Management: Samsung Electronics
Executive Summary
This report will discuss whether Samsung Group can establish a company in Malaysia. The report will be divided into two parts: the external environment and SWOT analysis of the external environment. In the external environment, it provides six sections which are political, economic, socio-cultural, technological, and legal environment, each of them gives the analysis and suggestions to Samsung Group. Furthermore, the findings will be presented in the recommendation and conclusion of the report.
Introduction
Samsung group is the largest electronic manufacturing company in Seoul. The company mainly produces electronics such as stylish phones, semiconductors, and digital TV. Now the company considering expanding the subsidiary company in Kuala Lumpur, Malaysia. This report will focus on a detailed analysis of the external environment of Malaysia. The aim of this report is to provide an evaluation of the external environment of Malaysia in the context of the electronics manufacturing industry. The investigation will report on the political, economic, socio-culture, technology, and legal environment of Malaysia. The report will help the company do expansion of analysis opportunities & threats for Samsung in the Malaysian electronics industry and assess the strengths or weaknesses of Samsung. The report will discuss the possibility of expanding Samsung group operations in Malaysia. It provides political, economic, socio-cultural, technology, and legal environment analysis. Then it will cover SWOT analysis and provide recommendations.
Political Environment
Government stability
Malaysia is a federal constitutional monarchy in Southeast Asia. The system of government is a legacy of British colonial rule. The head of the state is referred to as the king and selected every five-year term. Compared with other countries, the death penalty is still used, therefore, Malaysia’s crime rate is lower. Because of the Consolidate leadership, Malaysia’s political situation keeps stable in recent years, the crime rate becomes down. It shows the level of government stability in Malaysia is high.
Government and contribution
Malaysia serves as a bridge between the East and the West and also plays an important role in the world stage by establishing a long-term cooperative relationship with the other ASEAN members, such as China, South Korea, and Japan. The government implements several plans and welcomes outside investments.
Analysis Depending on the political stability and global trading relationships, Malaysia can make a closer operation with the other countries. With the mutually-beneficial foreign policy, Samsung Company has a great opportunity to operate smoothly in Malaysia.
Legal Environment
Regulatory framework
Malaysia and South Korean do not have a similar legal system, Malaysia’s legal system is based on English common law while the South Korean legal system is based on civil law. South Korean government. It means the Samsung Group would not be familiar with the regulatory framework.
Business laws
Although there are some legal restrictions on certain products imported from other countries. (Malaysia business guide) The law allows foreign companies to import raw materials. (Malaysia customers) However, the corruption problem in Malaysia has become much worse. (Corruption Malaysia’s top enemy)
Labour laws
Malaysia labor laws have improved in recent years, there are age and working hour restrictions in Malaysia. (Malaysia labor law)
Analysis
The government holds encouragement on foreign investment in Malaysia which presents an opportunity for foreign companies. However, due to Samsung Group is unfamiliar with the regulatory framework, it exists a threat to Samsung Company.
Economic Environment
Interest rate (%)
The benchmark interest rate in Malaysia is 3. 00 percent. Malaysia’s interest rate is likely to keep unchanged in these years. South Korean’s benchmark interest rate is 2. 75 percent. It means that the interest rate in Malaysia is higher than that in South Korean. Central bank rates. Currency Exchange Rate ($) Based on the exchange rate in March 2013, one Malaysian Ringgit equals 358. 31 South Korean Won. With the exchange rate increased each year in Malaysia, Samsung Company will invest more money in Malaysia in the future due to the cost will be increased. However, it is also a chance for Samsung to earn more money in Malaysia. Therefore, this is not only a threat but also an opportunity for the Samsung Company. Malaysian Ringgit to South Korean Won The money converter). Economic Trends/ forecasts Malaysia keeps one of the best economic records among Asia countries. GDP is predicted to rise by 4. 5% in 2013 and increase by 5. 4% in 2014. Over the next decade, GDP is expected to grow by 4. 2% a year on average. According to forecasts, one of the fastest-growing sectors in the manufacturing industry over the next 10 years will be electrical equipment. (Oxford Economics) Nowadays, Malaysia begins a transition towards a more multi-sector economy that means the economic forecast in Malaysia is strong.
Analysis
Although the interest rate and exchange rate in Malaysia are high, the international trade ability of Malaysia is still locating at the forefront of the world. This kind of ability makes a great positive impact on the international stage.
Socio-cultural
Overall, the Samsung Company should organize teamwork for its Malaysian employees.Work design – Malaysian employees prefer to work in groups while South Korea employees prefer to choose personal works.
PlanningPower Distance affects the hierarchical order in an organization. Compared with South Korea, Malaysia employees accept hierarchical order more than Australian employees. Therefore Samsung Company’s manager should take an autocratic style.
The planning in Malaysia employees would like clearly aims while South Korea employees prefer relaxed attitudes. It demonstrates that clear rules and regulations are more suitable for local employees. Time orientation. Planning–South Korea employees prefer having a long time orientation, however, Malaysian employees are known to prefer having short time plans. Therefore, Samsung Group should set short term targets for its staff.
AnalysisMasculinity and Femininity will have an impact on social competition, achievement, and success. Both Malaysia and South Korea are similar in this level of Femininity. It shows that Samsung Company can perform female leadership in Malaysia.
Although both Malaysia and South Korea would be inclined to work with females, there are also several differences between Malaysia and South Korea.
Technological Environment
Technological infrastructure
Malaysia has a well developed technological infrastructure while (Asia’s New High Tech Competitors) the infrastructure in Malaysia is one of the best in Asia. (Invest in Malaysia) It demonstrates the brilliant infrastructures can maintain the good operation of Samsung Group in Malaysia.
Communication networks
Compared with South Korean, the telecommunication network in Malaysia is developing faster.
The communication network in Malaysia is served by digital and fiber optic technology. (Invest in Malaysia)
Logistics networks
The logistics networks in Malaysia cover sea, land, and air transport modes. The Malaysian government will strengthen the management of roads and improve the quality of transport in the future. (Trade and Transport in Malaysia: an overview of the logistics)
Analysis
The great Technological infrastructure, Communication networks, and Logistics networks in Malaysia will provide an opportunity for Samsung Group.
SWOT Analysis
Samsung Company has:
- good reputation
- high-quality products
- large scale international corporation
- strong financial resource
- a strong market influence
- weakness
Samsung Company:
- lacks business experience in Malaysia
- the shortage of qualified personnel
- no stable customers in the local market
Opportunities
Malaysia has:
Political environment-stable governmental environment -good trading relationship legal environment-improvement in labor and business law economic environment-strong economic forecastsocio-cultural environment-similar in female leadership. Advanced Technological infrastructure – good communication networks. A legal environment-different regulatory framework to South Korea- corruption problems economic Environment-high interest rate in Malaysia-high exchange ratesocio-cultural environment-used to work collectively-higher power distance-lower Uncertainty Avoidance-only achieve short time target.
Recommendations
Based on the analysis of the external environment of Malaysia, it is suggested that Samsung Company should:
- continue to produce high-quality products to make a good reputation in Malaysia (strengths)
- train more new professionals in the local market (threats)
- use the new technology and the political system to achieve mutual benefit (opportunities)
- seek professional legal advice and the lowest cost supplies (threats)
Conclusion Political, socio-cultural and technological environments constitute opportunities for Samsung Company. However, the threat appeared in the different socio-cultural, weak legal environments and the economic conditions will in recession in the future. According to this report, there are still more opportunities than threats. To sum up, from the current market environment, there are many favorable aspects for Samsung Company to be expanded in Malaysia.
References
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- www.juriglobe.ca/eng/sys-juri/index-alpha.php.
- http://www.samsung.com/au/aboutsamsung/ourbusinesses/index.html
- South Korean Interest. 2013.
- Central bank rates. www. bok. or.kr Malaysia information technology report 2012.
- http://search.proquest.com.dbgw.lis.curtin.edu.au/docview/919719232/13D455FB3221B7702F2/1? accountid=10382 Rupa Damodaran 2013.
- “Malaysia’s key interest rate expected to remain unchanged in these years. ” Business times April 201 82 (11): 14-15. Currency Converter Widget. 2013.
- http://www.tradingeconomics.com/malaysia/interest-rate Asia’s new high tech competitors. 2013. government statistics
- http://www.nsf.gov/statistics/s4495/conten3c.htm
- http://www.mida.gov.my/env3/index.php?page=invest-in-malaysia South Korea economic. 2013. South Korea government.
- http://www.tourism.gov.my/en/au Malaysia Hofstede 2013 South Korea Hofstede
- http://geert-hofstede.com/malaysia.html Malaysia Interest Rate. 2013.
- Trading Economics http://www.tradingeconomics.com/malaysia/interest-rate Malaysia’s top enemy. 2013.
- http://www.asiaone.com/News/AsiaOne+News/Malaysia/Story/A1Story20091225-188007.html
