7s Model Samsung

Case field of view 2. Trade and Innovation in the Korean Information and Communication Technology sphere¹. Onodera, Osamu Kim, Hanna Earl OECD journal General Papers 2008, Vol. 8 manage 4, p109-155, 47p, 34 Charts, 20 Graphs This includes the st prescribegy of the organisation, the institution system, the last in the organisation towards risk-taking and change, the penury of employees, cross functional skill, association concern and the employ of internal and external ne bothrks. Employees leaveingness to coin risks very much dep blockades on the gentleman beings of a noblame culture.A powerful culture fosters re b be-assedal on the whole if it is make on norms much(prenominal) as accepting misfortune (Goffin & planetaryistic angstromere Mitchell, 2005, s. 265). Multifunctional learning fosters innovative and learning by doing on the office of the employees and encourage them keep up to season with the in vogue(p) growths. It in add ition serves as a radix for creating a climate that can consume about organizational transition (Takeuchi & adenine Nonaka, 1986). Organizations need to subjoin their innovative faculty and one powerful mechanism for doing so is to ext close familiarity in the functioning to a much wider people.Mobilizing high directs of participation in the innovation carry through and through is unacquainted with(predicate) and, for many organizations, relatively untested and patently risky (Bessant, 2003, s. 767). Mobilizing and managing k straightway conductge constructs a indigenous task and many recipes offered for achieving this depend on mobilizing a much higher aim of participation in innovative problem-solving (Bessant, 2003, s. 767) Companies industri completelyy can non expect to w atomic number 18house their technologies, waiting until their stockes operate use of them (Chesbrough, 2003, p. 32) Thirdly, the 7-S fabric contains the very process of innovation. The proc ess is divided into a serial of relatively well-kn cause steps in the funnel approach that seems to be trite in theory and praxis these days. However, it has been chosen to illustrate this differently than conventionally, because The assumption of a sequential progression without feedback loops and recurring tasks is impractical (Saren, 1994, s. 633). Hence, the illustration of the process circling the innovation fundamentals.So what is contained within the process element of the 7-S framework? Again this can be illustrated by victimisation a quotation from close to of the state-of-the-art literature There is no doubt that for managers to increase the success rate of their raw intersection efforts, they should master techniques for the planning, givement, deployment, military rating and control of necessary competencies throughout the new crop (NPD) process, i. e. , from the generation of the new estimation to the launch of the yield to the condescensionplace (Tzokas et al. , 2004, s. 619).In an otherwise(prenominal) words, the innovation process is metric by looking at come out management, pop out planning, top management involvement, project managers, and the application program of innovation fundamentals crossways the s raze stages of the process. Companywide, we will build a content-rich railway transmission line structure that fosters innovation in hardware and package. Building from our creative platform, we will develop new craftes in health, the environment, and renew equal to(p) energy. A go with that epitomises the transformation of the Korean ICT sector is Samsung Electronics.Samsung Electronics is one of the arena jumper lead in semiconductor units, in particular drachms and fiash memories. melted Crystal Displays (LCDs), supple phones, and digital appliances much(prenominal) as fiat panel TVs. go Samsung had quickly gr let from an assembler of raw and white TVs in the 196()s to one of the securities industry l eaders in DRAMs in the agent(a) mid-eighties, making use of foreign engine room and based on international markets, it was roughlyly a market fol overturn quite an than an innovator even in the new-make 1980s. Changes in the craft environment in the primaeval 1990s, i. . great contestation at the lower end of the market overdue to the increase use of evolving achievement ne twainrks in the Asian section by Nipponese producers, increase competition in the Korean domestic market due to progressive trade and perpetratement liberalisation, and withdrawal of the speak system of preference (GSP) privileges in merchandise markets, triggered a transformation of Samsung with a greater violence on engineering, increased world(prenominal) achievement and sourcing, and promoted international gross gross gross revenue and scattering.The fact that Samsung now has question facilities non precisely in atomic design 63, US and lacquer but besides in Russia, Indi a and most youngly mainland China, that it now has 27 manufacturing facilities in 12 countries, with foreign I 1ECD JOtJRNAL habitual PAreRS mass 2008/4 ISSN -IMS-2821 oe C D 2008 112- reason hold 2 toil reaching 35. 9% in 2007, and that it has multiply its sales tietwork from 32 sales organisations in 23 countries in 2000, to 60 in 48 countries iti all regions, shows how worldwide Satnsungs operations fool break as a result hich has become one of the leading firms in the ICT industriousness worldwide from a modest position in the noncurrent two decades. The study assesses how regulatory, trade, and investment policy prizes harbor helped, a broadside other disclose policies, to provide the right framework conditions for applied science absorption and innovation. In addition, it examines how the mysterious sector, and more than than peculiarly Samsung, has taken advantage of those conditions to upraise its innovation competency. The purpose of this study is non to provide a comprehensive tarradiddle of Koreas culture or to evaluate Koreas innovation policy.Rather it is an attempt to shed more or less light on the blood surrounded by trade and innovation from the recent quick growth of Koreas ICT industry in the one-time(prenominal) 15 courses. focuses on Samsungs strategies in international RD, manufacturing, sourcing, supply chain management, sales and distribution. (Other key determinants of Samsungs success include its backbreaking branding and market strategy, its investment strategy of investing in striking efficiency when other companies are cautious, and effective human resource management.The Samsung Group is today the largest chaebol in Korea, which has businesses spanning from electronics and electro-mechanics, shipbuilding and engineering, petrochemicals and fine chemicals, life indemnity and securities to job and constructions. Samsung Electronics is its largest company with 2006 consolidated sales of OECD journal world-wide PAIRS strength 2008/4 SSN -1995-2S21 O OECD 2U0B CASE STUDY 2 1 4 1 USD 92 trillion and net income of USD 8. 5 billion.It employs 128 000 the great unwashed in more than 120 offices in 57 countries, and is organized into five major(ip)(ip) businesses semiconductors ( retrospect chips, system LSI devices and hard disc drives), LCDs (TFTLCD products in various applications). telecommunication profits (mobile phones, telecommunication systems), digital appliances (washing machines, refrigerators, air conditioners and stoves) and digital media (TVs, audio/ telly products, PCs and computer peripherals) (Samsung. 2006). It is among the international leaders in semiconductor such(prenominal) as DRAM.SRAM chips, and meretricious memory. CDMA mobile hand manipulates, and digital media technologies such as Liquid Crystal Displays (LCDs), and has fast become a truly world(prenominal) transnational company. For ex angstrom unitle, value of tbe Samsung brand was US D 16. 1 billion in 2006 in the Brand look on Survey conducted by Business workweek magazine and Intcrbrand, or 20&8243 among all corporations in tbe worid and 7&8243 in the IT sector. Samsung Electronics is also ranked 27* in the worid on fortune magazines list of Global Most respect Companies.Samsungs success in particulariy noteworthy in light of two factors first, the companys medium size domestic market (Korea has a population of 48 billion) and, second, its origins and recent history. Samsung started off in 1938 as a trading company, and bit it enrolled two manufacturing sectors i. e. sugar and textiles) in the mid-1950s, it was not until 1969 that the firm memorialiseed the electronics industry with the incorporation of Samsung Electronics Co. angiotensin converting enzyme major characteristic of Samsungs main course into the electronics industry was its reliance on foreign engineering. prorogue 21 provides a brief overview ofSamsungs exploitation to the 1990s. e lude 21. Samsung tecbnological capabilities and features of international drudgery mid-seventies 1980s 1990s 20008 Key activities primary(prenominal) sources of capabilities Level of technologicai capabilities International doing and mount of fundamental interaction Conglomerate diversification J/V partners, Original Equipment f/lanufacturer (OEM) buyers and overseas training Capabilities in mass output signal (TVs) Entry into DRAM market OEM buyers, foreign licensing, reverse engineering Broader product surf (VCR, MWO, DRAfvl, agents) but very weak in ability to introduce a major change of productUS & EC for lowend markets ( extra success). commutationised intrafirm interaction Organisational reform, internationalisation Acquisitions. strategicalal alliances, in-house R&D Continued weakness in product organic evolution International proceeds of lowend items in peripheral regions. Moving toward decentralised intraand inter-firm interaction Transformation into a o rbicular company. In-house R&D, strategic alliances and increasing wildness on intellectual property. Strengthened R&D and purpose capabilities, with a core competency in product development. Creation of a world-wide deed network ainly in the Asian region but also in other split of the globe as well. author Kim (1994) for 1970s 1990s. IH-XD JOlRN. M. GENERAL text file VOLl/ME 2008/4 -ISSN -1995-2821 OECD 2008 142-CASE STUDY 2 1970s dependance on foreign engineering effrontery its insufficiency of expetience in electronics, Samsung had no choice but to turn to foreign sources of engineering science in management, production in marketing and Samsung constituted a close relationship with Nipponese and US firms. It created several articulatio backs with foreign engineering science suppliers such as NEC, Sanyo, Corning Glass Works and other companies. It reached legion(predicate) agreements to assemble electronic products for foreign master copy equipment ma nufacturer (OEM) buyers, who provided it with design and engineering live as well as with an international market. Samsung also relied extensively on away suppliers for the purchase of core components. However. Samsung and its affiliated partners have increased its capabilities for parts supply and for some parts even began to ship parts to Korean and Japanese customers. Samsung electronics grow and improve its assembling capacity, producing ten one million million million scurrilous and white TV sets by the end of the 1970s.Most sales were through OEM channel. OEM buyers provided Samsung with product design, quality control and engineering support, deviation Samsung to increase its manufacturing capability. Samsung proceed to increase access to other international distributors and was able to renegociate TU and ease initial geographical restrictions enforce by its jomt venture partners. Samsung expanded its OEM channels and capabilities by adding two new products VCRs a nd atomize ovens. As Samsung was unable to gain foreign licensing for these products, it used reverse engineering, and succeeded in developing its own microwave in 1978 and VCR in 1979. Samsung win modify into the telecommunication sector through a 1977 JV with GTE of the US. In 1974, Samsung acquired Korea semiconductor unit Co. (KSC), a joint venture between Korea engine room & Manufacturing Co. and Integrated Circuit International, a US firm, which manufactured simple interconnected circuits for electronic watches, which formed the basis for Samsungs entry into the dynamic random access memories (DRAMs) business. 980s and ahead of time 1990s Upgrading of technology entry into DRAMs The 1980s was the finish of expansion and diversification for Samsung.As Samsung began to experience limitations on growth in the CTW and VCR markets due to drop of component availability. Samsung made a decision to enter the IC business. To achieve its objective, Samsung once once again tried to learn foreign technology through a broad paradigm of formal and informal contacts, and decided to enter the DRAM market which was considered more adequate for Samsung which had familiarity with incremental process innovation and large scale manufacturing efficiency both of which could become sources of competitive advantage in this sector.In 1983, Samsung licenced a DRAM design from Micron Technology, a US company, and entered the merchandiser market for DRAMs which require the most modern manufacturing technologies and huge capital outlays. In 1983, Samsung successfully developed a 64K-DRAM, followed by a 256K in 1984. and a lM DRAM in 1986. Samsung continued to prove its technology and decreased its reliance on immaterial technology, except for capital equipment and thus uprise from a virtually zero grant in memory chips in 1984 to be the world market leader in DRAMs by 1992. skirt 22 shows how Samsung has step by step caught up with technology leaders Samsung un plowed closing the cattle ranch between itself and the technology leaders, and has been the leader in DRAM development since 1992 when it the first company in the worid to develop 64 Mbit DRAM. OECD daybook GENERAL document VOLUME 2008/4 ISSN -1995-2821 O OECD ZIKlti CASE STUDY 2 1 4 3 Table 22. Samsung technology gap in DRAM 64Kbit 256Kbit IMblt 4Mbit 16Mblt 64Mbit 256Mblt IGbIt 4GbIt First development company Intel NEC Toshiba Hitachi jj Samsung SamsungSamsung Samsung Development date by Leader 06/1979 01/1981 07/1984 08/1987 08/1992 08/1994 11/1996 12/2000 Development dale by Samsung 12/1983 01/1984 06/1986 02/1988 07/1990 08/1992 08/1994 11/1996 12/2000 offend between Leader and Samsunq months 3 months . . . 1 Design licensing from Micron Technology put to work technology from Sharp 2 Samsung with two Korean partners generator. Kim (1997), Siegel and Chang (2006), Samsung website (http//www. samsung. com). By the late 1980s, Samsung was able to produce a wide bo d of semiconductors for use in phone sets, computers, private automatic outgrowth exchanges (PABXs). acsimile machines, and VCRs (Kim. 1997). As a result, it was able to reduce dependency on Japanese suppliers for core components. nonetheless the mass of the DRAMs produced in Korea were tradeinged to foreign countries and the other non-memory chips unavoidable (I. e. microprocessors) continued to be imported from other countries (Kim, 1998). The strong resource shift to semiconductors meant that development of other capabilities suffered to some extent. While Samsung Electronics Co. had a minor change capability, it remained weak in major change capability (Kim, 1997).As a result, it continued to use license technology from foreign companies for its main export products in this period. OEM channels remained dominant in the company sales at over 65% of tally sales even in 1988. and Samsung maintained close relationships with OEM buyers such as JC Penney, Sears Roebuck, GTE, To shiba, IBM, Hewlett Packard, RCA and Crown Corporation (Kim. 1997). It was towards the end of the 1980s that Samsung slowly started to build its own technological capability with the acquisition in 1988 of Micro Five Corporation, a US company, and with the establishment of Samsung Infonnation Systems the countrys Inc. SISA) in atomic do 14 Valley to support export activities as well as to gather information on ICT products. It was also in this period that Samsung began its search for foreign genius as a means to compensate for its lack of internal expertise (Box 3). It was also in the 1980s that Samsung started to internationalise its production for certain(prenominal) products such as colour TVs, audio products and microwave ovens. Samsung also sowed the seeds of its telecom business at this time, acquiring Korea Telecommunications in 1980 and started production of a cellular phone in 1986.Box 3, Technology transfer through hiring One of the ways Samsung has overcome its lack o f technical capabilities has been through recruiting top level engineers from world leading competitors. In earlyish days, Samsung focused on recruiting Korean engineers work at foreign companies. Hwang Chang-gyu, a fountain president of Samsung Electronics, was recruited from Intel, and Chin Daeje. another former president, worked at IBMs Watson look for Center forward being hire by Samsung, to urinate just a few.These people have significantly contributed to the transformation of Samsung from a me-too memory producer to the world leader by bringing cut of meatting-edge technical knowledge and managerial skills. Samsung also hired foreigners in order to fill the gap it identifies to upgrade its technical capabilities. It is widely known that Shigeo Fukuda, who was hired from Kyocera, played a diminutive occasion in the Samsungs new initiative in 1993 known as New Management. It is believed that his critical comments on Samsung during the 1980s tuged the company to enha nce its product development processes and design capabilities.to a greater extent recently hiring has become more and more various(a) from all over the world including David motionless (US), David Henri (France). Roman Sepeda (US). Nelson Allen US). Hao In (China), and Tung Wang (China). OECD JOURNAI. GENERAL PAPERS VOLUME 2008/4 ISSN -1995-282 O OECD 2008 144-CASE STUDY 2 Transformation into a orbiculate company 1993 and onwards several(prenominal) changes in the business environment approach Samsung in tbe early 1990s. First, lower trade barriers and transportation costs and enhanced ICT from the latter(prenominal) 1980s and the 1990s resulted in greater fragmentation of the ICT industry.In the late 1980s, Japanese producers rapidly increased overseas production in response to increased competition from Korean competitors and the rapid appreciation of the yen, which led to greater competition at the lower end of the market. Secondly, Koreas domestic electronics market whi ch had long been protected from foreign competition was in stages liberalised as Korea prepared to join the ranks of industrial nations. In 1989. import quotas on consumer electronics were removed. By 1993 there was a plan to cut the average tariff rate at a lower place 10% for all imported electronics goods.The come up of items subject to the import diversification computer program wbich shielded the Korean market from Japanese competitors was steadily decreased with a muniment put in place for abolishment in 1999. Thirdly, on the export side, the generalize system of preferences privileges were withdrawn from Korean electronics goods by the US and EC in 1988. The win also started to appreciate against the dollar making exports from Korea less attractive. The above changes in the business environment led to a strong initiative headed by the Chairman Kun-Hee-Lee in 1993 lo become a truly international company. Under this new initiative, Samsung began its transformation fr om a successful company to one of the global leaders in the industry. There was a renewed emphasis placed on quality, and several new products were subsequently introduced such as the TFT-LCD and CDMA mobile handsets. The Asian pecuniary crisis presented a further challenge as the domestic market plunged, and Samsung had to undergo a fundamental restructuring of its activities, exiting from numerous businesses, press clipping 30% of its workforce and cutting its debt-toequity ratio from terzetto hundred% to 30%.However, the Asian crisis also presented an chance for Samsung to consolidate its domestic market as competitors weakened their positions, bandage shifting more of its resources to the Liquid Crystal Display (LCD) and mobile phone businesses which has allowed it to diversify its revenues. The growth has been particularly strong in the CDMA mobile handset market, where Samsung has leapt from almost a negligible percent in the global market to routine one in CDMA pbones with a partake of about 30%, and figure two in the global market boilersuit bebind Nokia.Below we focus on iii main strategic responses of Samsung greater emphasis on technology, global productions and sourcing, and international sales and distribution. Greater focus on technology (globalisation of R&D and strategic alliances) Samsungs RD expenditure in Korea bas continuously increased both in terms of amount and as a percentage of sales, on average 18% annually from 2002 to 2006, and now approaches 10% of entirety sales (Figure 21). Tbe proportion of R&D staff has jumped from 16% in 1997 to 24% in 2006, and the company plans to push it up to 32% by 2010.The enactment of scientists and engineers at various query centres in Korea has increased by 70% since 2001. Table 23 indicates how Samsung has aggressively recruited scientists and engineers with graduate degrees tbe number of Ph. D. s is up by 50% and the number of Masters degree holders has been more tban manifold. Samsung bas also changed its patenting activities since the early 1990s (Table 24). While Samsung only bad 1 704 patents for applications made in front 1994, it was granted over 2 600 patents for applications made in the three yeai- period 1994-1996, and has consistently been granted over 1 000 patents since then. * This shows how Samsung has OECD JOURNAL GENERAL PAPERS VOLUME 2008/4 ISSN -IWS-2821 OECD 200s CASESTUDY2-145 become aggressive in the application of patents in the unite States as part of its technology strategy. Figure 21. Samsung Electronics R&D expenditures 12. 00* 10,00% 0. 00% 2002 2UU3 2001 2005 2006 Table 23. Nunfiber of scientist and engineers in Samsung search laboratories Period Ph. D. Masters Bachelor radical 2001-02 2003-04 2005-06 1 039 873 1 537 2 980 3 453 8 320 6 038 6815 7 363 10 057 11 141 17 220 Table 24.Number of Samsung patents in the United States 1 Patents by course of instruction of grant Patents by application year Patents by year of grant cont. ) Patents by application year (cont. ) Pre-1994 850 1 704 2001 1 446 1 550 1994 412 498 2002 1 328 1 804 1995 423 656 2003 1 313 2412 1996 485 1 532 2004 1 604 2 005 1997 584 1 613 2005 1 641 890 1998 1 305 1 845 2006 2 451 216 1999 1 542 1470 2007 2 723 13 2000 1 437 1 336 Total 19 544 19 544 obtain Based on US Patent and Trademark Office (2007). Samsungs efforts to assure its inquiry capabilities have not been limited to Korea.In order to improve responsiveness to the topical anaesthetic demand conditions and tap into the share of cutting edge scientists and engineers, the company established R&D centres in various paits of the worid (Table 24). Samsung started by setting up Samsung Information Systems the States (SISA) in atomic number 14 Valley in 1988, followed by Samsung Electronics search Institute in capital of the United Kingdom in 1991. These two research facilities are normal examples of R&D facilities set up to monitor abroad as is the case with the Dallas and OECD JOURNAL GENERAL PAPERS VOLUME 2008/4 ISSN -1995-2821 O CffiCD 2008 146-CASESTUDY2Yokohama facilities in 1997. More interestingly, the company has rapidly expanded its global network of research centres with the objective of utilising the foreign pool of research talent starting with Russia (1993), India (1996) and the three recently added research centres in China focusing on semiconductor, mobile telecommunications, and electronics. Samsung has also seriously increased the size and capabilities of the foreign research centres its research centre in Moscow had only one Ph. D. and seven Masters in 2001 and now has ten Ph. D. s and 29 Masters its Bangalore package facility had no Ph.D. , 17 Masters, and 37 Bachelors in 2001 and now hires four Ph. D. s, 179 Masters, and 164 Bachelors. Table 25. Samsung RD facilities explore centre Samsung Information Systems the States Samsung Electronics Research Institute Moscow Samsung Research Centre Samsung Electronic s India Software Operations Dallas Telecom Laboratory Samsung Telecom Research Israel Samsung Yokohama Research Institute Beijing Samsung Telecommunication Samsung semiconductor China RD Samsung Electronics China RD Location San Jose London Moscow Bangalore Dallas Yakum Yokohama Beijing Suzhou NanjingEstablished 1988 1991 1993 1996 1997 1997 1997 2000 2003 2004 spirit tasks Strategic parts and components, core technologies wide awake phones and digital TV software Optics, software algorithms and other new technologies System software for digital products, protocols for wired/wireless networks and handsets coterminous generation telecommunications systems Hebrew software for mobile phones Core next-generation parts and components, digital technologies brisk telecommunications standardization and commercialization for China Semiconductor packages and solutions Software, digital TVs and MP3 histrions for ChinWhile, Samsung had already begun to use strategic alliances especially f or acquiring technologies, the increasing RD capabilities of Samsung is allowing it to benefit from strategic alliances in developing new cutting edge technologies (Table 26). Because there is an increasing overlap of technologies, for example between telecommunications and broadcasting, mobile phones and ad hominem computers, telecommunication equipment and household appliances, it is becoming increasingly difficult and expensive to conduct the research and development necessary to cover all technology areas in one company.Samsung, therefore, has been using its technology base to conduct strategic alliances to build new strategic capabilities. OECD JOURNAL GEKERAL PAPERS VOLUME 2008/4 ISSN -1993-2821 O OECD 2130 i Partners Table 26. Date Selection of recent strategic alliances Areas of cooperation CASE STUDY 2 -Ul Nokia April 2007 Limo Alcatel Sony (S-LCD) IBM Intel & Microsoft Discovery Salvarani sunbathe Microsystems VDL Charter Bang & Olufsen Kent State University Qual comm Toshiba (TSST) Sony (S-LCD) IBM Dell Hewlett-Packard Disney Napster Sony NEC Matsushita Microsoft January 2007October 2006 July 2006 jar against 2006 March 2006 family 2005 July 2005 July 2005 February 2005 January 2005 November 2004 October 2004 July 2004 April 2004 Maroh 2004 March 2004 January 2004 September 2003 September 2003 September 2003 August 2003 July 2003 January 2003 November 2001 Co-develop technology for handsets and DVB-H normalization solutions Establish a joint venture for developing a Linux platform (SAMSUNG Electronics, Vodafone. DoCoMo, Motorola and NEC) cooperate on satellite DVB-H Jointly invest in 8th-generation LCD line (2200mm x 2500mm motherglass)Co-develop and market technologies for industrial printer solutions Co-develop UMPCs join on high-definition contents Co-develop new built in products combining household electronics and article of furniture Cooperation in solution business and next-generation business computing systems Cooperate in commer cialisation of terrestrial DMB Co-develop cable broadcasting receiving system and set-tcp box for digital TV safe Duplex service Partner in home theatre business Co-develop vaunt technologies Cooperation in MDDI (Mobile Display Data Interface) technology Develop and market optical transshipment center devicesEstablish joint venture for seventh generation LCD (1870 x 2200 mm) line Co-develop nano-logic process technologies Supply multi-functional laser printers cover technology for ink-jet printers Supply impression Beam set-top box for VOD Co-develop and market SAMSUNG-Napster player Expand and consolidate memory appease business Cooperate in high-end business computer systems Standardise technology, co-produce and jointly market DVD recorders Co-develop digital household electronics descent Based on Samsung homepage. OECD JOURNAL GENERAL PAPERS VOLUME 20U8/4 ISSN -1995-2821 O OECD 2008 148-CASE STUDY 2Globalisation of the production network and global sourcing Samsung Elec tronics began to build its global production network in the early 1980s when it established its first manufacturing facilities in the U. S. and Portugal. It went on to establish a ancillary in the UK (1987). Mexico (1988) and Thailand in 1988. Since then, the company has continued to expand the network by adding new countries to the network as well as setting up new facilities in countries where it has already established its production facility. In 1989. Samsung further set up production subsidiaries in Spain, China. Hungary and Turkey.Table 27 lists the countries where the company has its production facilities and illustrates that the company has been selectively expanding its global production network. Table 28 shows how overseas production is gradually increasing in recent years reaching 35. 9% in 2007. It should be noted that while this figure is a measurable increase from the levels in tbe early 1990s, it remains well smaller than comparable figures for Japanese electronics companies which exceeded 70% as of the early 1990s (Table 8). The major products manufactured in overseas facilities are consumer electronics products such as TVs.VCRs, refrigerators, and microwave ovens. The companys Mexican production subsidiaries produce flat-screen TVs and LCD TVs and export them to the US and other Latin the Statesn countries. As Mexico is a member of NAFTA, Samsungs exports to the U. S. from Mexican plants are exempt of import tariffs. Samsung Electronics Hungarian Co. Ltd.. established in 1989, produces 3. 2 million TVs annually and exports them to Western and vitamin Eern Europe, and Central Asia. Recently, Samsung announced to increase its production capacity of the mobile phone manufacturing plant in Haryana, India from one million to three million units per year.In addition to the importance of the local market, India is considered as a strategic substitute to China to hedge tbe uncertainty from relying heavily on Chinese operations. In the semicond uctor sector, Samsung pursues a triad strategy Giheung multifactorial in Korea as the R&D and frontier semiconductor manufacturing hub. the American facilities in Austin. Texas as strategic manufacturing hub for the Americas, and the Suzbou intricate in China as the global testing and packaging hub. Table 27. Samsung electronics global production network* Korea wedlock America Asia Pacific Europe South America substance East and Africa CIS 2000 Six Facilities Mexico, U. S. China(7), India, lndonesia(2), Maiaysia(2), Thaiiand, Vietnam Hungary, Spain, U. K. brazil None Uzbekistan 2006 Eight Facilities Canada, Mexico(2, U. S. Ctir)a(13). india(2). Indonesia, Malaysia(2), Philippines, Thaiiand, Vietnam Hungary, Slovaiiia None None None The number in parentheses is tlie number ol subsidiaries in the country Countries in italics are those newly added to the list between 2000 and 2006. witness Samsung Electronics website (www. amsung. com/us). OECD JOURNAL GENERAL PAPERS VOLUME 2008/4 ISSN -I9I5-282I O OECD 2008 CASE STUDY 2 1 4 9 Table 28. Samsung production network (KRW million) 2003 2004 2005 2006 2007 Total Domestic production oversea production 64 817 456 100% 43 582 016 67. 2% 21 235 440 32. 8% 81 57 24 963 009 100% 632 359 70. 3% 330 650 29. 7% 80 629 510 100% 57 457 670 71. 3% 23 171 840 28. 7% 85 58 26 834604 100% 972 765 68. 7% 861 839 31. 3% 98 507 817 100% 63 one hundred seventy-five 968 64. 1% 35 331 849 35. 9% Source Korean Government. International sales and distributionSamsungs initial expansion of international sales was through Samsung Corporation, the group affiliate tangled in general overseas trading in the early 1970s. While this whitethorn have aided Samsung initially, it blocked Samsung Electronics further expansion and in 1978, Samsung established its own sales affiliate in the United States for the first time. Since then, Samsung Electronics has continuously expanded its sales and distribution network around the world (Table 2 9). In 2000, the company had a network of 32 sales organizations in 23 countries and its primary emphasis was on North American and European markets.However, the company doubled its sales subsidiaries to 60 in 48 countries over six years, and it is now compensable more attention to emerging markets, including Asia Pacific. Middle East, Africa. CIS, and South America. According to Samsung Electronics homepage as of 2008, Samsung had a total of 53 sales subsidiaries and branch ofllces in 36 countries. Samsung has achieved over three quarters of its sales overseas in recent years (Table 30). Table 29. Samsung electronics global network of sales subsidiaries* 2000 2006 North America Canada, Mexico, United States (6) Canada, Mexico, United States (4) Asia PacificEurope South America Middle East and Africa CIS Australia, Hong Kong. India, Japan, Philippines, Singapore, Taiwan France, Germany2), Italy, Poland, Portugai, Sweden, The Netherlands(2), U. K. (2) Argentina, Colombia, Panama So uth Africa, U. A. E. Russia Australia, China(6). Hong Kong. lndia(2). Indonesia. Japan. Malaysia. Pakistan. Philippines, Singapore. Taiwan, Thailand. Vietnam Austria, France, Germany(2), Greece, Hungary. Italy, Poland, Portugal, Spain, Sweden, Netherlands. U. K. (2 Argentina, Brazil. Chile, Colombia, Panama, Peru Algeria. Iran.Jordan, Kenya. Morocco. Nigeria. Saudi-Arabian Arabia. South Africa. Tunisia. Turkey. U. A. E. Kazakhstan. Russia. Ukraine. Uzbekistan The number in parentheses is the number of subsidiaries in the country COUNTRIES in italics are those newly added to the list between 2000 and 2006. Source Samsung Eiectronics website (www. samsung. com/us). UKCD JOURNAL GENERAL PAPERS VOLUME 2008/4 ISSN -1W5-2S2I OECD 2008 150-CASE STUDY 2 Table 30. Samsung sates network 2003 2004 2005 2006 2007 Domestic sales Overseas sales % of overseas sales to total Source Korean Government