[Market Economy Guide] Business Success

A Company’s Success or Failure Depends on Consumer Satisfaction

Samsung also threw itself fully into growing its semiconductor business

People could grow produce in their backyard and eat it, or buy wood and make their own furniture, yet they choose to buy these things in the market instead. Why do they rely on companies to meet their needs? Because they can purchase products through the market more cheaply and with better quality than if they made them themselves. Even if they could make them better on their own, they still usually do not. That is because it benefits everyone for them to leave that work to others and instead spend their time contributing in fields where they can create greater added value.

Why We Do Not Farm Ourselves

In this way, the useful tool of civilization that people created to engage in better economic activity is the company. A company is an organization through which people join together for economic activity. Through companies, people can make what others want faster, in greater quantity, and with better quality. What once existed only in imagination is now being turned into reality. For example, only 50 years ago, who would have imagined that people could walk around carrying telephones, talking on them, and even using the internet?

Because companies are an efficient mechanism in market competition, they have become increasingly sophisticated and advanced over time and have come to play the leading role in the market. Stock companies rather than cooperatives, and large corporations rather than cottage industries or self-employment, have become the main agents of competition.

A Company That Survives Is a Successful Company

That does not mean every company has survived in the market. Only those that effectively achieved their economic goals have endured. Therefore, a surviving company is a successful company, and a company that has earned renown as a brand offers the clearest proof of success.

What is a company’s goal, in other words, its vision? It is to discover new ways of doing business and sell products so outstanding that they move consumers. From a neighborhood bakery to a world-class automobile company, the essence of the goal is the same: consumer satisfaction.

The companies that exist today are the result of evolution. Companies chosen by many consumers can exist as large corporations, while those chosen by only a small number of consumers cannot help but remain small. To compare them blindly as merely big or small is to speak without understanding how the world works. It is better to accept the outcomes chosen by individuals called consumers as they are. If one disparages the results of humanity’s choices as “inequality” and tries to forcibly correct them, that is a mistake that goes against the natural order.

In January 2010, the Financial Times of the United Kingdom carried an Op-Ed titled “Korea Is No Longer a Backwater Nation.” Samsung’s excellence, which was driving Korea’s dramatic economic development, had drawn the world’s attention.

The most remarkable achievement in Samsung’s history was, above all, the success of its semiconductor business. In 1992, it succeeded in developing the world’s first 64M DRAM. This sent shockwaves around the world. It was a monumental achievement that not only caught up with Japanese technology, then regarded as the world’s strongest, but also elevated Korea into a powerhouse of advanced technology.

Samsung’s rapid advance did not end there. After that, Samsung continued to thrive in the semiconductor industry. It never once gave up its position as the world’s No. 1 and maintained an unchallenged lead. Needless to say, the Korean economy also continued its dazzling growth alongside it. Had Samsung Electronics not entered the semiconductor business, the Korean economy would not have achieved such remarkable development today.

When Samsung first announced it would enter the semiconductor industry, most reactions were negative. But the late Byungchul Lee, who led Samsung at the time, did not waver in his decision. Declaring that the semiconductor industry had not only immense growth potential in itself but also enormous spillover effects on other industries, and that it was a high-value-added industry intensive in technology and brainpower, he firmly committed himself to semiconductor development. He invested without hesitation, to the point of pouring even the profits from Samsung’s other business sectors into semiconductor development.

Samsung’s Choice Was Right

In the end, Samsung was right. When everyone else strongly opposed the move and insisted it could not be done, Samsung accurately read future trends and, through the fast decision-making and strong drive characteristic of owner-led management, brought into being semiconductors, a highly advanced concentration of technology. If Samsung had given up semiconductor development in the face of opposition from government bureaucrats and public opinion, Samsung Electronics as we know it today would not exist. Likewise, the dazzling development of the Korean economy would also have been impossible. It was only because an entrepreneur, acting on conviction, undertook a bold risk and achieved innovation that no one had anticipated that the semiconductor industry—which made today’s Samsung Electronics and today’s Korea possible—was able to flourish.

■ Please remember

What is a company’s goal, in other words, its vision? It is to discover new ways of doing business and sell products so outstanding that they move consumers. From a neighborhood bakery to a world-class automobile company, the essence of the goal is the same: consumer satisfaction.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: [시장경제 길라잡이] 기업 성공

Author: Sung-no Choi

Date: 2019-12-23

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=11&idx=22187