Transnational Corporations - Samsung Electronics

Ahlaq HyderTransnational Corporations:

TNCs – Who and what are they?TNCs (Transnational Corporations) are enterprises that manage production and deliver their services in more than one country. They are distinguished as business systems that have their management in one country, which is the country of origin, but also operate in several other countries, known as host countries. Industries including manufacturing, oil mining, agriculture, consulting, accounting, construction, advertising, entertainment, banking, telecommunications and legal are often run through TNCs. The corporations maintain various bases all over the globe, with stockholders owning most of them with most of them being owned by domestic and foreign stockholders.

Most TNCs are colossal with budgets that overshadow even smaller nation’s GDP. This makes TNCs highly influential to globalisation. They accelerate globalisation and are influential to economical, social and environmental pressure in the countries in which they operate hence why TNCs are sometimes referred to as the ‘architects of globalisation.’ TNCs grow to an extent that they are known globally and this is due to three factors. Expansion, which is growing as a result of a company’s product or service being popular, for example names such as Coca-Cola, Ralph Lauren, Apple and thousands more. There’s also companies that take-over or merge. This is where a company takes over its rivals as to increase its market share; an example of this is Diageo, which took over the company Guinness. The last factor is diversification. This involves companies which take over others to broaden their product range, for example Cadbury, which is a chocolate company took over Schweppes, which is a soft drinks company.

My chosen TNC: Samsung Electronics – Who are they?Samsung Group is a South Korean transnational conglomerate corporation. The Samsung Group started off as a small trading company, however it grew and evolved with businesses that span skyscraper and plant construction, petrochemicals, fashion, medicine and many more. But out of all of these, the most notable and important one is Samsung Electronics, which totalled to 70% of the Samsung Group’s revenue in the past years.

Samsung Electronics is the world’s largest information technology company by revenues since the year 2009. Samsung has for a long time been a manufacturer and distributer of electronic components which include lithium-ion batteries, flash memory and hard drive devices for clients such as Sony, HTC, Nokia and even Apple, which is very interesting considering the long battle between each of their phone markets, Apple’s iPhone and Samsung’s Galaxy S series.

What are their areas of operation and what do they produce?Samsung Electronics focuses in four areas of operation, digital media, semiconductors, LCD digital appliances and telecommunication network.The digital media area covers computer devices, including laptop computers, laser printers; digital displays such as TVs and computer monitors; and consumer entertainment devices that include devices

such as MP3/4 players, DVD players and digital camcorders; home appliances such as air conditioners, refrigerators, microwave ovens, vacuum cleaners and, purifiers and washers. The semiconductor business area includes semiconductor chips such as SDRAM and SRAM; smart cards; mobile application processors; mobile TV receivers; storage devices such as optical disc drivers and many more.The LCD area focuses on the production of TFT-

LCD and organic light-emitting diode panels for laptops, desktop monitors and televisions.

Ahlaq HyderThe telecommunication network area includes DSLAMs and fax machines; cellular devices such as mobile phones and also satellite receivers.

Where are they based, where do they operate, what are their revenue and profits?Samsung Electronics has assembly plants and sales networks in 80 countries, however it’s main company headquarters is located in the Gyeonggi Province in Suwon, South Korea. It has a total of over 370,000 employees worldwide and reaching revenue of $218 billion and an operating income of $29 billion and a gross profit of $86.7 billion in the year 2013. From this Samsung has been able to achieve the largest market share in the global smartphone segment, 31% as of the year 2013. On the map following this are some of the countries in which Samsung Electronic has production lines:

Where do their profits go? Do they give back to the host countries? Some of Samsung Electronics profit goes to the parent company itself – Samsung Group, which then feeds the money directly back into the country of origins economy, explaining why Samsung plays a huge part in the economical development, politics, media and culture of South Korea. Samsung’s revenue was equal to 17% of South Korea’s $1,082 billion GDP and Samsung and its affiliate companies produce around one fifth of South Korea’s total exports.

However Samsung does also contribute to other communities and nations. Samsung cares about two main objectives currently. Bridging the digital divide in Africa and other less developed countries, and overcoming environmental limitations and designing a better future. They are doing this through the investment of their own profits into four factors: education, employment and community, health and medical, and the environment.Samsung invests in education in order to

improve the use of technology in education, applying employee expertise to empower the youth around the world.In Employment and Community, Samsung aims to provide employees and local residents with the

First printer factory in Africa - Ethiopia

Samsung Electronics factory – São Paulo, Brazil.

Research and Development institute – Bangalore, India

Samsung Electronics America HQ – New Jersey, USA.

Consumer electronics factory – Cikarang, Indonesia.

Samsung’s Electronics’ HQ – Suwon, South Korea.

Samsung’s largest mobile phone factory- Thai Nguyen, Vietnam.

Ahlaq Hydermeans to improve their community and accomplish their goals through providing meaningful employment opportunities.Health and Medical is where Samsung seeks to address the need to increase healthy life expectancy with the convergence of IT technology. And as for environment, Samsung practices environmental responsibility throughout its operations for the benefit of the global community.

Where do they obtain their supplies? Samsung makes an effort to develop environmentally friendly products that minimises the impact to the environment through the whole process from getting the raw materials, production, transportation, usage and end-of-life disposal. The main raw materials needed for Samsung are coltan and tantalum. Coltan is an essential element used in the manufacture of many portable electronic devices. It is found and mined in several regions such as Australia, Brazil and Congo, it is known that illegally mined coltan from the Congo is contributing to intense political conflict in the region and is causing significant harm to wildlife. Samsung’s policies on this material are that they do not obtain materials illegally mined from the Congo. And also all their vendors should refrain from purchasing tantalum powder from the Congo – Samsung make sure by regularly auditing vendors to ensure compliance.

Why does Samsung operate in the countries it’s located in? Are the products localised?Samsung is known on a global scale. This is due to it expanding. Samsung spread its product around the world, from rich wealthy countries to poorer, underdeveloped countries all in search of new markets to continue spreading their products. Samsung also operated in small communities in continents such as Africa as to reduce the labour costs; however what it pays to its employees is better than the average local wages. Another reason is because of how diversified Samsung has become; it’s responsible for hundreds of different products, from electronics to fashion and skyscrapers and cars. This meant Samsung had the ability to reach farther in order to spread its products and to cope with multiple production lines for different products. The products Samsung creates are localised occasionally, however this depends on the type of product, the countries rules to these products being available and the overall wealth of the country. For example, Samsung Electronics’ phones that are produced in Korea are obviously localised and are available throughout the country. However in Ethiopia where Samsung has a plant for laptops and printers, the items are not localised, and are instead shipped back into various electronic goods exporters around the world. Although this might seem bad for Ethiopia, it is actually pretty good. The plant allows more jobs to be created, this means the money earned can improve the lives of the local people as well as it can be run back into the economy to slowly improve it for the future.

What is ‘spatial division of labour’ and what are the working conditions of Samsung’s employees?Spatial division of labour refers to the ways in which labour is allocated across different spaces and scales. For example, division of labour can be seen on a global scale as between developed and developing world countries, a mesoscale between minority and majority cultures in a region, or in a micro-scale as between management of a company and it’s assembly workers, or between different workers in a factory doing separate tasks.Samsung Electronics takes labour and human rights very seriously. The work hours of employees are continuously monitored as to promote a good work-life. Working hours and the working conditions at global production subsidiaries are adequately managed according to the local employment standards of the country and the guidelines of the

Electronic Industry Citizenship Coalition (EICC), therefore this means that the working conditions and

Ahlaq Hyderthe hours spent working of the production factory depends on its location and the country’s own regulations.Samsung strives to provide superior working conditions. Most of the production lines, especially for small electronic devices consist of tightly focused, cell system working atmosphere, where a couple of workers (usually four) work in a tandem rather than a traditional assembly line.

Controversies surrounding Samsung ElectronicThere are quite a few controversies surrounding Samsung Electronics, one of the most notable one is the diagnosing of 26 employees on the semiconductors with blood cancer, a total of 193 people got sick with cancers or rare terminal diseases. Samsung denied this however due to rising tensions offered an apology and compensation to ill workers. The quarrel is still on going; the number of sick and dead employees is rising. The Public Prosecutor for Labour of the Amazon is sued Samsung for $108 million sue to the working conditions of one of its plants in Manaus, northern Brazil. Around 6,000 people are employed by Samsung to work there, however employees performed triple the amount of movements considered safe under ergonomic studies. Some worked for over 10 hours on their feet. Cases of tendinitis, bursitis and repetitive strain injuries created more than 2,000 sick leaves for as many as 15 days, which is why a formal government investigation was put in action.Another controversy is the safety issues concerning the popular Samsung phones exploding. A Swiss teenager was left with second and third degree burns in her thigh due to her Galaxy S3 exploding in her pocket. Two more explosions in Switzerland and Ireland followed this. An S2’s battery also exploded in 2012. A house in Hong Kong was allegedly set on fire by an S4 in mid 2013, followed by burn incidents and fire being reported. Some users have also reported the batteries overheating and swelling up. Samsung countered this by offering free batteries.In December 2013 YouTube video was uploaded describing how a man’s S4 combusted. Samsung then allegedly asked the uploader to sign a legal document requiring him to remove the video and to also remain silent about the agreement, and surrender any future claims against the company in order to receive a replacement. No further response from Samsung was received afterwards.

One of the most popular controversies about Samsung electronics is to do with the litigations. Apple sued Samsung in 2011. Apple believed that several of Samsung's Android phones and tablets, including the Nexus S, Galaxy S 4G, and the Samsung Galaxy Tab, infringed on Apple’s intellectual property: including its patents, trademarks, user interface and overall style and design. In August 2012 the jury returned a verdict favourable to Apple. Samsung had wilfully infringed on Apple’s design and utility patents. The jury awarded Apple $1.049 billion in damages. The jury found Samsung infringed Apple's patents on iPhone's "Bounce-Back Effect" "On-screen Navigation

and "Tap To Zoom", and design patents that covers certain features of the iPhone.

Final opinions on Samsung ElectronicFrom my research I see Samsung to be less of a reputable company I once deemed it to be, mainly due to all the controversies that surround the firm. A company like Samsung should prioritise safety and reliability of its products, however as I found out, some of its products are not very safe. Some devices exploding and catching fire, whilst others overheat and cause the battery to swell up. Samsung should also prioritise the working conditions of its employees around the world. Although Samsung's policy on working regulations and human rights seems very strict, looking at the controversial issue that happened in the Brazilian factory, where workers overworked significantly, this doesn’t seem to be the case. I see this as very unethical of the company.I am also starting to see Samsung as somewhat of a ‘sketchy’ company, due to the YouTube incident where they told the man if he wanted a replacement phone, he had to take his video

Ahlaq Hyderdown and literally shut up about his phone bursting into flames and not tell anyone. This isn’t something a big company should be doing and it’s understandable why it led them into a lot of trouble and many people questioning the quality of their handheld devices. From my continued research into the firm, I also believe that Samsung is somewhat of a decently ethical company, ignoring all its controversial happenings; it takes into consideration its impacts on the environment, and the local economies. It uses its profits to fund and invest in aspects that include education, health, employment and the environment in the countries that it operates in, all this to improve the lives of people in the communities it operates in and also the world that we live in. This in my opinion makes it a very respectable firm, which is why I currently believe it to be very successful. In conclusion, I still continue to enjoy Samsung products, especially their phones and phablets and deem them to be revolutionary despite all the negative feedback and the controversies it has come under.