Deck 4: Managing in the Global Environment

Question 1

In recent years the number of U.S. companies that buy their inputs from low-cost overseas suppliers has been growing, and concern about the ethics associated with employing young children in factories has been increasing. In Pakistan and India, children as young as six years old work long hours to make rugs and carpets for export to Western countries or clay bricks for local use. In countries like Malaysia and in Central America, children and teenagers routinely work long hours in factories and sweatshops to produce the clothing that is found in most U.S. discount and department stores.
If child labor is an economic necessity, what methods could be employed to make it as ethical a practice as possible Or is it simply unethical

Answer 1

The number of companies in U.S that purchase their required materials from low-priced overseas suppliers has been increasing frequently in these recent years. The apprehension about the ethics related with children working in factories is also increasing. In Asian countries, children of very young age are appointment as labors for long-hours shift for making carpets. Companies export those materials in Western countries.
The opportunities of companies to explore tremendously in the global market for trading their products through export-import facilities and foreign investments are increasing with the reduction of cultural barriers and distance. With the increase of such facilities, competition in global market increases day-by-day. But with this profit in business and significance of competitive global market, the western companies are concerned about the ethics associated with increase in child labor in factories. Hence, it is important for companies to discuss whether they should buy products manufacturers by children in factories.
The work that is emotionally and physically detrimental for children and deprives them from getting the respect, dignity and education that they deserve is referred as child labor. In most of the factories, children have to perform their job for a long hour which is extremely injurious for their help. Education is the basic right that every child should get in order to shape the future of the society. But in case of child labor, children do not get proper opportunity to go to school or to study at home. But children by working in manufacturing factories will get a scope to learn work and to be productive and independent in future. Children from comparatively poor families are mainly working in the factories and earning money is extremely important from them in order to feed their families.
Child labor is actually an economic necessity. In order to reduce or abolish child labor, it is significant to find out alternative ways of earning money for a family. Adult members of the family should have the provision and capability to earn enough money on a regular basis for feeding their families and to provide education for the future generation. Child labor can never be an ethical practice of employment. However, factories play an important role in employing child as labor. In order to reduce the severity of child labor, factories may employ children of higher ages and assign easy tasks to them to perform and it would be better if factories employ more adults of the families. Factories, without taking advantage of the poverty of families, should provide justified remuneration to the labors and scope for getting education properly.

Question 2

Evaluate the main barriers to entry into the copying business.

Answer 2

The task environment is the set of forces and factors that the global value chain partners i.e. suppliers, merchandisers, competitors, and customers generate and which affects the way the organization acquires it resources and converts them into outputs. The general environment of a firm consists of political, economical, sociocultural, technological, environmental, and legal factors than the firm faces in its global environment. Managers or owners of any new business should always analyse different aspects of the task environment and general environment in order to reduce the chance of failure. In this particular context, the business is a copying business in a well-populated college town.
The main barriers of entry in this business include the following:
1. Economies of scale - The materials can be purchased from the suppliers at a low cost if the order size is increased. This is possible by establishing a huge customer base. Over a period, a copying business can establish such a high customer base and reduce the cost per copy by not only realizing the quantity discounts from the suppliers but also from the reduced fixed cost or overhead per unit.
2. Differentiated service - The quality of the service provided, the product variants 9e.g. copying, printing, laminating, design, layout etc. are provided at one place), and flexibility is copying options can also create barriers to entry. For this, the owners and managers must be competent enough to make the flexibility realizable in a short lead time for the customer.
3. Advanced technology - If the equipment required for copying can be purchased from a source which has mastery with high technology, and with these agencies, long-term contracts can be made for repair and maintenance, a strong barrier to entry can be created.
4. Brand - While it will be very difficult to differentiate among the service provided by different copying business in a true competitive environment, value of the brand can be an important source of barrier.

Question 3

Which organization is likely to face the most complex task environment-a biotechnology company trying to develop a cure for cancer or a large retailer like The Gap or Macy's Why

Answer 3

The task environment is the set of forces and factors that the global value chain partners i.e. suppliers, merchandisers, competitors, and customers generate and which affects the way the organization acquires it resources and converts them into outputs. When acquiring of resources are from diverse sources and the distribution of output is to several points, the complexity of task environment increases.
Compared to a biotechnology firm, the task environment of a large retailer can be more complex. Note that the retailer needs to deal with a lot of supplier for purchasing several products. Decisions regarding the share of business can be very complex considering diverse customer requirement. Furthermore, the number of competitors is generally many and the competitive forces are tight because of marginal existence of differentiation in products. The firm may not be distributing its products to ay other firm but the customer base remains too diverse. All these factors make the daily decision-making tough for the manager and hence the task environment becomes complex.

Question 4

How Samsung Became the World's No. 1 Smartphone Maker
I'm in a black Mercedes-Benz van with three Samsung Electronics PR people heading toward Yongin, a city about 45 minutes south of Seoul. Yongin is South Korea's Orlando: a nondescript, fast-growing city known for its tourist attractions, especially Everland Resort, the country's largest theme park. But the van isn't going to Everland. We're headed to a far more profitable theme park: the Samsung Human Resources Development Center, where the theme just happens to be Samsung.
The complex's formal name is Changjo Kwan, which translates as Creativity Institute. It's a massive structure with a traditional Korean roof, set in parklike surroundings. In a breezeway, a map carved in stone tiles divides the earth into two categories: countries where Samsung conducts business, indicated by blue lights; and countries where Samsung will conduct business, indicated by red. The map is mostly blue. In the lobby, an engraving in Korean and English proclaims: "We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society." Another sign says in English: "Go! Go! Go!"
More than 50,000 employees pass through Changjo Kwan and its sister facilities in a given year. In sessions that last anywhere from a few days to several months, they are inculcated in all things Samsung: They learn about the three P's (products, process, and people); they learn about "global management" so that Samsung can expand into new markets; some employees go through the exercise of making kimchi together, to learn about teamwork and Korean culture. Samsung's internal practices and external strategies-from how TVs are designed to the company's philosophy of "perpetual crisis"-all spring from the codified teachings of Lee Kun Hee, the 71-year-old chairman of Samsung Electronics. Since Lee took control of Samsung in 1987, sales have surged to over $175 billion, making it the world's largest electronics company. In 1993, Chairman Lee gathered his lieutenants and laid out a plan to transform Samsung, then a second-tier TV manufacturer, into the biggest, most powerful electronics manufacturer on earth. Today, Samsung is dominant in TVs and sells a lot of washing machines, but it's smartphones that made Samsung as recognizable a presence around the world.
Samsung Electronics is the largest part of Samsung, a conglomerate that accounts for 17 percent of South Korea's gross domestic product. It employs 370,000 people in more than 80 countries. Consider the disciplined way Samsung Electronics moves into new product categories, the first step is to start small: make a key component for that industry. Ideally the component will be something that costs a lot of money to manufacture, since costly barriers to entry help limit competition, such as microprocessors and memory chips facilities. Once the facilities are in place Samsung begins selling its components to other companies. This gives the company insight into how the industry works. When Samsung decides to expand operations and start competing with the companies it has been supplying, it makes massive investments in facilities and technologies, leveraging its foothold into a position that other companies have little chance of matching. Last year, Samsung Electronics devoted $21.5 billion to capital expenditures, more than twice what Apple spent in the same period. In 1991, Samsung started making LCD panels it sold to other television brands. In 1994 it started making flash memory for devices such as the iPod and smartphones. Samsung is now the No. 1 maker of LCD televisions and sells more flash memory and RAM chips than any other company in the world. And in 2012 it passed Nokia (NOK) to become the world's largest mobile-phone manufacturer. As Samsung has risen, others have failed, often in spectacular fashion: Motorola was split up and its handset business sold to Google. Nokia watched its long-standing No. 1 position erode when it got blindsided by smartphones. When it comes to mobile hardware, today there's only Apple, Samsung, and a desperate crowd of brands that can't seem to rise above being called "just average."
Such striving for efficiency and excellence wasn't always a priority. In 1995, Chairman Lee was dismayed to learn that cell phones he gave as New Year's gifts were found to be inoperable. He directed underlings to assemble a pile of 150,000 devices in a field outside the Gumi factory. More than 2,000 staff members gathered around the pile. Then it was set on fire. When the flames died down, bulldozers razed whatever was remaining. "If you continue to make poor-quality products like these," Lee Keon Hyok recalls the chairman saying, "I'll come back and do the same thing." The lesson stuck. In May 2012, three weeks before the new Galaxy S III was to be shipped, a Samsung customer told the company that the back covers for the smartphone looked cheaper than the demo models shown to clients earlier. "He was right," says DJ Lee, the marketing chief of Samsung Mobile. "The grain wasn't as fine on the later models." There were 100,000 covers in the warehouse with the inferior design, as well as shipments of the assembled devices waiting at airports. This time, there would be no bonfire-all 100,000 covers, as well as those on the units at the airports, were scrapped and replaced.
In 2010, Samsung introduced the Galaxy S line based on the momentous decision to use bigger screens. The Galaxy S's screen was significantly larger than the original Galaxy and other Android models. "We settled on a 4-inch screen, which people thought was too big," says DJ Lee. "There was a lot of argument about that." But the bigger screens proved to be a major selling point; they grew larger still on the Galaxy S II and S III. Now, Samsung smartphones come in sizes ranging from 2.8 inches to 5 inches (to say nothing of the company's "phablets," which go up to 5.5). "Nobody had any idea what the right screen size was, so Samsung made all of them and saw which one worked," says Benedict Evans, a researcher at Enders Analysis. "When we released the Galaxy S III, our research showed that, for some people in some markets, the handset was too big," says DJ Lee. "So we were able to create the same phone with a 4-inch screen, and we called it the Galaxy S III mini." Getting the smaller device into production took about four to six months, says DJ Lee. "We watch the market, and we immediately respond," he says; the Galaxy S 4 came out only nine months after the GS3.
"Samsung has taken differentiation to a new art," says Michael Gartenberg, an analyst at Gartner (IT). "If I want something in between an iPad and an iPad mini, I can't get that from Apple." Maybe iPhones 6, 7, and 8 will prove so beautiful and compelling, not even Samsung will have an answer. A likelier scenario is that another company, probably from China, will do to Samsung what it has done to its competitors. "The Chinese look like Samsung did five years ago," says Horace Dediu, an independent mobile analyst. He identifies Huawei and ZTE as particular threats (other analysts bring up Lenovo). "Samsung makes less profit per smartphone than Apple," Dediu continues. "The Chinese make even less. If the smartphone is going to become a commodity, how does Samsung play in that game "
When the mobile business ceases to be profitable, Samsung will have to force its way into some other industry that requires a lot of upfront capital and expertise in mass-manufacturing. The company announced in late 2011 that it would spend $20 billion by 2020 to develop proficiencies in medical devices, solar panels, LED lighting, biotech, and batteries for electric cars. And if Samsung batteries or MRI machines don't take over the market, maybe the chairman will set a huge pile of them on fire. "The chairman is saying all the time, 'This is perpetual crisis,'" says mobile marketing chief DJ Lee. "We are in danger. We are in jeopardy."
Search the Internet. Is Samsung still the global leader Why How have Apple and other smartphone makers changed their global strategies to better compete with Samsung
Source: Sam Grobart and Jungah Lee, "How Samsung Became the World's No. 1 Smartphone Maker," Bloomberg Businessweek, www.business.com, accessed March 28, 2013.

Question 5

Analyzing an Organization's Environment
Pick an organization with which you are familiar. It can be an organization in which you have worked or currently work or one that you interact with regularly as a customer (such as the college you are attending). For this organization do the following:
Explain how environmental forces affect the job of an individual manager within this organization. How do they determine the opportunities and threats that its managers must confront

Question 6

Based on this analysis, list some of the steps you will take to help your new copying business succeed.

Question 7

The population is aging because of declining birth rates, declining death rates, and the aging of the baby boom generation. What might some of the implications of this demographic trend be for (a) a pharmaceutical company and (b) the home construction industry

Question 8

How Samsung Became the World's No. 1 Smartphone Maker
I'm in a black Mercedes-Benz van with three Samsung Electronics PR people heading toward Yongin, a city about 45 minutes south of Seoul. Yongin is South Korea's Orlando: a nondescript, fast-growing city known for its tourist attractions, especially Everland Resort, the country's largest theme park. But the van isn't going to Everland. We're headed to a far more profitable theme park: the Samsung Human Resources Development Center, where the theme just happens to be Samsung.
The complex's formal name is Changjo Kwan, which translates as Creativity Institute. It's a massive structure with a traditional Korean roof, set in parklike surroundings. In a breezeway, a map carved in stone tiles divides the earth into two categories: countries where Samsung conducts business, indicated by blue lights; and countries where Samsung will conduct business, indicated by red. The map is mostly blue. In the lobby, an engraving in Korean and English proclaims: "We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society." Another sign says in English: "Go! Go! Go!"
More than 50,000 employees pass through Changjo Kwan and its sister facilities in a given year. In sessions that last anywhere from a few days to several months, they are inculcated in all things Samsung: They learn about the three P's (products, process, and people); they learn about "global management" so that Samsung can expand into new markets; some employees go through the exercise of making kimchi together, to learn about teamwork and Korean culture. Samsung's internal practices and external strategies-from how TVs are designed to the company's philosophy of "perpetual crisis"-all spring from the codified teachings of Lee Kun Hee, the 71-year-old chairman of Samsung Electronics. Since Lee took control of Samsung in 1987, sales have surged to over $175 billion, making it the world's largest electronics company. In 1993, Chairman Lee gathered his lieutenants and laid out a plan to transform Samsung, then a second-tier TV manufacturer, into the biggest, most powerful electronics manufacturer on earth. Today, Samsung is dominant in TVs and sells a lot of washing machines, but it's smartphones that made Samsung as recognizable a presence around the world.
Samsung Electronics is the largest part of Samsung, a conglomerate that accounts for 17 percent of South Korea's gross domestic product. It employs 370,000 people in more than 80 countries. Consider the disciplined way Samsung Electronics moves into new product categories, the first step is to start small: make a key component for that industry. Ideally the component will be something that costs a lot of money to manufacture, since costly barriers to entry help limit competition, such as microprocessors and memory chips facilities. Once the facilities are in place Samsung begins selling its components to other companies. This gives the company insight into how the industry works. When Samsung decides to expand operations and start competing with the companies it has been supplying, it makes massive investments in facilities and technologies, leveraging its foothold into a position that other companies have little chance of matching. Last year, Samsung Electronics devoted $21.5 billion to capital expenditures, more than twice what Apple spent in the same period. In 1991, Samsung started making LCD panels it sold to other television brands. In 1994 it started making flash memory for devices such as the iPod and smartphones. Samsung is now the No. 1 maker of LCD televisions and sells more flash memory and RAM chips than any other company in the world. And in 2012 it passed Nokia (NOK) to become the world's largest mobile-phone manufacturer. As Samsung has risen, others have failed, often in spectacular fashion: Motorola was split up and its handset business sold to Google. Nokia watched its long-standing No. 1 position erode when it got blindsided by smartphones. When it comes to mobile hardware, today there's only Apple, Samsung, and a desperate crowd of brands that can't seem to rise above being called "just average."
Such striving for efficiency and excellence wasn't always a priority. In 1995, Chairman Lee was dismayed to learn that cell phones he gave as New Year's gifts were found to be inoperable. He directed underlings to assemble a pile of 150,000 devices in a field outside the Gumi factory. More than 2,000 staff members gathered around the pile. Then it was set on fire. When the flames died down, bulldozers razed whatever was remaining. "If you continue to make poor-quality products like these," Lee Keon Hyok recalls the chairman saying, "I'll come back and do the same thing." The lesson stuck. In May 2012, three weeks before the new Galaxy S III was to be shipped, a Samsung customer told the company that the back covers for the smartphone looked cheaper than the demo models shown to clients earlier. "He was right," says DJ Lee, the marketing chief of Samsung Mobile. "The grain wasn't as fine on the later models." There were 100,000 covers in the warehouse with the inferior design, as well as shipments of the assembled devices waiting at airports. This time, there would be no bonfire-all 100,000 covers, as well as those on the units at the airports, were scrapped and replaced.
In 2010, Samsung introduced the Galaxy S line based on the momentous decision to use bigger screens. The Galaxy S's screen was significantly larger than the original Galaxy and other Android models. "We settled on a 4-inch screen, which people thought was too big," says DJ Lee. "There was a lot of argument about that." But the bigger screens proved to be a major selling point; they grew larger still on the Galaxy S II and S III. Now, Samsung smartphones come in sizes ranging from 2.8 inches to 5 inches (to say nothing of the company's "phablets," which go up to 5.5). "Nobody had any idea what the right screen size was, so Samsung made all of them and saw which one worked," says Benedict Evans, a researcher at Enders Analysis. "When we released the Galaxy S III, our research showed that, for some people in some markets, the handset was too big," says DJ Lee. "So we were able to create the same phone with a 4-inch screen, and we called it the Galaxy S III mini." Getting the smaller device into production took about four to six months, says DJ Lee. "We watch the market, and we immediately respond," he says; the Galaxy S 4 came out only nine months after the GS3.
"Samsung has taken differentiation to a new art," says Michael Gartenberg, an analyst at Gartner (IT). "If I want something in between an iPad and an iPad mini, I can't get that from Apple." Maybe iPhones 6, 7, and 8 will prove so beautiful and compelling, not even Samsung will have an answer. A likelier scenario is that another company, probably from China, will do to Samsung what it has done to its competitors. "The Chinese look like Samsung did five years ago," says Horace Dediu, an independent mobile analyst. He identifies Huawei and ZTE as particular threats (other analysts bring up Lenovo). "Samsung makes less profit per smartphone than Apple," Dediu continues. "The Chinese make even less. If the smartphone is going to become a commodity, how does Samsung play in that game "
When the mobile business ceases to be profitable, Samsung will have to force its way into some other industry that requires a lot of upfront capital and expertise in mass-manufacturing. The company announced in late 2011 that it would spend $20 billion by 2020 to develop proficiencies in medical devices, solar panels, LED lighting, biotech, and batteries for electric cars. And if Samsung batteries or MRI machines don't take over the market, maybe the chairman will set a huge pile of them on fire. "The chairman is saying all the time, 'This is perpetual crisis,'" says mobile marketing chief DJ Lee. "We are in danger. We are in jeopardy."
What is Samsung's approach toward managing the global environment
Source: Sam Grobart and Jungah Lee, "How Samsung Became the World's No. 1 Smartphone Maker," Bloomberg Businessweek, www.business.com, accessed March 28, 2013.

Question 9

How do political, legal, and economic forces shape national culture What characteristics of national culture do you think have the most important effect on how successful a country is in doing business abroad

Question 10

The Changing Environment of Retailing
You are the new manager of a major clothing store that is facing a crisis. This clothing store has been the leader in its market for the last 15 years. In the last three years, however, two other major clothing store chains have opened, and they have steadily been attracting customers away from your store-your sales are down 30%. To find out why, your store surveyed former customers and learned that they perceive your store as not keeping up with changing fashion trends and new forms of customer service. In examining how the store operates, you found out that the 10 purchasing managers who buy the clothing and accessories for the store have been buying from the same clothing suppliers and have become reluctant to try new ones. Moreover, salespeople rarely, if ever, make suggestions for changing how the store operates, and they don't respond to customer requests; the culture of the store has become conservative and risk-averse.
Analyze the major forces in the task environment of a retail clothing store.

Question 11

After the passage of NAFTA, many U.S. companies shifted production operations to Mexico to take advantage of lower labor costs and lower standards for environmental and worker protection. As a result, they cut their costs and were better able to survive in an increasingly competitive global environment. Was their behavior ethical-that is, did the ends justify the means

Question 12

Analyzing an Organization's Environment
Pick an organization with which you are familiar. It can be an organization in which you have worked or currently work or one that you interact with regularly as a customer (such as the college you are attending). For this organization do the following:
Describe the main forces in the global task environment that are affecting the organization.

Question 13

Choose an organization, and ask a manager in that organization to list the number and strengths of forces in the organization's task environment. Ask the manager to pay particular attention to identifying opportunities and threats that result from pressures and changes in customers, competitors, and suppliers.

Question 14

In recent years the number of U.S. companies that buy their inputs from low-cost overseas suppliers has been growing, and concern about the ethics associated with employing young children in factories has been increasing. In Pakistan and India, children as young as six years old work long hours to make rugs and carpets for export to Western countries or clay bricks for local use. In countries like Malaysia and in Central America, children and teenagers routinely work long hours in factories and sweatshops to produce the clothing that is found in most U.S. discount and department stores.
Either by yourself or in a group, discuss whether it is ethical to employ children in factories and whether U.S. companies should buy and sell products made by these children. What are some arguments for and against child labor

Question 15

Decide what you must know about (a) your future customers, (b) your future competitors, and (c) other critical forces in the task environment if you are to be successful.

Question 16

Why is it important for managers to understand he forces in the global environment that are acting on them and their organizations

Question 17

How Samsung Became the World's No. 1 Smartphone Maker
I'm in a black Mercedes-Benz van with three Samsung Electronics PR people heading toward Yongin, a city about 45 minutes south of Seoul. Yongin is South Korea's Orlando: a nondescript, fast-growing city known for its tourist attractions, especially Everland Resort, the country's largest theme park. But the van isn't going to Everland. We're headed to a far more profitable theme park: the Samsung Human Resources Development Center, where the theme just happens to be Samsung.
The complex's formal name is Changjo Kwan, which translates as Creativity Institute. It's a massive structure with a traditional Korean roof, set in parklike surroundings. In a breezeway, a map carved in stone tiles divides the earth into two categories: countries where Samsung conducts business, indicated by blue lights; and countries where Samsung will conduct business, indicated by red. The map is mostly blue. In the lobby, an engraving in Korean and English proclaims: "We will devote our human resources and technology to create superior products and services, thereby contributing to a better global society." Another sign says in English: "Go! Go! Go!"
More than 50,000 employees pass through Changjo Kwan and its sister facilities in a given year. In sessions that last anywhere from a few days to several months, they are inculcated in all things Samsung: They learn about the three P's (products, process, and people); they learn about "global management" so that Samsung can expand into new markets; some employees go through the exercise of making kimchi together, to learn about teamwork and Korean culture. Samsung's internal practices and external strategies-from how TVs are designed to the company's philosophy of "perpetual crisis"-all spring from the codified teachings of Lee Kun Hee, the 71-year-old chairman of Samsung Electronics. Since Lee took control of Samsung in 1987, sales have surged to over $175 billion, making it the world's largest electronics company. In 1993, Chairman Lee gathered his lieutenants and laid out a plan to transform Samsung, then a second-tier TV manufacturer, into the biggest, most powerful electronics manufacturer on earth. Today, Samsung is dominant in TVs and sells a lot of washing machines, but it's smartphones that made Samsung as recognizable a presence around the world.
Samsung Electronics is the largest part of Samsung, a conglomerate that accounts for 17 percent of South Korea's gross domestic product. It employs 370,000 people in more than 80 countries. Consider the disciplined way Samsung Electronics moves into new product categories, the first step is to start small: make a key component for that industry. Ideally the component will be something that costs a lot of money to manufacture, since costly barriers to entry help limit competition, such as microprocessors and memory chips facilities. Once the facilities are in place Samsung begins selling its components to other companies. This gives the company insight into how the industry works. When Samsung decides to expand operations and start competing with the companies it has been supplying, it makes massive investments in facilities and technologies, leveraging its foothold into a position that other companies have little chance of matching. Last year, Samsung Electronics devoted $21.5 billion to capital expenditures, more than twice what Apple spent in the same period. In 1991, Samsung started making LCD panels it sold to other television brands. In 1994 it started making flash memory for devices such as the iPod and smartphones. Samsung is now the No. 1 maker of LCD televisions and sells more flash memory and RAM chips than any other company in the world. And in 2012 it passed Nokia (NOK) to become the world's largest mobile-phone manufacturer. As Samsung has risen, others have failed, often in spectacular fashion: Motorola was split up and its handset business sold to Google. Nokia watched its long-standing No. 1 position erode when it got blindsided by smartphones. When it comes to mobile hardware, today there's only Apple, Samsung, and a desperate crowd of brands that can't seem to rise above being called "just average."
Such striving for efficiency and excellence wasn't always a priority. In 1995, Chairman Lee was dismayed to learn that cell phones he gave as New Year's gifts were found to be inoperable. He directed underlings to assemble a pile of 150,000 devices in a field outside the Gumi factory. More than 2,000 staff members gathered around the pile. Then it was set on fire. When the flames died down, bulldozers razed whatever was remaining. "If you continue to make poor-quality products like these," Lee Keon Hyok recalls the chairman saying, "I'll come back and do the same thing." The lesson stuck. In May 2012, three weeks before the new Galaxy S III was to be shipped, a Samsung customer told the company that the back covers for the smartphone looked cheaper than the demo models shown to clients earlier. "He was right," says DJ Lee, the marketing chief of Samsung Mobile. "The grain wasn't as fine on the later models." There were 100,000 covers in the warehouse with the inferior design, as well as shipments of the assembled devices waiting at airports. This time, there would be no bonfire-all 100,000 covers, as well as those on the units at the airports, were scrapped and replaced.
In 2010, Samsung introduced the Galaxy S line based on the momentous decision to use bigger screens. The Galaxy S's screen was significantly larger than the original Galaxy and other Android models. "We settled on a 4-inch screen, which people thought was too big," says DJ Lee. "There was a lot of argument about that." But the bigger screens proved to be a major selling point; they grew larger still on the Galaxy S II and S III. Now, Samsung smartphones come in sizes ranging from 2.8 inches to 5 inches (to say nothing of the company's "phablets," which go up to 5.5). "Nobody had any idea what the right screen size was, so Samsung made all of them and saw which one worked," says Benedict Evans, a researcher at Enders Analysis. "When we released the Galaxy S III, our research showed that, for some people in some markets, the handset was too big," says DJ Lee. "So we were able to create the same phone with a 4-inch screen, and we called it the Galaxy S III mini." Getting the smaller device into production took about four to six months, says DJ Lee. "We watch the market, and we immediately respond," he says; the Galaxy S 4 came out only nine months after the GS3.
"Samsung has taken differentiation to a new art," says Michael Gartenberg, an analyst at Gartner (IT). "If I want something in between an iPad and an iPad mini, I can't get that from Apple." Maybe iPhones 6, 7, and 8 will prove so beautiful and compelling, not even Samsung will have an answer. A likelier scenario is that another company, probably from China, will do to Samsung what it has done to its competitors. "The Chinese look like Samsung did five years ago," says Horace Dediu, an independent mobile analyst. He identifies Huawei and ZTE as particular threats (other analysts bring up Lenovo). "Samsung makes less profit per smartphone than Apple," Dediu continues. "The Chinese make even less. If the smartphone is going to become a commodity, how does Samsung play in that game "
When the mobile business ceases to be profitable, Samsung will have to force its way into some other industry that requires a lot of upfront capital and expertise in mass-manufacturing. The company announced in late 2011 that it would spend $20 billion by 2020 to develop proficiencies in medical devices, solar panels, LED lighting, biotech, and batteries for electric cars. And if Samsung batteries or MRI machines don't take over the market, maybe the chairman will set a huge pile of them on fire. "The chairman is saying all the time, 'This is perpetual crisis,'" says mobile marketing chief DJ Lee. "We are in danger. We are in jeopardy."
What kinds of strategies did Samsung use to become the global leader in the smartphone industry
Source: Sam Grobart and Jungah Lee, "How Samsung Became the World's No. 1 Smartphone Maker," Bloomberg Businessweek, www.business.com, accessed March 28, 2013.

Question 18

The Changing Environment of Retailing
You are the new manager of a major clothing store that is facing a crisis. This clothing store has been the leader in its market for the last 15 years. In the last three years, however, two other major clothing store chains have opened, and they have steadily been attracting customers away from your store-your sales are down 30%. To find out why, your store surveyed former customers and learned that they perceive your store as not keeping up with changing fashion trends and new forms of customer service. In examining how the store operates, you found out that the 10 purchasing managers who buy the clothing and accessories for the store have been buying from the same clothing suppliers and have become reluctant to try new ones. Moreover, salespeople rarely, if ever, make suggestions for changing how the store operates, and they don't respond to customer requests; the culture of the store has become conservative and risk-averse.
Devise a program that will help other managers and employees to better understand and respond to their store's task environment.

Question 19

Analyzing an Organization's Environment
Pick an organization with which you are familiar. It can be an organization in which you have worked or currently work or one that you interact with regularly as a customer (such as the college you are attending). For this organization do the following:
Describe the main forces in the global general environment that are affecting the organization.