History of Samsung

 Samsung was established in 1938 by Founder Byung Chun Lee as a trade and
export company in Korea.

 They used to sell fish, vegetables and fruit to China.

 It became the co-operation in 1951.

 From 1958 Samsung began to diversify its business to other sectors like
financial, media, chemical and ship building.

 In 1969, Samsung electronics was established producing Television, Radio,

Mobile, Computer and other electronic devices.
 New Leadership of Samsung
• In 1987, founder and chairman, Byung-Chull Lee passed away
and Lee Kun-Hee took over as chairman

• In the 1990's Samsung began to expand globally building

factories in the US, Britain, Germany, Thailand, Mexico, Spain and
China until 1997.

• Since Lee took control of Samsung in 1987, sales have surged to

$179 billion last year, making it the world’s largest electronics
company by revenue.

Lee Kun Hee, • Samsung, a conglomerate accounts for 17 percent of South

Korea’s gross domestic product.

• It employs 370,000 people in more than 80 countries,

 How did the Samsung became World’s No.1 Smart
Phone Maker
 In 1993, Chairman Lee gathered his colleagues and laid out a plan to transform
Samsung, then a second-tier TV manufacturer, into the biggest, most powerful
electronics manufacturer on earth.

 He decided to go through the high-volume, low-quality manufacturer to a high-quality

one.

 Firstly, they decided to make the key components for that industry which requires lot
of money to manufacture & they started with micro processor and micro chip.

 In 1991, Samsung started making LCD panels it sold to other television brands.

 In 1994 it started making flash memory for devices such as the iPod and smartphones.
 How did the Samsung became World’s No.1 Smart
Phone Maker
 Besides the Great Phone Incineration of 1995, the other reason for rise in Samsung
mobile was use of Google operating system in their mobile phones.

 The bigger screens proved to be a major selling point for Samsung.

 Now, Samsung smartphones come in sizes ranging from 2.8 inches to 5.5 inches.

 Apple’s approach is fewer models, each of them exquisitely designed. Samsung’s is try
everything, and fast. “

 Samsung employees are given incentives to come up with ideas like these. A cost
savings is calculated, and a portion of that is returned to the employee as a bonus.
 Market Analysis
As Samsung has risen, others have failed:
 Motorola was split up and its handset business sold to Google (GOOG)
 Nokia watched its long-standing No. 1 position erode when it got blindsided
by smartphones
 The Sony-Ericsson (ERIC) partnership dissolved

When it comes to mobile hardware, today there’s two brands and other desperate
crowds of brands.

Today, Samsung is probably the only other company that can throw a product
introduction and have people line up around a city block.
 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
 Management & Employees

 59,000 employees
 Development of employees strategic to success
 “Making rounds” encouraged as a key management
practice
 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
“ Add your company slogan ”

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