Samsung’s Project Risk Management Strategy Evolution
Task: In this assessment in Part A students are asked to imagine they have been engaged by Apple (Apple Inc APPL) (or a similar technology company) to develop a report on key aspects of project risk management and how they might be used in proposed future projects in order to manage and limit risk.
In Part B you are asked to conduct a capital budgeting analysis for the Apple Corporation.
PART A: Imagine you have been engaged by a technology company to develop a report on key aspects of project risk management. Please chose a company in the technology sector (based anywhere in the world) and write a report to address the below areas. The report should begin with a short executive summary and conclude with several, short general recommendations. The content you include in the report should link the project management principles detailed above with the practices of the technology company you have chosen.
The topics on which students need to make recommendations in their report include:
- Project selection – How should the company you select determine what projects to undertake and what ones to avoid? What tools, measures, and practices are available to project analysts in this industry?
- Cost management – What is the role of project cost management for your chosen company? Why is it important? What strategies or approaches should the company you have chosen adopt in order to effectively manage project costs?
- Funding – What funding measures or options are generally available to assist companies like the one you have chosen to fund proposed new projects? The report should include reference to any implications associated with different funding types or models
- Implementation and winding up – Are there any particular issues associated with commencing a project that your company must consider? Why are they important? Who do they impact or affect? What happens when the project finishes? How are projects wound up? Do they just end or are there resource or infrastructure considerations? Are there environmental issues associated with the end of a project?
It could be said that risk is associated with all the activities like funding, cost management, completion and commencement of the project. There are measures to control these risks. There could be trend analysis for taking the project. The cost could be managed by taking the appropriate budget and measuring the performance, proper fund procurement techniques need to be employed. It will help to inject capital in the project. There is a labor cost issue with the company. this could be analyzed by managing the competition in the R& D team. It will help to provide them an incentive. There will no need to add the increment in the salary environmental risks that could be managed by creating proper funds for the risks.
Management principles are the base of taking any project under any sector. This is helpful in underpinning the work ethically. This paper will discuss the project risk management of Samsung. The company was founded in the year 1938 on the 1st march. The founder of this company was Lee Byung- Chul. It is one if the best company in the technology industry. its presence is marked worldwide. The revenue of the company in 2017 was 210. Billion US dollars. The number of employees serving this company is 320671. There are several divisions of the company like Samsung electronics, engineering and many more. This paper will project selection, cost management, funding, and implementation and winding up of the company in part A. part B will follow the questions and answers. This will serve a summary that will provide an overview of the entire task.
Part A: Samsung analysis
i)Project selection: The major reason for the growth of Samsung is the best price with more features. The tools and practices used for achieving the selection of project are:
Figure 1: reason for growth and tools used
New features in projects- It is the major practice of the company to select those projects that serve different features than the competitors. The major example of this distinctive practice of the firm is galaxy note 9, s10, s10 plus. They have been marked as the most demanding phones. Taking the example of another smartphone Galaxy S8, this has the invisible him button and Bixby in it. This allows the phone more demandable which was present in some of the mobiles with a high price (Terlizzi et al. 2016).
More efficient- This one of the major practices of Samsung. It is always in target to compete for the market with its efficient features. This is the reason customers across the globe easily more real to the product. Under all the new projects taken by the company, the major focus was in the efficiency level of the project (Kerzner and Kerzner, 2017). It has raised its market area with this practice whether it is a smartphone or television or refrigerator. [Referred to appendix 1]
The major tools followed by the company are:
Reasonable price- This tool is working for the company since it has realized that people search for the best features under the budget. This significantly followed by the company under all its products. This is being the major goal of the company.
Attracting features- Samsung all projects run under this strategy. They are confined to the quality of the products. However, there are other marketers who are ruling the market too. Under the market structure where there is a number of firms available to beat each other, Samsung has found a better place to live in (Hornstein, 2015). It deals with the best feature products which attract the customers more shortly.
The best practice of the company this date has been analysed as dealing with reasonable prices in the market. It is dedicated to creating superior services and products for the customers. It has been found under the previous and recent projects undertaken by the company. There has been a focus on several aspects like quality which one of the major areas of the project development. Efficiency could be seen from its previous projects like galaxy note 9 and S10. Its growth is related to the communities and people which make it a global leader (de Carvalho et al. 2015).
ii)cost management : Samsung projects are also always cost effective. The example could be seen from the projects that have been launched with low prices and making a huge profit from that project. This is the major practice of the company. the major role played by the cost management team which are discussed below:
Controlling operations- The cost manager of Samsung ensures that all the operations are performed under the standard cost set for the objective. It also ensures that the activity of each department that they are running to control the cost or not (Falkner and Hiebl, 2015). This is the major role that will help to control the budget of the organization.
Maintaining the required standard for safety and quality- This has been under all the projects undertaken by the company. it is focused on maintaining the quality of the phones and other products manufactured by the company. It could be seen from the customer's feedback on social sites.
Cost management is necessary for the company to maintain the inflow and outflow of the cash from the projects. It helps to control the budget of the project. There is a significant impact of this process on the budget and deviations arising out of the planned budget. Cost manager ensures the budget of the projects (Joslin and Müller, 2015). An additional budget used to disbalance the budget of the other projects too. Cost manager used to keep track of the changes in the required amount of investment for any particular project. This also helps in the completion of the project on time. There is a specific role of this c as it could help to manage the NPV of the projects too. Therefore, cost management is an integral part of the organization.
Recommended cost management strategies for Samsung:
labour cost- It has been found that the labour cost of Samsung is 27.3 percent lower than that of the competitors. The average salary of the workers was found to be $44000 in the year 2003. It is recommended to the company to achieve a higher growth target by investing in human resources. Infernal competition could be held by the company to provide incentives to the employees (Lager, 2016). It will also help in paying extra in the basic salary of the employees.
Depreciation cost- The depreciation cost if Samsung was higher than that of its competitors by 17.7 percent. This could be managed by the cost control team. The technology could be upgraded to achieve the scale of economies.
Price premium- Products offered by the company used to score a lower price than the competitors. It was lower to the percentage of 34 percent. This could be handled by the company. it could offer products that could get more attractions (Hwang and Ng, 2016). However, it has launched DRAM products more than that of its competitors.
iii) Funding: Funding the projects is a major role in the cost department of the company, there needs to be an appropriate fund to initiate and complete and the project. The cash flow requirement is based on the nature of the project. Samsung used to handle a large volume of the projects. The suitable source for injecting the capital in the projects are:
Equity- Equity is the most used source of funding the projects in the technology sector. This is because it has the potential to gather the required fund for the project. It is owners fund and does not create extra liability on the project managers. The return that is paid to the investors is dependent on the profit earned by the company. there for in case of incurring loss dividend decision could be changed. The company used to issue a large "number of shares" in the securities market (Kwak et al. 2018). This helps the company to focus on the capital structure and injecting in the required fund. The net income of the company gets divided into a larger amount of the shares. The dividend policy for the investors changes according to revenue earned by the company in that particular period.
The benefit of the equity funding for Samsung is:
- Do not have to make compulsory payments to the investors.
- Investors will have the voting rights
It will help to increase the capital structure of the company without levying any extra burden. This is the major implication of this funding option for the company (Borker and Nastl, 2018). It has no significant impact on the profitability position of the business.
Debt- Debt funds are borrowed funds for the company. the company becomes the debtors of the investors. Under this fund procurement technique company has to make a necessary payment to the creditors of the company in the form of the interest. There is a compulsory payment to the investors along with the fixed interest is. Penalties ate also applicable when the debts are n it paid on time (Gill et al. 2015). Samsung if using this funding process has to ensure safety for both the project and the investors.
The benefit of the debt funding for Samsung is:
- It will help to inject required capital in the project
- It is tax efficient, which means the longer the holding period, the longer the indexation benefit.
The major implication of the debt fund is that Samsung might face difficulty in paying the interest when the company did not earn an appropriate profit. It creates pressure on the company in case if compulsory payment to the debenture holders.
iv)implementation and winding up: There is a major responsibility associated with the project manager until the completion of the project. The challenges faced during starting the project are:
Figure 2: challenges faced during starting the project
Risk management- Samsung used to undertake the large volume projects with huge fund associated with it. Therefore, the major issue is the management of risk associated with that particular project (Seidiaghilabadi et al. 2018). For example, if Samsung is going to launch a new feature, it will be accepted the consumers or not.
Insufficient skills- It is a major issue as if the company is going to launch a new feature and the staff are not capable enough to develop that feature. The company has to incur extra costs on the training of the staff. Therefore, issues have many side effects on the project planned by the organization.
Issues related with the finishing of a project:
Trend analysis- Company has to ensure that this kind of project has performed well in the previous periods or nit, this need to be done to know the successfulness of the project. It will help to determine the best strategy to launch the product in the market. There is a competitive advantage of this practice too.
Warehousing and Delivery- After the completion of the project in case if the production, warehousing took a significant position. The products need a particular place from where it could be delivered to the prospective buyers. After the project finishes, strategies are developed to take a new project into consideration. (Samsung, 2019)
The resources that are required for the completion of the project are:
Human resource is the most important resource that is associated with the completion of any project. They used to control and take the initiative to meet the target of the organization. Works are assigned to several groups to complete the project.
Apart from the infrastructural requirement are necessary for the project which are:
Data center- this is the major infrastructure that includes cooling, power and building elements which are vital to support the hardware of data center. The hardware (data center) involves storage, servers, networking, physical cabling, subsystems, switches and many more. The data center needs to be security alerts (Gill et al. 2015). It includes physical security available for the building, which includes electronic key human surveillance and many more.
Technology is also one of the important infrastructures that could support the manufacturing of the project requirements. It helps to build the project competitively. There will be more advanced products that could satisfy consumer wants of Samsung. (Samsung, 2019)
There could be environmental issues like bad weather which could affect the manufacturing process. This will create problem in the procurement of the raw materials. For example, excessive rain could damage the parcel of the parts required for manufacturing.
Conclusion and Recommendation
The issue identified in the project selection is choosing the project which makes more profit. Cost management issues could be labor costs. In the other hand, funding problems could be funding through debt funds. The commencement of the project has funding issues. Completing the project could be interrupted by bad weather. The recommended strategy for choosing the project is making the trend analysis that could be beneficial or not. Again, there could be internal competition in the R&D team to help them with an extra incentive. Samsung does not have to incur extra cost like increasing the basic salary. Funds could be raised from the equity fund options. This will not affect the profit and there is no compulsory payment for the investors. There could be proper measures fur the infrastructural development. It will help in keeping the products safe after the manufacturing proves. Strategies need to be made for dealing with contingent liabilities. There could be a proper funds for those liabilities that could be used at the time of the requirement. It helps to manage the rusk of the company. Cost management could be done in an effective way to manage the funds of the company. Risk Management Strategy assignments are being prepared by our project risk management assignment help experts from top universities which let us to provide you a reliable assignment help online service.
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