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SAMSUNG
Introduction
Samsung group is a South Korean multinational company its headquarter lies on Seoul its Samsung town, it comprises variety subsidiaries and affiliated businesses most of them controlled under Samsung brand
Lee byung-chul is the man who established Samsung in 1938 as a trading company and over the next 3 decades the group divided into areas that include food processing, textiles,insyuance,securities and retail.
Samsung started or entered the electronic industry on 1960 and also Samsung entered the construction & shipbuilding industries on 1970 and all of this areas was following lee byung-chul but after he died in 1987,Samsung was separated into 4 business groups
Samsung group
Shinsegaegroup
Cj group
Hansol group
Samsung has increasingly globalized its activities & electronics on 1990specially the mobile phone and semiconductors considered from the most important source of income
Samsung industrial subsidiaries include Samsung electronics and this considred as a world’s largest information technology company according to mesurment of 2012 revenues and also considered as a 4th in market value. Samsung heavy industries considered as 2nd largest shipbuilder measured by 2010 revenues and Samsung engineering and Samsung C& T considred no. 13th and 36th largest construction companies.
Also there is Samsung life insurance and this count no.14th largest life insurance company also we can Samsung has (Samsung everland) the operator of eve land resort, the oldest theme park in south Korea also Samsung include (Samsung Techwin) an aerospace,surveillanceand defense company also the Samsung has (Samsung cheil worldwide) and this considered as the world’s 15th largest advertising agency measured by 2012 revenues
Samsung has a very high powerful influence on South Korea’s economic development, politics, media and culture. Samsung produce fifth of South Korea’s total exports
Samsung began construction on building the world’s largest mobile phone factory in 2013
. Main Evaluative Content of the Case Study.
Globalization and its impact on SAMSUNG
Globalization describes the treatment and process by which national, regional economics; societies and cultures become integrated within or through the global network of communication, trade, immigration and transportation
Samsung started to build telecommunication devices in 1980 its early products were switthchooards, later Samsung’s mobile phone manufacturing took place
First step of Samsung into globalization when the company established or released its logo that consist of the word of Samsung that written on white color on blue background, the logo reflect the stability, reliability and warmth also the logo represent a moving world-symbolizing advancement, Samsung has 3 key messages to the world and its target audience (new technology innovative – products creative and solutions
Samsung cell phone found its way through American hands for the first time in 1996 when the company did partnership with “sprint” on sleek and compact phone
Samsung started to enter into mobile os market when the company launched its own open mobile operating system that known of the name of (Bada) later the company launched Samsung galaxy mobile that work by android technology
Samsung entrance into global market occur threat to “Apple”
Globalization lead Samsung to exchange of technology, Samsung network spread widely over the world, the company won 32 awards of innovation and engineering at the (consumer electronics show in 2008)
Samsung growth increase rapidly and the company had assembly plants & sales network in 61 countries in a short period Samsung can provide a lot of modern production techniques and also services allocated anywhere and this allow the company to achieve and gain the advantage of low cost labor and other resources charges
The awareness in India Samsung appoints AAmir khan as the brand ambassador for mobile phones on mar 18 2008
In 2013 Samsung released mobile (Samsung galaxy s4) into the market
Drivers of globalization
2 macro factors compose or underlie the tendency toward greater globalization, first one is the reducing the barriers to the free flow of goods and services and capital and all of these has occurred since the end of world war #
the second factor is the tremendous change that occurred on technology specially the rapid and dramatic development in recent years that happened in communication, information processing and transportation technologies
This is the original context from the book
International business
Competing in the marketplace “8e”
Evaluation of benefits and shortcomings of globalization for MNC and Hc
Samsung is truly global in scope and nature with more than 285 overseas operations in 67 countries, the strategy is to expand outside its home and this strategy bring to Samsung and also for the countries that Samsung chose to expand more opportunities, definitely globalization provides access to new customers, partners and suppliers and make Samsung gain more benefits from new cultures also new ideas
Samsung is already world leader in a lot of areas on business for instance in electronics filed Samsung considered as no1 as a producer of LCD, displays, memory chips, and CDMA handheld phones also according to finance filed Samsung ranked no 10 as a life insurance company
Samsung has formed collaboration and cooperative with some leading names in the global technology arena like Microsoft, sprint and AOL time warner also Samsung working with Intel, Sony as a technology exchange
And also Samsung make collaboration with Dell,IBM and Hewlett-Packard and this collaboration has helped to reduce risks in entering new areas on doing business and also achieve secure stable supplies
The listed companies for Samsung
Samsung gain an excellent opportunity from globalization, the company constructing the synergy with the Japanese company and its and its competitor (SANYO Electric Co.) in 2oo2 Samsung and SANYO formed joint venture
the core of Samsung globalization is that known as the regional specialist program since 1990.samsung started to send the young employee abroad for one year
And this one of the main reasons for me in chose SAMSUNG as the Multinational Company on this assignment.
Many companies dispatch employees to the four winds but in Samsung the program is distinguished more and the reason lie on what the role of Samsung employee once they arrive to the appointed country
Tae Gyun Shin, president of Samsung human resources center has conduct 3 missions to them
Learn the local language
Learn the local culture
Become an expert in their specialty
The program conducted on Samsung from 23 years ago and Samsung has sent more than 5000 employees to more than 80 countries
Story of how Samsung became no.1 on the world smartphone maker:
Shin himself is a product of this system, having gone through the program in 19995, he was sent to America, he traveled around the country visiting 40 states and by the time his year was up and took classes at Florida state university and Wharton. After a year he got a high global perspective and he said the regional specialist program is about improving and enhancing one’s capabilities and he was referring into his cultural education and experience that he gained we can conclude from the story that don’t achieve one purpose but achieve multiple purposes.
The host country that I choose for Samsung is Vietnam and I choose Vietnam for the following reasons:
I chose China,Malysia,India,Saudi Arabia and united Arab Emirate because of Samsung has a lot products and existence in Malaysia and India , Samsung has a big existence in India but its not proper in my opinion to be a host country for Samsung because of the high existence or presence for apple the direct competitor for Samsung electronics on India also the big existence for IBM
I chose Saudi Arabia and United Arab Emirate because of Samsung want to increase its value on this area on the world Like Saudi Arabia, Emirate, Kuwait…etc. and also Samsung has a high contact and presence on this area specially all citizens on this area prefer Asian and American products rather than European products
From the figure above that represent that china is the highest rank but this doesn’t mean that any company should chose china to be as a host country
Samsung has a lot of products industry in china but now china is doing the copy past for a lot of electronics devices also recently the worker wages has increased in china
Samsung electronics built world’s largest smartphones business in china and one of the reasons that make Samsung did that in china is the cheap and abundant workforce but now the workers wages has increased on china
Vietnam is suitable for Samsung for example the worker wages is very cheap also cheaper than china also Samsung should defend profit margins as growth in sales of high –end handsets slows.
The trend of companies shifting to Vietnam from China will likely accelerate for at least two to three years, largely because of China’s higher labor costs,” said Lee Jung Soon, who leads a business-incubation team of the Korea Trade-Investment Promotion Agency in Ho Chi Minh City. “Vietnam is really aggressive in fostering industries now.
Vietnam politically is stable also it has a young people increasingly and well educated workforce, LG said in an e-mailed statement: like Korea, Vietnam understand what it takes to rebuild an economy after devastating war
With about one third smart phones in global market Samsung may produce 80% of its handset in Vietnam, the handset is all about assembling well sourced components so the main and the most important element is the manpower
After Samsung established up in china in 1992 now the company has 13 manufacturing sites and 7 research laboratories there and the employee of Samsung represent more than 19% of Samsung Electronics global workforce and this considered as the largest source of workers of Samsung outside its home (Korea)
Record economic growth that make china the second biggest economy this occurred wage inflation so Samsung decided to search for another country that are also close or near to Korea and Vietnam is proper for this shifting also Vietnam has a good features that encourage Samsung to be there
Other countries is also near and close to Korea but Vietnam has an advantage of that it’s very close to Samsung ‘s supply chain
You can see Korean companies everywhere you look in Vietnam right and left
Samsung Electro machines co. factory announced that the company make camera modules and circuit boards along with other Samsung plants, well get half their infrastructure rent subsidized under a so- called strategic partnership
Also Samsung said this would help Vietnam build social infrastructure and nature key industries such as petrochemical and shipbuilding according to the south Korean conglomerate
MNC and Global Institution:
o Impact of Global Institutions on HC and MNC (eg.WTO/IMF/WB/FED/ECB/UN/G8 etc) o Impact of Regional Unions on HC and MNC (eg. EU/BRIC/NAFTA/ASEAN etc) o Discussion of one international trade theory – evaluation for MNC o Critical Evaluation / Summary of Impact on MNC Management (adv./disadv etc.)
MCN and National Factors
o HC ‘Macro’ Factors: political systems, economy, culture, religion, social structure, languages, legal system, goods/labor/capital markets (particular to HC and MNC)
o HC ‘Micro’ Factors: Intellectual Property / Competition / Product Safety / Contract Law / Product Liability / Privatization (particular to HC and MNC)
o Critical Evaluation / Summary of Impact for MCN Management (adv/disadv etc.) o Foreign Direct Investment in HC – evaluation - evaluation for MNC
Vietnam located in southeastern Asia bordering the gulf of Thailand, the gulf of Tonkion and the south china sea, the geography of Vietnam consist of mountains in the Western north and also has densely & hills
The governmental system of Vietnam is communist state Vietnam has a mixed economy, Vietnam is a member of the Asian pacific economics cooperation (APEC) and also the association of Southeast Asian nations (ASEAN)
Vietnam: Economy
On Vietnam’s congress approved broad eco. Reforms (Doi Moi or renovation) and this allowed the foreign investments to come to the country and this improved Vietnam’s business climate and Vietnam become one of the fastest growing economics in the world and the average is 8% annual gross domestic product (GDP) since 2011 the foreign trade and FDI have improved the FDI capital totaled on 2011 9.1 $ billion up by 1% in comparison of 2010 that was $ 8.88 billion, from 1990 to 2011 the agriculture production was doubled and this transforming Vietnam from a net food importer to be no.2 exporter of rice Vietnam export $ 70 billion with increase of 23% on 2001 in comparison with 2010
Vietnam shifted away from central economy planned to be more market oriented and this has increase the capita income and improve the quality of life
Also Vietnam has a grater emphasize on private sector development and this considered as a critical for job creation
The government on Vietnam proposed a strategy for restructuring the nation eco. By 2015 and this strategy consist of 3 pillars
Improving public investment
Reforming the state owned enterprise
Restructuring finance market and focusing on the banking system
The entrance into force of the bilateral Trade agreement (BTA) that occurred between Vietnam and USA was significant millstone for the Vietnam’s economy and it has expanded rapidly and dramatically it was raising from $2.97 billion in 2002 to $18.6 billion in 2010 and USA considered as Vietnam’s second largest trade partner after China
The implementation of (BTA) include provision on trade in goods and services and this reinforcement, application and enforcement of intellectual property rights and also considered as a protection for investment and this obviously and fundamentally changed the regime of the trade in Vietnam and also assist Vietnam to accede to the world trade organization (WTO) and this occurred in 2007
To meet the obligations of (WTO) Vietnam granted permanent the normal trade relation with USA in 2006, Vietnam did review its law about trade and investment to guiding the regulations and opened up a large sector of its eco. To foreign investors and exporters
Trade and balance of payment
Vietnam liberalized trade, devalued its currency to increase exports and to make integration with the world economy, Vietnam concern on create more competitive and open eco. By committing to several comprehensive international and open eco. And also trade agreements that including the association of Southeast Asian nation (ASEAN) and also free trade area (AFTA)
In 2010 Vietnam make negotiation for the trans pacific partnership (TPP) free trade agreement
Vietnam chief of state is president “Truong tan Sang” and the head of government is Prime Minister “Nguyen tan Dung”
A new state constitution was approved in April 1992 reaffirming the central role of the communist party of Vietnam (CPV) in politics and society
Over the last decades Vietnam has realized and recognized the increasing importance of growing global economy and it did a lot of effort to adjust its foreign relation and this to evolving international economic and political situation in southeast Asia and it has integrated itself into the regional and global eco. By joining international organizations, Vietnam become a member of the (WB) , the international monetary fund and the Asian development bank the country has expanded its trade with its east Asia neighbors as well as countries in western Europe and North America and on Vietnam joined the (ASEAN) also joined the (APEC) on 2006
Vietnams culture
population : 82,689,518
ethnic make up: Vietnamese 85%-90% , chinese,hamong
Thai, Khmer,cham,various mountain groups
Religions Buddhist,Hoa hao, cao dai,cherstian muslims
Language: the official language is tonal official language that can be compared with Cambodias language and there are 6 difference tones that can be used
There are other language spoken such as Chines, khmer , cham and other languages spoken although there are some similarities to Southeast Asian language
The written form is Roman alphabet
Vietnamese (official), English (increasingly favored as a second language), some French, Chinese, and Khmer; mountain area languages (Mon-Khmer and Malayo-Polynesian)
.
Confucianism
This describe the positions of the individual in Vietnamese society
The teachings of Confucius influence the Vietnamese describe the position of the individual in Vietnamese society.
Confucianism is a system of behaviors and ethics that stress the obligation of people together and on another based upon their relationship
Intellectual Property on Vietnam
Vietnam realize and recognize the importance of protecting intellectual property rights that include trademarks and services marks also copyright and industrial designs all of this with the implementation of Bilateral Trade agreement provisions regarding IPR the intellectual property rights was modeled on the (WTO) agreement. The National office intellectual property (NOIP) is responsible for the registration of intellectual property so any foreign organization should did application on that office and complete the registrations, obligations at the copyright office that controlled by Ministry of culture and Information
Foreign investment on Vietnam
Foreign investment has grown in the country and USA considered as the main trading partner to Vietnam, the country consumer market is fuelled by the appetite of a young, and distinguish of middle class for electronic and luxury goods, Vietnam has joined the world trade organization in 2007 after 12 years of negotiations
Vietnam government conduct policy of attract the foreign direct investment to bring investment and technology to the country and provide opportunity for unemployment so the country do facilities to attract the consumers to do their business in the country so this ease a lot of regulations to Samsung like low taxes flexible law contract etc.…
With the limited capital and tech. resources of Vietnam its essentially to attract TNCS for contributing to the country manufacturing and economic develop
Foreign Contractors on Vietnam
Withholding tax for foreign contractors
Foreign corporations doing business in Vietnam or earning income in Vietnam without establishing a legal entity therein are subject to a withholding tax, generally comprising CIT and VAT.
Depending on whether or not the foreign contractors adopt Vietnamese Accounting Standards, the FCT can be applied on a deemed method or a deduction method. Generally, the former is used in most cases. The majority of services carry the rate of 5% each for both VAT and CIT under the deemed method basis.
In addition, a hybrid method where a foreign contractor can pay VAT under the deduction method and pay CIT on withholding basis on the gross value of the contract can also be applied for eligible foreign contractors.
Vietnam capital investment
According to the World Bank that said that Vietnam depend on the rapid economic growth from resilience on capital investment this is not sustainable so the country should focusing on making its workforce to be more productive
The economy of Vietnam grew 5.42% in 2013 and forecasting to expand less than 7% on 2014, Vietnam received $11.5 billion in distribution FDI in 2013 with 10% increase from 2012, and the statistics office represent the FDI has rapid growing on the country and this reflect how Vietnam is a good environment for FDI however this has a high advantages to the foreign investors and also the country (Vietnam) but also has some disadvantages on Vietnam productivity and creativity
Impact of Samsung & Advantages and dis advantages on Vietnam
Vietnam has set a goal to create an advanced tech. eco. That contributes 8% to 10% to gross domestic product by 2020 as a companies such as SAMSUNG that has a high quality employee and workers also Samsung bring new technology and high direct investment and capital also pay taxes
Samsung electronics co. has increased its presence in Vietnam the country that is one of the fastest growing economic .its local arms
The Vietnam plant will focus on mass production of PC monitors and printers and Samsung has already TV plant on HCM this is a city on Vietnam
MNC Entry Strategy into HC
(KPMG)
KPMG considered as a largest professional service firm in Vietnam the firm established and has been activated since the country has opened the doors to the foreign investors and conducted the open market to FDI
KPMG has an active office in city of HANOI.HO
Chi Minh city and phnompenh and the company has more than 800 professional employees in Vietnam, KPMG provide services such as (audit, tax, advisory and market entry
KPMG is an active participant in the reform program and regularly advises the government and also KPMG provide tips and advises to the international organization that do business in Vietnam and this help Vietnam to reform and integrate program
Critical Evaluation of Strategy used by MCN into HC – with evidence.
The entry strategy of SAMSUNG on VIETNAM is Partnerships
Samsung Group Enters Strategic Partnership with Vietnam
Samsung group has established global strategy office (GSO) and this office has operated by C&T and considered as a part of the efforts that provided and it seeking to build and establish partnerships with countries that have rapid and enormous potential growth
Samsung want to implement complex infrastructure, bullied projects and global strategic partnerships and the company selected Vietnam to be the first strategic partner and Samsung arranged a huge visiting to Vietnam that was include president of Samsung , CEO and operator of the project to meet Prime Minister
Of Vietnam and the minister of planning and investment and the negotiation was about establish cooperate on priority programs for the Vietnam’s government that include power, urban development, , shipbuilding and public ICT programs and airports, chemical engineering
The company expect that the MOU will enable the company to develop detailed plans and participate in the thermal plant construction and operation project and this project Vietnam are promoting to be as a part of its national power development plan also SAMSUNG will cooperative on developing the infrastructure of Vietnam that include the HANOI urban development project and the national shipyard management normalization project
The developing strategy of Vietnam jointly invited more than 150 government officials & academic & business leaders to the intercontinental hotel of HANOI so Vietnam government organized conference to share Korea’s model of economic development and discuss measures for mutual cooperation
If I talk about SAMSUNG Electronics I can say that Samsung electronics employs approximately 40,000 workers in Vietnam also the company has a large scale of R&D center
Conclusion
From this assignment we conclude that how the globalization change the trade ways and obligations all over the world and on SANSUNG and VIETNAM case we see how the partnership that Samsung do with VIETNAM after Samsung decide to shift up from china to Vietnam and also the assignment represent the market features of Vietnam and how the country policy to attract FDI by doing open market and the impact of the world institutions on the country and also the multinational company
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