survival and growth. Most of the employees were more concerned about costs and volumes than
design. "Samsung was a technology company whose management thinking came out of
exporting rice," said Bruce, "There was no design involved. It was all about keeping the price
down and outselling the other guy."...

Systemic and Process Changes 
Samsung redesigned its systems and processes to improve the design delivery process. First, the
company modified its product creation process. Samsung earlier was an engineering-driven
company and there was very little interaction between the company's engineers, marketers, and
designers. The designers only took orders from engineers and product planners. However, this
arrangement was done away with, and designers began to enjoy as much, if not more, authority

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Samsung Electronics: Success by Design 

as engineers and marketers. Collaboration between different departments became a key aspect of
new product development...

Samsung's Design Successes 
Samsung had a string of design successes in the 2000s. For example, the Syncmaster series of
LCD monitors was lauded for its simple design and went on to win several awards.

In the 2000s, LCD TVs and Plasma TVs were gaining in popularity, while the popularity of the
much bulkier projection TVs was waning.

Therefore, Samsung's design team started work on developing a slim projection TV based on
digital light processing (DLP) technology. The result was the highly acclaimed HLP series of
DLP TVs, which had the processing engine standing upright and functioning as a pedestal base...

Criticism 
Some critics commented that even if Samsung's design capabilities had improved greatly, the
company still lacked a coherent design. "Samsung has improved, but I don't see an identity in
their design that really speaks to consumers," said Jim Wicks, vice-president (in charge of
designing cell phones), Motorola Inc. According to some other critics, the company still did not
have the design culture of Apple Computer Corp., or the breadth and depth in design that Sony
possessed...

Outlook 
In September 2006, Samsung unveiled the Syncmaster 971P, an LCD monitor. The product was
unique in the sense that it had a geometric shaped stand, unlike conventional LCD monitors (See
Exhibit XI for a photograph of the Syncmaster 971P). The company claimed that the S-Shaped
stand gave the monitor additional stability...

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Samsung Electronics: Success by Design 

SWOT Analysis

Strengths 
o New product concept to rollout in five months.
o Catching the pulse of the consumer, offering good designs & understanding
Emotions.
o Heavy investments in technology, product design, and human resources.
o Focus on innovative products for the high-end market.

Weaknesses 
o Not proactively coming out with newer models.
o Lack in product differentiation.
o Different models at different price points.
o Focus on mass market instead of niche market.
o Not very user friendly designs.
Opportunities 
o Distinguish its service from competitors.
o Offer product variations.

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Samsung Electronics: Success by Design 

o Lowering the price of the products in many countries could increase its
affordability by 43%.

Threats 
o Aggressive competitors
o Not keeping track of the new trends in the market.
o Not an accessory and fashion statement.

Samsung Strategies in India

¾ Aggressively hawking flip-tops and clamshells with polyphonic ring tones and color
screens.

¾ Nationwide distributor and retail presence in the domestic consumer durables market.

¾ Samsung has been associated with the Lakme India Fashion Week (LIFW) for its mobile
phones. The company used the LIFW-2005 as a platform to launch its D-500, World’s
Best Mobile Phone in Indian market.

¾ Set up a handset manufacturing facility in India.

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Porter’s Generic Competitive Model and Samsung Electronics

Michael E. Porter in the year 1979 came out with a framework that set the benchmark
profitability on the basic of cost of capital. The theory suggested that all strategies are derived
strategies from three generic strategies. They are cost leadership, differentiation and focus.

Three Generic Strategies

Strategic Advantages

Uniqueness perceived
Low cost position
by the customers
Strategic target

Overall Cost
Industry wide Differentiation
Leadership

Particular segment
Focus
only

If we consider these Samsung case with the Michael Porter’s Generic Competitive Strategies,
then we can easily tell that they are following differentiation strategy. Because the differentiation
strategy adapted by the firms needs to possess sufficient skills and abilities to differentiate the
product from that of the competitors. Firms that adopt the differentiation strategy successfully
have to do scientific research, a highly skilled labor force, and effective customer
communication strategies. A firm may differentiate its products and services in various ways like
it may differentiate itself from others in terms of design of brand image, features, technology,
customer service or quality. By using the differentiation strategy, a firm is able to influence the
perception of customers that a product or service is unique, rather than having to reduce its costs
to attract customers.

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Samsung Electronics: Success by Design 

Samsung also differentiate themselves by invocating various and new types of design in their
products apart from using cutting-edge technology. Samsung was not sure that their design
would appeal to a global audience or not that is why they hired a group of Japanese Design
Consultant to evaluate Samsung Designers. They try to incorporate Korean values in their
design. Also, in order to create high level of creativity, Samsung sending it’s more experienced
designers to work abroad in diverse industries. These way Samsung design strategy involved
several initiatives and Samsung began to implement a global brand communication strategy. In
2006 IDEA Competition, Korea based Samsung Electronics Co. Ltd. won a Gold and two Silver
awards for their design invocation.

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Samsung Electronics: Success by Design 

Value Creating Activities Associated with the Differentiation Strategy

and Samsung Electronics

Secondary Activities: 
• Firm Infrastructure: In 2001, Samsung inaugurated the New Design Management
Center at Seoul and 2004, company created a new Position-Chief Design Officer.

• Human Resource Management: Send designers on a worldwide tour in an effort to

expose them to various culture as well as ACCD, California, hired a group of Japanese
Design Consultant to expand the employees’ horizons.

• Technology Development: Samsung modified its products, creating process and try to
increase the interaction between Engineers, Marketers and Designers.

• Procurement: Introduction of design bank, where designers saved designs, so they could
be used later.

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Samsung Electronics: Success by Design 

Primary Activities: 
• Inbound Logistics: Samsung began holding design meetings on a regular basic where
the Heads of all Business Units assessed new products and evaluated their design.

• Operation: Consistent manufacturing of attractive products like 10 Megapixel Camera

Phone, Watch Phone, Extiva Nuon-Enabled38 DVD Player, the World’s Largest 102” Full
HD PDP Plama TV, The Syncmaster 971P.

• Outbound Logistics: To ensure that the supplier supply the raw materials at right time,
right place, they try to extensive the personal relationship with suppliers.

• Marketing & Sales: Increase the delcredere commission, giving slotting charge to
reduce the product shelf life.

• Service: Complete field stocking of replacement parts.

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Samsung Electronics: Success by Design 

Creating a Premium Brand

Samsung Electronics has entered new territory as a premium brand, outshining many of the
biggest names in the business.

(Source: Business Week / Interbrand)

Leadership through a continuous commitment to R&D

Certain competencies are important for becoming the world leader. First, a company must have
the creative people who can develop the appropriate technologies. Second, cooperation is needed
among business partners throughout the entire supply chain. Finally, new markets have to be
pioneered continuously.

Speed is essential for remaining competitive in today’s digital era, as new technologies are being
constantly introduced to the market. Samsung strive to understand what customers need ahead of
competitors. Samsung engineers adjust their thinking to develop original and innovative products
that will meet those needs as well as new technologies to lead the future market.

(Source: USPTO)

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Questions for Discussion

Qs. 1) While design may be a differentiator, to what extent do consumers make their purchase
decisions based solely on this aspect? Will your answer be the same if the product in
question was not a high-tech product?

Ans.1) There is many other factors that come into consideration while purchasing a product,
design is only one factor, there are also other factors like price, quality, brand, etc.

For high tech product, consumer purchase decision sometime solely depend on design
strategy, e.g. mobile, electronic goods, etc. But in case of low tech product, their decision
may vary depending upon the product category, an individual choice, standard, etc., for
e.g. in case of a pen which is a low tech product, while purchasing it, a student will
search for a cheap price, good quality and more utility one. But if the same pen is
consumed by a person holding a executive position, he will look for a high price, high
utility, innovative design, which suits his personality. Therefore, decision of purchasing a
product depends on many other factors, rather than design.

Qs. 2) Analyze the changes that Samsung brought about in its design delivery process. Which of
these were the most critical in helping the company improve its design capabilities?

Ans.2) Samsung redesigned its system and process to improve the design delivery process:

i. The company modified its product creation process. Samsung earlier was on engineer
driven company with very little interaction between the company’s engineer, marketers
and designers. The designers only took orders from engineers and product planners.
However, this arrangement was done away with and designers began to enjoy as much as
authority as engineers and marketers, collaboration with different department became a
key aspect of new product development.

ii. All designers at the corporate design center worked in a four stored design lab in large
open halls with hardly any segregation. For e.g. designers in consumer electronic and
computer product division worked alongside appliance and mobile handset designers.

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Design department also started a design bank where designers save design so they could
be used later.

iii. Samsung also begin holding design meeting on regular basis. In 2004, the company
created new design position – Chief Design Officer.

iv. From 2000, Samsung increase its design budget by 20-30% annually. It also doubled its
number of design staff from 230 in 2000 to 4000 in 2006, adding 120 designers in 2005-
2006 alone.

v. It also incorporated Korean value in its design. The founder Byung-GHULL Lee choice
Seokguram, a remote mountain cave that housed an 8th century Buddha, and the phrase
“The Balance of Reason and Feeling” as the design philosophy for Samsung product
design and graphic communicate. It states that we will meet the emotional needs of our
customer with technological solution.

vi. The most critical strategy which helps the company in improving its design is
incorporating Korean value in its design and it implies in the phrase “Balance of Reason
and Feeling” that reason and feeling are opposite but they are essential to each other. In
design terms, reason is rational sharp edged and very geometric where as feeling is soft
and organic. Its makes an emotional connection with the user. The reason and feeling
approach was to have six guiding principles such as:

a. To balance consistency with variety

b. Harmonize with environment

c. Design for experience, etc.

Qs. 3) Do you see a future where design would cease to be a useful differentiation? Are there
some markets or industries where there is happening faster than its others?

Ans.3) Since many industries have started concentrating in design strategy as a tool for
differentiation its product from others. So design would no longer be an adequate

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differentiator. Now-a-days, even smaller players are also concentrating on design strategy
to fulfill the need of their potential customers. Therefore, in order to stay ahead in the
competition, an industry should focus in high-tech technology rather than concentrating
in design strategy.

Though in the long run design, strategy will not act as a differentiator for many
companies, but still some industries like automobile, telecommunication etc. are
concentrating on design strategy than in any other strategies.

Additional Questions:

Qs. 4) How Samsung changing their approach to design?

Ans.4) In the past, Samsung regarded designers as people merely carrying out the role of
designing products. In the future, they believe designers will have to be integrators,
combining everything from initial research to the use of products. They must invest more
in researching user behavior and discovering what's happening in the market.

The first concrete step is expanding design labs overseas. Their focus will be shifted to
uncovering consumer trends, what's hidden beneath the surface, instead of more visible
things such as color or materials. Design comes from experience. One of the most
important activities of a designer is to figure out how to take that experience and turn it
into products that fit a specific market.

Qs. 5) How are the foreign labs different from Samsung’s "usability lab" in Seoul?

Ans.5) The usability lab focuses more on the behavior of users before products are made, while
labs in various regions focus on the lifestyle of local people and on making sure products
are adapted to local tastes. The Tokyo lab is more geared to finding out trends in
materials and finishing technologies in Japan.

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Qs. 6) What are the recent measures Samsung has taken to improve its design capabilities?

Ans.6) Nearly 90% of Samsung’s sales come from overseas markets. To support their products,
they must become a more global organization. Their objective is to develop premium
products, what they call mass-prestige products. To make premium products, designers
will be allowed to focus on their own strengths. Designers with outstanding creativity
will explore and formulate product concepts, those with a lot of experience will work
closely with engineers to design them, and finally a group of designers will be engaged in
assessing markets and user response to the products. And their research activities will be
expanded so that they will have a better sense of trends in various markets.

Qs. 7) What are some examples of bad design at Samsung?

Ans.7) Low-end refrigerators produced in China were a bad example as Samsung did not
conduct user research for the products. Although China had become a production base,
they did not make products to suit Chinese consumers' tastes and needs. Consumers were
not satisfied with the finishing, and assembly quality was badly managed.

The designers should take at least half the responsibility for this failure. The designers
behaved as if they were bystanders. Designers should sign off on a product after checking
its final quality. Had designers been involved more deeply, they could have avoided such
a lapse of quality control. To make sure they do take such steps, they set up the Shanghai
design office. They'll also dispatch their designers to the production sites to make sure
they will be able to issue final approval for the quality of products.

Qs. 8) Which competitors have good design and good design management along with
Samsung?

Ans.8) Apple (AAPL), Sony (SNE), and Sony-Ericsson are excellent. The managers of those
companies have maintained a special interest in design. Matsushita [Electric Industrial]
(MC), which recently spun off its design unit, has successfully managed its National and
Panasonic brands. Their management system served as a stimulus for Samsung.

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Conclusion
In the case of Consumer Electronics, design has come to play a significant role. Earlier, most
consumer electronics product were expensive and not within the reach of everyone. At that time,
purchase decisions were primarily based on a price, quality, and features. However, over time,
products like TVs, home theater systems, and digital cameras became more affordable and
within the reach of a vast majority of people. Quality was no longer a differentiator, and most
brands offered similar products in terms of features and pricing. In this scenario, the most
successful consumer electronics companies were those that recognized the importance of design.

Sony also thinks that design is the only thing that differentiates one product from the other in the
marketplace. A marketing expert, Seth Godin, believed that design was the single highest-
leverage investment that any business leader could make. Also, a reputed industrial designer,
Yves Behar, believed that design bred customer loyalty. Actually, design could be used to create
emotional bonds with customers. Samsung also not a exceptional case, they are also trying to
connect with its customer by introducing products with appealing designs.

On the other hand, looking at design trends and the fact that even smaller players were coming
up with products with interesting designs, it seemed as though in the future, design would no
longer be an adequate differentiator, as most products were expected to be well designed. So, to
sustain Samsung’s position in the marketplace as a market leader, they have to think something
which is out of the box, like in the year 1993, they started design innovation.

:: The End ::

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