STAKEHOLDER RELATIONSHIP OF SAMSUNG COMPANY

Dr Kennedy Amadi, Ph.D

Lecturer
The Great Lakes University of Kisumu
Nairobi ,Kenya.

SAMSUNG CONTEXT:

As reported by Bondarenko, P. (n.d), Samsung was originally introduced by Lee Byung-chul in Daegu,
South Korea as a grocery trading store and later in 1969 it set foot in the electronics industry. Size of
Samsung: Tiwari, R. (2016), states that Samsung employs over 489,000 people and operates in more
than 80 countries all around the world. This multinational company makes up 17% of South Korea’s
Gross Domestic Product (GDP). Main market In accordance with Bajaj, A. (n.d.), the company mainly
focuses on customers or countries which have similar needs and interests. Most of the main markets of
Samsung are located in Asia (especially India). Main customer segments: Samsung focuses on customers
who are between the age of 15 and 45 this is because the consumers in this age group are more
updated on the technological changes (Mmaglobal, n.d.). Products and services: The multinational
company produces almost all kinds of electronics, some of them include: smart phones, smart watches,
tablets, televisions, refrigerators, laptops, desktops, printers, surveillance systems and medical
equipment (KOREA EXPOSÉ, 2017). Refer to appendix 1 for Samsung’s products. Key competitors:
Bhasin, H. (2018) specifies that the key competitors of Samsung consist of: Apple, Oppo, Lenovo,
Panasonic, HTC, Sony, Huwawei, Philips, Microsoft, Nokia and LG. Change project: According to the
report of Bohn, D. (2019), Samsung recently produced an improved version of the Galaxy Fold after
receiving complaints about the screen being harmed when users tried to peel off a layer thinking that it
was the screen protector. Refer to appendix 2 for Samsung’s change project.
INTRODUCTION

Samsung Electronics is also known as the South Korean giant because it is categorized as one of the
largest companies. The company’s head office is located in Seoul, South Korea and has market value of
42.74 billion dollars. Below I have explained the roles and the importance of the stakeholders in
Samsung with regard to the change project by using the SPECRES (Social, Political, Economical,
Commercial, Regulatory, Environmental and Security) stakeholder interest tool. Thereafter, I go ahead
and define stakeholder engagement, explain the three tiers of stakeholder prioritization in relation to
the Korean giant then I go on to prepare a stakeholder engagement plan for Samsung where I included
the key stakeholder concerns and the communication channels that the multinational company uses to
engage with its customers. Next, I assess various communication methods used by the company that
support the engagement with the main stakeholders of Samsung and I also give the advantages and
disadvantages of the methods. Last but not least, I elaborate how different stakeholders resist to change
and I used the Onion model where I proceed to describe the six layers and explain which stakeholders
have problem with the change and how the Samsung will deal with the resistance.

THE IMPORTANCE OF SAMSUNG’S KEY STAKEHOLDERS ON THE CHANGE PROJECT

In agreement with Landau, P. (2017), a stakeholder is any individual or group that has an interest in an
organization and is affected either negatively or positively by the organization’s decisions and outcomes
of various projects.

Analyzing the stakeholders’ interests in Samsung’s change project using the SPECTRES tool:

a) Social The first impression of most customers was that the Galaxy Fold was too expensive because
$1900 cannot be afforded by everyone. On the flipside, some of the (wealthy) customers were actually
very excited to purchase the “fixed version” and they are also eager to see what changes it brings to the
users around the world (Bunton and O’Boyle, 2019). Stabile, A. (2019), states that one of the consumers
said that the new Galaxy Fold is worth the money he paid and he thinks that Samsung did a really good
job in presenting the likelihood of a phone being flexible enough to be folded. He also added that
consumers must be cautious because the device is still somewhat brittle. As per the report of Kelion et
al. (2019) it is getting more and more difficult for people to buy the new and expensive Samsung
products that are launched every year; therefore, people are not letting go of their old smart phones
hence Samsung is hoping that the foldable phone changes this pattern. The above clearly reflects that
customer satisfaction is the main objective of Samsung because the actual aim of relaunching the
product was to meet every need of its customers.

b) Political

Petrov, D. (2019) informs us that after the major fail of launching the galaxy fold, Samsung faces another
issue regarding its supplies from Japan. Japan and Korea have had many quarrels in the past and it could
be one of the reasons behind Japan banning the export of a “transparent cover material”- which was
one of the most important material used to make the foldable phone as it enables the screen to bend. c)
Economical As explained by Jung-a, S. (2019), Samsung has not yet posted any financial reports of their
newly improved product but they are sure that the relaunch of the product costed them less than the
losses incurred due to the Note 7 (which was more than $5.3 bn).

Analysts are not sure whether this folding phone is useful to the ordinary customers and they are
doubting whether the sales will be the same as the predictions of Samsung. The vice president of
Samsung is confident that the product is going to do well in the market. The diagram below shows how
he expects the sales to rise in the coming years: 625507 6 6USSR Jung-a, S. (2019).

d) Commercial The multinational company decided to drop the idea of using only glass for their new
product and decided to go with the “high-tech” polymers. The company decided to join forces with a
Japanese firm called Sumitomo Chemical to put together a screen that can be folded multiple times
without showing any dissimilarities. According to a report, one more Japanese supplier called Nichido
Denko is creating the “polarizer film” for the foldable screen. Samsung also took the help of a company
named KH Vatec for the “stretchy” hinges that are used as an elastic under the foldable screen
(Gizmochina, 2018). In accordance with Cipriani et al. (2019), Samsung has also decided that the Galaxy
Fold will not be sold online, instead they will assist people in finding retail stores in which the device will
available in. The above shows how important suppliers are in a firm although they do not have that
much power, they contribute a large share of resources for production of goods.

e) Technology

Samsung Galaxy fold has to be one of the most innovative products produced by Samsung. It is by far
the most unique products compared to any other electronic company. The galaxy fold is unique because
of the best resources and the outstanding technology which has been used to build it. Samsung went on
another level by developing a new layer called the “polymer screen layer” which enables the screen to
bend without cracking the screen. It also went further and added a “special metal hinge” that divides
the rear side of the phone into two parts (Giffgaff, 2019). 625507 7 6USSR f) Regulatory Ying, F. (2016),
states that, thanks to the drained relationship between North Kore and South Korea, there are laws that
companies must abide by. These laws include; higher tax rates and increase in minimum wages. Zhou,
M. (2019) tells us that people are assured that this is the reason why the prices of most Korean products
including the Galaxy Fold are very high because the price of the new Galaxy Fold goes from $1,980 but
after adding additional fees and sales tax, the price shoots up to more than $2,000.

g) Environmental

Dolcourt, J. (2019) highlights that he Galaxy Fold is boxed using environmentally friendly materials only
and the box includes a glass cover for the phone (which acts as a shield in case it falls). Samsung tried its
best not to use plastic while making the phone itself but they had to use the polymer screen layer which
is solely made of plastic because glass is not flexible enough to be folded. Except for the foldable screen,
the rest of the phone consists mostly of special metal materials and Gorilla Glass- which is a chemically
strengthened glass.
h) Security

According to Bohn, D. (2019), Samsung has assured its customers that the issues of the previous Galaxy
Fold were not harmful at all and it did not threaten anyone’s safety and they also made it clear that the
scenario is the complete opposite to the one of Note 7 (which exploded due to overheating). To avoid
any risks (most importantly of breaking the screen), there are some warnings on the instruction manual
for new customers. Samsung has also posted step by step guides on several websites on everything one
needs to know about how to use the Galaxy Fold.

STAKEHOLDER ENGAGEMENT PLAN OF SAMSUNG

Stakeholder engagement is when an organization discuss and works with its stakeholders so that they
can accomplish their goals or to complete a project; therefore, intensify accountability (apm, 2019).
According to Grow Group Alliance (2016), stakeholder relationship tiers illustrate the position of the
participation and assistance in a project or an organization. It could also mean that it is the present
relationship with stakeholders. Grow Group Alliance. (2016) According to Grow Group Alliance. (2016),
there are three main tiers of stakeholder prioritization and these are: Tier 1. Central Stakeholders: (also
known as Primary Stakeholders) these are the main stakeholders within the organization and they are
directly linked to the organization for example; shareholders, directors, managers and customers.
Samsung (2019) states that it gives customers the highest priority and makes sure to interact with them
about everything, from quality development to complaints and necessities Samsung is all ears when it
comes to listening to its customers and they make sure that the customers get what they have asked
for. Whether the customers are within the home country or overseas, the company manages to
communicate with its consumers all thanks to the different channels of communication including
websites (for example the Samsung Newsroom) and call centers. For Samsung to relaunch the Galaxy
fold it had to interact with the customers to know what the main issue was with the previous one so
that it could rectify the mistakes and make a new and improved phone. Tier 2. Boundary Stakeholders:
these are stakeholders who are present in the organization and have time to time encounters with the
organization but they do not have a well-built connection with the company for example; suppliers and
the government. Manna, D. (2008) tells us that Samsung relies on a very few suppliers hence it realizes
the importance of the few suppliers that it has and makes sure that it manages to have a good
relationship with them.

As Samsung depends completely on suppliers who are well aware of the needs of Samsung, it has
developed an everlasting relationship with them. The South Korean giant maintains relationships with its
suppliers by transparently sharing information about the product improvement and the production
plans. In accordance with Gizmochina (2018), Samsung worked with two well-known Japanese suppliers
to get the materials for the new foldable phone and they made sure that the suppliers were aware
about the previous issues regarding the screen so that they could put more effort on rectifying the
mistake and produce an improved version of the old one. Tier 3. Other Stakeholders: these are
stakeholders who do not have a strong relationship with the project or the organization but if the
organization chooses to engage with them, they have the capacity to have an impact on the
organization for example; the community. Jun, M. (2015) informs us that Samsung impacts the
community both positively and negatively. It affects the community positively by bringing a lot of
income into the country through exporting not to forget, the multinational company also helps in
decreasing unemployment by hiring a large scale of people to work in their company.

The South Korean giant also has negative effects on the community and these are; underpaid workers &
income inequality. Although the company decreases unemployment, it does not pay the employees
enough money and this reduces their purchasing power hence leading to less money circulation. In
addition to the above, environmental harm is also one of the negative impacts of the company but it has
tried its best to use eco-friendly materials to produce its new foldable phone but they had to use plastic
for making the screen because glass is not flexible enough to be folded without breaking.

COMMUNICATION BETWEEN THE STAKEHOLDERS OF SAMSUNG

Roseke, B. (2019) tells us that stakeholder communication is one of the most significant tasks that a
project manager has to carry out whereby he/she has to interact with the stakeholders because they
give meaning to the favorable outcome of the project. Methods of communication: 1. Face-to-face: an
informal way of discussion between the sender and receiver while they are both physically present in
the same place (The Business Communication, 2019).

Meetings are one of the examples of face-to-face communication and the most common means of
communication in Samsung. The meetings as essential for Samsung as it is a means of managing risks,
therefore they have meetings very often. The multinational company conducts regular meetings with
almost all of its stakeholders for instance, they hold monthly meetings with the natives to get regular
feedback or to discuss the changes that they want to see in upcoming products. Recently, Samsung
interviewed some of its customers to find about their views on the relaunch of the new and improved
Galaxy fold. They also hold meetings with employees to discuss about the working conditions, salaries
and other ongoing activities. Samsung also arranges sessions with directors to swap their thoughts on
key issues (Samsung Electronics, 2019)

Eli, B. (2017), tells us that online communication is a method where people communicate over a
network for example the internet. Examples of online communication include; social media, websites
and blogs. As stated by Yoo-chul, K. (n.d.), Samsung is trying to focus more on communicating better
with customers and press that are overseas hence it has started using modern means of communication
like blogging and tweeting. Samsung has attracted the foreign press transparently sharing information
with them.

Blogging is actually the main means where Samsung got to know that the Galaxy Fold had various issues
and the company was able to easily make the improvements that were needed and they relaunched the
product a few months later.

The internet has a number of disadvantages but if it is used wisely, it will change the business world for
the better. 3. Written communication: Manker, A. (2019) states that it is a method of communication
that uses words that are written down for example; reports, emails, reports and memos. Samsung
(2019) shows us that it posts its sustainability reports for each year (since 2015) on its websites as a
means of communication to update stakeholders on their business strategies, achievements of the year,
current and upcoming projects. An example includes; the sustainability report of 2019 stated that the
company was going to launch their latest products- Galaxy fold and the Galaxy S10 and they also
included that the company made sure that most of the materials used in making those products are
environmentally friendly.

Samsung is confident that stakeholder engagement is very important because it not only adds monetary
value to their work but it also builds a strong relationship between the company and its stakeholders.
The multinational company makes sure that it interacts and works together with its stakeholders to
become aware of their opinions and ideas that could help the company with growth and stability.
Samsung also mentions that it shares information transparently with its stakeholders because it creates
trust which leads to long lasting stakeholder relationships (Samsung Electronics, 2019).

STAKEHOLDER RESISTANCE TO CHANGE IN SAMSUNG

As stated by Spacey, J. (2017), stakeholder resistance to change is when a stakeholder interprets that a
change that is taking place as a threat and strives to take action against it. The onion model of resistance
to change: Refer to appendix 4 This model assists the organization to understand how and why different
stakeholders do not agree with the change. When a person fears change, resistance is a natural
response that they give. Handling resistance and dealing with people in a well mannered way is one of
the most helpful abiliy for a stakeholder engagement manager. It is a must for the manger to listen,
understand and respond in a suitable manner. The onion models is made of many layers (levels) and as
they peel one layer, the new layer is hotter than the first. According to Clayton, M. (2017), there are six
layers to resistance and each has its own features and causes. The layers include:

1. I do not understand why we need change The stakeholders may not agree to the change until you
convince them why the change is important hence they need explained why the change is required.
Kingsley-Hughes, A. (2019) tells us that, when Samsung launched the Galaxy Fold for the first time, it did
not communicate effectively with the customers about the device therefore, they were not aware that
peeling off a layer of plastic would harm the device. Customers are one of the most important
stakeholders of the company and they do not believe that the company tested the product before
launching it hence they do not understand why the company needs to relaunch the product. The
customers think that it is easier to inform the users not to peel of the plastic rather than customizing the
product from scratch.

2. I do not understand why this change This means the stakeholder is not sure why the organization
chose to do things a particular way and this could simply be a lack of understanding or a lack of the
ability to interpret the messages that they are given. The stakeholder may understand the change but in
a different than the way you intended it. In this level communication is very important because the
change must be elaborated in a way that the stakeholder understands why the organization has chosen
this change. In accordance with Fowler, G. (2019), people have taken a lot of time and effort to develop
slender phones because masssive phones were very hard to carry around therefore, people do not get
why Samsung would launch such a thick and heavy phone (the Galxy Fold) thinking that it is innovative.

3. I do not like this change This is one of the important layers because here, the stakeholder understands
the change but does not like the change. Especially in big companies not everyone is benefited by the
change therefore it is totally valid for someone to say that they do not like the change. Also, the engager
must make sure to be transparent with the stakeholders for instance, if the change is bad for the
employees, the engager must not lie to them just to convince them to agree with the change instead,
they have to tell the employees that it is bad for them and come up with ways to help them. At times,
the stakeholder may say that they do not like the change simply because they think that the change may
negatively impact the company or other stakeholders. Dolcourt, J. (2019) states that until the customers
are not not assured that the foldable phone also has a good side to it, they will not be confident enough
to embrace the change (the relaunch of the galaxy fold). Samsung is trying its best to convince its
customers by pursuading them by saying that it is the first foldable phone, a wider screen, it has two
displays and multiple tabs can be opened.

4. I do not like change This means that the stakeholders do not have a problem with this specific change
but they just do not like change itself. This is because they lack confidence to face change and they fear
the consequence of change. The organization must work with them to show them how to adjust
themselves to change and to give them the confidence. Most of the customers of Samsung have a
problem with each and every change that takes place in the product not only the relaunch of a product
but they even have issues with the software update. Some of them make a big deal out of small
changesfor example, the new update changes the design of the icons and this is what one of the
customers wrote to Samsung: “icons look like a child's phone”. The above clearly reflects that some
people will never appreciate change at all (Marleenvds Explorer, 2019).

5. I do not like you This is not a reaction to change but is just an opportunity to misbehave therefore it
needs to be dealt with in a proper manner. Some of these people are not even the stakeholders of the
company they could even be the customers of the competing firms e.g. Apple simply because they
dislike the company and its products (Daquan, n.d.)

6. I like to resist These are rare people in organizations who simply like to resist and they are probably a
very few of these people and the company also probably has refrained from hiring them, but the ones
who have hired such people, it is a must to deal with them in the best way possible.
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