Challenges Facing Samsung

CHALLENGES FACING SAMSUNG
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Challenges Facing Samsung
Introduction
Samsung’s core competencies in innovation and strategic acquisition enabled Samsung to gain a head start in the IoT market. According to Prahalad and Hamel (2006, p.1), core competencies refer to an organization’s resources and collective knowledge, which gives it a competitive advantage. Samsung had solid innovation capabilities and acquired SmartThings, giving it an edge in incorporating IoT (Okundaye & Haggerty 2019, p.6). Also, as posited by Porter and Millar (1985, p.13), only companies that responded to change in the information technology revolution would gain a competitive advantage. Samsung understood the potential benefits of IoT and how this could give it a competitive advantage in the electronic and vertical industries. However, the company was at a crossroads and needed to decide its next steps. This report highlights the key issues facing Samsung and provides recommendations on the way forward.
Issue
Samsung was facing an ethics issue because it had to make an investment decision that would impact its shareholders, consumers, and the public. The company had to decide whether to invest an additional $1.2billion, scale down by making a smaller investment, or withdraw entirely from the IoT market to avoid initial risks (Okundaye & Haggerty 2019, p.7). The ethical challenge in making this decision involves balancing the interests of the shareholders against those of consumers and society. According to Smith and Hasnas (1999, p.122), in the shareholder theory, the ethical responsibility of managers is to maximize shareholder value. Samsung’s CEO had to consider how issues such as the lack of interoperable standards, a single method for device connectivity, and potential security breaches (Okundaye & Haggerty 2019, p.6) would affect the company’s ability to maximize shareholders’ value. The company had no financial return guarantee because these issues hindered the realization of IoT benefits, and no solution had been identified, despite the initial $100 million investment. Therefore, making an additional investment while these issues were still unresolved would be more costly to shareholders because there was no guarantee that they would yield returns from the investment.
There were privacy and data security concerns around IoT (Okundaye & Haggerty 2019, p.2) that could lead to IoT failure. The CEO had to consider these concerns, especially from an ethical perspective. As Bock et al. (2021, p.5) reveal, privacy and data security are essential ethics domains in information systems. Companies should ensure the privacy and security of consumer data while considering new technology or information system initiatives. However, at the time of the case study, Samsung could not guarantee consumers' privacy and data security using connected devices (Okundaye & Haggerty 2019, p.6). This lack of guarantee could hinder Samsung's successful investment in IoT and IT alignment. IT alignment ensures effectiveness and efficiency (Luftman (2000) and is dependent on a flexible infrastructure (Chan, 2002,...