Samsung Australian
Subsidiary
Daniel O’Neill, Kayla Stravin, Anthony Masucci,
Chris Drakos, and Andrew Hastings
Samsung Inc.
• Samsung was founded in 1938 as a trading
company and since then has erupted into one of
the world’s largest companies with a revenue in
2012 of 268.8 billion dollars.
• Products such as Smartphones, Televisions and
Galaxy Tablet
Samsung Australia
Cox Peninsula on the
Coast of the Beagle Gulf.
Northern Australia
Parent Company Description
• Parent Company Description
• Name: Samsung Electronics Co., Ltd.
• Location: Samsung Town, South Korea
• Company Annual Revenue: ₩ 201.103 trillion (2012)
• Number of Employees: 235,868
• Type of Business: Consumer electronics, Telecoms
Equipment, Semiconductors, Home Appliances
Mission Statement
• At Samsung, we follow a simple business
philosophy: to devote our talent and technology to
creating superior products and services that
contribute to a better global society.
“A digital leader. A
responsible global
citizen. A multi-faceted
family of companies. An
ethical business.”
Parent Company
Organizational Chart
Vision 2020
• “Inspire the World, Create the Future”
• Goal of $400 billion in revenue and expand into new
markets including health, medicine, and biotechnology
Marketing
• In order for Samsung to stay on top of the market
they must have a great Marketing Team.
• Innovation communicated to consumers.
• It takes a group of creative individuals who know
the market to structure captivating
advertisements.
Marketing
• Things to consider….
• Area Being marketed
• Culture such as religion, beliefs etc.
• Out of the box ideas
• Certain area find interesting
Finance
• Being a Subsidiary of Samsung Inc. means that we
will have a great backbone.
• In order to manufacture and sell these high tech
products it takes a large initial investment.
•
•
•
•
•
Buildings
Land
Robots, manufacturing equip.
Training
Employee hiring
Human Resource Management
• HR is primarily concerned with how people are
managed within organizations, focusing on policies
and systems. With this said it is extremely vital to
a company’s success to have their employees
operating at a high level.
• The ability to keep employees happy in the work
place is essential.
Business Organization Chart
Expatriates from South
Korea (10)
1%
Researchers (200)
20%
Production (300)
29%
Financial Analysis (100)
10%
Marketing (150)
15%
Managers (150)
15%
Designers (R&D) (100)
10%
Cultural Differences
Cultural Factor:
Religion
Education
Economics
Parent Country
(South Korea)
Buddhism, Protestantism, and
Catholicism are the 3 dominant
religions.
1.) Primary Education (Elementary
School)
2.) Secondary Education
(High School)
3.) Tertiary Education
(Universities or Vocational School)
-High Income, Developed Country.
-Considered an Emerging Economy
-OECD Member
-Ranks 15th in the World from
nominal GDP
-Currency: South Korean Won
Country of Business Unit
(Australia)
Predominantly Christian
1.) Primary Education
(Elementary School)
2.) Secondary Education
(High School)
3.) Tertiary Education
(Universities or Vocational
School)
-22 Years of Uninterrupted
Growth
-Real GDP Growth Expected
to Outperform Every Major
-Advanced Economy Through
2017
-OECD Member
-Currency: Australian Dollar
Cultural Differences
Politics
-Republic of Korea
-3 branches: Executive, Judicial,
Legislative
-Follow the Constitution of the
Republic of South Korea
-Democracy
-Australia’s government is based on
a popularly elected parliament with
two chambers: the House of
Representatives and the Senate.
-Citizens required to vote in all
elections.
-Follows the Australian Constitution
Family
-Family is the most important part of
Korean life.
-Father is the head of the family and in
charge of providing food and shelter.
-Oldest Son has special duties to first
his parents, then siblings, then his own
sons, then he wife, then his daughters.
-Value their privacy and stick
exclusively to their “nuclear family”
unit (Mother, Father, Children)
- Will only invite someone into their
home if they are known well
-Many single family homes
-Men and women share the
responsibilities in the home
Income gap between the working class and
industrialist class has formed. New power
elite has formed as a result.
No legal class divisions. Everyone
is treated the same and granted the
same support whether you are a
millionaire or unemployed. Idea of
everyone living in peace with one
another.
Class Structure
Cultural Differences
Official Language
Korean
English
History
Formally established in 1948. Created
after World War II when Korea was
separated into North and South Korea.
Has developed from one of Asia’s
poorest countries to one of the
wealthiest.
First inhabited by the
Aborigines. Officially claimed by
James Cook of Britain in 1770.
Commonwealth of Australia was
formed in 1901.
Natural Resources/
Geography
Coal, Tungsten, Graphite, Lead,
Hydropower Potential
Bauxite, Coal, Iron Ore, Copper,
Tin, Gold, Silver, Uranium,
Nickel, Mineral Sands, Lead,
Zinc, Diamonds, Natural Gas,
Petroleum.
Lies on the Korean Peninsula.
Mountainous in the East. Harbors in the
West and South.
Peninsula. Mountain ranges
from North to South along the
East coast. Western half of the
continent is barren desert.
Great Barrier Reef lies along the
North coast.
Economy of Australia
• Australia has experienced 22 years of
uninterrupted economic growth.
• Member of the OECD (The Organization for
Economic Cooperation and Development)
• The OECD is made up of 34 countries and their
primary goal is to stimulate economic growth and
world trade.
• Australia specifically is benefitting mainly from the
strong trade ties that they have with Asia, Europe,
and the Americas
One of Fastest Growing
Regions in the World
• With the Asia-Pacific region at the center of global
growth, Australia is in a unique position as a safe and
reliable location from which to service that market.
• By 2050, two thirds of the world’s population and
consumption will take place within the Asia-Pacific
region.
• There are two main business opportunities that will
excel in Australia:
-Information and Communication Technology
-Creative and media products.
Important Aspects of
Business in Australia
• Business etiquette to put feelings and emotions
aside.
• Punctuality is critical.
• Australian business people are very matter-of-fact
with their communication and planning deadlines.
• Ideal place for bridging the time zones in business.
The time zone spans the close of the business day
in the United States and the opening of the
business day in Europe. This offers twenty four
hour access for global organizations globally.
Important Laws/Regulations
• Workplace Relations Act-“to provide a framework for
cooperative workplace relations which promotes the
economic prosperity and welfare of the people of
Australia”
• Intellectual Property Law-designed to encourage the
innovation and creativity of parties and protect these
ideas so that they have a competitive advantage.
• In addition to Intellectual Property, there is protection
for patents, trademarks, design, and copyright. All of
these are put into place because they value the
individuality and effort put into the creation of new
material.
Financial Laws and Regulations
• It is important to note that even temporary residents of
Australia must pay personal income taxes.
• Businesses operating in Australia are required to lodge
a Business Activity Statement to the Australian
taxation office. These Financial reports must meet the
requirement of the ASIC which is the Australian
Securities and Investments Commission Australian
Trade Commission.
• These reports are audited to make sure that the
business rules and regulations are being followed
properly.
International Business
Metrics
High risk high reward
•
•
•
•
Key performance indicators
Set reachable goals and objectives
Accurate measurements of progress
•
Learning process
What to measure? (KPI’s)
• Customer satisfaction
• Employee retention
• Market changes
• Inventory
• All costs
• Revenue
Foreign Direct Investment Plan
• 650 million Australian dollar greenfield investment
• State of the art facility
• 400 million dollar production facility
• Eco- friendly
• Employee 300
• 8 other buildings consisiting of office buildings,
customer service, return centers, corporate
headquaters
Foreign Direct Investment Plan
• Entering on strategic scale
• Allows us to make a strategic commitment to the market
• Confident: Australia is politcally & economically stable
with low inflation rates
• Wholly owned subsidiary
• Build from the ground up
• Seamless integration of parent company values and
principles of business
• Allows us to be efficient in the south pacific market
Foreign Direct Investment Plan
• Cut costs through the state of the art facility
• Discounted consumer products for transportation
companies
• Sell products to all major phone carriers in south
pacific region
• Telestra, Optus, Vodafone, as well as other electronic
companies
Foreign Direct Investment Plan
• Hedge funds  minimize exchange risks
• Keep Australian revenue in Australian dollars
• Other countries within the south pacific region
have similar exchange rates to the Australian dollar
so minimal hedging will be necessary
Key Performance Indicators
• Market Share
• Inventory Turnover
• Profit Margin
• Liquidity
• Employee Retention
• Parent company expatriates
• International management sector from parent
company in order to ensure seamless integration
• Parent company to oversee operations for the next
three years, in order to make sure we abide by
companies international business policies.
Evaluating Success
• Achieving 40% Market Share within the region
• Increasing Profits
• Functioning Independently from parent company
headquarters
• 15% increase in customer satisfaction within first 6
years
• 70% employee retention within first three years
• 80% employee retention rate within the first 6
years
1
Chris Drakos
Andrew Hastings
Anthony Masucci
Dan O’Neill
Kayla Stravin
SAMSUNG ELECTRONICS
I EXECUTIVE SUMMARY
Samsung is a South Korean multinational conglomerate company which is headquartered in Samsung
Town, Seoul South Korea. Samsung was founded in 1938 by Lee Byung-chu as a trading company. Throughout the
first three decades of Samsung it was exploring many different areas including food processing, textiles, insurance,
securities and retail. Although in the late 1960’s Samsung entered the electronics industry, as well as the
construction and shipbuilding industries, which would propel Samsung into a period of significant growth, and as a
result their electronics group—which is made up mostly of mobile phones and semiconductors—has become the
main source of revenue. Samsung’s mission statement is simple and it reads, “At Samsung, we follow a simple
business philosophy: to devote our talent and technology to creating superior products and services that contribute to
a better global society.” At Samsung we have proven ourselves to be an elite global company, but as our mission
statement says, we are always looking to contribute to a better society, and part of that is expanding our company
into areas which we are not currently located to provide better service to our customers. We are dedicated to creating
an optimal experience for our customers and employees. In order to continue to be successful we must expand and
broaden our horizons as a company. To contribute to our customers satisfaction, we will be expanding a business
unit into Australia, and due to the large nature of the expansion, a strategic integrated international business plan
will be used.
Our entry strategy into Australia will be much like opening up a new division in the United States or any
other country. Australia is an excellent test market for design and innovation within the realm of technology.
Samsung is always creating new products and this area will be a good place to test new innovations from the
company. We will be purchasing a large piece of land south of the Tremor Sea, to the northern part of the continent.
Here will be opening up a large production plant. The opportunity to expand a unit into Australia is a big step for
Samsung, as we will build a state of the art production facility which is eco-friendly and environmentally safe. We
are looking to create products efficiently because it follows with our Code of Ethics that is dedicated to keeping the
Earth as well as our customers healthy and safe. With our production facility strategically located we will be able to
ship and access customers throughout Australia, New Zealand, the Southern Pacific, and even some parts of
Southern Asia. We will take advantage of the fact the Australia has the benefits of bridging the world’s major time
zones. The time zone in this country spans the close of the business day in the United States and the opening of the
business day in Europe. This has the capability of having twenty four hour access to companies internationally. A
combination of planes, ships, and trucks will deliver the product to our customers in a timely manner. We believe
that this division will help Samsung reach its goal of $400 billion dollars in annual revenue within the next ten years.
As Samsung takes on the challenge of moving operations into Australia, it will be adding hundreds of
employees to work in the plant, and oversee day to day operations. Due to this there are many key performance
indicators which will be needed in order to measure Samsung’s success in Australia. By looking at market share,
incurred costs, inventory turnover rates, profit margin, liquidity, and employee retention we will be able to have
measurable results to look to and evaluate the company’s success. Using Samsung’s past success on an international
level, we will open up a new state of the art production facility, while keeping costs low, and in the end creating a
profitable business with a high market share.
2
PARENT COMPANY DESCRIPTION:
II PARENT COMPANY HIGHLIGHTS
Parent Company Description
Name: Samsung Electronics Co., Ltd.
Location: Samsung Town, South Korea
Company Annual Revenue: ₩ 201.103 trillion (2012)
Number of Employees: 235,868
Type of Business: Consumer electronics, Telecoms Equipment, Semiconductors, Home Appliances
III PURPOSE OF BUSINESS:
At Samsung, we follow a simple business philosophy: to devote our talent and technology to creating superior
products and services that contribute to a better global society. Samsung is a multinational corporation which for the
past 70 years has been dedicated to making a better world trough diverse business that today span advanced
technology, semiconductors, skyscrapers and plant construction, petrochemicals, fashion, medicine, finance, hotels
and more. Their flagship company, Samsung Electronics, leads the global market in high-tech electronics
manufacturing and digital media. Samsung has found itself able to be so successful through innovative, reliable
products and services; talented people’ a responsible approach to business and global citizenship, and collaboration
with our partners and customers, Samsung is taking the world in imaginative new directions.
IV ORGANIZATION UNIT:
CEO
Australia Business
Unit
Consumer
Electronics
Visual Display
Business
Printing Solution
Business
Digital Appliance
Business
Health and Medical
Equipment Business
Mobile
Communications
Network Business
Digital Imaging
Business
V PARENT COMPANY STRATEGIC PLAN AND GOALS:
2-Year Goals:
Media Solution
Center
Device Solutions
Memory Business
5.1.51 Business
LED Business
3
Samsung has set its goal to bet the world’s largest appliance manufacturer by 2015. This would mean that they
would have to out-perform General Electric, Whirlpool, and Kenmore Electric that have all held this title for
decades. “It’s already the fastest-growing appliance brand in the U.S., having jumped from 2.3 percent in market
share to more than 10.5 percent over the last five years” 1. B.K. Yoon, Samsung’s co-chief executive officer says that
he believes that they are on track to achieve this goal as of January 9th. With its success in televisions and mobile
devices, Samsung has a competitive advantage because far more people are aware of the brand.
Change between Present and 2 Year Goals:
The top appliance leader holding the title of the World’s Largest Appliance Manufacturer is Whirlpool.
“But grabbing the top spot from appliance leader Whirlpool won’t be so easy. Samsung’s appliance-related revenue
totals roughly $12 billion a year; Whirlpool took in almost $18 billion in 2012” 2. Samsung must work extremely
hard in order to achieve this goal. “Currently, Samsung’s average price for an appliance is $1,046 in the U.S.,
according to the Stevenson Co. The industry average is $702” 3. In order to capture the market, Samsung must find a
way to make their models more reasonably priced. With a quality product at a low price, they are allowing
themselves to position their products as high end but something that is affordable to the core of the market. They are
working towards this goal while at the same time continuing to gain recognition because of the variety of products
related to the Samsung brand.
VI International Business Strategy for the Company
When bringing Samsung into Australia there are some important structural considerations that need to be
assessed. Samsung is currently one of the largest Electronic companies in the world. They have some of the largest
market share in terms of their television all the way too their cell phones. With their main company based in Seoul
South Korea, they have already mastered penetrating into markets all across the world. As a new branch in the
1
Grobart, S. (2014). Samsung Wants to Be the World's Biggest Appliance Maker by 2015.Bloomberg
BusinessWeek,
2
Grobart, S. (2014). Samsung Wants to Be the World's Biggest Appliance Maker by 2015.Bloomberg
BusinessWeek,
3
Grobart, S. (2014). Samsung Wants to Be the World's Biggest Appliance Maker by 2015.Bloomberg
BusinessWeek, .
4
Australian market we need to look at the structure of how a Samsung facility is run. The Samsung names has grown
to be extremely popular has an industry standard in terms of how the company is run and the products they sell to
the consumers. When creating this new Australian headquarters for Samsung, we need to realize that Samsung
products are already prevalent in the Australian community. As a company we need to gather information on the
Australian culture and see what we need to do in order to make Samsung the top brand for cutting edge electronics
in Australia.
Samsung was founded in 1938 as a trading company and since then has erupted into one of the world’s
largest companies with a revenue in 2012 of 268.8 billion dollars. It currently has three CEO’s: Kwon Oh Hyun,
Boo-Keun Yoon, Jong-Kyun Shin. These three individuals oversee the multibillion dollar company and work to
make Samsung the top company in the world. It is safe to say that Samsung has great innovative products that have
penetrated the market and become an instant success. Samsung has reached this success with millions of dollars
spent on research and development. As a new section of Samsung we need to take this approach of working to be
the best so that we can make a huge impact on the market. Samsung as a whole has succeeded but as a new
subsidiary of Samsung we need to do everything we can in order to keep the high standards of the company in mind
with every business decision we make. The company will need to focus on a few specific sections such a Marketing,
Human resource management and financing. These three areas of focus are key to a successful company.
The marketing team of a company can make or break how well a company does. In the electronics industry
it is vital to have top of the line products that are marketed to the consumer in an out of the box way. In order to do
this a company must compile a team of different background so that they can create an innovative way to market the
new products. The new market gives the marketing team an opportunity to do research and see what will be the best
way to market their products to the Australian people. It is the idea that we will take existing marketing team
members and have them facilitate interviews so we can hire the top individuals with understanding of the Australian
culture. The theory of competitive advantage falls in line with the idea of opening a Samsung subsidiary in
Australia. 4 Since opening a new production facility we will be able to ship and trade out in the areas out and around
Australia. This will help the overall economy. We will be using local companies to ship and advertise which will be
a big help to the Australian economy.
Financing a company is the most important part of the company. Without the ability to spend money there
is no way to make money. All facets of a working company begin with the ability to finance projects such as
research and development, marketing, hiring the best employees and other day to day cost. Being a subsidiary of
Samsung INC we are lucky since we will be asking our parent company to help us finance our startup costs. Being
in this position we are more than ready to finance our projects and uphold the Samsung name in a new market.
Human Resource management is a function in organizations designed to maximize employee performance
in service of their employer's strategic objectives. HR is primarily concerned with how people are managed within
organizations, focusing on policies and systems. With this said it is extremely vital to a company’s success to have
their employees operating at a high level. A company like Samsung has a high expectation that their product will be
the best in the market and this starts with the best employees. Coming to Australia, a new market for assembly and
retail of these electronic devices the Human resource section of the company needs to make sure that the new
employees buy into to the system of being the best. It is about showing them how Samsung is run and how to keep
the high standards in mind when doing daily activities.
4
Hill, Charles W. L. International Business: Competing in the Global Marketplace. Boston: McGraw-Hill/Irwin,
2005. Print.
5
VII BUSINESS ORGANIZATION CHART
Expatriates
from South
Korea (10)
1%
International Business Development
Researchers (200)
20%
Production (300)
29%
Financial Analysis
(100)
10%
Marketing (150)
15%
Managers (150)
15%
Designers (R&D)
(100)
10%
VIII INTERNATIONAL BUSINESS ISSUES FOR BUSINESS UNIT
There are important aspects of Australia that should be considered for a new International Business unit.
Whenever a company is opening up a new unit of their company in a new place it is important that they understand
the standards in that new country. It is highly likely that there are differences between the two countries culturally,
economically, legally, politically, and geographically.
In terms of culture, the people of Australia are extremely proud of their home. All Australians have the
right to express their culture and beliefs freely. They are also encouraged to participate in Australia’s national life
“Australians are wealthier, have on average more highly skilled jobs, greater employment opportunities, and can
look forward to more stable investment incomes in retirement due to the diversification of funds overseas”. Australia
is an egalitarian society which means that there are no formal class distinctions in society. The most commonly
spoken languages after English are Italian, Greek, Cantonese, Arabic, Vietnamese, and Mandarin. The culture of
Australia is considered “modest and authentic” 5. In terms of business, this means that people should stick to the
facts and figures and avoid emotional influencing techniques. In Australian business etiquette, people tend to put
their feelings and emotions aside when doing business. Business is taken extremely seriously in Australia.
Punctuality is something that is critical to the business people. “Australian business people are very matter-of-fact in
5
Gustafson, E. (2011). 5 things You Should Know When Doing Business in Australia. Careers in Finance, Pg. 1
Retrieved from http://careerinfinance.com.au/2011/08/31/5-things-you-should-know-when-doing-business-inaustralia/
6
their communication and business deadlines” 6. New people doing business in Australia should be prepared for the
fact that if Australians don’t like what you say, they will let you know without hesitation.
Australia has a strong legal system that works hard to make sure that the people of Australia are both safe
and protected. The Commonwealth was formed in 1901. One major focus they have is on anti-corruption laws.
These measures are taken to make sure that there is no bribery of public officials. “Australia’s judicial system
operates independently and impartially” 7. With a democratic government, they are based off of the ideas of
respecting religious values, freedom of speech and association, and the rule of law. Australia’s government is based
on a parliament with two parts: the House of Representatives and the Senate. Although Australia is technically its
own nation, Queen Elizabeth II of Great Britain is also formally the Queen of Australia. Her role is to elect the
Governor-General to represent her within the Australian democratic government. Australia follows a written
Australian Constitution that outlines the rights and responsibilities of the people and the government. There is a law
that all citizens over the age of eighteen must vote in both federal and state elections.
Economically, Australia is competitive in services, technologies, and high-value added manufactured
goods. “Australia’s highly competitive regulatory framework promotes business formation and operational
efficiency” 8. The economy is strong due to flexible labor regulations which enhance employment and productivity
growth. More than 80% of the economy in the country is service based. As a country, they are working to encourage
consumers and companies to use alternative energy sources so that they can eliminate their carbon footprint as a
country. Australia’s economy has experienced 22 years of uninterrupted growth. Angel Gurria, the OECD Secretary
General said: “Australia’s long period of uninterrupted economic growth makes it the Iron Man among the OECD
countries” 9. The OECD is the Organization for Economic Cooperation and Development. It is made up of 34
countries and their primary goal is to stimulate economic growth and world trade. Australia specifically is
benefitting from the strong trade ties that they have with Asia, Europe, and the Americas. “Australia’s real GDP
growth is expected to outperform every major advanced economy to 2017”10. With 22 years of uninterrupted
growth, it admirable that Australia has developed consistently even through economic depressions. The currency of
Australia is the Australian dollar. In terms of Samsung it is important to know how the exchange rate transfers for
the South Korean Won. 1 Australian Dollar converts to 973.30 South Korean Won.
Australia is home to world class innovation. As a country, there has always been a sense of advanced
innovation. The government and business investors work hand in hand to do research and development that puts
them ahead of many other countries worldwide. They are focused on intellectual property protection and have a
strong track record with world-class outcomes. Australia works hard to “create opportunities for investors to
collaborate in commercializing research and innovation” 11. Some of the strongest and most accredited research
institutions are located in Australia and often collaborate with private-sector businesses to come up with new
products and innovations. To date, Australians have helped to develop products such as the bionic ear, Google maps,
and high speed WIFI.
Australia is one of the fastest growing regions in the world. John Corcoran, Executive Chairman of Global
Switch said: “With the Asia-Pacific region at the center of global growth, Australia is in a unique position as a safe
and reliable location from which to service that market” 12. It is predicted that the Asia-Pacific region is going to
continue to take over the global economy. “By 2050, two thirds of the world’s population and consumption will take
6
Gustafson, E. (2011). 5 things You Should Know When Doing Business in Australia. Careers in Finance, Pg. 1.
Retrieved from http://careerinfinance.com.au/2011/08/31/5-things-you-should-know-when-doing-business-inaustralia/
7
The Heritage Foundation. (2014). Australia: Quick facts. 2014 Index of Economic Freedom, Retrieved from
http://www.heritage.org/index/country/australia
8
The Heritage Foundation. (2014). Australia: Quick facts. 2014 Index of Economic Freedom, Retrieved from
http://www.heritage.org/index/country/australia
9
Australian Trade Commission. (2014). Why australia? : Growth. Australian Government Trade Commission
Retrieved from https://www.austrade.gov.au/Invest/Why-Australia/Growth
10
Australian Trade Commission. (2014). Why australia? : Growth. Australian Government Trade Commission
Retrieved from https://www.austrade.gov.au/Invest/Why-Australia/Growth
11
Australian Trade Commission. (2014). Why australia? : Growth. Australian Government Trade Commission
Retrieved from https://www.austrade.gov.au/Invest/Why-Australia/Growth
12
Australian Trade Commission. (2014). Why australia? : Growth. Australian Government Trade Commission
Retrieved from https://www.austrade.gov.au/Invest/Why-Australia/Growth
7
place within the Asia-Pacific region” 13. It is smart for a business like Samsung to expand now because their business
will continue to pick up if they can learn how to capture the market in these areas. There are two main business
opportunities that will excel in Australia. Information and Communication technology provides companies with
tools and services that accelerate business growth. Australia is a good test market because they are highly educated
and always looking for a way to grow as a business. The second is creative and media products. “The high qualified
personnel and a competent audience suggest that the Australian can be a valuable market to test products”14.
Australia is growing rapidly and has plenty of room for opportunity to new business units from foreign nations.
Australia excels in trading efforts. There are seven free trade agreements in operation to date which include
countries such as Singapore, Malaysia, and Thailand. They also have tax agreements with over 40 countries
throughout the globe. It is legal for companies to important goods from overseas as part of their business activity.
The one requirement is that the goods are classified and checked to make sure that they are not hazardous to the
people or Australia as a whole. The purpose of these treaties is to prevent double taxation and create a sense of
cooperation between international tax authorities. These collaborations work for the consumer so that they are not
being charged too much for the products that they are interested in buying. “Australia’s westernized consumer
culture makes it an excellent test market for products intended for launch in North America and Europe”15. Since the
culture is somewhat similar, Australia is an easy test market that is geographically closer and easier to access.
Australia also has the benefits of bridging the world’s major time zones. The time zone spans the close of the
business day in the United States and the opening of the business day in Europe. This offers twenty four hour access
for global organizations globally.
Australia has made is extremely easy to start a business within their country. “More than 18,000 foreign
companies are registered in Australia, including 18 of the top 20 Fortune Global 500 and 8 of the top 10 Fortune
100” 16. The regulatory environment is ranked one of the best in the world because of the dedication that the
authorities of Australia put in to make sure that all of the businesses are running smoothly. “Australia’s financial
sector has access to one of the world’s largest pools of investment funds and is the third largest pool of bank assets
in the Asia-Pacific region” 17. This shows that it is just as easy to be successful in this area as it is to set up a
company.
Starting a foreign unit of a business is relatively easy in Australia. First, you must ensure that the name you
wish to register is available. Second, you must reserve that name. Third, you must complete a relevant application
form and apply as a foreign unit of a company. Four, you must show any legal documents necessary. The fifth and
final step, it to bring in all of the forms and documents along with the fee to get your business started. The only
requirements are that there must be a translation if the documents are not in English and you must provide the
government with a current manual of ethics and standards of your company so that they can make sure that they
agree with the standards already in place in Australia. “The purchase, lease, and development of commercial
property in Australia are facilitated by state and territory, and local governments” 18. The government has a strong
presence but they are welcoming to new companies as long as they are willing to abide by the rules and regulations
of their country.
Once the business is started, there are Financial Reporting standards that they must follow. “Businesses
operating in Australia are required to lodge a Business Activity Statement to the Australian taxation office to make
13
Officers of the World Energy Council. (2011). Global transport scenarios 2050. World Energy Council, Retrieved
from http://www.worldenergy.org/documents/wec_transport_scenarios_2050.pdf
14
ASIC. (2014). Financial system inquiry: submission by the australian securities and investments
commission.Australian Securities & Investments Commission, Retrieved from
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/ASIC-submission-to-the-Financial-System-Inquiry-4April-2014-1.pdf/$file/ASIC-submission-to-the-Financial-System-Inquiry-4-April-2014-1.pdf
15
Australian Trade Commission. (2014). Why australia? : Growth. Australian Government Trade Commission
Retrieved from https://www.austrade.gov.au/Invest/Why-Australia/Growth
16
Australian Trade Commission. (2013). Why australia? benchmark report 2014. Australian Government Trade
Commission, Retrieved from https://www.austrade.gov.au/.../Australia-Benchmark-Report.pdf.
17
Australian Trade Commission. (2014). Why australia? : Growth. Australian Government Trade Commission
Retrieved from https://www.austrade.gov.au/Invest/Why-Australia/Growth
18
Australian Trade Commission. (2013). Setting up a business in australia. Australian Government Trade
Commission, Retrieved from https://www.austrade.gov.au/.../Australia-Benchmark-Report.pdf.
8
payments and report their tax obligation” 19. These Financial reports must meet the requirement of the ASIC which is
the Australian Securities and Investments Commission. Annual financial reports are required to be audited so that
the government and authorities can make sure that the business standards and being followed fairly and properly.
Cultural Factor:
Parent Country
(South Korea)
Buddhism, Protestantism, and Catholicism are
the 3 dominant religions.
Country of Business Unit
(Australia)
Predominantly Christian
Education
1.) Primary Education (Elementary School)
2.) Secondary Education
(High School)
3.) Tertiary Education
(Universities or Vocational School)
Economics
-High Income, Developed Country.
Considered an Emerging Economy
-OECD Member
-Ranks 15th in the World from nominal GDP
-Currency: South Korean Won
Politics
-Republic of Korea
-3 branches: Executive, Judicial, Legislative
-Follow the Constitution of the Republic of
South Korea
Family
-Family is the most important part of Korean
life.
-Father is the head of the family and in charge
of providing food and shelter.
-Father approves marriages of other family
members
-Oldest Son has special duties to first his
parents, then siblings, then his own sons, then
he wife, then his daughters.
1.) Primary Education (Elementary
School)
2.) Secondary Education
(High School)
3.) Tertiary Education
(Universities or Vocational School)
-22 Years of Uninterrupted Growth
-Real GDP Growth Expected to
Outperform Every Major
Advanced Economy Through 2017
-OECD Member
-Currency: Australian Dollar
-Democracy
-Australia’s government is based on
a popularly elected parliament with
two chambers: the House of
Representatives and the Senate.
-Citizens required to vote in all
elections.
-Follows the Australian Constitution
-Value their privacy and stick
exclusively to their “nuclear family”
unit (Mother, Father, Children)
- Will only invite someone into their
home if they are known well
-Many single family homes
-Men and women share the
responsibilities in the home
Class Structure
Income gap between the working class and
industrialist class has formed. New power
elite has formed as a result.
Official Language
Korean
Religion
19
No legal class divisions. Everyone is
treated the same and granted the
same support whether you are a
millionaire or unemployed. Idea of
everyone living in peace with one
another.
English
Australian Trade Commission. (2013). Financial reporting in australia. Australian Government Trade
Commission, Retrieved from http://www.austrade.gov.au/Invest/Doing-business-in-Australia/InvestorGuide/Running-a-business/Understanding-Australian-business-regulation/Financial-reporting-in-Australia
9
History
Formally established in 1948. Created after
World War II when Korea was separated into
North and South Korea. Has developed from
one of Asia’s poorest countries to one of the
wealthiest.
First inhabited by the Aborigines.
Officially claimed by James Cook of
Britain in 1770. Commonwealth of
Australia was formed in 1901.
Natural Resources/
Geography
Coal, Tungsten, Graphite, Lead, Hydropower
Potential
Bauxite, Coal, Iron Ore, Copper,
Tin, Gold, Silver, Uranium, Nickel,
Mineral Sands, Lead, Zinc,
Diamonds, Natural Gas, Petroleum.
Lies on the Korean Peninsula. Mountainous in
the East. Harbors in the West and South.
Peninsula. Mountain ranges from
North to South along the East coast.
Western half of the continent is
barren desert. Great Barrier Reef lies
along the North coast.
In terms of employing people while running business in Australia, all employers are entitled by law to the
terms and conditions that are already set by the national employment standards. “Employers are required to maintain
a safe workplace and meet Australian occupational health and safety requirements” 20. As long as employees are
treated properly and ethically and provided with the benefits of an employee in Australia than the businesses should
be left alone by the government. For most employees, personal income tax is paid by their employer. This is the
benefit of working for a company within Australia. “Temporary residents are required to pay taxes on income in
Australia” 21. This is important because if business leaders from other areas are working to get the new unit started,
than they must realize that they must pay income taxes even if they do not plan to stay in Australia for a prolonged
period of time.
Australia works extremely hard to regulate business. The legal systems want to make sure that businesses
are designed to “ensure fair competition, sufficient protection for the relevant parties, and the integrity of the
market” 22. One major concern that Australia protects is an individual or business’ Intellectual Property. Australia IP
Law is designed to encourage the innovation and creativity of parties and protect these ideas so that they can have a
competitive advantage from all of their hard work. In addition to Intellectual Property, there is protection for patents,
trademarks, design, and copyright. All of these are put into place because they value the individuality and effort put
into the creation of new material. People deserve credit for their work and Australia works to ensure that this will
happen for them. This goes along with the pride that Australians have in their home, everyone stands together and
respects the work of their fellow Australians.
In terms of Business and Environment laws, the Australian Competition and Consumer Commission
dedicates a lot of their time to this. There are fair trade offices located in every state and territory. The government
has worked to make these visible so that businesses can have regular interaction with them. The Australian
Consumer Law “provides regulations of unfair contract terms, consumer rights guarantees, product safety laws,
unsolicited consumer agreements, lay-by- agreements and penalties”23. A lot of effort is put into making sure that
businesses and consumers are treated properly and receive the benefits that they deserve. Privacy is something that
20
Australian Trade Commission. (2013). Setting up a business in australia. Australian Government Trade
Commission, Retrieved from https://www.austrade.gov.au/.../Australia-Benchmark-Report.pdf.
21
Australian Trade Commission. (2013). Setting up a business in australia. Australian Government Trade
Commission, Retrieved from https://www.austrade.gov.au/.../Australia-Benchmark-Report.pdf.
22
Australian Trade Commission. (2013). Understanding business trade regulation. Australian Government Trade
Commission, Retrieved from http://www.austrade.gov.au/Invest/Doing-business-in-Australia/InvestorGuide/Running-a-business/Understanding-Australian-business-regulation/Financial-reporting-in-Australia
23
Australian Trade Commission. (2014). Australian business and environment laws. Australian Government Trade
Commission, Retrieved from www.austrade.gov.au/...regulation/Australian-business-and-envi..
10
should be respected for all people. The National Privacy Legislation works to regulate how businesses can collect,
access, and store information that is personal from their consumers. Environmentally, the Federal Environment
Protection and Biodiversity Conservation Act (EPBC) works on national environmental concerns. The Energy
Efficiency Opportunities Program run through the EPBC “requires businesses that use large amounts of energy to
identify, evaluate, and report publicly on opportunities to save energy” 24. They are also focused on activities related
to importing, the sea, hazardous waste, and fuel efficiency. It is important to realize that Australia is dedicated to
keeping the globe green and healthy for the sake of the people.
IX IMPACT OF PARENT COMPANY’S INTERNATIONAL BUSINESS POLICIES
The impact of our parent company, Samsung, international business policies all deal directly with our
foreign partners. The goal of the company is to create high quality products and as a result improve global society as
a whole. Samsung Australia would be engaged in business within the south Pacific region of the world and therefore
doing business with multiple countries. As a company we would need to ensure that our international business
procedures were in accordance with that of our counterparts, while paying close attention to details and differences
amongst our respective cultures. Samsung is extending their business in Australia and this means that they must
continue to follow the ethical rules and standards already in place within the organization. The South Korean
headquarters of Samsung will be overseeing this transition and it is their duty to continue to follow the practices and
international business policies that have already been put in place so that the organization can run smoothly. The
company put together a Global Code of Conduct that outlines how they believe that the businesses should run and
how the employees should act.
Samsung maintains a stern international business policy in regards to all of their products located in various
countries across the world. As a company Samsung holds itself to a high standard in regards to their business, and
global perception. Samsung’s philosophy is to be “a digital leader. A responsible global citizen. A multi-faceted
family of companies. An ethical business.” Samsung headquarters in South Korea “upholds a belief in shared
responsibility – to our people, our planet and our society. Across the company, we hold ourselves to the highest
standards so that we can more effectively contribute to a better world.” With this in mind, Samsung Australia needs
to be able to uphold all of these values, principles and philosophies that Samsung is built upon while also being
profitable and an asset to the company in its entirety. Within the Global Code of Conduct, Samsung outlines a code
of ethics for the company. It states “The Company will respect the human rights of all employees and will not
discriminate against on the basis of race, color, creed, national origin, gender, age, citizenship, religion, regional
background, physical disability, marital status, or any other characteristics protected by law” 25. The rights and
dignity of each and every individual that interacts with the company must be respected in order to comply with the
standards. The goal of Samsung is to remain transparent and keep a sense of trust with all those that come into
contact with them. They key for Samsung is respect. They want to continue to improve the quality of life for the
customers as well as the employees. This company is genuine in caring for individuals as well as the environment.
These policies are upheld all over the globe and must continue within the Australian business unit.
Samsung Australia plans to utilize South Korean Samsung expatriates within the Australian headquarters,
in order to insure that international business is in compliance with already existing company strategies and goals. To
further our interest in aligning our international business strategy with our parent company we plan to have an
international management element within the Australian branch. By having this managed by a South Korean
expatriate we will guarantee a seamless integration of international policies and avoid any types of ambiguity. Also
as stated before in our business plan corporate Samsung plans to manage and oversea our operations in Australia for
the foreseeable next three years which will alleviate the stress of possible failures in complying with international
company policies.
24
Australian Trade Commission. (2014). Australian business and environment laws. Australian Government Trade
Commission, Retrieved from www.austrade.gov.au/...regulation/Australian-business-and-environment
25
Global Code of Conduct. (2006). : Samsung .
11
26
X FOREIGN DIRECT INVESTMENT
Samsung Australia plans to be a subsidiary of Samsung Incorporated. Utilizing a $650 million Australian
dollar Greenfield investment, which is equivalent to 6.399.077.262.501 won we plan to completely build a facility
from the ground up on the Cox peninsula located on the coast of the Beagle gulf. $400 million Australian dollar be
dedicated in order to build a production facility, 300,000 square feet in size, for the Australian business unit. This
facility entails all necessary state of the art, Samsung technology with a cutting edge facility that is used efficiently.
Inside the building, 50,000 square feet will be dedicated to office spaces that include offices, break rooms,
bathroom, and employee lounges. 150,000 square feet will be for the development and production of the televisions,
phones, and other products being manufactured and the remaining 100,000 square feet will be allotted for the boxing
and shipping of the products. The facility is eco-friendly with energy provided from solar panels, wind turbines, and
power provided by water energy. The vast majority of the $650 million dollar investment will be used in order to
create a state of the art eco-friendly facility. The eco-friendly aspect of this facility plays into the idea that Samsung
is focused on finding alternative solutions to keep their carbon footprint small.
In terms of staffing, there will be 300 employees dedicated to the production facility. These employees will
consist of production workers, engineers, supervisors, managers, product packers, maintenance workers, and
janitors. There will be two other research and development sites which will consist of researchers, engineers, and
designers always looking to create new and innovative products. There will be eight other buildings which consist
of office buildings, customer service and return centers, and a corporate headquarters. Throughout those buildings
there will be designers, managers, marketing teams, financial analysts and accountants, researchers and developers,
and expatriates from South Korea. The purpose of sending the expatriates from South Korea temporarily is to bring
experienced employees of Samsung in to make sure that everything runs smoothly in the transition to a new area.
Samsung plans to enter the South Pacific due to the lack of headquarters in that area. By doing this, we plan
to benefit Samsung incorporated by helping them to accomplish their goal of attaining $400 billion U.S. dollars in
revenue by 2020 as well as being one of the top 10 global companies by 2020. This will be successful because most
of the South Pacific companies are politically and economically stable and have low inflation rates. Samsung plans
on entering the market on a significant scale which will allow us to make a strategic commitment to the market.
Although this has a low term impact on Samsung and is often difficult to reverse, we feel that with our previous
26
Cocotas, A. (2012, January 1). CHART OF THE DAY: Samsung's U.S. Smartphone Sales Are Shockingly Small.
Business Insider.
12
expertise and success within the global market this is an appropriate strategy for our company. Samsung plans to
enter through a wholly owned subsidiary. A Greenfield Strategy will allow us to build our subsidiary from the
ground up and it will be better when we transfer organizationally embedded competencies, skills, routines, and
culture of the South Korean Headquarters into Australia. With an entirely new facility we possess the ability to
customize our facility to meet our corporate values and goals, while also being efficient and successful in the South
Pacific market and dynamic in our host country.
Samsung Incorporated is a multi-billion dollar company with vision to grow into one of the top 10 global
companies by 2020. Samsung has granted us the money that we need to invest from within the business in order to
capitalize in the South Pacific market and add to their long term profitability. In addition to this, we hope to cut
costs through our state of the art facility as well as cutting deals with our sub-contractors which mainly include
shipping contractors. To cut down on transportation costs, Samsung will offer transportation companies discounted
consumer products in return for discounted shipping. We plan to sell our products to the major phone carriers, which
are Telstra, Optus, and Vodafone, as well as the major electronic companies within the area.
For the Foreign Exchange Plan, we want to hedge our funds in order to minimize our exchange risks
because we realize that the Australian dollar is much stronger than the won. The Foreign Exchange Market could
change at any time so we want to avoid the risk in this. Hedging allows us to keep the Australian revenue in the
Australian dollar and use this for other aspects of business like production and other financial aspects. Each time we
receive revenue, we will take that revenue and put it back into our Australian business unit to keep producing
products. When selling products throughout other countries throughout the rest of the South Pacific, the other
currencies have a similar exchange rate to the Australian dollar so there will not be much change in the revenue
when it returns back to our headquarters at Samsung Australia.
XI INTERNATIONAL BUSINESS METRICS
As we focus on our international expansion in Australia, it is absolutely imperative to have a thorough
understanding of how to measure our success. With large growth and profit potential comes great potential risks that
can either make or break our future business. Our business metrics will be extremely helpful in making sure that our
goals and objects will be achieved according our standards. Therefore, we will demand an accurate measurement of
our success along the way to ensure that we are running an efficient and profitable business, while finding any ways
to reduce current costs as well as avoiding future costs. We have many key performance indicators in which we will
consistently check to measure our progress towards our goals. The main indicators consist of our market share,
overhead costs, inventory, revenue, customers, and employees. We are going to make great efforts to ensure that
these indicators are met at our standards. By doing so we will consistently learn more about the factors that will have
an impact on our growth. By learning more about our customers, industry, and employees for example, we can set
higher goals and objectives that will allow our business to prosper even further. Learning the things that we couldn’t
possibly have known beforehand, will prepare us for any challenge that we may face.
We understand that it will take a few years for our business to get established to our satisfying level. We
have set early goals that we expect to achieve, which will allow us to use those successful methods and strategies for
further growth. We will learn every aspect of why our goals are either being met or not, where we can then build on
the effective strategies and strengthen the weaknesses. If we don’t know why something is working, then we won’t
know how to respond to the inevitable changes in the marketplace. The more we understand about our industry,
customers, and ourselves, the more prepared we will be to successfully adapt to those changes and create a more
profitable long run business.
Two of the most important factors that we demand learning about is our industry and customers. Samsung
exists in a tricky industry, where in this day of age technology is always changing. Consumers are constantly
looking for “the next big thing” where if someone has it, others are going to want it as well. Therefore, we are going
to invest a lot of time and money in our research and product development in order to stay ahead of our competitors
and provide products that appeal more to consumers. We are also going to keep learning more about our customers
to make sure that our products continue to satisfy their needs and wants. The more we understand our customers, the
better we will be at providing products that will keep our current customers loyal and attract new ones from buying
Samsung devices.
13
Acquiring the knowledge that pertains to our customers and industry will allow us reduce multiple costs.
By keeping a close eye on how our industry and consumer’s demands are changing, we will be able to able to
control our level of inventory and cut production costs. With new technology coming out everyday, we have to
make sure that we are not over stocking our shelves with too many products that might not sell. We will keep
records with information on what is attracting consumers, and use that to create new products and either stop or
reduce the amount of less popular products from being produced.
The last measure we acknowledged in being an important factor to learn about is our employee retention. It
is extremely important to us to create a friendly working environment that keeps our employees happy. We are
hiring well-qualified managers who have the ability of running a serious business the way we want. We will do our
best to make sure that our employees enjoy working for Samsung and try to keep them employed for a long period
of time. This will save us the costs of interviewing and training new workers. The longer workers stay with our
company the more we can develop them in higher ranked positions, which avoids us from searching for the people
with those qualifications.
Once we establish our international operations in Australia, we are going to use our business metrics to
make sure that we are on the right path in becoming a successful business. To evaluate our success we plan on
reaching our main company goals that consist of increasing our market share and annual revenue while decreasing
costs. Using the key performance indicators that we have set will highlight the progress we make towards those
strategic goals and allow us to make any necessary changes. If we trust and abide by our business metrics, we feel
confident in reaching those goals and ultimately running a healthy long run business.
XII EVALUATING SUCCESS
Market Share:
There are many ways to measure the success of a business. Whether that be through sales and profit, or
through some other parameter. For Samsung there are many different factors which are needed in order to evaluate
the success which we have in Australia. As we prepare to expand operations already existing in Australia we are
going to measure success by looking at the current market share. Samsung has many main competitors, which
include Apple, Nokia, Intel, LG Display, Sony and Lenovo. The way which we are going to measure our success
within Australia is through market share. By the end of 2013 Samsung had already shipped more than 88 million
smartphones within the quarter, which is already a 55% increase from the same quarter the previous year. This
boosted Samsung’s market share to 35%. Main competitors like Apple, and LG each had market shares which came
in at 13.4% and 5% respectively. As Samsung moves operations further into Australia, we hope to continue to see
the market share increase. This is promising due to the fact that just recently the Global smartphone shipments grew
to over 45% or more than 251.4 million shipped and sold within the third quarter. Smartphones in general accounted
for every 6 out of 10 smartphones shipped worldwide.
Customer Satisfaction:
Obviously as we first expand on our operations which currently exist there is going to be much oversight
and guidance from our corporate leadership. With new leaders, and new workers it is more important that we are
able to establish ourselves as an independent division. One way which we will be able to evaluate our success is to
see our progress within three years after initial opening of the production facility. The goal of this would be to show
that opening up a production facility in Australia will allow us to be efficient and effective in our business ways.
One of the main reasons which we are deciding to move into and expand our facilities into Australia is due to
customer satisfaction. We hope to provide better products to our customers, quicker then they previously would
have experienced. One way to measure this goal is by looking at customer satisfaction ratings. We know these are
often tough to measure so we are setting our goal, and hope that within six years we will be able to see our customer
satisfaction ratings within that region to increase by at least 15%. This is very important to us and especially to us in
this industry. The smartphone industry is unique in a sense that after about two to three years a new phone is usually
purchased, and customer’s contracts are up. They are able to go to any of our competitors’ products. That’s why
creating a loyal customer base, and having customers who trust our products will be extremely important to us.
Employee Capacity:
The last thing which at Samsung we feel is an important part of gauging our success is by looking dealing
with our employees. Having well trained employees who are committed to their work is extremely important for us.
Our goal is to have an employee retention rate of at least 70% within the first three years of operation, and 85%
14
employee retention rate after six years after we start operations. This will reduce the costs that are incurred with the
rehiring process of employees, and will also allow employees to be better trained to fit into managing positions and
move up within the different production facilities, distribution centers, and headquarters which we will be setting up
throughout the Southern Pacific region. With 235,868 employees and 71,419 of them being hired in 2012 it is so
important that Samsung holds a high retention rate in order to keep up with the ever increasing global demand for
smartphones.
15
Balance Sheet:
16
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