Samsung’s 10-Year Plan Turns Five: The Sustainability Report 2014

Here is a joke that is 7 months too late.

“A New Year’s Resolution is something that goes in one year and out the other.”

Get it? If you’re slowly nodding, you may have had a hard time keeping up with your resolutions. However, when a company announces its resolution, it is definitely no joke; it’s serious and means business.

To see if companies actually walk the talk, they provide a sustainability report each year. Samsung’s sustainability report 2014 just recently became available and it is 133 pages long. To save you some time, here is an overview of Samsung’s sustainability report 2014.

1. CEO lays out the point.

Oh-Hyun Kwon, Vice Chairman and CEO, Samsung Electronics, addressed several key points at the beginning of the report.

* Samsung has focused its efforts on pursuing sustainable and positive growth.

* Samsung is aware of the uncertainties and risks in its business environment, and has the ability to respond to it.

* Samsung is sharply aware of the growing environmental impact associated with the sourcing, manufacturing, use and disposal of our products. Therefore, it emphasizes its ‘Green Management philosophy’ internally and externally.

* As a responsible corporate citizen, Samsung is keenly aware of its social impact and promotes responsibility through 5 key programs: the Smart School, the Nanum Villages, Samsung Care Drive, Solve for Tomorrow, and the Samsung Tech Institute

* Samsung Electronics continues to reinvent itself around one key concept: reinvesting the dividends of our work into the growth of the company and the communities Samsung serves.

2. Samsung has had very specific set goals

In 2009, Samsung Electronics announced its ambitious “Vision 2020” with a set of specific goals under the slogan “Inspire the World, Create the Future.” What does that mean?

Qualitatively, it means becoming an innovative company; a respected company; one of the top 10 World’s Best Workplaces; a creative leader building new markets; a global enterprise that attracts the world’s best talents.

Specifically, it means achieving 400 billion dollars in sales, reaching No.1 in the global IT industry & being a top 10 global company by 2020.

3. Can Samsung deliver its goals? The progress so far..

It is 2014, which means that Samsung is 5 years, or half way, into its vision.

– No.1 in the global IT industry & at top 10 global –

As the graph suggests, the trend for ranking seems to head north. Work still needs to be done, but if you ask us, the progress Samsung has been making is tremendous and they are in very good shape.

– 400 billion in sales –

This particular number is overwhelming. 400 billion is 400,000,000,000. We are not even sure that can fit into a conventional calculator. So how is Samsung doing on this ambitious vision? Since 2011, Samsung has achieved a 38.6% increase in sales, recording $220 billion.

Achieving this goal isn’t going to be an easy one, as the industry is getting more competitive by the second. However, there is no fun in achieving an easy goal. While Samsung recognizes there is plenty of space for improvements half way into its vision, according to the report, Samsung has been making solid progress. With Samsung’s unique and diverse business portfolio, global operation structure, and aggressive R&D activities, we expect Samsung to deliver its goal. 

4. Of Course, Samsung has strategies for each goal

Samsung has been successfully executing its plan of sustainable growth and profitability, especially in six selected core areas to secure new growth engine: Capital expenditure (Capex), R&D, Patents, Marketing, Human resources, and M&A. However, what most stands out is their change in direction of future R&D.

While Samsung has always been known for its aggressive R&D efforts, (as you can see in the chart below)

Samsung has shifted its global R&D investment strategies from hardware to software; in-house R&D systems to overseas R&D centers for region-specific customized technology; expansion of B2B products and solutions.

5. Samsung has been hiring.

Not only has Samsung hired more R&D personnel, it has been investing in human resources very actively, which is no surprise. While Samsung has already established its position globally, as the emphasized core message of the sustainability report, it plans to continue to expand its business both qualitatively and quantitatively.

Since every organizations starts with its people, it was inevitable that Samsung would expand its human resources as well. Its workforce has seen a significant increase over the past 5 years and with a 77% increase, Samsung has a total of 286,284 employees as of 2013. Moreover, in 2013 alone, Samsung has hired 97,937 people (49,299 of them are entry level).

6. Samsung takes responsibility seriously.

According to the data from the sustainability report 2014, Samsung takes its social responsibility as a corporate citizen very seriously. Its efforts using/developing eco-friendly materials and product have been widely recognized/certified by many international organizations due to its investment in Green Management.

It also has been investing in various CSR programs, which has resulted in a 93% increase from 2012 in CSR expenses. (536.3Billion KRW). Most importantly, Samsung has established 5 key Global corporate citizenship programs – Smart School, Tech Institute, Solve for Tomorrow, Care Drive and Nanum Village – and has been successfully managing them,  with results already beginning to show.

Of course, more details, which are worth a look, are available on the full version of the sustainability report 2014. At a glimpse, the slogan “Inspire the World, Create the Future” might sound a bit vague and a slightly generic combination of compelling adjectives, However, Samsung’s goals are very specific. As all the data from the report suggests, Samsung is well on its way to achieving its goal aka Vision 2020 and it will be very interesting to see where Samsung will be in the year 2020.