The goal of the study is to have an in-depth analysis into the organizational structure, its relevance, importance, and its impact over the culture, brand value, sales, and success of the organization. This report will take into consideration various arenas of organizational structure of Samsung Electronics. It will cover the type of organizational structure followed, its impact over the present sales and success, problems and issues which act as a hindrance in in organizational development and classification of Samsung according to the Mintezberg theorem.
Samsung has evolved as a world’s leading brand resonating with the global leadership and success ladder. It is the world’s topmost leader in smartphone production, second leader as a technological organization and a brand that is ranked among top ten of the world. The diverse perspectives, cutting-edge technologies, innovation, and bold investments are the catalysts for growth and tremendous success. This South Korean electronics multinational paved its path as a subsidiary of Samsung group from 1969. There are a plethora of products such as batteries, semiconductors, hard drives, televisions, air conditioners and smartphone being manufactured by the company. Samsung electronics is spread across 80 countries and has developed a reputation by emphasizing on innovation in its management strategies.
The organizational structure of the company is spread over four major arenas namely digital media, telecommunication network, LCD and home appliances, and semiconductors. Each of these business units produce products in a variety of domains(Chang, 1988).
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The Organizational Structure
The organizational structure of an organization is decided based on the size of the company, the type of the industry of functioning and on the marketing strategies adopted by the company. It is the way in which job tasks are grouped and coordinated with each other.
The key elements in organizational structure are division of labor, span of control, departmentalization, formalization, chain of command, centralization or decentralization(Child, 1972) . All these key elements when coordinated and combined into a single thread of control governs the present and future of the organizational success.
Formalization is the degree to which officials are guided by the culture, rules, laws and regulations(Fredrickson, 1986). The degree of standardization is known as formalization. In Samsung Electronics, all the employees at any level of the hierarchy are strictly guided to follow the orders and decisions made by the chairman without any challenges. The structure in Samsung is centralized as lower level managers are not competent or do not have the authority to make any kind of decision. The decision chain filters from the topmost level seaming down to the ground level of management. Moreover, the lower management do not even have a stance in decision structure. In this centralized structure all decisions are critical and significant acting as a decisive factor for the company. This ensures that the decisions taken are well consistent with the organizational strategic objectives and reduces to take up the risk of wrong decisions. Even though Samsung has a geographically dispersed structure yet, the division of power and decision making abilities lies in the hand of top management team or more specifically the chairman. Samsung also ensures a constant spirit of dealing with all the stakeholders. The span of control is the number of employees functioning under a single manager. For the chairman of Samsung,this span of control covers the entire organization spread across the globe. Otherwise, the structure of the Samsung has a large degree of span of control. The chain of command is he flow of line of authority from the top level of management to functional level of the organization. The authority is inherent in the hands of the leaders and top of the managers with the responsibility lying over their competent shoulders. The unity of command follows from the strict organizational structure and management being accountable to just one authoritative leader. The work specialization and the division of labor is based on the fields of functioning and production of the organization(Miles et.al, 1978) . Individual experts specializing in different areas of the company’s manufacturing and development are given tasks to fulfill and execute. The main element of the organization is the theory of departmentalization which can be done based on various platforms and dimensions. The functional departmentalization of Samsung Electronics is done into four key areas of digital marketing, telecommunications, home appliances and semiconductors. This departmentalization is done inside the organization and calls for in depth specialization in every field with orientations, skills and coordination among the divisions. This functional departmentalization can also be seen from the in the view of product departmentalization in which employees function in different projects and groups targeting the type, nature and requirements of the products and the consumer base regarding the same. This kind of departmentalization in Samsung makes the product line close to the customers and hence is successful in making the organization as the world’s leader. However, there may be other types of departmentalization but Samsung Electronics have a centralized structure which limits to these models only.
The model of the organizational structure in the Samsung Electronics company is a department organizational structure with CEO as a commanding officer for the whole organization spread globally and with multiple heads, managers or leaders taking up the departments of finance, technology, marketing, research and development, or finance. This structure is the best suited of the organization as it segregates the skills and expertise and give an ability to best harness and exploit the expertise(Porta, 1999). However, sometimes there might be a lack of coordination and a narrow scope of learning and responsibility and a hindrance in the goals of far-sighted employees. Sometimes, the structure of Samsung can also be viewed as matrix structure with partly department oriented management and others based on the demarcation based on the product line or product organizational structure. But, it is seen that these structures may lead to duplicate managerial roles in each product line. The four major groups divided under fourteen divisions have manipulated the globe and have marked an imprint of Samsung Electronics all over.
The management of Samsung Electronics switched from a single CEO management system to a two-person team including GeeSung as CEO and vice president and Lee as COO and president of the company.
The organizational flow is from the chairman Lee filtering down to the office of secretaries and then down the hierarchy with affiliate leaders. Hence, Samsung has a powerful and effective structure which is owner-centered and is based on the platform to empower management. The chairman holds the power authority and hence decisions made are quick and empowered. The accountability and the responsibility for all the strategies and its implementation lies over the shoulders of one centered authority(Pugh, 1968). This owner empowered structure fits well with the high risk or high return industrial natures. The development of LCD technology or Play-stations were innovative results of this structure.
The structure also includes the inner circle within Samsung comprising of office of secretaries in which trained personnel are sent in the key positions to the affiliates. The trust based relation and the loyalty for the chairman is the key quality for selection. The group of engineers are key placeholders for technological expertise.
Effective Structure for Strategic Goals
The present structure of the organization is a golden key to the door of success. It is the catalyst for organizational success stories and developing brand image. With uncountable people owning at least one Samsung product, it is a true picture that the present organizational structure is promoting in overall progress.
Samsung uses smart strategies for advertisements used for marketing and based over its customers. It focuses over the special noteworthy features to be highlighted for their use.
They excel in pioneering the market by accelerating the technological productivity. The present marketing strategy resonates with the interplay of innovative, imagination, global research and development, strong commitment to ongoing investment, cooperation and collaboration of every element of the organizational structure and the supply chain.
The progress curve of Samsung electronics is ascending with the launch of cost effective, trendy and user friendly products.
The price for all the products are based over the motto of providing a trendy technology with a high command over brand quality and image in a premium price.
The Samsung stores are spread all over the world providing a digital experience.
The structure of Samsung is successful till date to produce world class range of products which is accepted and appreciated by the customers globally. The strategy of the company is more of end focused and less of mean focused(Hunter, 2002). This is as a result of the centralized hierarchy of organizational control which pays more attention over innovation and production of various product range meeting the demands of the customers and less attention towards the methods, means or process undertaken in order to produce goods or services. Decisions from the top management are filtered down the control line to be followed by the executives and employees and to return the final product in the market.
The organizational effectiveness is prudent and strategic utilization of resources (Brews, 2004) of all the departments to create and maintain competitive advantage. There are various approaches to attain the organizational effectiveness namely goal approach, system resource approach, strategic constituency approach, internal process approach, competing value approach (Cameron, 1983).
The goal oriented approach assumes the organization to be planned and logical entities for accomplishment of rationales of the organization. The organizational formal goals are dependent upon the social acceptability and the brand value. The effectiveness cannot be measured solely based on the goal approach as there may be multiple conflicting goals. Samsung is visionary to set up goals for the future and innovation to justify the procedures and means to fulfill the objectives. The vision 2020 of Samsung is goal oriented and aims at creating a promising and exciting future. The profound vision is itself appealing i.e. “Inspire the world, Create the future”. The product outputs and the marketing outputs are compared with the set objectives by the top management to evaluate the present performance and set future missions. This approach is more critical about the outputs and the results.
The system resource approach assumes the organization to be an open system of function (Denison, 1990) being aligned towards the inputs. It calls for effective utilization of valuable resources. It anticipates a blend of high quality of raw material and lower costs. Samsung is quite efficient is system resource approach for effectiveness as it guarantees good quality of material at premium costs. This effectiveness approach focuses its roots in means or the process of operation rather than the ends or result and products of the operation.
The strategic constituency approach fulfills the demands and requirements of the agencies or stakeholders in its supporting environment. This approach is highly ideal for organizations which are relying on the feedback or response to the demands of the customers. For Samsung as a leading brand for electronics and phones, this model is a perfect suit for the type of the organization and its sales. The marketing success and development lies to a great extent over the response from the customers. But critical care must be taken for satisfaction of every stakeholder associated with the organization.
The internal process approach is an outcome borne out of fixed output approach of goal orientation. But, it has a deep insight into the health, culture, commitment, coordination or satisfaction of the staff. When there is an effectiveness check into the organization then process and product both can be enhanced and improved.
Mintzberg’s Theorem of Organizational Structure
According to Mintzberg, organizational framework can be classified into various setups namely entrepreneurial, machine, divisional, professional, and innovative(Mintzberg, 1979). Entrepreneurial company usually showcases a loose structure driven by founders, leaders and business-minded people. These organizations are adorned with forward thinking ideals ad enthusiastic personnel. There is a vertical line of authority with direct supervision over subordinates and authority lying in the hands of the peak i.e. The CEO (Mintzberg, 1980). Samsung is directed by the the Chairman and is lead by the family holding major part of the shares. The control the overall management of the multinational company. Mintzberg suggested another type known as machine in which highly bureaucratic functionality (Mansfield, 1973) are practiced with a high level of standardization of tasks. Samsung as an enterprise do not have a machine bureaucratic structure which might sometimes limit the openness and innovation to new perspectives. Professional and innovative types are an outcome of decentralized architecture and organizational structure. Professional type showcases a high degree of competent driving the knowledge engine and fueling the talent pool by being able to make strategic decisions in their prevalent specialized skills by showcasing their autonomous working techniques. Qualified professionals enjoy a high degree of independence to depict their capabilities and highlight their talent. Innovative type calls for cutting edge creativity which decentralization as a superior feature for efficiency and judgments. There is no basic standardization to incorporate changes in the marketing environment. Samsung though calls for highly intensive and creative research and development unit and department yet, the key decisions, rules and regulations are being set and modulated by the top management leading to a spring back of innovative disruptive thinking strategies and increasing the level of dependence to execute something worth Euphoria! The divisional type of organizational type is common in large enterprises like Samsung Electronics with numerous units for business and a wide production line. The business is departmentalized to promote effective and divisional management with a centralized control commanding or guiding of vice presidents taking the responsibility of leadership in all facets of work within operational departments.
The problems with the present structure of Samsung is the main strength i.e. One man decision making structure. There is a complete uncertainty of sustaining of leadership. Even a wise emperor falls trap of mistakes and hence, a single decision making power may make several mistakes which cannot be challenged or questioned by the inner circle of management. Any sort of differences or challenges may lead to job threat and hence, may result into wrong or sometimes blunder decisions. All the important or unimportant decisions are taken up by chairman Lee and there is a lack of leadership by professional managers.
The sustainability of the family control over the Samsung and using cross shareholding to hold one of the largest portion of the shares can prove to be a threat in future.
The competition of the executives are against one another rather than behavior of cooperating and group work.
There is a need of transition from the founder management and the leading generation towards professional management and its rule over the decisions in the company. But care should also be taken to avoid future confusion, or intersecting conflicts, and to overcome cultural differences.
The unique leading model is not as proactive as expected. According to the organizational structure, there is a complete lack of accountability towards the external stakeholders. There is a leading trend of cross shareholding among the affiliates which is shifting the funds across various subsidiaries.
This current organizational structure on one hand empowers the critical decision making by concentrating the responsibility and a vision for focus in hands of some top managements only. This also leads to a fast execution in any department and any part of the organization by reacting to the dynamism effectively and by discussing the pros and cons of the market scenario thereby making rapid and well thought decisions. This is one of the secrets of quality of the Samsung Electronics products and their speed of product introduction. The response from customers are critically analyzed and hence quickly a new launch of product can be planned. But this system may not expand well geographically. Samsung electronics is spread across 80 countries and decisions if taken by just top management residing at the headquarters may lead to differences in execution. Different geographic areas may call for different requirements and hence decision making must be decentralized into the hands of managers for a particular branch as they understand the local needs ad culture and thereby will be able to make better decisions. The support and knowledge from expert and skilled personnel can be blended with the intellectual minds of the management and hence decision making process can be refined and qualified. The legacy of the family hierarchy may also call for challenges and criticism in regard with operational efficiency and in concern with incorporation of highly talented personnel by giving them opportunities to lead and rule the organization.
Hence, Samsung must adopt a hybrid structure with centralization for critical and globally important decisions and to let small decisions be taken up by the lower managing authorities. The structure must become a bit less tightened up and must open the doors for intellectual talent pool to be able to innovate and provide services for the organization. The organization should be flexible in order to remain competent in this dynamic world.
Hence, after research and knowledgeable insight into the concepts and techniques of organization structure it is observed that different organizational structures lead to various dimensions of efficiency in operations and meeting the targets, harnessing the expertise by creating a talent pool and appointing specialized personnel for special tasks, to enrich and enhance the quality of decision making, the modes and ease of communication within the organization and the span of control. Samsung Electronics is a huge organization with a spread across various geographic nations but still a centralized structure being guided by the Chairman Lee leading major organizational decisions and flow of commands.
Organizational structure in a vision inside the key competent factors and strategies of the company to overcome the challenges of the market and the consumer demands and excelling in the filed of production, research and development.
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