Introduction
The purchase of shares of any company represents ownership of that company. Therefore, it is fundamental for any individual, to have reliable information of a company before purchasing its shares. In addition to having this knowledge, other critical issues such as the financial the past and present financial position of the company are crucial. Possessing of shares is thus considered as a form of investment, and like any other investment, sufficient knowledge on an investment is a key requirement. Therefore, a crucial question arises, what aspects of a company should one focus on, before deciding to buy or not to buy shares of certain company? This study aims at investigating the performance and financial prospects of Samsung Company. The study should be able to assist shareholders in making decisions on whether to buy or not to buy the company shares. The most relevant sections which will be evaluated that will help any shareholder in making such a decision are history of the company, its sustainability, its social responsibilities, its corporate governance and most notable, its financial statements.
History of Samsung Company
It was started in 1938 as a small business in Korea. From that time, the company has evolved to be one of the leading electronics companies in the entire universe. Although, it started with basic electronics, over time it has developed to specialized appliances ranging from digital appliances to semiconductors. The product line of the company has also expanded over time. This has reflected in the growth of its revenues and shares in the market. It has thus achieved its mission of making life better for consumers around the world. The history of the company clearly shows that it has a strong financial base. In addition, it reveals that there is continuous development in their products. This continual improvement is the basis of success for any company. This is because; it provides an insight of where the company will be in terms of developments in the future.
Corporate Governance
This section of the company is fundamentally concerned with the company’s Constitution. This includes the management and the sections under it that govern the operations of the company. When evaluating the corporate governance of a company, the core sections to be considered are legal, marketing team, management team and the production team.(Warren & Reeves, 2002). Samsung electronics company has a strong work force. The team includes contract based workers and regular employees. The number of either group varies depending on the activity of the manufacturing sector. The board of directors coordinates from above the above workforce. In addition to their role of overseeing basic and critical issues concerning the company’s operations, it has also enhanced value and rights of shareholders. ( corporate profile-About Samsung-Samsung…(n.d). Samsung/corporate profile/index.html/.). The management principles of continual improvement of any company state that, integration of different departments of the company to operate, as a single unit is the key to achieving continual growth. Samsung Electronics corporate governance has embraced this principle. The board of directors has different roles that are geared towards attaining a common goal and that are achieving the company’s vision. It is the individual contribution of all the company’s workforce that reflects the overall success. Samsung Electronics board of directors has devised a mechanism for evaluating the individual performance of the members of its Board. This can be viewed as a strategy of ensuring continual improvement in the company.
Sustainability of the company
Any shareholder or stakeholder will have a key interest in any company’s ability to sustain it even in turbulent times. Sustainability of any company depends mainly on its ability to produce dynamic products. In addition to dynamic products, it should integrate innovative means of production that improve the quality of products whose quality meets the present needs of the customers. This is an essential consideration for establishing a strong foundation for global competition.(Wild, 2008). Samsung Electronics has developed strategies that aim at maintaining sustainable growth. The company has aggressively invested in Research and Development. In addition, it has maintained strategic patent management as well as investing in new enterprises. (Garrison, 1997) Insists that, integration of corporate social responsibility in any business activity is essential to attaining sustainable growth. This has totally been achieved by Samsung Electronics company.
The company has set up plans that will ensure that talent is identified, nurtured, and retained in the company. Moreover, the company has set up a mechanism for receiving ideas proposal in their research centers. This will enhance the development of the company’s products thus strengthening and widening its market.
Social Contribution
(Hoyle et al, 2000) Discuss the mutual relationship between business enterprises with their social environment. A company that has a positive impact to its society tends to acquire a status in the community. In fact, some stakeholders are moved to invest in various companies due to the companies’ contribution to the society. (Jeter & Chaney, 2007) Describes social contribution of companies as a strong marketing practice that could be embraced by many companies. Therefore, as the community benefits from the company, the company also benefits in terms of growth in its sales. Samsung Electronics Company has embraced this practice and has set an example to other leading companies. The company has developed a Quality assurance department as one of their strategies. This department is concerned with ensuring that the company’s growth does not affect the local communities around. The emphasis is mainly in terms of negative impacts on the environment. Thus, before a project is approved, the quality assurance department does an environmental impact assessment.
It is also essential to consider the views of both the internal and external stakeholders and integrate them in any company’s social responsibility. (Bhimani, 2006) Samsung Electronics Company has created a corporate social responsibility liaison office. This is composed of several executives from various departments. The main objective of this office is to discuss how to tackle and solve critical corporate social issues that are raised by external stakeholders. This has not only promoted transparency but has also enhanced communication with the external stakeholders.
Financial Statements
Financial statements are intended to provide information of a group of legal activities for a company and its subsidiaries, which operate as a single unit.(Kimmel et al, 2004). They give the current financial position of the company but also provide an insight of the expected future performance trends.(Wild et al, 2004). The factors that are to be put in consideration in this case are balance sheets, inventories, taxes, legal issues, accrued liabilities among other factors.(Evaluating the company-Paragon ventures…(.n.d). Balance sheets reflect the total assets and liabilities of the parent company and its subsidiaries. Evaluating the financial statements of Samsung Electronics Company for the financial year ending 2010, the company is in a tremendously strong position as it realized 66.5% adequacy and 18.0% return on a consolidated basis. Dividends also reflect the average performance of the company since it indicates the profits made in a certain financial year. Samsung dividend payout ratio rose from 9% to 12% from the year ending 2009 to the year ending 2010 respectively.
Conclusion
From the evaluation, of the Samsung Electronics Company, there are several conclusions that con are drawn:
- The corporate governance of the company meets the desired structure. This implies that it can enhance the company’s performance.
- The company can sustain its performance. This implies that it can face its main competitors in the market.
- The company is profitable, and its development is continuous.
From the above conclusions, which result from the company’s evaluation, it is therefore, correct to recommend any individual to buy shares from Samsung Electronics Company. This is because, all the above factors show that, it will be profitable to be a shareholder of this great company.
References
Bhimani, A., (2006). Contemporary issues in management accounting. New York: Oxford University Press.
Corporate profile-About Samsung-Samsung…(n.d).Web.
Evaluating the company-Paragon ventures…(.n.d). Web.
Garrison R., (1997). Managerial Accounting. New York: Mc Grew-Hill companies, Inc.
Hoyle et al, (2000). Advanced accounting. (6th Edition). New York: Mc Grew-Hill Companies, Inc.
Jeter, C., & Chaney, P. (2007). Advanced Accounting. (3rd Edition), New Jersey: John Wiley & sons.
Kimmel et al (2004). Financial Accounting: Tools for business Decision making.Toronto; John Wiley & Sons Canada, Ltd.
Warren.C., & Reeves.J., (2002). Corporate financial Accounting. (7th Edition), Ohio: South-Western Learning Press.
Wild.J., (2008). Financial Accounting: Information for Decisions. New York: McGraw-Hill companies, inc.
Wild J et al (2004). Financial statement Analysis. (8th Edition). New York: McGraw-Hill companies, inc
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