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Seoul, Korea
Japan / Korea Trip 2001
Fabio Armani Julian Carey Jennifer Goodwin
Agenda
Samsung Group History & Structure Samsung Electronics
History Company Focus Financial Overview Strategy Organizational Structure Challenges
Samsung Group
Founded in 1938
exporter of dried fish, vegetables, and fruits flour mill and confectionery machines
Samsung Group
% of Sales ($72B)
distribution hotels amusement theme parks trading construction textile advertising baseball team security
life insurance credit card services securities trading finance and trust management services
Samsung Electronics
Established in January, 1969 1970s: Bet the future on electronics
laid the groundwork for electronics in Korea helped the domestic economy grow paved the way for exports
Early 90s: Integration and Globalization Mid-Late 90s: Implementing new management strategies New Millenium: Digital Vision
Personal Multimedia
Core Components
Samsung Electronics
% Sales ($27B) % Operating Profit
Digital Media 6% Semiconductors 40% Digital Media 29% Telecommunications 12% Home Appliances 3%
Home Appliances 8%
Telecommunications 23%
Semiconductors 79%
Financial Overview
Revenue growth and Operating Income suffered in 1996 1997: New CEO Jong Yong Yun
major turnaround
new business focus new management practices
Operating Income
(billion Won)
Stock Performance
Samsung is feeling the effects of the downturn in the high-tech market
Common Stock Preferred Stock
Strategy
1997 Turnaround: Cut a third of workforce, cut debt Sold and spun off divisions Set firewalls to other Samsung Divisions New business proposition: profits Streamlined inventories Diversification
Strategy
New Economy: Exodus of engineers and managers to startups Top 4 conglomerates: $1.2B in startups (Samsung: $520M)
Stakes of up to 29.9% in 80+ startups
Startups benefit from links to global networks and financial expertise You simply cant survive without adapting to the fast-changing Internet era, and one solution is linking up with startups
Strategy
Digital Vision: A Company that leads the digital convergence revolution Brand power, logistics, IP:
High-margin products Create value chain that integrates competencies of all areas Customer and market oriented
Strategy
Digital Vision: Innovation, meeting challenges and creativity Target debt-to-equity ratio: 50% R&D: 7% of total revenues Overseas partners:
Joint R&D projects Technology transfer arrangements Joint investments
Organization Structure
4 main groups with 14 divisions Samsung Electronics
Digital Media
Semiconductors
Home Appliances
Culture
Entrepreneurial Profit focused Decisive Different from other firms in Korea and within chaebol
Current Challenges
Internal: You must maintain a sense of crisis to stay competitive Profits vs. Growth
Financial discipline
Current Challenges
External: Abandon dependence on cheap commodity products Emphasis on goods developed in-house
Rivals are outsourcing production and design
Current Challenges
Corporate Governance: Cross-shareholding among affiliates
Shifth funds among subsidiaries Manipulate debt-to-equity ratios