Balanced Scorecard Study – Samsung

Kashun Davis TMAN 680 Fall 2012 Balanced Scorecard: Samsung Samsung is the technology-based organization that will be the subject for my Balanced Scorecard. Founded in 1938 in Seoul, South Korea, Samsung Electronics Co. Ltd. engages in the manufacture, distribution, and sale of finished electronic products and device solutions worldwide. They offer consumer products, including mobile phones, tablets, televisions, Blu-rays, DVD players, home theaters, multimedia players; home appliances, such as refrigerators, washing machines, air conditioners, etc; Laptops and personal computers.

The company also designs and manufactures integrated circuits for digital information storage in consumer electronics. It has operations in Korea, U. S. , Europe, Asia, Africa, Africa and China. Because of the large size of the Samsung Corporation, I will focus on Samsung smartphones, one of their technology-intensive business units. The vision of Samsung: “Samsung is dedicated to developing innovative technologies and efficient processes that create new markets, enrich people’s lives, and continue to make Samsung a digital leader. Their 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. Samsung’s net sales have risen from 158. 9 billion in 2007 to 220. 1 billion in 2011. Their total assets grew from 280. 8 billion in 2007 to 343. 7 billion in 2011. Unfortunately their total liabilities went from 181. 7 billion in 2007 to 202. 6 billion in 2011. Stockholder’s equity almost doubled from 80. billion in 2007 to 141. 1 billion in 2011. Samsung’s net income also increased from 12. 9 billion in 2007 to 21. 2 billion in 2011. It’s also not strange to see their employee base increase due to their explosive growth over this five-year time p. They had 254,000 employees in 2007 and now have over 344,000 employees in 2011 (“About Samsung,” 2010). Their electronics division has 190,500 employees at the end of 2011. With respect to the Smartphone business unit out of the 1. billion mobile phones sold worldwide in 2011, Samsung accounted for 330 million of those units. Their Galaxy S II sold more than 20 million units since its launch in 2011. In 2012, Samsung launched the Galaxy S III and expects to strengthen their brand and increase market share in the mobile phone arena (“About Samsung,” 2010). The balanced scorecard is defined as a management system that maps an organization’s strategic objectives into performance metrics in four perspectives: financial, internal processes, customers, and learning and growth (NetMBA, 2002).

The four perspectives mentioned above construct the balanced scorecard framework. To create a balanced scorecard for Samsung’s Smartphone business division this framework has to be applied. First, I will assess the mission, vision, challenges, and partners of the company. The vision of Samsung: “Samsung is dedicated to developing innovative technologies and efficient processes that create new markets, enrich people’s lives, and continue to make Samsung a digital leader. Their 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. Samsung not only makes smartphones, but they also create components like displays and integrated circuits that also go into competitor’s smartphones, such as Apple’s iPhone. Samsung’s competitors in the mobile phone market are Apple, Microsoft, Google, HTC, Nokia, and Blackberry. Samsung doesn’t make their own proprietary software and hardware as Apple, Google, and Blackberry.

Samsung exclusively uses Google’s Android Mobile OS for their phones. Another challenge Samsung faces, is that their mobile phones are not only in competition with other phones that have different software platforms, but they are in even stiffer competition with other phones that also use Google’s Android Mobile OS. This market in itself is very fragmented from the fact that more than 4,000 distinct smartphone models exist that uses the Android operating system (Valazco, 2012). Fortunately for Samsung they command 25. % of the smartphone manufacture market putting them on top. LG, Apple, Motorola, and HTC own 18. 4%, 16. 3%, 11. 2%, and 6. 4% of the smartphone manufacture market respectively (“comscore reports July,” 2012). With respect to the balanced scorecard framework, a strategy map will assist with connecting the four perspectives and how they relate to each other. The strategic measures chosen for the Learning & Growth Perspective were chosen based on information listed in the Samsung’s annual report. Samsung’s employees have grown over the past few years. Samsung’s social etwork presence is currently greater than their competitors, but there is always room for improvement. Samsung invested $8B USD in R&D, which this funnels down to organizational capital and learning from their competitors. With respect to the Internal Process Perspective $8B USD were invested into R&D for innovation. Customer Satisfaction is never perfect in any organization, thus leaving room for improvement. Not to mention customer satisfaction can translate into sales. Management of operations was chosen because process improvement is always needed in an organization.

The customer perspective measurements are strengthening the brand, gaining OEM market share, and exceeding customer expectations. All of these links to financial success within the organization, thus focusing on these measures is vital to the growth Samsung expects to see in the future. Stockholder equity, net sales, and net income all affect the customer, internal, and learning & growth perspective measures and vice versa. This provides a top to bottom and bottom to top flow balanced measures. Learning & Growth Perspective| Objective| Measure| Target| Initiative|

Grow Human Capital| # Of Employees in Samsung Electronics Division| 200,000 employees| Aggressive Recruitment and Retention Program| Improve Information Capital| Social Networking Effectiveness| 6 Million Twitter Followers; 40 Million Facebook Likes| Aggressive & Interactive Social Networking Campaign| Build Organizational Capital| Submittal of Employee Ideas| 5,000 Employee Ideas Submitted| Conduct Organizational Learning Study of Samsung Mobile Division (Amiri, 2010)| Learn from our Competitors| Mobile OEM Market Share| Increase Mobile OEM Market Share by 20%| Analyze competitors customer base and meet the needs of that customer base through innovative mobile technology | Internal Process Perspective| Objective| Measure| Target| Initiative| Manage Innovations| Successful Research & Development Projects| Double R&D Projects| Allocate more capital to R&D projects and their implementation| Manage Customer Relations| Customer Satisfaction| Double and Sustain Customer Satisfaction scores| Aggressive ustomer service training for employees| Manage Operations| Value Added & Non-Value Added Operations| Increase Value Added Operations and Reduce/eliminate non-value added operations| Lean Six-Sigma Process Improvement Initiative (Qun, 2012)| Customer Perspective| Objective| Measure| Target| Initiative| Strengthen Samsung Smartphone Brand| Market Share| Increase Market Share| Aggressive Marketing Campaign| Gain Smartphone OEM Market Share| OEM Market Share| Increase Mobile OEM Market Share by 20%| Analyze competitors customer base and meet the needs of that customer base through innovative mobile technology| Exceeding customer needs and expectations| Customer Satisfaction Scores | Customer Retention| Double Customer satisfaction scores & retention | Customer Loyalty & Rewards Program | Customer Perspective| Objective| Measure| Target| Initiative|

Increase Stockholder Equity| Stock Price| Increase from $489/share to $510/share| Increase Market Share| Increase Net Sales| Net Sales| Increase from 135B to 170B| Aggressive Marketing Campaign| Increase Net Income| Net Income| Increase by 15%| Make Operations Efficient and reducing costs| Sources About Samsung. (2010). Retrieved from http://www. samsung. com/us/aboutsamsung/corporateprofile/ourperformance/samsungprofile. html Amiri, A. , Jandghi, G. , Alvani, S. , Hosnavi, R. , & Ramezan, M. (2010). Increasing the Intellectual Capital in Organization: Examining the Role of Organizational Learning. European Journal Of Social Science, 14(1/2), 98-108. comscore reports July 2012 U. S. mobile subscriber market share. (2012, Sept 04). Retrieved from http://www. comscore. com/Insights/Press_Releases/2012/9/comScore_Reports_July_2012_US_Mobile_Subscriber_Market_Share NetMBA. (2002). Netmba business knowledge center.

Retrieved from http://www. netmba. com/accounting/mgmt/balanced-scorecard/ Samsung Group. (2011). Samsung profile 2011. Retrieved from http://www. samsung. com/us/aboutsamsung/corporateprofile/download/Samsung_Profile_2011-EN-final-revise. pdf Qun, Z. , Irfan, M. , Khattak, M. , Abbas, J. , Xiaoning, Z. , & Shah, M. (2012). CRITICAL SUCCESS FACTORS FOR SUCCESSFUL LEAN SIX SIGMA IMPLEMENTATION IN PAKISTAN. Interdisciplinary Journal Of Contemporary Research In Business, 4(1), 117-124. Valazco, C. (2012, May 15). Techcrunch. Retrieved from http://techcrunch. com/2012/05/15/3997-models-android-fragmentation-as-seen-by-the-developers-of-opensignalmaps/