Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

Challenges to Business Success an Operations Management Focus

Initially Samsung started as a small business of exports in Taegu, Korea in 1969.

Samsung has developed and grown enough to become the market leading and the words
leading electronic company, Samsung has 10 divisions (Samsung electronics 2014) so it will
be complex to go through all the divisions in one go so will only discuss the mobile
communication business division. The vast product line of Samsung shows that the company
has achieved some major milestones in its history also shows that the company has gained
more market share over the time. According to the report of times of India 2014 Samsung is
the world’s top ranking mobile phone company. 444 million mobile phones were sold by
Samsung during 2013, with market share 24.6%, which resulted in upswing of 2.6 percent as
compare to 2012 as in 2012 Samsung sold 384 million mobile phones (Times of India, 2015).

According to The Challenge Of Technology (2015) Handling the changes in the

technology is the fundamental part of any mobile communication company like Samsung, and
it is one of the major issue faced by the operation managers of any firm because the
technology changes rapidly. The reason why to give priority to the technology is that if the
operations managers of Samsung will fail to cope up with the change in the technology, it will
be a severe threat to the organization as the competitors will be in the market with high
efficient products. Technology is no doubt one of the major issues faced by Samsung as the
competitors are coming up with advanced technology rapidly, the operations managers must
scale the technological aspect in their mind. To keep pace with the market managers must
realize the need for acquiring the talent of technology, it will help the operational managers
to gain the competitive advantage over the competitors, not only the operations manager
has to keep pace with the technology he should also be able to foresee the emerging trends
in technologies to build a road map which will help Samsung to keep its position as the market
leader (Samsung electronics, 2014)

Adaptation of globalization by the operations managers of Samsung was slow it is

slowly globalizing its brand because in a highly competitive global market the attitude of the
customer about the actual country of origin becomes a sensitive issues the consumers is
conscious about the originating country of the product. China is the biggest manufacturer of

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

Samsung and some other leading brands, consumer looks for the origin before making a
purchase decision and before showing loyalty towards the product of the organization.
Samsung is basically South Korean company by origin, South Korea has a great name in the
technological world, but the operations managers of Samsung should work with the officials
to entice freedom in global manufacturing and trading. Globalization also brings changes to
the ways the operations managers do their daily activities, it also helps the operation
managers to maximize the profits by minimizing the costs (Samsung electronics, 2013).

The customer expectations changed drastically over recent years, now consumer
demand variety of products that can satisfy their need because the customer of the present
age makes a comparison of the substitutes available and then choses the best to satisfy his
needs, they also need the after sales services. It has been and still is a challenge for the
operations manager of Samsung as they always have to be accurate, efficient, and courteous
to the customers, to be accessible, continent and responsive. As the consumer satisfaction is
equal to your performance in ratio to the expectations of the customer. In past few decades
the mobile phone industry is innovating day by day the customers get many substitute
available in the market so the operations managers of Samsung had faced many challenges
to cope up with the pace of the market and to meet the varying expectations of the customers
(Samsung electronics, 2014).

The job design is the vital element of an organization as it helps the organization to
perform its tasks in the best possible way, therefore the job design is important for
organizations. The changing job design is the challenge for the operational manager because
the design of the job signifies the way to run procedures in the organization, in other words
we can say that the organization’s structure is designed by the job design. So the changing
job design will impact the overall organization, the job design if remains same it makes the
task less interesting a change in the job design brings challenges for the employees and makes
them motivated that results in the high performance so the operations managers faced the
challenge of keeping the job design up to the mark as if the job design will not be according
to the trends of the market then the company will face downfall (Collier& Evans 2012).

Collier& Evans (2012) describes that the organization should have a strong system of
quality metrics on which it can trust blindly. Quality always remain the issue as it is always

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

difficult to maintain quality and to keep it constant. Samsung operation managers always try
to keep quality constant, if the quality is not kept constant it can result in the increase in the
cost of the company, the cost of poor quality which is always higher than the cost of good
quality. In past few years Samsung’s operations manager faced the issue of quality
management because of increase in the number of competitors more and more quality
products are available in the market so to maintain the market position and to maintain its
position in the market as the market leader (Samsung electronics, 2013)

Form recent future we can deduce that there is a gap in the manufacturing and we
call it as quality, quality is now considered as a department of the organization instead of
considering it the responsibility of the customer worldwide. Samsung also employs TQM
(Total Quality Management) which entails improving the quality of production process by
bringing down the rejection rate which ultimately reduces the costs. The target is to bring the
rejection rate to zero which means the company has to strive for continuous improvement.
Effective Implementation of TQM and JIT has helped Samsung achieve a competitive edge
over its peers which has facilitated it in capturing a significant share of global mobile business.
The poor quality also effects the value chain design so the manager of the Samsung face many
issues related quality management but they also maintained the quality of the product. The
operations managers of Samsung are dealing exquisitely with the challenges liked to the
quality management (Samsung electronics, 2013). 1 1 1 1 1 1 1 1 1 1 1 1 1 1

The global competition is being discussed everywhere but many people don’t really
understand the meaning of global manufacturing. It is defined as the map and define the rule
that how things will be done to maintain the quality in the product throughout the world, to
satisfy the customer and to have a management style which promotes the above mentioned
characteristics. Global competition is a challenge for the markets working globally, Samsung
started to face this problem since it started global exports. The operations managers of
Samsung tried their best to be consistent in implementation and output aspects globally.
Being global Samsung always had to be flexible that means that it tried to have the least
possible lead time as there are a lot of competitors in the market and a little shortage can
bring great loss. These all challenges mentioned above are those which Samsung encountered

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

and still is dealing with them efficiently and effectively and is still staying the market leader
and stable with huge market shares in market. (Collier& Evans, 2012)

Supply chain design:

The supply chain management is known as the real way of gaining competitive
advantage over the competitors and to improve the performance of the organization since
long, now the competition not only lies between the organization but it also lies among the
supply chain of the organizations (Rao et al. 2004, p.107). As the competition raised in 1990s
many companies became global, the challenges linked with the issues like delivering the
product at lowest possible cost and on time also became the great issues, and the companies
realized soon that the improvement of the process within the company is important but by
managing the whole supply chain will make the organization more competitive, the supply
chain has become the prerequisite to be competitive in the market (Moberg 2002, p.756-
757).

Samsung believes in its supply chain, it started a collaborative program to increase the
stability among the organization and its key suppliers. Samsung knows the importance of the
supply chain design, it is the fast follower of the market trends, company keeps an eye on the
new entrants of the market and purchases the one having a potential of leading edge. The
collaborative planning, foreseeing and replenishment (CPFR) plan of Samsung mainly focuses
on flourishing its supply chain processes and design by merging the intelligence of all the
stakeholders involved in the supply chain. Samsung signed the CPFR in 2004 with the best
suppliers for its market in North America, the initiative helped to improved efficiency by
reducing the cost of inventory, merchandising, transportation and logistics. In 2009, Samsung
started manufacturing at China (Han et al. 2013).

The supply chain design of Samsung became more complex after operating globally,
the designed got modified and advanced approaches to plan, schedule and operate as they
are necessary or success and stability. After the study and the survey Samsung analyzed that
75 % of the processes or projects based on six sigma will be about the redesigning methods
and the rest of 25% will be used to focus on the improvement of the processes, applied lean
production methodology for manufacturing of the products, soon Samsung tailored that six

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

sigma is the best technique for Samsung to run its processes. When the company gets into
the diversified and complex model it is usually obvious that the company will go for
improvement of its supply chain to be successful and to be market leader (Han et al. 2013).

The supply chain design is the vulnerable to the changing technologies, as there will
be change in the technology then the design of the supply chain will also be changed and it
will be aligned with the changes because if it is not mold with the changes in the technology
the organizational will face loss and those who change their supply chain with the
technological changes tend to be successful. Since it’s the age of globalization the first entrant
always has the edge on the second on the third one, so as soon the company starts to operate
globally it starts to gain more revenues so when the company starts working globally it has to
bring little changes in its supply chain design as the geographical location changes and it is
important to bring the necessary changes in the core design of the supply chain. Customer is
always right is a famous proverb. The customer is the one who generates the profits for the
organization so it’s really important for the organization to match the customer expectations,
a strong efficient supply chain design always meets the expectations of the customer. Quality
management is important aspect, a well-structured supply chain is a solution to all the issues
linked to the supply chain. Global manufacturing is the most diverse and complicated
phenomenon and is too delicate to be a successful global manufacturer the organization has
to have an effective supply chain design.

Quality management:

In this era of intensified completion in the market every organization is trying its best
to satisfy the customer to retain a greater pool of loyal customers, it can only be achieved by
providing the constant or improved quality products which leads to the increase in the level
of customer satisfaction and quality is very important in this regard as the customer today is
much concerned about the quality of the products so the companies focuses more on quality
as it was before (Kaziliunas 2010, p.31). The changing trends urged the organizations to
change their typical quality systems and to move to the new quality techniques to deliver the
high quality products and services (Nkechi Eugenia, 2009). Quality has become the most
sensitive concept these days around the globe. There are numerous ways to improve quality.

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

We can say that quality management is the determinant of the success of manufacturing firms
(Kaziliunas 2010, p.33).

The family of the standards ISO 9000 was developed to assist the organizations of any
kind of industry to operate and implement an effective quality management system. Samsung
uses a quality management system which completely satisfies the requirements of
certifications like ISO-9000: 2008 and K-SQ ISO-9001: 2009 and ensures that the employees
understand these standards and follow these standards and policies. To provide constantly
quality product Samsung conducts CSI (customer satisfaction index) regularly to assess
customer satisfaction, to address the customer’s complaints and queries and to identify the
areas where the improvement is needed. A step by step survey is conducted on each stage of
the process of manufacturing. From the results and the feedback Samsung brings
improvement in its quality management process. This also helps Samsung to reduce its cost
of poor quality, delays in the manufacturing process and to control interruption of any kind
and helps to increase the level of customer satisfaction (Samsung Engineering 2013, Quality
Management).

Samsung also employs TQM (Total Quality Management) which entails improving the
quality of production process by bringing down the rejection rate which ultimately reduces
the costs. The target is to bring the rejection rate to zero which means the company has to
strive for continuous improvement. Effective Implementation of TQM and JIT has helped
Samsung achieve a competitive edge over its peers which has facilitated it in capturing a
significant share of global mobile business (Samsung Engineering 2013, Quality
Management).

Quality management is strongly associated with the change in the technologies, a

change in the technology always brings a better way to deal with the issues related to the
quality. If the company accepts the change in the technologies and adopts the change only
then it can cope up with the changing market trends by providing the quality product. When
companies operate globally then it has to focus more on the quality of the product as the
competition increases, so a company that is operating globally should be conscious about the
quality of the product. The customer expectations related to quality of the product is
increased customer has many alternatives and they buy the product that is of good quality

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

from all the substitutes. The quality management process for the organizations that
manufacture their product globally have to keep the quantity constant in every country where
they are manufacturing their product to be successful and to maintain its position in the
market.

Inventory management:

Inventory management is a crucial business function and its effectiveness allows an

organization to meet or exceed the requirements of product availability in a way that
maximizes the profitability of its operations. Inventory management practices directly
contribute to the success or failure of a business (Kang 2002, p.62).

Inventory management is important for a number of reasons. Firstly inventory

involves storage costs and if it is managed efficiently lesser space will be required which will
contribute to the bottom line of a business (Kang 2002, p.65). Secondly if excess inventory
leads to an unnecessary increase in the working capital that could have been bore effectively
deployed in the growth of the company (Kang 2002, p.65). An efficient inventory system leads
to reduced costs which helps businesses in pricing their products more competitively (Kang
2002, p.67). Traditionally inventory of Raw material and finished goods were kept as a buffer
against stock run-outs but as stated earlier keeping higher levels of inventory has costs
associated with it (Manna 2011, p.356). Globalization and tough competition has led the
organizations to alter their approach to inventory management in order to reduce their costs.
Most successful businesses have moved on to JIT (Just in time) inventory management
systems (Manna 2011, p.356). As the name implies, under JIT an item is order only when it is
required for the production process or shipping (Manna 2011, p.357). The target of an
efficient JIT system is to reduce the inventory level and lead time to zero or bare-minimum
which is achieved by creating a demand pull environment. JIT requires effective coordination
between various departments within the organization and with suppliers and customers
(Manna 2011, p.358).

Samsung earns most of its revenues globally and has to compete on price in addition
to quality. The competition in mobile and consumer electronics is very stiff. For example
Samsung mobiles use the Android operating system which is also being used by a number of

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

its competitors, this entails that Samsung has to price its mobiles in a narrow range in
comparison to the similar mobiles offered by its competitors. If other businesses are able to
offer similar products at a lower price Samsung is bound to lose its customers. In order to
price its mobiles competitively Samsung must bring down the production cost which it does
by using the JIT inventory system. Samsung closely coordinates with its suppliers and
maintains long term relations with them. Effective communication lines are crucial for the
success of JIT environment and Samsung is able to achieve this through a worldwide
collaborative portal called Global Samsung Business Network. (GSBN). It allows its suppliers
and partners to a have a real-time view of the status of purchase orders, shipping and
inventory. Samsung also promotes JIT among its suppliers and helps them through technology
transfer. Close coordination between various departments or levels i.e. purchase,
manufacturing, sales and logistics is crucial for the effectiveness of JIT which is also made
possible through this portal (Informs.online, 2015)

When the companies incorporate the technological changes in their inventory

management system they save cost, less resources are used to manage inventory and the
process of inventory management will be smoother than before. The company which has its
setup all over the globe it has to have a strong and efficient inventory management system
to make its product available for the customers a shortages of product even for few hours can
cause loss to the organization. In this era were the customer has many choices the customer
expects that the product should be available to him on time many companies work on the
concept of just in time inventory these days, successful organizations have a strong inventory
management process. In case of global manufacturing the companies have to maintain a
strong inventory system and for that they have to work on their supply chain system and to
have strong relationship with the suppliers to be successful in the market.

Resource management:

Great companies always find ways to improve the level of profitability, eliminate
waste and to streamline the costs. Bearing in mind that to some businesses the employees
represent the significant cost, so it sometimes is not a surprise if such companies have to use
the layoffs and the staff terminations to cut off their costs during the period of economic crisis
(Huselid 1996, p.950). Whereas on the other hand the sometimes the success of the business

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

in hard times depends on the efforts put by its employee heavily; sometimes organizations
may feel that laying off the skillful, experienced and the persons having expertise may be a
solution but it can be a solution for a short run, in the long rum this loss perhaps it can leave
some adverse consequences on the performance of the business (Huselid 1996, p.950). The
solution to this issue is to device a resource management system. The resource management
system will help the company to cope up with the problems linked with the faulted resource
plan, lack of the proper understanding about the skills of the staff working in the organization,
the limited conflicting resources and over or underutilization (Huselid 1996, p.950).

Samsung uses a standardized resource management process, Samsung improved the

control and the visibility of the resources, which helped Samsung to be at the top place in the
market and to flourish its business (123HelpMe.com, 2015). The standardized resource
management system helped Samsung to utilize the resource pool entirely on daily basis, in
some cases weekly or maybe monthly, this helps Samsung to increase its revenues and it helps
to make sure that the most valuable ones are utilized completely (123HelpMe.com, 2015).
The other thing while managing resource is to manage the conflicting resources as it can affect
the revenues, the unresolved conflicts may cause an opportunity to be missed, it never leaves
short time impact but it can also create some strong loop wholes that can be hard to remove
in future. But Samsung with the efficient resource management system the operations
managers make some plans for the allocation of resources in such a way that the conflict
about the resources minimizes. Improving the delivery of the assigned task can also help to
reduce the cost of the procedures and increases profit margins (Samsung, n.d, Samsung press
information). Samsung through its efficient delivery mechanism is successful in reducing the
costs of delivery the resource management systems n solutions are used to do the resource
allocation on the skill, availability and location basis and Samsung makes it sure that the right
person is allocating the job. As the success lies in the resource management Samsung believes
in improving its resources to be able to manage the resource perfectly. Samsung also uses
resource management software to reduce the cost of resource administration and to have an
error free management process. As the software also provides the control, visibility and
opportunity (Samsung Engineering 2013, Quality Management).

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

The resource management is the biggest issue that the organizations face these days.
The technological changes always provide the better solution to the organization to manage
the resources and to utilize the resources to get the maximum output. The organizations
working with the latest technology are also able to give the best output under the constraint
of limited resources. The issue of resource management is more important for the
organization present in the global market as the have to manage their resources at all he
locations where their operations are being conducted because if the process of production
will not be efficient the company will incur more cost, which means lack of price
differentiation strategy that will be fatal for the success of the organization. On the other
hand the organizations who manage their resources well at all the stations are usually the
market leaders or hold the great share in the market. Resource management is also
associated with the customers, if there is mismanagement in the resource it can cause delays,
quality issues and it can also and in the high price of the product if the resources are not used
efficiently. Manufacturing either at national, international or global level is always effected
by the resource management. If the resources is not properly handled then the process of
manufacturing can encounter many issues which the organization will never like to face.
Global manufacturing is the most diverse and complicated phenomenon and is too delicate
to be a successful global manufacturer the organization has to have an effective resource
management system.

In a nutshell, business need two things profit and customers. Any organization can be
successful if they are making plenty of both. In this era of technological advancements the
expectations of a customer are changing on a daily basis. For an organization to reach the
customers’ expectation everywhere they should focus on making quality products globally
most of the time to those areas where they have no or less competition so that they can have
a technological leadership advantage. A proper supply chain system will manage all the
resources from raw material till customer in a streamline flow and will reduce the cost of
product. If manufacturing on a global scale proper inventory management system will lower
the storage cost and deliver the product to customer on time.

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

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Name: SYED MOSA RAZA ZAIDI Charles Darwin University, Sydney, Australia

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