Samsung Mobile Phone Business Case Study
Abstract:
Problem statement: Although there is a burgeoning literature on the rise of Multinational Enterprises (MNEs) from developing economies, comparatively less work exists on MNEs from small, developing economies. Given the precipitous rise in the level of outward foreign direct investments from small, economies, it is still not clear in the academic literature and for policy purposes, those factors in the home environment which influence the rise of these multinational enterprises from these smaller economies.
This study aimed to determine those economic and social factors at home that are most important in influencing the level of outward foreign direct investments from Small, Island Developing States (SIDS)? Approach: To achieve the …show more content…
The offshoring of mobile phone assembly to China, India, Brazil and Vietnam did not result in a reduction of domestic jobs. On the contrary, Samsung’s domestic employment increased from 5960 persons in 2002 to 20,500 in 2012. This increase mainly reflects a net increase in high-paying jobs (R&D, engineering, design, marketing) while the number of low-paying jobs (assembly) remained stagnant. To cope with possible technological hollowing out, Samsung kept its core engineers/technicians in a special unit, instead of firing them, whenever domestic assembly lines were reduced or foreign lines were established. They were kept inside the so-called ‘‘global manufacturing technology center,’’ with the number of its employees increasing from 80 in 2006 to more than 1103 in 2011. These employees visit overseas factories to conduct activities such as maintenance, monitoring, re-modeling of assembly lines, and automation. In terms of strategy, Samsung engages in offshoring, but not outsourcing. This is in contrast to Apple which does both offshoring and outsourcing by contracting with …show more content…
On the basis of these arguments, the directionality of international trade flow should be from developed to developing countries because of the efficiency and sophisticated nature of the goods, capital and labor market in the developed world. Indeed, multinational firms will face greater uncertainty in operating in the host country compared to local firms[16], therefore, they have to possess a monopolistic advantage over local firms in order to survive.
Increased outward investments bring positive externalities to the home market[16]. Therefore, to encourage increased levels of foreign direct investments from smaller economies, it is important for government policymakers and managers at the firm level to understand those country level factors in the home market which influence these investments. This will help to ensure that the correct policies are put in place to enhance the increased outflow of investments from these economies.
Studies on outward foreign direct investments from developing economies generally focus on factors in the host market that determine whether firms choose direct investment or other entry modes such as exporting[6,
1
Problem statement: Although there is a burgeoning literature on the rise of Multinational Enterprises (MNEs) from developing economies, comparatively less work exists on MNEs from small, developing economies. Given the precipitous rise in the level of outward foreign direct investments from small, economies, it is still not clear in the academic literature and for policy purposes, those factors in the home environment which influence the rise of these multinational enterprises from these smaller economies.
This study aimed to determine those economic and social factors at home that are most important in influencing the level of outward foreign direct investments from Small, Island Developing States (SIDS)? Approach: To achieve the …show more content…
The offshoring of mobile phone assembly to China, India, Brazil and Vietnam did not result in a reduction of domestic jobs. On the contrary, Samsung’s domestic employment increased from 5960 persons in 2002 to 20,500 in 2012. This increase mainly reflects a net increase in high-paying jobs (R&D, engineering, design, marketing) while the number of low-paying jobs (assembly) remained stagnant. To cope with possible technological hollowing out, Samsung kept its core engineers/technicians in a special unit, instead of firing them, whenever domestic assembly lines were reduced or foreign lines were established. They were kept inside the so-called ‘‘global manufacturing technology center,’’ with the number of its employees increasing from 80 in 2006 to more than 1103 in 2011. These employees visit overseas factories to conduct activities such as maintenance, monitoring, re-modeling of assembly lines, and automation. In terms of strategy, Samsung engages in offshoring, but not outsourcing. This is in contrast to Apple which does both offshoring and outsourcing by contracting with …show more content…
On the basis of these arguments, the directionality of international trade flow should be from developed to developing countries because of the efficiency and sophisticated nature of the goods, capital and labor market in the developed world. Indeed, multinational firms will face greater uncertainty in operating in the host country compared to local firms[16], therefore, they have to possess a monopolistic advantage over local firms in order to survive.
Increased outward investments bring positive externalities to the home market[16]. Therefore, to encourage increased levels of foreign direct investments from smaller economies, it is important for government policymakers and managers at the firm level to understand those country level factors in the home market which influence these investments. This will help to ensure that the correct policies are put in place to enhance the increased outflow of investments from these economies.
Studies on outward foreign direct investments from developing economies generally focus on factors in the host market that determine whether firms choose direct investment or other entry modes such as exporting[6,
1