Enterprise and Innovation in Practice - Case Study Example

Enterprise and Innovation in Practice al affiliation: Samsung growth strategies Select a company that has grown rapidly over the last five years. Identify and analyze the strategies that are used to do so. Discuss what you learn about developing and growing a business and the challenges to growth Introduction brief Samsung is a conglomerate that is based in South Korea and has a number of auxiliaries. The corporation’s principal focus is on electronics, defense, heavy industry and construction industries. The company has presence in other sectors like the insurance, entertainment and advertising businesses. The company’s products accounts for twenty percent of South Korea exports. The company was formed in 1938 by Byung-chull lee as a grocery, and later into a textile in 1947 (Michell, 2011). The company started a diversification strategy that became the company’s growth strategy, swiftly expanding to securities, insurance and retail business. The company further developed a redevelopment strategy with the key focus being industrialization, following Korea destruction after the Korean War. In 1960, Samsung ventured into the electronics industry with the creation of divisions focusing on electronics. These included the Samsung electro-mechanics, Samsung semiconductor and telecommunications that produced black and white TV sets. The growth strategy continued in 1980 when Samsung ventured into telecommunications industry, building telephone switchboards, phone and fax systems and mobile phones. This resulted in heavy investments in research and development, which resulted in cross border expansions to places like New York, England and Portugal. Byung-chull’s death in 1987 led to the split of the Samsung group into four business groups; engineering, construction, electronics and high-tech products. Growth throughout the 1990s saw Samsung secure high profile construction projects like the Burj Khalifa Tower in UAE. Samsung underwent a reorganization in 1993 that entailed selling off of some auxiliaries and downsizing, with a growth focus on electronics. This made Samsung the largest LCD panels’ manufacturer in the globe (David and Foray, 2005). In 2011, Samsung acquired Sony’s stake in their 50-50 LCD supply partnership and took full control. The future’s focus for Samsung is centered on electronics, mobile and biopharmaceuticals. Why firms grow (literature) The most common imperative for firms and businesses entails the need to grow. All firms need to grow, and those that do not struggle to find new human resources and capital. The reason is that, a firm that does not grow is an unattractive investment, and will only offer scarce opportunities for the personal development for the company’s workers. Firms grow for the following reasons: seek revenue growth opportunities, compete against global rivals, gain global knowledge, sustain global customers, as well as to attain efficiency in management of value chain activities. In some industries, growth opportunities in the worldwide markets exceed those that exist in home markets. Firms operating I smaller countries like Switzerland will find globalization a stronger imperative than firms operating in larger economies like Japan (Tassey, 2011). Firms seeking for a market leadership position have to compete on a worldwide basis when a global rival exists. A firm operating in a global industry will experience competitive demerit by not competing globally. For instance, the upstream oil industry of oil and gas examination and manufacture, firms like ExxonMobil and BP must grow in order to compete globally and view the globe a potential source of petroleum supplies. Whilst there are numerous regional players in the oil industry, they cannot compete globally for market leadership. The reason is that enormous capital, knowledge and ability to manage perils are needed for major upstream projects. This is the sole reason why there are unending mergers and acquisitions in the oil industry. The need for supporting global customers is another imperative why firms need to grow, especially when global clients have a noteworthy bargaining power. For instance, when Japanese vehicle manufacturers ventured into North American markets in the 1980s, the automakers persuaded their suppliers to follow them. If the suppliers declined to follow the automakers (their customers) to North America, they would have damaged the complex network of implicit trade agreements existing between manufactures and suppliers in Japan. In this case, the Japanese had no option except to go into North America (Lundvall and Johnson, 2004). Firms also need to grow in order to gain global knowledge, as the knowledge based competition has become a verity in many industries (Penrose and Pitelis, 2009). This implies that acquiring knowledge beyond the firm’s borders is usually a strategic need for survival. In every global industry, there exists centers of excellence or bunches of competitors like the high tech Silicon Valley, fashion in Paris and cosmetics in Japan. To be a market chief in the cosmetics business, a firm therefore has to compete in Japan, as Paris as well. The firm has to be exposed to state of the art knowledge across all its value chain activities. Firms also grow to achieve efficiency. Efficiency can be either in terms of per unit production and location outside the domestic market so as to execute a value chain task a lower cost. In terms of per unit calculation, a firm has to look for growth in international markets to exploit sales advantage as part of logical course of action, once a company outgrows its domestic market. For instance, pharmaceutical companies experience a high cost of developing commercially viable drugs, due to high r&d expenses. Such firms have to look for international markets to justify the cost of production. Firms attaining efficiency outside the home markets seek to optimize labor costs, technological know-how, logistics, tax burden and national based incentives in order to be cost efficient. This implies looking closely at the firm’s value chain and coming up with the best possible location in which to execute the multiple value chain functions. Strategies that Samsung used for growth Samsung is among the world’s largest companies that have attained growth in the last five years. The growth strategies leading to such alarming growth result from opportunity recognition and entrepreneurial insight by the company’s executive management. Other strategies include rapid catch-up through technology acquisition and learning, product line diversification, resource release through restructuring and beating rivals through product and process innovation. Samsung uses discrete strategies and capabilities to achieve the above growth strategies by embracing innovation to bring new and existing products to the market. Three main strategies Samsung embraces are the need seeker strategy, market reader and technology drive. The company uses a need seeker strategy to actively involve existing and prospective customers to shape new products (diversification), which are founded on the finest end-user comprehension. By so doing, the firm struggles to be the first to market the new products. Need seeking endeavors to ascertain the desires of consumers and then developing products that address such needs before competitors (Patel and Pavitt, 2007). The abilities needed for success begin with the ideation stage where the company pursues an open innovation and generates consumer analytics and insights and emerging technologies. This helps Samsung establish consumer’s wants and new technology developments that help it meet these needs. The firm constantly engages in technology risk evaluation and management, since it relies on development of technically innovative products for its success. The company also focuses on both their customers and their competitor, by largely creating value through incremental change, and by taking advantage of the proven market trends (market reader strategy). Marketing reading strategy necessitates that the company pays attention on the competitor’s innovations. This calls for close attention by the firm to identify what customer look for in the products they chose, ensuring that it delivers fully differentiated products. Samsung’s top management ensures that the right products reach the market at the appropriate time to ensure that this strategy succeeds. The original process of choosing the projects to center on is very critical. The management focuses on forecasting and planning for the undertaking resource requirements, as well as making a tough decision with regards to portfolio tradeoffs (Abernathy and Clark, 1995). The technology drive makes the corporation follow the direction of its technological abilities, where the company devotes a substantial investment in research and development activities. Technology drivers start with a different methodology to ideation. Samsung uses its technological dexterity to come up with products that customers do not know they need. The ideation is very critical for this strategy and Samsung pursues an open innovation process that captures as many ideas as possible. The company creatively scans the market for new technologies that may propel further the quest of its ideas. Companies pursuing this growth strategy ensure that the technical human resources have time to ideate. For instance, Google has a 70-20-10 rule, where technical experts utilize seventy percentage of their time resource on main business activities, twenty percent on linked projects, and ten percent chasing their own ideas. Creativity and innovation in an organizational context are used interchangeably. The relationship between innovation, creativity and enterprise is the focus that the company adopts. Innovation has to be integrated to distinctive capabilities like product management and new technology developments. By focusing on distinct capabilities, companies must decide on the capabilities that matters most to their specific innovation and creativity strategy. The best practice is to align creativity and innovation with the corporate strategy. In addition to innovation, Companies must excel in other corporate areas of sales and marketing, manufacturing and logistics (Dosi, 2002). Why a firm’s growth is essential from a socio-economic perspective and business development A firm’s growth is essential from a socio economic perspective, as it enhances the people’s quality of life by ensuring that the society around the firm benefits from the opportunities created. Growth increases employability, as more human resources are required to undertake various activities such as marketing and carrying out research. Businesses also attract other investments like housing, and other services, thereby integrating sustainable development (Salvadori, 2003). A business growth enhances neighborhood cohesion, as a firm has certain values that employees and society members identify with. What are the challenges for firms to grow? The major challenge for firms to grow is keeping control. A company that has grown cannot be run the same way as when the business started out. Fast growth may result in loss of control and this call for the best practice to handle growth. A company experiencing fast growth requires building a strong organizational structure, and a dedicated management team put in place. Fast growth arises depending how an organization handles people and finances (Empson, 2007). A company requires having people who adapt well to change, which calls for wise recruitment from an outsourcing human resource manager. Growth also requires financial resources, and usually results in tight expenditures even before sales are realized. The best practice is to plan carefully and constantly update cash flow projections. Literature holds that businesses should not neglect profits by getting excited about fast increasing sales and losing track of profits. Overhead expenditure may rise quickly during transitional periods. The best practice requires a company to have and incorporate the right people to make sure that costs do not spiral and cash does not run out. Growth requires careful planning, and the plans should reflect the type and assets the business has, and the type of industry that a business operates in. Challenges of applying innovation, creativity and enterprise in practice within existing organization and while pursuing new ventures Though companies may be strong in performing critical capabilities within areas of ideation, project selection and development, most underperform at the commercialization stage. The challenge of a Lack of strong format strategy to guide the continued growth in existing and new markets sets in. For many years, Samsung electronics was gaining market share and boosting revenues through distribution strategy. This was reinforced by the corporation’s core competence in speed to market design. However, the company brand remained fairly indeterminate among global consumers. As the company was technologically growing, it did not have a universally comprehended brand. The brand could not be recapped in the market, since it did not have the best marketing language to illustrate the brand’s authenticity and mission. This is a serious challenge, especially in a swiftly commoditizing industry, where a distinguishing brand narrative is dominant in retaining customers, maintaining margins and captures the minds of people with abundant alternatives. Lack of a clear and unique expression for brand positioning is another challenge for growth. Gathering consumer insights, analyzing market potential and involving customers in product development matters most. Yet, companies have difficulties in difficulties of introducing the new products to the market. This creates a gap between a firm’s capability to create innovative new products and its ability to effectively take them to the marketplace. Despite posing as good hubs for innovation, emerging markets pose a serious challenge for innovation growth. There are numerous barriers that exist in a new market such as the presence of international rivals and insufficient domestic partners and/or suppliers. Emerging markets may also have opaque financial markets, which hinder liquidity and availability of capital at the time required (Smith, 2010). Poor channels of distribution also pose a serious challenge for growth in emerging markets, coupled by little brand recognition of a company’s brand and poor comprehension of business culture. Other challenges include inadequate infrastructures, unstable political environments, domestic rivals, feeble legal and regulatory systems and massive corruption. Lessons learnt personally and from a business development perspective A vital lesson learnt from growth strategies and challenges encountered are that strategic innovation and alignment is very critical for organizational growth. A company must be conscious of its existence and that of its competitors in order to plan how to remain in operation and to stay ahead of competition. Strategic innovation and alignment needs to be a top-down and a bottom-up process. Another lesson learnt is that innovation is not just creativity process, but also an all-encompassing approach that is cross cutting, involving every element of business. Innovation must encompass finance and risk management, products and processes, branding and promotion, talent development among other vital pillars (Gaule and Moore, 2004). As such, the organizational leadership ought to pursue a collaborative approach where all principal stakeholders participate in building growth strategies. Timeliness is another imperative that I learnt in from innovation and from a business point of view. Getting a product or service swiftly to the market is essential ploys in helping an enterprise outsmart competition (Michell, 2011). Having a faster time to market is of the essence in both new and existing markets, especially in the supercharged information communication and technology, where Samsung is a major player. Innovation as part of growth is important in helping a firm have a global presence in emerging markets. One of the reasons why firms grow is to increase markets, and thus, gaining access to emerging markets like Africa and china helps promote and support innovations. Global firms stand to benefit from rich talents and lower cost base in emerging markets, eventually achieving revenue growth. Conclusion In conclusion, growth is not about spending millions of dollars in trying new products and development, growth entails coherent innovation. A company can achieve coherent innovation by aligning their innovation strategy with the overall corporate strategy. Optimizing the right set of capabilities enables a company to focus on what matters most, instead of stretching effort and resources across a wide assortment of capabilities, which are less significant. Firms focusing on vital abilities that are aligned with the overall corporate stratagem tend to innovate more successfully, and are able to bring their innovations to the marketplace more efficiently. This increases top line growth, whilst lowering relative costs. Companies with differentiating competences. Bibliography: Abernathy, W. and Clark, K., 1995. Innovation: mapping the winds of creative destruction, Research Policy, 14 (1), pp. 3-22. David, P. and Foray, S., 2005. Assessing and expanding the science and technology knowledge base, STI Review, 16, pp. 13-68. Dosi, G., 2002. 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