SAMSUNG ELECTRONICSSeoul, KoreaJapan / Korea Trip 2001

Fabio ArmaniJulian Carey

Jennifer Goodwin

Agenda

• Samsung Group - Sejarah & Struktur• Samsung Electronics• Sejarah• Fokus perusahaan• Ikhtisar keuangan• Strategi• Struktur organisasi• tantangan

Samsung Group• Didirikan pada tahun 1938• eksportir ikan kering, sayuran, dan buah-buahan• pabrik tepung dan gula-gula mesin• 1950 Stabilisasi Ekonomi• Perang Korea - Samsung kehilangan semua aset• bertujuan untuk membantu membangun kembali perekonomian

Korea; memasuki industri manufaktur (gula, kain)• menjadi pemimpin dalam praktek bisnis modern (merekrut dari

luar)• Ekspansi 1960 Industri Key• memasuki elektronik dan industri kimia• 1969 didirikan Samsung Electronics Co.

Samsung Group

Elektronik

28%

Mesin & Alat

Berat6%

Bahan kimia

2%

Jasa keuanga

n26%

Lain38%

% Dari Penjualan ($ 72B)• distribusi• hotel• taman

hiburan tema• perdagangan• konstruksi• tekstil• pengiklanan• tim bisbol• keamanan

• kamera• pesawat

terbang• kapal• truk sampah• truk minyak

• senyawa polimerisasi• plastik• bahan kimia khusus

• asuransi jiwa• layanan kartu kredit• perdagangan efek• jasa keuangan dan

manajemen kepercayaan

• peralatan rumah• komunikasi

nirkabel• semikonduktor

Samsung Electronics• Established in January, 1969• 1970’s: Bet the future on electronics

– laid the groundwork for electronics in Korea– helped the domestic economy grow– paved the way for exports

• 1980’s: A more comprehensive electronics company– established plants in Portugal and US– established Semiconductor and Communication corporation– began memory chip business

• Early 90’s: Integration and Globalization• Mid-Late 90’s: Implementing new management

strategies• New Millenium: Digital Vision

Focus: 4 Core MarketsHome Multimedia Mobile Multimedia

Personal Multimedia Core Components

Samsung Electronics

Semiconductors 40%

Digital Media 29%

Telecommunications 23%

Home Appliances 8%

% Sales ($27B) % Operating Profit

Semiconductors 79%

Digital Media 6% Telecommunications 12%

Home Appliances 3%

Financial Overview• Revenue growth and

Operating Income suffered in 1996

• 1997: New CEO Jong Yong Yun– major turnaround

• new business focus• new management

practices– very positive results in

1999, but…

Operating Income (billion Won)

Revenue (billion Won)

Stock Performance

Common Stock Preferred Stock

… Samsung is feeling the effects of the downturn in the high-tech market

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 can’t 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

• Global network by function• Performance evaluation and compensation

system

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

Digital Media

Semiconductors

Information &

Communications

Home Appliances

Samsung Electronics

Management & Employees

• 59,000 employees• Development of employees strategic to

success• “Making rounds” encouraged as a key

management practice

Recruiting and Training

• Heavy investment• Focus on creating agents of change• Expertise in technology and marketing

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

• Foster creativity• Executives jumping ship for startups

Current Challenges

External:• Abandon dependence on cheap commodity

products• Emphasis on goods developed in-house

– Rivals are outsourcing production and design• Guide the company into the global electronics

elite

Current Challenges

Corporate Governance:• Cross-shareholding among affiliates

– Shifth funds among subsidiaries– Manipulate debt-to-equity ratios

• Outside directors appointed by family• Lack of accountability to outside shareholders